What Grew Faster than the National Debt?
Can America be great without a middle class?
The MAGA catchphrase demands we look back to a time when America was great. There was a time when America had a thriving middle class. It was a time before we suffered from stifling inequality, a time when the national debt grew modestly. It was a time as a nation we sent a man to the moon. As a nation, we defeated Nazi Germany and Imperialist Japan. We made great strides in science and technology that laid the foundation for the digital age.
We have only memories of that greatness today. Now we stagger under national debt. The middle class is disappearing. The American dream of owning a home is out of reach for all but a select few. The level of inequality is dividing the population into two categories — rich man, poor man.
What Grew Faster than the National Debt? The wealth of the top 20% of the United States.
When America was economically great, we had a tax structure befitting a great nation. Between 1932 and 1981, the top marginal tax bracket never dropped below 70 percent. In President Biden’s recent proposal, he suggested raising the top marginal tax bracket from 37 percent to 39.6 percent, which would apply to income over $452,700 for single filers, $481,000 for head of household filers, and $509,300 for joint filers.
I think a 2.6 percent raise is laughable. These pathetically low top marginal brackets, a remnant Reaganomics, are a rich man’s dream. But they are a nightmare for our nation.
Wealth growth at the top is off the charts
While the National Debt grew from $3.233 trillion to $27,748 trillion,
the wealth of the top twenty percent grew from…
$26,182 trillion to $76,890 trillion
That’s right. Individuals hold three times our National Debt in their private wealth. And these figures do not even include the obscene growth of wealth during the period of the pandemic.
We suffer massive inequality because we fail to tax properly. We don’t need to be $27,748 trillion in debt. It’s a choice made by our elected representatives. It’s the devil’s bargain — they spend and spend but are afraid to tax and pay for it. We have allowed inequality to grow like fast-spreading cancer by an astonishing $50,708 trillion because we fail to tax — instead, we coddle the wealthy and compound the nation’s problems.
Granted, Biden is restoring a degree of business taxation, but businesses won’t pay a dime unless the loopholes are removed. Corporate America employs an army of attorneys to ensure they pay little or no tax. Taxing long-term capital gains as ordinary income for taxpayers with adjusted gross income above $1 million is an essential move in the right direction. The wealthiest Americans make most of their money on capital gains. Although Biden’s proposals head in the right direction, they won’t let him set his sights higher.
Remember, our country was strong and vibrant throughout the years when the top marginal tax bracket was 70 percent or above. We had a robust economy with a 70 percent top marginal bracket — this is not untested territory. Reagan’s “trickle-down” was untested theory that failed miserably. Do you see a lot of trickle-down in the graph above? Follow the link and see the misery suffered by remaining segments of the population — wealth shot up like a geyser, very little trickled down.
When all the wealth sits at the top, absolute political powers is the inevitable result. As a nation, do we want to depend on handouts from the wealthy for necessities? There was once a concept that taxes provided for the common good. Taxes provided for infrastructure that everyone used, but no one could fund on their own. Taxes have provided a safety net for the less fortunate. Taxes have allowed us to set aside vast tracks of land for national parks and wilderness areas. Money set aside for the common good provides benefits to everyone.
However, if we let wealth accumulate to astronomical heights to a select few, they no longer need or want anything tarnished by the unwashed masses. Instead they have the means to purchase their vast tracts of unblemished land for themselves and keep everyone else out. Infrastructure is no longer critical. The wealthy can fly or helicopter from business entity to private compound, no need for airports or highways, as long as their delivery trucks can rumble over the crumbling roads. Extreme wealth has reached such ridiculous levels that we have two individuals competing in space exploration. Is that what we want as a nation? Imagine if Jeff Bezos was the first to reach the moon. Would he have planted the American flag? I don’t think so.