Why have the rich get richer, the poor get poorer and why is the middle class disappearing? There are many reasons why, and one of them is the decline in federal tax rates for corporations and the wealthy elites.
During the Eisenhower administration, the top tax rate of all income was 25 percent for most working class Americans and 91 percent for the very rich. Today, the top tax rate on workers’ earned income is 37 percent, but only 15 percent on the investment income of the wealthy. The top corporate tax rate at that time was 52 percent; today, it is only 21 percent. By the way, Eisenhower was the last Republican president to balance a federal budget.
As federal tax rates have declined for corporations and the wealthy elites, federal budget deficits have increased and so has the national debt. In 1980, the national debt was less than $1 trillion; today, it is over $25 trillion and rapidly growing larger.
Cutting federal tax rates to stimulate the economy increases federal budget deficits and the national debt. The last Democratic president to balance a federal budget was Bill Clinton, and if federal tax rates in place then had remained constant, America could have been debt free by 2010.
However, two unnecessary wars, a Medicare prescription drug program and two unnecessary tax cuts from the rich followed by The Great Recession and the national debt doubled during the George W. Bush presidency.
Federal tax rates need to be increased on the income of corporations and the very rich and lowered for working class Americans in order to balance federal budgets and to lower the income gap between the rich, the poor and the middle class.
David L. Faust,