We were told that other people would spend our money more wisely than us. We were told that they would use it to create jobs and make us all better off. We were told it would expand our economy. But it hasn’t happened that way. The Reagan-Bush tax cuts transferred over a trillion dollars from the middle class to the wealthiest 3% of Americans. 95% of Americans have seen their income stagnate since the Reagan and Bush “tax cuts” increased the tax burden on the middle class. Meanwhile the wealthiest have seen double digit increases in their earnings and the economy has floundered. A robust and prosperous middle class is the backbone of our economy. Reagan and Bush have proven that “Trickle Down” does not work, and it is time to return to tax policies that benefit all Americans, not just the wealthy elites. This chart shows the average increase in income for different groups under Republican and Democratic administrations.
Source: Larry M Bartels. Chart by Catherine Mulbrandon, VisualizingEconomics.com
Clearly Democratic policies benefit all Americans while Republican policies primarily benefit the wealthiest.
The following charts show how the growth rate of the economy has fallen since the Reagan-Bush tax cuts were introduced in the early eighties (Top Marginal Tax Rates only apply to that part of income that exceeds $20,000 per week).
Source: The Rag Blog
Notice the downward trend in GDP growth under Republicans from 1980 to 1992 as money moved out of the middle class. Clinton stabilized the economy but could not generate significant growth because of deep reductions in the purchasing power of the middle class. The Bush tax cuts created an artificial bubble, but it accelerated the transfer of wealth from the middle class which assured its subsequent collapse starting in 2004. Clearly, tax cuts to the wealthiest wage earners actually slow economic growth. The wealthy invested selfishly in high risk, artificial instruments (i.e. derivatives) that did not create jobs. They did create the financial bubble which, when it finally burst, left the middle class burdened with debt.
This transfer of wealth has also enormously increased the power of the wealthiest Americans. The wealthy are using their money to control the political debate in this country. The elites funnel millions into campaigns for politicians who will make sure that the top 1% will continue to earn 80% of the income in this country. They control the media so well that a majority of the people are unaware that Obama has reduced taxes for 95% of Americans. The alleged grass roots “Tea Party” was created by, and is controlled by, wealthy elites using sham organizations with populist sounding names to hide the true source of their funding. Tea Party participants repeat what they have been told - that taxes are excessive and out of control - and are unaware that the US has one of the lowest overall tax rates among industrialized nations.
It is time to restore balance, reinvigorate the middle class, and make sure the richest earners contribute fairly to the system that creates their wealth. Incomes at the highest levels actually increase faster under a balanced system that benefits all Americans equally.