We are a house divided against ourselves. The evidence is everywhere. Neighbors are angry with neighbors. Republicans and Democrats accuse each other of treason and stupidity. Our government, churches, colleges and universities, scientific community, corporations and other institutions are subject to abuse and skepticism. People are even asking, “Shall we trade our democracy for authoritarianism?”
There is plenty to be angry about. In that sense, the anger is understandable.
There are so many problems that we could solve if we would just come together and use our collective best judgments. Universal health care, comprehensive elder care, affordable higher education, and housing. The list can go on. There is so much that we can do together, but don’t.
Why is it that all of this is happening at a time when new billionaires are being created almost weekly and when we may see the first trillionaire by the end of the decade? Our economy is creating enormous wealth, but only a few are benefiting. Why?
It’s a question worth pondering. How a society divides its wealth is not set in stone. The government itself determines it primarily through tax policy. And tax policies can be changed.
Kevin Phillips chronicled this relationship in his thoroughly documented book Wealth and Democracy. At the start of the great post war era of prosperity, the richest 1% were taxed at a marginal rate of 76.9%. The middle class rate was 5.3%. This era is aptly described as the “great compression.” It brought us together as a nation. The middle class grew and prospered while wealth and poverty shrank. The public treasury had the money to provide public services that benefited nearly everyone. My favorite example comes from public higher education. Do you remember the day when going to the University of Montana or MSU was almost free? That was government policy making at its best.
By the 1990s the tax rate for the middle class had risen to 25% while the top rate for the richest fell to 27%. More recently, rates for the wealthy have fallen even further. ProPublica found that between 2014 and 2018 the 25 wealthiest Americans paid just 3.4% of their income in taxes, while a typical married couple paid 26%.
The Republican mantra claims that lowering taxes on the wealthy will benefit all of us when the wealth trickles down. Reality has repeatedly proven otherwise. But old myths die hard and it’s very much alive here in Montana.
The Montana Budget and Policy Institute found that the income tax package proposed by Governor Gianforte and passed by the Republican supermajority last year gave a $7000 tax break to folks earning $650,000 or more. Those earning less than $81,000 got enough to buy a few pizzas. The Republicans then had the gall to raise residential property taxes by a record amount while lowering taxes for our biggest corporations.
And still, the problems that we face remain unsolved.
There is a solution. It’s called fair taxation of the richest. Those who have benefited disproportionately from the creation of wealth by our economy are not paying their fair share. It may sound simplistic to blame our social discord on tax policy. But even two thousand years ago the great Greek philosophers understood this relationship.
Extreme wealth works against the common good and pits us angrily against one another. We have the power to change this. By voting intelligently and by making our presence felt in Helena, we have the power to create a tax structure that gives us fair taxes now!
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Jon Ellingson serves as Vice Chair of the Board of Big Sky 55+. He is a former state legislator and was Senate Majority Leader during the 2005 session.
