As explained below, a lower top marginal tax rate destroys jobs and redistributes income from the 99 to the 1 percent. This process of redistribution weakens the demand for goods and services, which slows GNP growth. As the chart shows, the higher tax rates resulted in greater economic growth.
There’s a reason why the tax cuts for the rich slow the process of creating jobs. It’s because they destroy jobs (See below). That weakens the demand for goods and services, which means business firms hire less people. This graph shows that job creation slowed when tax cuts for the rich occurred.
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 tax 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 hold 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. Those tax cuts that began with corrupt President Reagan have been used to destroy democracy by buying politicians from both major parties, and paying them to pass legislation that redistributes more and more income from the 99 to the 1 percent.
Liberal Senator Ron Wyden of Wall Street and Wall Street Congressman Earl Blumenauer are cases in point. Both have been bought by Wall Street to sell out the voters who put them in office, the people of Oregon. Whenever legislation is up for a vote to redistribute income from the 99 to the 1 percent, Wall Street Ron Wyden always votes for it, but he’s a clever boy by calling it bipartisanship. There’s never anything bipartisan about it. It would be bipartisan if Wyden passed and got Republicans to vote to redistribute income from the 1 to the 99 percent, but he never has any intention of doing that. His Wall Street master’s keep him on a tight leash. Congressman Blumenauer votes for Wall Street almost as much as Wall Street’s boy, Ron Wyden.
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