Some of my colleagues in the Occupy movement are trying to get us to rally around Republican underdog Ron Paul. They say that he wants to get rid of the income tax and abolish the Federal Reserve, which would cure all our economic woes. While getting rid of the Fed may help the economy, I don't think getting rid of the income tax will. You can't expect the economy to improve or for us to get out of the national deficit by not taxing people, specifically the wealthiest 1%. Taxing the rich helped the economy twice last century: once under FDR in the 1930's as part of the New Deal and once again in 1990's. I'm going to outline the recent history of tax reform to illustrate why this works.
In the 1980's "Reaganomics" caused an increasing gap of income between the rich and the poor because a flat tax rate was put into place. That means that the rich paid the same percentage of their income as the poor did. The gap widened because the rich were paying less taxes as a percentage of their income than they did before. Not only that, but the national debt went up about 30% in the 1980's. The problem with Reagan's trickle-down economics is the assumption that the super-rich would use these tax cuts to invest in other companies and create jobs. To me that is a flawed assumption if I've ever heard one; why would the rich feel the need to make investments when they already make a crap-load of money? Why risk losing it all? It's nonsense: the psychology of greed is that you do whatever it takes to make more without giving back. Reaganomics only proved that they would hoard it and stagnate the economy. The more money they made the more it got concentrated into the pyramidal apex of the capital economy. All of the sudden we had billionaires who all competed for the famed "richest man in the world" and literally stuck a wedge in growth for small businesses. Now, after the reinstatement of Reaganomics by Bush Jr., we have a record number of billionaires, and their money is just sitting there while millions struggle to make ends meet in the lower dungeons of the pyramid. I'm not saying that all of the wealthy are hoarders, but a frightening portion are, and these are the ones on Wall Street who bribe politicians, advise tax-payer bailouts, and push legislation for anything they can get away with (even war in my opinion).
In the 1990's Clinton raised the marginal tax rate from 31% to 40% on income greater than 250,000. It relatively hurt the super-rich (oh come on... why complain when you lose $1000 for every million?), but the good thing it did was open the door for small businesses to prosper. My own mother was able to open a business and it succeeded until the housing bubble in 2008. The country saw a much needed, albeit short economic boom, until 2001 when Bush re-instated Reaganomics. The debt skyrocketed again, and the economy has been struggling ever since. Sadly, Obama hasn't taken a chapter from Clinton's book and pushed taxing the wealthy, even though a considerable number of 1-percenters like Warren Buffett would gladly pay more income tax. In the Clinton era the debt did increase, but the percentage went down (see link above), so to me this only means that the marginal tax rate wasn't high enough. Lessons learned: taxing the rich helps the economy by making it easier for local business to grow and decreasing the federal debt.
Don't be disillusioned when people tell you that because the rich have higher income they pay more taxes. It is statistical manipulation to look at the numbers as concrete and not based on relativity. That's the crucial difference between the flat tax rate and the marginal tax rate; I'm ashamed to tell you how many conservatives I've met that think the rich pay way too much in taxes simply because their income is higher. For example, right now the 1% pay 30% of all federal taxes yet their assets and incomes make up 80% of the GDP. Don't you think those numbers should be more consistent? Look at this chart. It says the bottom 60% of income earners pay only 15% of all taxes, but that's not what the rich are concerned about. The bottom 60% are the "uneducated consumers" and I bet the rate is only low so they can afford to buy corporate products. Now do the math; who pays the other 55%? That great chunk of our taxes come from the middle class, and that's what big business wants. The middle class is a threat to them because those are the only entrepreneurs that are capable of dethroning their run. As you can see, the system clearly favors the 1%. And to the people who argue that they deserve this imbalance because of all the hard work they put in to get there; that's the same disillusionment inherent from being a goon to statistical manipulation. Much of the wealth on Wall Street and big business is inherited from businesses that rose to the top of the corporate ladder prior to 1980; they earned it no more than the average joe earns a $400 paycheck busting his ass at the local UPS hub.
To bring it back to Ron Paul, getting rid of the income tax won't magically balance out these capital pyrotechnics. The system can only be fixed by regulating itself. Like many other Occupiers I'm not trying to criticize capitalism I just want to see it regulated a bit more. A well-functioning country is balanced by both ingredients of capitalism and socialism (and let's admit it, every country is a little of both). Here we have an overwhelming portion of the former, untamed and raging out of control like a forest fire. Would I pick Ron Paul over any other candidate? Certainly amongst Republicans I would, simply because he wants to end the Fed. I still wouldn't pick him over Obama because he's not big on health care or the environment. Speaking of Obama, if he's so environmentally friendly where's that Green Revolution he was talking about in 2008? Clearly it was all for show. His election was campaigned by Wall Street and they don't want an economic revolution, so that's probably why he hasn't pushed legislation for that. No thanks, I'll be voting for an alternative candidate: in 2008 I voted for Ralph Nader and I'll probably vote for him again.