There's a good deal of debate about how successful this country has been over the last decade. Some people argue that we've enjoyed unparalleled prosperity. Others say that we've been losing good jobs to other countries and that, while more Americans are employed, jobs pay less so that it now takes two family members to earn what one did in the past. But there's one thing no one disputes -- the gap between the rich and poor has widened tremendously in the past ten years.
The U.S. has long held fairness as an important ideal. And we've tried to live up to it, too. We did this, in part, by having one of the smallest gaps between the wealthy and the poor in any industrialized nation because we made sure that the wealthy paid their fair share of the tax bill. But over the past ten years, we have systematically failed to live up to this ideal of fairness. We've seen the rich get much richer, the middle class get squeezed and the poor grow in number and desperation.
If the middle class and those below believe they're running twice as hard only to stand still or even fall behind, they're right: The average wage of a worker hasn't risen since 1970. If young families fear they'll never own a home or afford college for their kids, that's understandable: Their median income has fallen by 14 percent since 1973. And if they suspect they've been carrying the rich, it's true: Top income groups greatly increased their share of the American pie while their tax rates dropped -- and dramatically.
Children have been the hardest hit by the increasing inequality in income and in the tax burden, though these things touch poor people of all ages. Despite the fact that we are still one of the richest nations on earth, we have a high infant mortality rate than 17 other nations, and we are beginning to see the spread of all sorts of preventable diseases because many poor children are not being inoculated. Our streets are filled with homeless people. In the years after World War II, Americans traveling abroad were always shocked when they saw people begging. Now they are confronted with beggars and people sleeping on heating grates in their own cities.
All these changes show how far we've declined from our ideal of fairness. And a big part of the blame falls on the tax policies put in by Ronald Reagan during the 1980s. These policies resulted in big tax reductions and subsidies for wealthy individuals and corporations, but we were assured that the tax reductions would not increase the budget deficit. On the contrary, we were told, they would stimulate the economy and trickle down to all Americans. But the people who assured us of this turned out to be wrong: Reagan's tax policies vastly increased the deficit. And now that the taxes of the people with the most money have been reduced, low and middle income people are being made to foot the bill -- as we discover from the deficit reduction package that was offered to Congress this week.
Under the terms of this package, individuals ( or couples filing jointly) who make $75,000 a year or less will bear the brunt of the tax increases -- and for most people, the less they make, the greater their own tax increase will be. For example, people making over $200,000 a year will see their taxes increase by 1.7 percent, whereas people making $30,000 to $50,000 will have an increase of 2.9 percent and those making $20,000 to $30,000 will get a 3.3 percent increase.
Taxpayers who are among the most vulnerable will be hit the hardest. Premiums for Medicare will be doubled, and the deductible that elderly and disabled Americans will have to pay before Medicare takes over also will be increased. This may make sense for the wealthy elderly, but for many retired workers living on Social Security and some small pension, it will be devastating. The budget reduction package will also add to the problems of the middle class and working poor who have just lost their jobs by making them wait two weeks before they can collect unemployment insurance.
On the other hand, the wealthiest taxpayers will benefit from the reintroduction of tax loopholes in the form of the so-called growth initiatives. Most tax loopholes were closed up in the 1986 tax reform when the 28 percent ceiling was introduced. Now, wealthy taxpayers will have both a low ceiling and more tax shelters.
The people in Congress, both Democrats and Republicans, who are trying to sell this tax package to their colleagues and to the American public saying it is the only possible solution are dead wrong. In my lifetime, the tax ceiling has been 91 percent. Now it is 28 percent. Would the sky fall in if it became 29 percent or 30 or 31? Or whatever figure we need to start bringing the deficit down to a manageable size?
No one doubts that we need strong financial medicine, but it's immoral to further tax middle class people who are already hanging on by their fingernails; it's immoral to further burden poor people who aren't sure where their next meals are coming from - and it's immoral to exempt the rich from helping make up the deficit.
It's up to our leaders to put together a budget reduction package that will be fair to all Americans -- it can be done!