The Coastal Post - October, 1995

Harbingers Of Dumb

BY FRANK SCOTT

Listening to what passes for political wisdom in America could lead one to believe that our nation is run by The Low IQ Club. Washington's proposals for change seem to come from the bottom of the Bell Curve. Old political Neanderthals and their young Cro-magnon partners murmur variations on the mantra "no taxes are good taxes," but ordinary citizens continue to be ravaged. What really goes on with our widely-criticized, intensely-hated and poorly-understood tax system?

Well, folks, it works this way: If you're part of the worker majority, you pay. If you're part of the investor minority, you may pay a little, but with book juggling by your accountant, you could pay nothing at all. Meanwhile, politicians scream about welfare, crime, immigration and other symptoms of disorder, which they cite as the cause, rather than the affect, of a tax system that O.J. Simpson's defense team wouldn't have the nerve to foist on a bunch of gullible drunks at a small town carnival.

Why do we stand for this? You might well ask why we stand for so much else, but you should notice that anger is growing, and unless it turns uglier, it could lead to positive change. That depends on what kind of leadership we follow in the area of tax reform, and right now the Low IQ Club seems to be doing most of the leading. That means we're headed for even dumber tax policy and more injustice.

The Flat Tax currently being hyped by conservatives is very different from the one proposed by Jerry Brown in his '92 presidential run, but Brown can be thanked for at least raising the subject of taxes in a presidential campaign. Of course, Jesse Jackson did it in '84 and again in '88, and the same Democrats who shrieked in horror at Jackson's call to raise rates on the top 2% were praising Clinton's proposal to do just that, four years later. It isn't a matter of who suggests what first, but what proposals are taken to the people, and whether those proposals would really change the tax structure. As an indication of just how much change we need, here are some figures for you to think about.

In 1966, 155 individuals or families with income over $200,000 paid no income tax. In 1974, 244 with that income paid no tax. In 1986, 659 with that income paid no tax. Do you see a pattern here? During this period, tax reform acts from the Democratic Congress were signed into law by Republican Presidents Nixon, Ford and Reagan, all to stop such outrages. These bipartisan efforts worked so well that by 1989, 1,081 with income over $200k paid no tax. Progress? Sure, for the upper 1% of the population. Meanwhile, the bottom 99% is told that welfare is the problem, without noticing that the biggest recipients of welfare are at the top. And they don't notice because the politicians who should be calling it to their attention are mostly in the employ of that top 1%.

Look at it this way: in 1989, those 1,081 rich folks paid a 0% tax rate, while 8.6 million Americans who earned $40-50k paid at a rate of 11.5%, 7.5 million who made $25-30k paid at a 10% rate, and 9 million who earned from $20-25k paid 8.9%. More than 25 million working Americans paid more than 18 billion dollars in income taxes that year, while a thousand rich folks paid absolutely nothing. Did the system start out with this kind of corruption? No. In fact, it was a model of fairness at the beginning.

The income tax originated back in 1913, and the rates then were 1% on taxable income up to $20k, and a high of 7% on income over $500k. The first $3k was exempt—$4k for married couples—which would amount to a $58k exclusion for families today! Most citizens in those days survived on less than $1k a year, so 98% of the people did not pay any income tax at all. As soon as rich folks got wise, they had their flunkies in Congress and the White House begin changing the rules every year, until the wretched system we have today took shape. And it carries over into Social Security, where the outrage may be worse.

At earnings of $40k a year, a worker pays 6.25% in SS taxes; at $400k the rate is .9%. And if you earn $5.2 million, as a CEO at Merrill Lynch did in 1992, you pay .07%. A middle income wage earner pays Social Security taxes at a rate 89 times higher than a millionaire. If you earned $30k a year and could pay at the rate that CEO did, you'd pay a total of 40 cents in Social Security taxes.

And the bottom of the Bell Curve at the top of the nation is talking about welfare, immigrants, ghetto crime and foreign menace? If you eat soup with a fork and comb your hair with a spoon, or are a rich person who employs such people, the current regime is working for you. All others, including white males whose median income has declined by 17% since 1973, are being sold out. Especially by the tax system, where black, white, male, female, straight or gay, most people are getting the shaft. And they will continue to do so until they start thinking and come together as what they are: the majority. Stay tuned.