This is why Barack Obama's tax plan concentrates benefits for those making less than $250,000 per year and asks that those making over that amount pay a little more. People who make over $250,000 a year aren't losing their homes, they aren't choosing between paying for healthcare and medicines or food, and they aren't worrying about whether they can send their children to college. They are doing OK and they will continue to do well if they have to pay $1000-$10,000 more in taxes.
Take a look at he first and second points from PBS' Middle Class myths. Because the middle class has less money to spend on clothes and appliances and everything else, the retail sector suffers. If you focus on strengthening the middle class, the entire economy will be better for it, including the wealthy who will see the benefits of the middle class having more money to spend.
This link is to an interview with NYU Professor of Economics Edward Wolff, the author of Top Heavy: The Increasing Inequality of Wealth in America and What Can Be Done About It http://multinationalmonitor.org/mm2003/03may/may03interviewswolff.html among other things, it talks about:
- In the United States ... the richest 1 percent of households own 38 percent of all wealth. ... We have had a fairly sharp increase in wealth inequality dating back to 1975 or 1976... The top 5 percent own more than half of all wealth.
- A household in the middle — the median household — has wealth of about $62,000. $62,000 is not insignificant, but if you consider that the top 1 percent of households’ average wealth is $12.5 million, you can see what a difference there is in the distribution.
- The (supposed) democratization of the stock market... it was more of an illusion. What did happen is that the percentage of households with some ownership of stocks... did go up very dramatically over the last 20 years. In 1983, only 32 percent of households had some ownership of stock... But a lot of these families have very small stakes in the stock market. In 2001, only 32 percent of households owned more than $10,000 of stock, and only 25 percent of households owned more than $25,000 worth of stock.
- Apart from the absolute level of wealth of people at the bottom of the spectrum, why should inequality itself be a matter of concern? ... inequality is actually harmful to the well-being of a society. There is now a lot of evidence, based on cross-national comparisons of inequality and economic growth, that more unequal societies actually have lower rates of economic growth. The divisiveness that comes out of large disparities in income and wealth, is actually reflected in poorer economic performance of a country.
- To what extent is inequality addressed through tax policy ... We have much lower taxes than almost every Western European country. And we have a less progressive tax system than almost every Western European country. As a result, the rich in this country manage to retain a much higher share of their income than they do in other countries, and this enables them to accumulate a much higher amount of wealth than the rich in other countries ... we have a much lower level of income support for poor families than do Western European countries or Canada. Social policy in Europe, Canada and Japan does a lot more to reduce economic disparities created by the marketplace than we do in this country. We have much higher poverty rates than do other advanced industrialized countries.
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McCain is arguing for the same failed Republican policies that bankrupted the federal AND state governments, put a lot of money into the hands of the wealthy and hurt the middle class and this resulted in an overall much weaker economy. He can use whatever words he wants to use for Barack Obama's proposed policies that reverses that trend and gives more tax breaks to the middle class, but the reality is, Obama's policies will work to heal the economy and strengthen the middle class at the same time.
America does well when the middle class does well. McCain is out there on all of the talk shows and on the stump aggressively trying to fool people into supporting what has not worked for the past 28 years. Don't be fooled. On November 4th, vote for policies that will help the middle class and the broader economy, vote Obama.
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