Richard Dawahare: Creation of the New Aristocracy undermining the nation's future

June 5, 2014 

Richard Dawahare is a Lexington attorney.

By Richard Dawahare

Money isn't speech, it's volume. And corporations aren't people, they're a legal fiction.

Yet today's so-called conservative Supreme Court majority has radically redefined the Bill of Rights, and in the process enhanced the power of the ultra-rich, the corporate supremacists and the favored few — in other words, the New Aristocracy.

This is all part of the trickle-down ruse, the promise that slashing taxes for the rich would flood their pockets with so much wealth that a little would trickle down to the parched peons below. Yeah, right.

Three decades of trickle down have exposed the fraud that it is. Inequality has reached pre-Depression levels.

An October 2011 report from the nonpartisan Congressional Budget Office showed that since 1979 incomes of the top one percent grew by 275 percent, the middle by only 39 percent and the low by a mere 18 percent.

The top 10 percent took over half of the nation's income in 2012, the most ever in a century of recorded history according to noted economists Emmanuel Saez and Thomas Piketty.

Likewise the "tax cuts fuel job creation and economic growth" promise was breathtakingly wrong.

After his famed tax cuts in 2001, President George W. Bush presided over the worst economic performance in 70 years.

According to the U.S. Bureau of Labor Statistics, average annual job growth during his tenure was a mere 0.2 percent, the lowest since Herbert Hoover.

America's greatest periods of prosperity have always coincided with higher tax rates. In the 1950s, when the top marginal rate was 90 percent, growth averaged 4 percent, more than twice that of the Bush years, when the top rate was just 35 percent, according to Michael Linden, director of tax and budget policy at the Center for American Progress.

All told, when the top rate was less than 39.6 percent, growth averaged 2.1 percent, compared to a robust 3.8 percent in years the top tax rate was 39.6 percent or higher.

This is not to say that higher rates necessarily lead to higher growth. But the facts most definitely show that conservatives' justifications for cutting taxes are completely wrong. Yachts aside, boats not only did not rise, they have nearly capsized from the crushing wake of consumer debt.

The flip side of trickle down is "pour up." While Republicans seek to slash spending on social welfare, they shower it on those who already have it all. (Democrats are also complicit in this).

A Huffington Post analysis by Bill Quigley, law professor at Loyola University New Orleans, listed examples of corporate welfare and welfare for the rich. These include direct federal subsidies totaling nearly $100 billion a year, with state and local governments adding another $80 billion, as well as special breaks that cut corporate tax rates from 35 percent to just 13 percent, costing us $200 billion a year.

The fact is, the nation was strongest, and more people lived better, when taxes were higher, when the wealth gap was narrower, when social services were more plentiful and when the government truly regulated in the greater public interest.

Currently we're paying less federal income tax than at any time in the last 60 years. Worse, the Center on Budget and Policy Priorities reports that most of the rich pay a lower overall tax rate than the middle class, thanks largely to a capital gains tax of only 15 percent.

Top income earners must pay more. Corporations must pay their full fair share. Steeper progressivity in the tax code and elimination of illogical and unfair tax breaks and subsidies are keys to properly funding government and narrowing the inequality gap.

And lest you think this is not so important: Seven hundred global experts at the recent World Economic Forum in Davos listed the chronic gap between rich and poor as the world's biggest risk in the next decade. Income disparity and social unrest go hand in hand.

"Disgruntlement can lead to the dissolution of the fabric of society, especially if young people feel they don't have a future," said Jennifer Blanke, the World Economic Forum's chief economist. "This is something that affects everybody."

Thus, we all must be part of the solution. Such collective action for the greater good is as American as apple pie. Ironically, our forefathers depended upon it to escape the grasp of corrupt English aristocracy, just as we must do to break the choking hold of today's money lords.

Richard Dawahare is a Lexington attorney.

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