Written by Thomas Magstadt   

Partly as a result of the Bush tax cuts of 2001, 2003 and 2005, taxation of the wealthy, in President Barack Obama's words, "is at its lowest level in half a century". Obama is quite right, but what he neglects to say is that he caved into political pressures and extended the Bush tax cuts. In other words, he’s part of the problem.

Unfortunately, many middle- and low-income taxpayers do not have a very clear understanding of “the problem” because powerful interests who have bought great influence in Congress like it that way. Here are a few facts that provide a glimpse into the origins and scale of the problem:

1) In the past 10 years the income of the top 1% has risen by 18%, while that of blue-collar male workers has fallen by 12%.

2) In the early 1950s, the federal-state-local revenue structure changed from one in which high income tax returns on average paid over 4 times the percentage of the average for the bottom fifty percent; today, the lowest fifty percent pays one-fourth more as a percentage of adjusted gross income (AGI) than the top one percent.

3) Based on estimated gross income the lowest fifty percent of tax returns, on average, now pay nearly two-thirds more as a percent of total income than the top one percent of tax returns.

4) At least half the nation’s wealth has been excluded from the tax rolls.

These are just plain facts – no media hype or Washington spin. The interpretation individuals attach to such facts is an altogether different matter. The British newspaper, The Guardian, for example, says “The consequence of such regressive policies is a level of inequality unknown in other developed nations.” That’s not something we like to hear, but it happens to contain at least a grain of truth.

And then there’s defense spending. Nobody on either side of the aisle in Congress wants to talk seriously about cutting back on defense. G. Ross Stephens, a recognized authority on public finance and intergovernmental relations, writes, “Massive increases in procurement contracts have altered the effects of federal expenditures…. Over three decades, step by step, tax loophole by tax loophole, like a parasitic worm, fiscal policy on the three levels of government has redistributed wealth upward to large corporations and the very wealthy.”

One demonstrable consequence of the historic downward shift in the tax burden is the steady erosion of middle class savings accompanied by a steep rise in middle class indebtedness and a protracted sag in consumer confidence. If the super rich pay less and less into the federal treasury, the middle class must pay more and more. (The poor never pay. You can’t squeeze blood out of a turnip.)

Conclusion: the tax burden has fallen increasingly – and now to an alarming extent – on the middle class. All the talk of “class warfare” emanating from the talking heads on Fox News, among others, is a thinly disguised cover for what has really been happening in this country over the past few decades. It is a form of class warfare but it is certain members of the super-rich elite and big corporations with massive lobbies in nation’s capital that are waging war on the middle class.

This, then, is “the problem” in a nutshell. To say the structural distortion in the way the federal government taxes and spends puts the nation at peril has nothing to do with ideology or partisanship. It’s just a fact: no democracy has ever prospered or long survived without a thriving middle class – or a leader in the White House without the courage of his stated convictions.