Culture and Religion

A world view where the guide for society is based on human nature,
 not on ancient scriptures.  Home  or Topic Groups

Tax Cuts for the Rich

Every society needs checks and balances, so one person or one group does not become too powerful to the detriment of that society. As any/every community and culture grows in size, its government needs to grow in size likewise to maintain order. Small communities need minimal government because everyone knows everyone else and that familiarity helps breed a level of trust. When strangers interact there is no basis for that trust and conflicts can easily arise due to mistakes in interpretation, in judgment, or even in disrespect.

The 1950's had the economic boom for the American economy, as World War II had devastated most of the other major industrial centers. The American economy was diverse and the wealth was spread around, due to high tax rates and the relative power of unions to negotiate increased wages due to corporate success, creating a vibrant middle class.

The 1960's had the American economy handicapped by the deficits for the military occupation in Vietnam and the 1970's were marked by OPEC oil price shocks and a global recession. By this time the American economy was also getting foreign competition from the other major industrial powers.

In response, American (and multinational) corporations claimed the need for less government regulation and for relief from unions, so there was a concerted effort on both complaints. The conservatives pushed to 'starve the beast' by cutting taxes that supposedly would enable corporations to expand their business and create more jobs. The 1981 firing of the striking air traffic controllers by the Reagan administration emphasized a lack of tolerance for the public unions, and this stance was accompanied by other anti-union policies in the succeeding administrations.

At the same time, the election campaigns became more fluff and less substance (since corporate power dominates the activities in the government but the campaign cannot be honest about that) so the need for funds increased drastically, to pay for the campaign needed to convince the voters the person might actually do something to their benefit, even though in practice the person once elected will certainly act to benefit his campaign donors, with the common practice becoming for lobbyists to draft legislation. Any benefits gained by the voters will be more incidental or just by accident.

Several recent studies have found that a very small number of companies actually manage much of the world's wealth. Another study revealed only four corporations control the indexes that determine change in much of the worlds traded funds.

Another continuing effort documents where in the world are the billionaires. This chronicles the fact that a great deal of wealth is becoming more concentrated among only a few in many of the major industrial countries. This effort is complemented by a study of the wealth being stored in offshore bank accounts, removing that money from those economies where if it had remained and recirculated the funds would help sustain a better standard of living for the other citizens.

The rich act in their self interest, which is to attain more wealth, but that is not compatible with the interest of the society that they are supposedly a member, especially when the wealth being gathered is not reinvested into the economy. This practice of pushing the increased wealth into offshore accounts is instead a drain on the economy and is bad for society. A diverse economy with both large and small businesses is more innovative and can maintain a higher standard of living for everyone, both the direct employees and the associated social organizations like education and health care.

The current debate on whether tax cuts are needed for the wealthiest Americans is dominated by influence on the legislators given to the very rich. Attempts to raise the tax rates on the rich are countered with the claim the taxes will affect the great number of small business owners, even though some very large businesses can get classified as small businesses.

One of the comments to the above article is the higher corporate tax rate is an incentive on the business owner to pay the employees because that reduces the taxable income within the corporation. That is exactly what is needed to get more money into the bottom lower levels of the economic ladder than just pushing more into the very top level.

Supposedly increasing corporate profits will lead to the trickle down of increased wages among employees. Recent history contradicts that claim where increased profits have not resulted in increased wages. When a corporate manager is at some profitable level for the market his company serves and then the government gives him a tax cut, that just means he can pocket the increased profits. If the market does not need more production and so more employees then there is no incentive to high more workers for the same level of production. By the offshoring of American jobs for a few decades the health of the American consumer market has been severely damaged, with many unable to increase their spending given their falling wages. American manufacturers know that increased production will not necessarily result in increased sales given the financially strapped consumer class.

The richest Americans now have the most influence in the political debate about spending and taxes, given their control over the election process. For most Americans, they get taxation without effective representation, when their representatives do not execute their office to the benefit of most of their constituents. When Washington passes rules and regulations that benefit multinational corporations and financial institutions, those are often not even voters within their district or state.

The bottom line is the current environment where the richest Americans gain more wealth rather than reinvesting it in the economy is certainly bad for the American economy and for the  majority of Americans who have seen their standard of living fall even as the richest Americans get richer.

created - November 2013
last change - 11/10/2013
Here is the list of topics in this Debates Topic Group .
All Topic Groups are available by selecting More TG.
All topics in the site are in the Site Map, where each Topic Group has its topics indented below it.

Ctrl + for zoom in;  Ctrl - for zoom out ;  Ctrl 0 for no zoom;
triple-tap for zoom to fit;  pinch for zoom change;  pinched for no zoom