Are you concerned about the country's large budget deficits? Are you wondering how we are going to pay for two wars, bank bailouts and economic recovery projects while continuing to maintain our roads and bridges and pay for our schools and police and firefighters? Are you wondering what we can do about the great concentration of wealth and income into the hands of a very few at the top?
There are so many budget problems. It would be so nice if we could just go back to a simpler time.
Well there is something we can do to solve most of these problems in one fell swoop. We really can just go back to a simpler time. Why don't we just go back to the income tax structure that we had back when budgets were balanced, our infrastructure was maintained, our schools were good, the economy grew at a nice, fast clip and the middle class knew that their incomes would grow steadily? What I am suggesting is that we just return the income and corporate tax rates to where they were during the Truman, Eisenhower and Kennedy administrations.
After these "golden years" we cut those top taxes and things started to fall apart. Then we started borrowing to make up for the lost revenue and even borrowed all of the money in the Social Security Trust Fund. We deferred maintenance of our infrastructure of roads and bridges, etc. We cut school budgets. We cut ... well almost everything except what the richest were taking home.
Cutting and passing the savings to a few at the top became the corporate business model, too, once executives no longer had to pay high taxes.
As a result of these policies income and wealth have concentrated at the very top ever since. While working people haven't had much of a raise since the 70's, the top 1% now recieve the highest share of the nation's income since 1929. (If that date rings a bell, there's a reason.) UC Berkeley Professor Robert Reich recently wrote, "In the U.S., the root of the problem is a growing share of total income going to the richest Americans, leaving the middle class with relatively less purchasing power unless they go deep into debt."
Suppose we did go back to the tax rates of a simpler time? What effect would such a change have on how our country is doing?
The United States now has to pay a huge share of its budget just to cover the interest on the borrowing that tax cuts made necessary. Raising taxes, stopping the borrowing and paying off the debt would remove this huge drag on our economy.
Raising the top tax rates removes the incentive for corporate executives to lie, cheat and steal. Today they can pocket huge sums in a single year, and leave behind the mess they make for others to fix. But high taxes at the top would force longer-term thinking. When it takes years to build up a fortune you want your company to be around for a long time, and you need the surrounding public infrastructure to be in good shape to support your enterprise. So we would all benefit.
I know I am going to be accused of wanting to "punish the rich." Nothing could be further from the truth. Taxes are not punishment; they are what we all pay to have the benefits and protections of modern society. Those benefits and protections enable people to become wealthy, and we ask that they give some back so others can prosper as well. We all want to be rich. With this tax structure, the more people make the more they can pay in taxes so we all benefit.
So of course we want our corporations to make money, too - and lots of it. That way they can distribute the money so shareholders benefit - and pay taxes.
I am asking that we return to a tax structure that builds wealth but also leaves the companies and communities that helped build the wealth intact and in good shape for the long term.
This was written as part of the Commonweal Institute Progressive Op-Ed Program and appears at the Commonweal Institute's Uncommon Denominator blog.