Wednesday, November 30, 2022
Bloomberg Tax: How Four Decades of Tax Cuts Fueled Inequality, by James B. Steele (Center for Public Integrity):
As a dense fog rolled over his California ranch, Ronald Reagan strolled to a table set up outside his adobe farmhouse and flashed photographers a radiant smile.
The president had much to smile about. Stacked on the table, awaiting his signature, was ERTA, the 185-page Economic Recovery Tax Act of 1981 that fulfilled his campaign promise to cut taxes in a big way.
The beneficiaries were largely high-net-worth individuals and corporations. What followed was a $750 billion hole in the federal budget, cuts in multiple public programs and a ballooning deficit.
But that was just the beginning. The bill signing on that foggy day set in motion a trend in tax policy that is supercharging America’s escalating income inequality. In the past four decades, Congress after Congress has cut taxes on the richest people and corporations —billions of dollars that would otherwise have gone to the federal till for spending that could help the rest of the public get ahead.
Soon a new and politically split Congress will make decisions, by action or inaction, that will ripple for years to come. Leave the tax system as is? Rework it to the benefit of struggling people? Or keep cutting? The result could help determine which Americans can build up savings, how bad the racial wealth gap gets and whether longstanding pressure to cut safety-net programs succeeds.
(Hat Tip: Ted Seto)