Many people are unaware of how a progressive tax code works. Consequently, our tax code has been amputated and shredded over the last 30 years with very little public outcry.
First, all income taxes must come from that part of income, called discretionary income, that remains after all essential living expenses have been paid. No legitimate government will tax the food off your table.
Through the 1960s, our income distribution remained healthy, but since that time the distance between the rich and poor has become so disastrously wide it threatens the stability of our nation.
Our progressive tax system, begun in the 1930s, bracketed income increases with the ascending marginal tax rates applied only to that segment in each bracket.
The top bracket’s marginal rate in the 1930s was 94 percent, which was applied to the topmost layer of the highest incomes. The bottommost layer started with a very low percentage rate, second layer a little higher percentage, and so on upward.
Millionaires and ordinary wage earners paid the same in every bracket their incomes both reached.
If you plotted all the U.S. incomes on a line, with each inch representing $100,000, that line, to include them all, would now continue the length of two football fields.
Currently, our tax increases only progress 4½ inches ($450,000) with the billion, which is clearly a huge amount of discretionary income relatively touched by a progressive tax. The median income is approximately $50,000 (marked at the first half-inch on that line) which tells us that half of our incomes are that much or lower.
This is a recipe for disaster! We have practiced “trickle-down economics” long enough. Those top layers of income could be bracketed again at 90 percent without beggaring anyone.
We are a big country, one of the world’s richest, and we need a carefully regulated government. Health care, housing, highways and education are all better investments than what the super-rich are trying to do with their excessive wealth (buying elections) with falsehoods and half-truths.
Beefing up our tax code would certainly be a good start.
Carolyn Doll lives in Columbia.