With the Occupy Movement losing steam and the GOP debates focusing on cutting taxes for corporations and capital gains taxes to boost economic growth, I realized something: Taxes for the wealthy during the 1950’s was somewhere in the vicinity of 90% of all income over $100,000.
Why then do GOP candidates, and many Americans, argue that wealthy should pay even less since the MOST a wealthy person can pay is about 37%????
Well, notice when the U.S. had a 90% tax rate? During the 50’s. That is also when that same tax rate for the wealthy started to decrease. What also started ramping up in the 50%? The Cold War. A World War that pitted two seemingly opposite economic systems: capitalism and communism. Leaving for a later blog post the fact that the U.S. was never true capitalism nor was the U.S.S.R true communism, this points to a REASON for this shift toward wealthy owners of production. But it doesn’t explain the current system, right? The Cold War ended in 1989, right?
That second point is mostly correct. The problem exists in Windows of Opportunity and an inability for the system to backtrack.
Windows of Opportunity: Taxes against the wealthy truly took a dive during the 1980’s, the height of the Cold War. The window was open, the U.S. government, and, more importantly, the wealthy in powerful positions, took advantage of this open window.
Inability of Backtracking: You know this theory better than you think you do. Your computer keyboard is called a QWERTY keyboard. It was designed with numbers and letters where they are on purpose and based on the old hammer-based typewriters. This is NOT the most efficient keyboard. The Dvorac keyboard is far more efficient. You could triple your typing and decrease the cases of carpel tunnel if everyone in the U.S. changed to the Dvorac keyboard. But you’ll never see it! Why? Do you want to relearn the keyboard??? Me neither!
It is highly studied and well confirmed that Social Welfare states around the world cannot backtrack on their Social Welfare system. The same is likely true of capitalist systems such as the U.S. Now that the wealthy have SUCH power and their tax rates are SO low, there is a HUGE push to maintain those tax rates.
The most interesting part of all of this is how the wealthy manages to succeed at this.
The wealthy have convinced the poor and pseudo-middle class that the current American Dream of becoming rich and famous is possible even in today’s seriously skewed system. Strangely, most poor and pseudo-middle class have bought into this mock reality.