Monday, August 02, 2004

Bush and Taxes

I see that around the blogosphere there's talk that Bush will propose abolishing the IRS. This is, of course, ridiculous and is designed to pander to people who complain incessantly about their taxes.

However, I think the real issue is not taxes, but income. Middle class real income has declined steadily for the past 30 years. There are a couple of reasons for this. Most importantly is that more and more money is being siphoned off to the super rich. Another reason is that as women entered the workforce, the pot of money allocated for middle class income didn't get any bigger -- it just got distributed among more people. And, as I think I've written about before, the exemptions for you and your children have not kept pace with inflation. As a result, real income is down (and in most cases it takes two working people to maintain a middle class lifestyle which is also made possible by cheap goods from superstores like Wal-mart which are produced overseas by exploited workers, but that's another post).

Taxes are around 25% -- not bad at all in a country like ours. Much lower than in most countries. However, because real income has declined, that 25% really, really hurts. Throw into that mix that even the richest are paying about the same percentage (when they should be paying more), and you can see how the whole mess is headed for disaster (not enough money to maintain services).

Of course, this argument is a lot harder to make in simplistic terms than "taxes are too high." I work with a guy who reads nothing and spouts platitudes from the Reagan era that I'm sure he gets from his parents (even though he's in his 30s). And he rails incessantly about taxes. Its the only political issue he cares about. But I would never be able to convince him that the problem is real income and not taxes. And of course what can he do about income? Unless there is a populist revolt, the distribution of the wealth will continue to favor the rich and super rich at the expense of the middle class.

Why there is not more anger about this is puzzling.


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