Which Policies Are Causing What Now?

The AMT and the middle class tax cut are fine. What needs to change is taxes on wages above $500,000.Up until 1982, the highest tax rate was 70% on any income earned over $215,400. Reagan cut the max rate to 50% on income over $85,600 in ’82, which actually represented a tax increase for the upper MC. But the plan was to progressively raise the top wage at which point the 50% tax would apply, leveling out at $175,600 in ’86. In 1987, another tax bracket was added, and it raised taxes again on the middle class, causing a loss of REAL wages, and putting a strain on how much cash was available to affect demand in the consumer market. This wasn’t Reagan’s idea, this was a Democratic idea based on getting more tax revenue from the upper middle class so that the earned income credit could be paid for more equitably. It failed miserably. Also at that time was another tax cut for the top earners, and it went too far.Reagan believed that his first tax cuts went far enough; that a 50% rate would provide a decent balance between “fair” and economically prohibitive. The economy grew very nicely while that top rate stayed at 50% and middle class taxes were left alone.The moment that top rate was dropped along with a middle class tax increase, the economy started to fail. This is the period where the gap between the wealthiest earners and the middle class grew the most. Incidentally, it also represents the period where a Real Estate bubble began to swell to its bursting point, not only in the US but worldwide…in the late 1980′s and into the early 90′s.I talked about the psychology of a progressive tax system a few weeks ago. Reagan believed 70% and higher was punitive, and only to be used on the wealthy during times of great economic distress. Incidentally, FDR believed the exact same thing, as his own words verify from numerous biographies. Reagan, from his autobiography believed that 50% was about right, so long as that rate did not encroach upon the middle class. The tax cut for the wealthy in the late 80′s along with the middle class tax increases by Bush senior started us in this valley where no politician will even consider going back to the Reagan tax rates that proved effective in the 80′s.Republicans claim to want a return to Reagan economics. I do, too, only I want that return to copy the tax rates he believed in most, 50% for the highest earners along with incentives for the middle class to become small business owners and higher earners. While modern-day Republicans may say they want to return to what Reagan believed in, if you remind them that he believed in a 50% tax rate for the rich, they’d call you a liar, until you show them his numbers AND his words. Then you hear nothing but “socialism!”. Imagine Republicans calling Reagan a socialist.He wasn’t, but it was and is true that no American President since Reagan has had the BALLS to reintroduce a 50% tax rate for the wealthy. He was accused of dropping the rate too far by Tip O’Neill, but his plan produced results, the likes of which America has not seen since. I wonder what Tip O’Neill would have to say about today’s tax rates. I think he’d call every President since Reagan a Conservative Republican.A 50% tax rate on the wealthiest Americans gives them more incentive to invest locally rather than abroad, which is exactly what they did the moment their tax rates started dropping. Reagan was all for free trade, but he wasn’t for giving American money away to foreigners for nothing. He knew that if you dropped the tax rate too low, American investment money would leave our shores at too high a rate too quickly. There HAS TO BE A REASON FOR THE WEALTHY TO KEEP A GOOD PORTION OF THEIR MONEY HERE, and the only way to do it is by making the tax rate high enough to encourage the wealthy to keep their money in their businesses, but low enough to allow them enough cash to help drive consumer demand locally. That is what creates jobs, and when demand is high, jobs are plentiful, and profits are good, America’s tax receipts are high enough to pay for any budget and reduce any deficit.Where is the President who has the balls to do this? Because, until we do, we will always be on the verge of another recession, our deficit will always grow, and the middle class will always shrink.

Apparently your comment mechanism is very sensitive to ascii characters…That should read aside from the 2 wars, the trillion dollar tax cut for the wealthy is one of the most destructive things done to the nation under Bush.

and what’s amazing is in this unending line of deficit concern trolls on TV (Born 1/21/09), not once are they confronted with this:”Ronald Reagan proved deficits don;t matter.”–Dick CheneyI am not saying they do not–it would be nice if the media brought some factual analysis to the GOP’s stunning intellectual dishonesty–In addition, much of the debt was brought on by the GOP not paying for anything.Thanks “liberal” media.