Time to cut taxes, Democrats. Here are some federal income taxes on the middle class that have gone up and contributed to a declining standard of living.
….over the past forty or sixty years is that taxes on lower incomes have increased. The payroll tax was 3% in 1960, or 6% if you consider both the employer and employee portions. Today, it is 6.2%, or 15.3% taking both sides and also considering Medicare. That’s a big increase.
Sales taxes have risen from an average of 7.0% in 1983 to 9.6% in 2010. Unfortunately, the data becomes murkier going farther back, but it appears that this trend higher in sales taxes has been taking place since the 1950s.
Also, the basic exemption has been driven lower and lower, mostly due to inflationary “bracket creep.” In 1950, a married couple was exempt on its first $1,200 of income. That might not sound like much, but in 1950, per-capita income was about $1,510. In 2010, per-capita income was $40,584, and a married couple was exempt on only the first $11,400 of it.
Overall, we’ve seen a gradual increase in the tax rates on the first $50,0000 of income. Today, for a family of four that makes over $36,900 — not exactly a high hurdle — you’ll be paying 15% on marginal income, plus 15.3% in payroll taxes (directly or indirectly), plus about 10% in sales taxes, plus additional state-level and possibly city-level income taxes, plus property taxes (directly or indirectly), plus additional fees and taxes on your phone, gasoline, and whatnot. A single taxpayer hits this level at $14,650. That is, in my opinion, much too heavy a burden at this income level.
http://www.newworldeconomics.com/archives/2012/062412.html
Who destroyed the middle class?
by Nathan Lewis
johnk says
they won’t let anyone adjust taxes which was a miserable failure with Bush II. Just want to keep on providing tax cuts to those who won’t spend and help the economy. I’m with you seascraper, let take republican policy over the last decade and flush it down the toilet where it belongs and lets get a sound tax policy in place, seemed to work pretty well with the guy before Dubya (just sayin’).
Christopher says
This has been another edition of simple answers to simple questions:)
Seriously, though there is a good point here. The tax code is upside down. The middle and lower classes have been sacrificed on the altar of lower taxes for the rich and they have to pick up the slack. Now if only the Taxed Enough Already crowd would join the fight for this too we’d make some progress.
mannygoldstein says
taxes on a median worker have doubled.
Both parties are complicit.
For the past 20 years, elected Republicans have moved from bad positions to sick/absurd/insane positions. During that same time Democrats have positioned themselves as the “we suck less than they do, who the !@#$ else ya gonna vote for, chumps?” party.
And here we are. Badly, badly screwn. Two middle-class salaries today have less purchasing power than a single salary did back when, say, Carter was president.
That’s why I’m hopeful that FDR Democrats like Elizabeth Warren can get back into power and, well, do what FDR did: turn the depression around and make America safe for working families.
merrimackguy says
I don’t think the tax code is responsible for the decline of middle class. Note the brackets are not the measure of the rate of taxation. It’s the effective rate that’s important.
The AMT was established around 1970 because some very rich people were paying zero taxes. Clearly the rates didn’t matter as much.
I don’t think the Republicans are to blame as well.
What about global competition? The effect of technology on productivity?
As to the superrich, what about the rise of entrepeneur? Only a few could start a company and become a billinare (Hughes, JP Getty and a couple others). Now 20 somethings can. Is that the “fault” of Republicans.
I find it hard to see how Mrs. Warren can pass legislation that saves the middle class. She would have to have divine powers of some sort. There’s a lack of middle class wealth in this country, but I don’t see it coming from the government.
SomervilleTom says
Rather than citing the handful of 20-somethings who’ve made fortunes, we should instead be looking at the experiences of 20-somethings as a whole — and it is dismal in comparison to a decade or two earlier. The fact that a lottery-winner has a fortune does not mean that playing the lottery is a wise investment strategy.
The reason that the middle classes have so little wealth today is that the very wealthy have so very much. Recent statistics are showing that about fifty percent of the American population is either in poverty or one paycheck away from it. We are the wealthiest nation in human history, and yet half of us are destitute or nearly so. This obscene wealth concentration will continue to accelerate unless it is stopped — only the government has the ability to do that.
In today’s America, the likelihood of being in poverty is inversely proportion to age. The youngest Americans are most likely to also be the poorest. That is a travesty.
And yes, this accelerated wealth concentration is the fault of the Republicans.
mannygoldstein says
I believe history demonstrates that when the economy becomes as pathological as it is today, only government can restore it, by:
1. Creating a level playing field
2. Priming the pump
When FDR took office, the US economy was quite literally in free fall. Nobody was really sure if there’d actually *be* an economy the next day. After just 100 days of leveling the playing field and priming the pump the economy was turned around, the US was growing, and jobs were being created at a ferocious pace.
That’s what good government can do. That’s what good government could do for us *now*. But to make it happen, we’ll need a legion of FDR Democrats to hold office – almost none do today.
(By contrast, I cannot think of an instance in history where austerity – the tool seemingly favored by both parties today – has led to good outcomes for the 99%. But it has certainly led to economic catastrophe and fascism.)
merrimackguy says
but I do disagree on the causes and the solutions.
Some of what I believe is shaped by personal experience, and let me share.
In 1978 I had a summer job as a Teamster. I made $10.50/hr loading trucks. My brother was a supervisor and got me the job. My college tuition was about $3500/yr.
35 years later people still make $10/hr (sometimes less). My brother is still in trucking and has worked at about 20 companies (maybe more) as trucking was de-regulated in 1980 and the industry has been in constant turmoil. He makes about 2x what he did then. College tuition at a state school is probably $15K.
Trucking is a much better industry than is was then. Stuff gets to where it is supposed to go and for less money. Almost all the union jobs in that industry are gone. Some of my college friends had similar experiences working in car plants at the time. In 1980 the UAW had 1 million people in the US auto industry. Now it’s 100,000.
Did the tax code have anything to do with it? No. Government policy moved in the direction of competition. It has been similar in many other industries, airlines, for example. We have been open to foreign competition as well (some might remember the auto quotas of the 1980’s). Our population has increased dramatically, up 50% since 1970, and the constant influx of new workers puts a damper on wages.
Demographic changes have been important. It used to be the doctor married the nurse and the lawyer married the secretary. Now professionals marry each other, further concentrated wealth.
In 1980 the richest people (besides oil moguls and the like) we CEO’s. The worked at a company 30 years and finally got that job. Bill Gates started the whole “started a company made billions or millions at a young age” – that didn’t exist before that. People complained that executives had big salaries whether the company did well or not. The solution was in the form of performance based compensation to provide incentive. This resulted in 1990 Michael Eisner of Disney made $100 million, a big number at the time. The thing was he increased the value of the company $1 billion that year. The shareholders were happy with that.
One last bit. Michael Milliken committed a crime and was convicted, but he created the modern high yield bond market. Before then only the best corporations could get money from bonds, and others had to beg stodgy bankers for it. It was a big step forward for our economy. He made $500 million, which was a huge number, but he helped fund a number of people (Steve Wynn, for example) that are still around today and have created millions of jobs.
I realize that some on this thread have either a post WW2 UK vision of how economies should run, or maybe a Jeffersonian semi-agrarian idea.
I am not all about “cut all taxes” but more about “make the economy run well” and “provide the best government services at a price that makes sense.”
I just don’t see how If you taxed the Zuckerbergs, the Mark Cuban’s, the stocks in 401ks (through corporate taxes) you increase autoworkers by 10X, and you pay truck loaders $50 hr (to adjust for inflation) and get us back to 1980. As I recall we have had plenty of government participation by both parties in those years, but the trend has continued unabated.
kbusch says
Economic well-being is not solely determined by tax rates. Other factors include the level of salaries and wages, the cost of housing, and the cost of healthcare. Oh, and happiness. Happiness is very important. There have been a few studies of happiness by country, and low taxes, contrary to Republican prejudice, provide no guarantee of happiness.
To care about the middle class is to care about more than just there 1040s.
kbusch says
By “there” I meant “their”.