Tax cuts for the rich are destroying the American middle class. When the rich receive their tax cuts, CEO’s find ways to attract that cash to their stocks by increasing their profits. Rising profits normally mean increasing dividends and share prices. Investors are inclined to sink their newly available tax money into investments with higher rates of return.
That’s why CEO’s race to ship jobs overseas, create jobs overseas and place downward pressure on the compensation of their US employees. The difference between the old wages and the new is redistributed into the pockets of the already affluent via higher dividends and share prices.
This allows the 1 percent to purchase more legislation that redistributes even more income from the 99 to the 1 percent, such as free trade treaties and deregulation. Free trade treaties result in more and more jobs being shipped oversea, or created over there rather than here. The difference between the old and new wages goes into the pockets of the rich.
The demand for goods and services has declined in the US because less people have money to buy stuff, unless they’re using their homes as ATMs during a housing bubble. Once that bubble burst, the demand sector was squashed, meaning less jobs can be created, and there’s still downward pressure on middle class wages and salaries.
The process means the destruction of local bases, layoffs of teachers, fire fighters, police and other government employees. The economy begins to collapse in slow motion over a period of several years. Only the New Deal and the Great Society programs hole the economy up.
That’s why, “In 1979 the middle three household income quintiles in the United States—that is, the population between the 21st and 80th percentiles on the income scale— earned 50 percent of all national income. But by 2007 the income share of those in the middle shrank to just 43 percent. Between 1979 and 2007 the Gini coefficient including capital gains, in the United States, climbed from 48 to 59, ranking the United States in the top quarter of the most unequal countries in the world.”
Tax cuts for the rich are also why the 1 percent received 93 percent of total US income growth from 2009 to 2011.
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