Let's Get Real On Tax Reform

 

Write to your representatives.  Nothing changed in 1976 until a great many people expressed their outrage to Congress.  The same applies today. Well-connected lobbyists with fat checkbooks can easily get the attention of your Congressmen.  The only way to trump this type of influence is with the threat of massive voter backlash. 

First, e-mail the senators and the representatives from your state. The e-mail addresses for your congressional delegation are available through links on the Act page of this website.  For best impact, use the special contact form located on their website.  Most congressmen won't bother reading, much less corresponding with, letters from people in other states.  Next, write the Letters to the Editor section of  your local newspaper.  This will help to raise awareness of the issue.  Keep the letters short and mention the link to this site.  A 200-word letter is much more likely to be selected for publication, than a 2,000-word letter.

The letter below is a sample you can send to Congress.  Copy all or part of it, then add your own comments.  Expressing your informed, personal opinions on the issue will add impact to your correspondence.  

A Sample Letter To Congress

Dear (Senator/Representative) _________________:

To claim that the Rich are benefiting from the tax cuts is to buy into a fallacy. This fallacy has distracted us from the truth about what is taking place. This is not simply a rich vs. poor issue. Though they are better off than many Americans, the richest one-quarter of the population believes it is paying too much in taxes and does not think it is making much economic progress. Most of them are correct on both counts.

After adjusting for inflation, the economy doubled between 1976 and 2000. The economic tide has indeed risen. However, the number of workers contributing to this economic growth has increased by 153%. The real growth per worker has been about 29%. 

By the year 2000, 93 million taxpayers were still earning less than $50,000 per year. Tax decreases were not consistent for all income ranges in the group, but, on average, their taxes had decreased by about 9 percent. The decrease in taxes for this group cost the government $14 billion in lost revenue. Despite this tax decrease, the after-tax income for the group DECREASED by 6% compared with inflation-adjusted 1976 dollars. The economic boat of the 72% of taxpayers in this under $50,000 income group was not helped by the rising tide of economic growth. 

Yet, we can't simply blame the Rich. The group whose income was between $50,000 and $500,000 was nearly 28% of the taxpayers. This group has actually increased by about 3%, which has added about $14 billion to the government's revenue stream. Despite paying slightly more taxes, the group's after-tax income has increased by 28%. Their boat has risen modestly, but it could have done much better if it had gotten its promised tax cut.

So what happened to the tax cuts for the Rich and the promised economic gain for the other 93 million taxpayers? Look to the group whose income was $1 million or more in 2000. This group's taxes have decreased by about 31% since 1976. The after-tax income for this group has increased by 591%. Though this group made up less than one-fifth of one percent of the population, the decrease in taxes for this group cost the government $102 billion in lost revenue. The massive decrease in revenue has eaten up about half of total economic growth of the nation.

Would the country have been better off if the $102 billion in government revenue had been distributed to the 99.5% of taxpayers who make $500,000 or less each year instead of the Superrich? Those in the $50,000 to $500,000 income group would have averaged a $1,500 tax cut, with the $200,000 to $500,000 group getting $6,857 each. Those in the $0 to $50,000 group would have averaged $214 with the $40,000 to $50,000 group getting $659 each. These tax cuts to the 99.5% of the population instead of a 31% tax cut for the richest 0.2% of the population, would not only have been revenue neutral, there would have been money left over to begin addressing other problems. Such tax redistribution would certainly have stimulated the economy in 2000 and would do a fine job in today's sluggish economy.

Passing tax code revisions (such as capital gains, estate tax, and dividend tax repeal) skewed in favor of the Superrich are going to catch up with the country. You are shrewd enough to know that such measures have and will continue to dramatically shift the tax burden away from the Superrich. Increasing the long-term tax burden of other groups must be used to make up any shortfall in revenues generated from one group. 

Giving the largest tax breaks to the Superrich has done nothing but concentrate income into the hands of the privileged few. The top 1/5 of 1% of taxpayers got 3% of the nation's income in 1976. By 2000, they were getting 13% of the income.

The 1990s were a decade of unparalleled economic growth. The record growth has provided cover for the dramatic shift in wealth to the Superrich. Now that times are tough, the shift in tax burden will become increasingly apparent. I would hate to be on the wrong side of the tax issue once the 99.5% of Americans who have been harmed by the tax redistribution realize what you and your colleagues have allowed to happen.

There is an analysis of how two decades of tax cuts have affected Americans in each income range available at www.getrealontaxreform.info. Please take a look and get the facts you need to do right by your constituents.

 

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Copyright © 2003 Stephen Rodnesky                          Last modified: February 07, 2003