The ruling elite wants us to be afraid of the 'Radical' tax plan proposed by Rep. Cortez earlier this month. They are knowingly misunderstanding the proposed plan and our own tax history in this county. The rich and powerful are scared out of their minds about the prospects of them having to pay taxes again.
The Real Proposal
Rep. Cortez is proposing that income earned over $10,000,000 annually will be taxed at 70%. This means that every penny earned less than ten million dollars would be taxed at the current top rate of 40%, and only the income earned over this threshold would be taxed at 70%. Presumably, this will incentivize corporations to invest in their labor force, rather than giving exorbitant salaries and bonuses to executives and shareholders.
US Tax History
In the 1960’s the US economy was booming. The productivity growth for the nation was 7-9% annually since the end WWII. Specifically, the growth on the middle class has never been as high as it was during this time. Federal tax payers paid 70% to taxes over $40,000 in 1961 and 91% for income over $200,000.
It wasn’t until 1980 when President Reagan dramatically restructured the tax code to favor the rich at the expense of the poor and middle class. He lowered the top tax bracket to 50% for income over 41,000. He lowered it the top bracket even further in 1986 to 38%. This action, in conjunction with manufactured loop holes for corporations and the extremely wealthy, incentivized corporations around the country to hoard their profits, rather than investing in the labor force.
The notion that Cortez’s proposal in radical or impossible is simply a lie intended to discourage support for undoing the ‘trickle-down’ experiment. You can see why the rich and powerful will stop at nothing to stay this movement; but when the wealth inequality gets this bad, something has got to give.