The Middle Class Squeeze Is A Result Of LOW Taxes

It is a popular misconception that taxes add to the squeeze on the middle class. But it isn't tax increases that have squeezed the middle class, it's tax cuts. It may be hard to believe (after so many years of constant anti-tax rhetoric) but here is why.

The middle class IS squeezed these days. There are pressures and long hours at work, long commutes, health insurance costs, housing costs, food and gas prices rising, and wages are not keeping up - they haven't been for a long time. But it is not a coincidence that the middle-class squeeze began at the same time as the corporate-funded anti-government, tax-cutting fervor. In fact a good case can be made that many of the reasons the middle class feels squeezed are the result of pressures brought about almost entirely FROM the effects of tax CUTS and cutbacks in government services, regulations and enforcement that went along with the tax cuts.

There are direct and indirect relationships. One example of a direct relationship is the dramatic rise in the cost of a college education. Sending kids to college has become extremely expensive. And this places a very hard squeeze on parents who want their children to get a degree. But here in California tuition was very, very low before Proposition 13. Tax cuts directly led to this squeeze on the middle class. (And remember, most of the property taxes that were cut were on business property.)

Indirect results include rising energy prices from cutbacks in government R&D and subsidies for oil alternatives as well as longer commutes as the government cuts back on transit solutions like buses, trains and roadbuilding or improvements. Health care costs continue to rise because of government inaction and deregulation -- the result of the anti-government sentiment encouraged as part of the the anti-tax campaign. And insurance costs rise while coverage is reduced or even denied as the government cuts back on regulation and enforcement. (My wife is the one who brings in the health insurance for our family. Every year she gets a raise, but every year the amount taken out of her check to cover her portion of the health insurance payment goes up by more than her raise, and her take-home pay is lower. So more squeeze.)

Other areas where the anti-government, anti-tax campaign has increased pressure on the average person is at work. Anyone that works for a corporation is feeling the extra pressures there. As government of, by and for the people declines corporate power fills the vacuum.

And there are so many more areas where we are squeezed by this increasing dominance of corporations in our lives. As government -- the power of We, the People -- diminishes, the corporations swoop in to pick us clean. How many examples of corporate power coming to dominate over people power can you think of?

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Comments

[bgregs]

So, wait, let me get this straight, Dave. You're saying that since the government cannot now perform many of the services that we were used to it performing, this costs us more? I just can't see it, man!!!

[loril]

THANK YOU! I feel so alone on this one. People crow about getting an extra $200 back from the Feds like this is some big coup. Then they say nothing when they have to turn around and give all of this "windfall" back to their city or state...or else pay for some service out of pocket when it has been slashed at the local level.

I live in an inner ring suburb. My exurban counterparts always crow about how they pay less in taxes. When I point out that my mortgage is half what they pay and that I have loads of free programs for my child, convenient public transport at the end of my street, a great library and a beautiful lakeside park within walking distance of my home, they just stare blankly and say "but the taxes..."

I could bankrupt myself and try to finance a $400,000 McMansion in a field 30 miles from my husband's job. Enjoy a "community" of strip malls and few sidewalks and probably pay fewer taxes. However, I would more than make up for this "savings" in commute, mortgage and paying for things I get at low/no cost in my neighborhood.

This thinking is pervasive. People cut off their nose to spite their face. And they always carp about "government not doing things as well". As well as what? The corporations that are screwing us senseless? I am tired of the corporate utopian model.

[TakeSake]

I used to take a perverse pleasure at driving by the 10 mile long, 3-lane parking lot that is the highway that runs into the city in the morning. I worked out "there" and drove opposite the traffic. I got to see it again when they all went back. Keep me movin'... over 50.

Now I work much closer to home. It takes 1/2 the time and 1/4 the distance. Very nice in these times.

[centsworth]

Lets see if I have this right. You want government to pick us clean and diminish the organizations that we work for. Everybody knows that government runs things much better than private enterprise and it's less expensive too.
Now, our medical insurance is going out of sight and corporations raise our share of the cost each year, but government can do a better job. I'm retired these 5 years and my medical costs for medicare are going up also. Thats coming out of my social security benefit. But wait a minute, if we get universal health care the government can tax the hell out of my corporate pension and all will seem better. That way I won't have to bitch on some godforsaken blog about how corporations screw me all month.
As for college tuition being out of range for the middle class, did you ever notice how people leave their money to colleges for some new building with their name on it, but nobody ever leaves money to pay the electric bill, or the janitors, or the heating bill, or to mow the grass. I wonder who pays those bills? And don't you love those big new stadiums, and the million dollar payrolls.
Tell you what we do. We turn everything over to the government, let them run the whole thing, and in turn they can doll out our freedoms as they see fit. I mean, they really know how to save a buck.

[TakeSake]

Who is going to pay your (at this time, and growing) $30,000 share of the national debt? You, or your kids? Grandkids?

Who benefits from all that debt? The case can be made that the benefit is probably in proportion to the amount of wealth one has. Therefore, someone with $10,000,000 in assets is "responsible" for 100 times as much as someone with $100,000.

Budget deficits and national debt amount to nothing more than wealth redistribution from those who have the least - children - and transfer it to those who have the most. Actually, it is something more like embezzling, because it's all done under the cover of spreadsheets and tax forms.

[RS]

Here's the answer to who benefits from the HUGE national debt--those that own Treasury bills--the most notable owners are the Chinese, the Japanese, and former Federal Reserve chairman Alan Greenspan. They're the ones COLLECTING THE INTEREST while the rest of us (i.e. the working stiffs) are paying the taxes.

[oldpotsmuggler]

As I understand it, one way to restate the principle that you're speaking of is "from those to whom the most has been given is the most expected". Somehow, though, whenever this principle is brought forward in the form of public policy "the most" do nothing but squeal about how unfair universal wisdom is to them. (And then they proceed to use their fabulous wealth to buy themselves out of the consequences of what is really no more than ordinary justice.)

[RS]

Oh boy, did you hit the bullseye dead center today, David. Let me state a tax rule that I call Universal Tax Rule #1: when rich individuals and big multinational corporations don't pay taxes or pay less than their fair share, SOMEONE ELSE MUST MAKE UP THE DIFFERENCE. Middle class and working poor Americans know all too well who that someone else usually is.

[UpperWest]

Exactly -- but middle class and working poor Americans have taken a long time to find out that they are the ones making up the difference. Many still have not found that out.

Exhibit A is the support for estate tax repeal by majorities of those who will never pay a cent of that tax.

[RS]

And Exhibit B is middle class and working poor Americans' PROPERTY TAXES--since the Bush administration took office in 2001, most of the local county governments in the U.S.--especially the ones in the "blue" states--have had to RAISE THEIR PROPERTY TAXES THROUGH THE ROOF in order to make up budget shortfalls caused by VERY DEEP CUTS in federal aid. Remember--state and local county governments' constitutions REQUIRE THEIR BUDGETS TO BE BALANCED.

[RS]

And guess who are two of the leading families shelling out MILLIONS OF $$$$ in propaganda ads in order to have the estate tax repealed? That's right--the WalMart heirs (i.e. the Walton Gang) and the Mellon-Scaife family--the SAME descendants of Andrew Mellon who was secretary of the Treasury in the 1920s in the Harding administration. Andrew Mellon is widely known by most economists as the architect of the Great Depression.