Redistributing
To The Rich
Seizing
on comments Sen. Barack Obama (D-IL) made to "Joe
the Plumber," Sen. John McCain (R-AZ) campaign has argued that
Obama's economic policies would redistribute the wealth of hard working
Americans and provide "just
another government giveaway to others." "The redistribution
of wealth is the last thing
America
needs right now. The
goal is not to redistribute wealth, but to create it," McCain said
during an event in
Manchester
,
NH
. But as the
Tax
Policy
Center
points out, "today's tax code is riddled with examples of government
'taking' money from one taxpayer and giving
it to another." "[F]or decades, government has used the tax code
for much more than raising money. These days, redistributing tax revenues are
the principal
way government encourages people to do what it wants and discourages them
from doing what it doesn't," TPC wrote. In fact, during the last eight
years, President Bush's regressive economic policies have effectively
redistributed the nation's wealth to
the richest Americans. According to a recent report released by the
Organization for Economic Cooperation and Development (OECD), "the
United States
has the highest
inequality and poverty in the OECD after
Mexico
and
Turkey
, and the gap has increased
rapidly since 2000." Unfortunately, McCain's proposed economic
policies would give
even more wealth to the richest Americans, exacerbate the nation's
income inequality, and further erode opportunities for social mobility.
BUSH
REDISTRIBUTED TO THE WEALTHY: An analysis by the Center for
American Progress Action Fund shows that President Bush's economic policies
have "redistributed
wealth to the richest Americans and left the majority with stagnating
wages and declining household incomes." Looking at the effects of the
first three Bush tax cuts, the Congressional Budget Office concluded that
"the percentage by which the effective tax rate was cut for high-income
families was nearly
twice the rate cut for those in the middle of the income spectrum."
Meanwhile, the administration's failure to raise the minimum wage coupled with
its poor enforcement of federal wage and hour laws, trade agreements, and
union rights further undermined the economic security of middle
and lower-income Americans. Data prepared by the IRS from tax returns
filed during the post-9/11 recovery (2002 to 2006) reveals that household
income grew by $863 billion during the period. "The 15,000 families at
the top of the income scale saw
their annual incomes go from about $15 million a year to nearly $30
million," accounting for more than 25 percent of all of the growth in
income for the entire country. The remaining 1.7 million families in the top 1
percent of households accounted for nearly another 50 percent. But while the
"top 10 percent of families accounted for 95.3
percent of the nation's income growth between 2002 and 2006," the
average real income for families in the bottom 90 percent of households
increased by about $300 to
a little less than $30,700."
MCCAIN
WOULD DOUBLE DOWN: McCain claims that "in this country,
we
believe in spreading opportunity." But his Bush-like economic
policies would only further
America
's income inequality. In fact, by extending
Bush's tax cuts to the wealthy and proposing $175
billion in tax breaks to America's largest corporations, McCain's regressive
economic agenda would redistribute
wealth to the richest Americans during a period of stagnating wages and
growing economic anxiety. The bottom 60 percent of taxpayers would see only 12
percent of the benefit from McCain's plan to extend Bush's tax cuts,
while over 100
million middle class households would receive nothing from McCain's proposal.
Moreover, even though corporate profits increased by
an estimated 66 percent between 2000 and 2006, McCain's plan to slash
the corporate tax rate to 25
percent from 35 percent would give even more benefits to America's richest
corporations. According to a Center for American Progress Action Fund analysis
of McCain's plan, the 200 largest companies stand to gain
$45 billion a year from McCain's proposal. Highly profitable industries
like energy companies and merchandising and retailing companies would receive billions
from additional tax breaks.
MOBILITY
THREATENED:
America
's income concentration is at its highest
level since 1928. According to the OECD
report, "the richest 10 percent earn an average of US$93,000 -- the
highest level in the OECD. The poorest 10 percent earn an average of US$5,800
-- about 20
percent lower than the OECD average." But income inequality is cause
for even more concern than the simple numbers suggest, since it also has an
effect on mobility. In fact, just "7 percent of children born to parents
in the bottom wealth quintile make it to the top quintile in adulthood,"
and "36 percent of children born to parents in the bottom wealth quintile
remain
in the bottom as adults." As OECD Secretary General Angel Gurria has
pointed out, "greater income inequality stifles upward mobility between
generations, making it harder for talented and hard-working people to get
the rewards they deserve."
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