While there is a debate over whether we’re in a recession or a depression, there is little debate that we are in hard times. High unemployment, falling wages and the rising cost of living are just several issues facing the middle and working classes. In the face of mounting state and federal budget deficits, members of government are attempting to cut funding to some of its most essential services: student aid and Pell grants, social security, Medicare, among other draconian measures. One solution to the budget crisis lawmakers are hesitant to entertain is raising government income by raising taxes on the wealthiest among us.
Currently, the tax rate for the highest income bracket is 35 percent, set by George W. Bush in one of his first acts as president. The prior rate, under former President Bill Clinton, was 39.5 percent and is credited by many as one of the primary causes for the country’s economic boom during his tenure. Obama pledged to allow the Bush tax cuts to expire last December, but republicans in the house and Senate threatened to cut off unemployment benefits if lawmakers didn’t renew the tax cuts. According to the Congressional Budget Office, allowing the Bush tax cuts to expire would have saved $700 million annually from the budget deficit.
Between the Great Depression and the 1980s, the tax rate on those in the highest income bracket never fell below 63 percent. The Reagan administration was the first to lower this rate, first to 50, then 38.5 percent under the theory of “Trickle Down Economics.” This policy states that by letting those who create jobs—the rich—keep more of their money, they will invest it and create more jobs.
So what are the actual effects of the Bush tax cuts and “trickle down” ideology? According to SRJC sociologist professor Shelly Stewart, “The middle class is carrying a majority of the tax burden, and as a result we see a shrinking middle class, which some day might become non-existent.”
Wealth inequality has grown also grown steadily since the Reagan administration and now stands at historic levels, greater than the early 20th century. The top 20 percent of households are estimated to have 70 percent of the country’s wealth, according to the Federal Reserve Board.
The wealthiest among us are also the most influential. A handful of corporate conglomerates own a majority of the media. Perhaps that is why calls for raised taxes on the rich are often derided as socialism, redistribution of wealth or even class warfare. From Medicare to education to social security, the programs on the chopping block are all designed to help the majority of Americans.
When Pell grants and college funding are cut, those affected are working class people for whom that assistance created an opportunity where there wasn’t one before. If educational funding continues to be cut, higher education may become exclusively for the elite.
