President Reagan broke with past traditions of fiscal responsibility to give corporations and the rich huge new tax breaks, creating federal deficits two and a half times larger than all presidents before him combined. George W. Bush followed in his footsteps, further cutting taxes for those who need it least and boosting deficits even more. In fact, Bush’s tax cuts and unfunded wars contributed more than twice as much to the federal deficit as the economic stimulus program aimed at reviving the economy.
As cuts like these were implemented, inequality in America deepened. From 1983 when Reagan was president to 2009 when Bush’s presidency ended, 82 percent of increases in wealth went to the top 5 percent, while the bottom 60 percent actually lost wealth. The top 1 percent of U.S. households now own more wealth than the bottom 90 percent combined. Average CEO pay that was 24 times greater than the average worker’s before Reagan was in office is now 243 times greater.
Now, the pendulum is swinging back as Americans rebel against growing inequality and face the consequences of decades of attacks on the traditional balance in America’s tax system. Many working Americans find themselves paying taxes at a higher effective rate than their bosses. They see highly profitable corporations paying no income taxes at all. Services are being cut in local communities because big corporations and the top 1% are not paying their share.
Polls consistently show that a large, bipartisan majority of Americans supports raising taxes on people with household incomes more than $1 million a year. A recent ABC News/Washington Post poll found support for this among 67 percent of independents and 57 percent of Republicans.
Of course, millionaires and big corporations continue to claim that they need even larger tax breaks in order to be “job creators,” but most Americans now have enough evidence to see through that contention.
According to a new report by Citizens for Tax Justice, over the last four years GE has had a negative 18.9% tax rate, resulting in a tax subsidy of $10.6 billion on top of almost $20 billion in profits. That’s as they’ve slashed American jobs by 34,000 over the past decade. Wells Fargo has received a $21.6 billion subsidy from taxpayers over the last four years despite billions in profits.
Despite facts like these, many Republican candidates continue to bow down before Grover Norquist’s pledge to never raise taxes on anyone at anytime. Increasingly, that kind of outdated and out-of-touch political gimmick will become an albatross around the party’s neck.
This is 2012, not 1994 or 1980. Most Americans want good jobs, quality education, and affordable health care and housing – and that means making the top 1 percent and corporate giants like Wells Fargo and GE start paying their fair share.
Deepak Bhargava is executive director of the Center for Community Change.