This year, like always, the Republican Party platform proposes to cut taxes for the wealthy and their corporations. Unfortunately for American workers, the percentage of the federal budget funded by corporations has fallen from 40% in 1943 to less than 11% today. Meanwhile, the top tax rate for individuals has decreased from 90% in the 1950s to 40% today. These two factors comprise a powerful one-two gut punch to America's ever-shrinking middle class, forcing you and me to pay an ever-growing proportion of our nation's tax burden. And now, like always, the Republicans want to double down on their malicious scheme, squeezing us tighter and tighter, while the vast crevasse between America's rich and everybody else grows ever wider.
Why do Republicans want to lower taxes for the wealthy and their corporations? This time around they have shied away from their standard marketing mantra: "like pennies from heaven, prosperity will trickle down to all," and instead say that corporate taxes are like "putting lead shoes on your cross-country team," giving the impression that taxes are hobbling American corporations and that if they had more money in their pockets, they could really get going, expanding their businesses and hiring more workers. That sounds like it makes sense but, according to the Federal Reserve, U.S. corporations now have more cash on hand than they ever had, over $2 trillion.
U.S. corporations have been sitting on their $2 trillion cash reserves since 2010. There hasn't been a lot trickling down to the U.S. worker but, at the top, there have been a lot of mergers, stock buybacks, and the upper echelons of American wealth have never been wealthier. Ten percent of Americans now own 80% of U.S. wealth. And income growth of the top 10% of Americans has been spectacular. They took home about 34% of our nation's income in 1980, and are now taking home about 50%. However, income for the U.S. worker, adjusted for inflation, has gone up a mere 9% since 1973, as profits from productivity gains have flowed almost exclusively to the top.
But wait, there's more. Since 2009, our nation's banks have been sitting on the greatest amount of excess reserves in history. Traditionally, bankers have sought to keep their excess reserves as close to zero as possible, by creating loans and collecting interest. But now, and for the past three years, they've held over $2 trillion of excess reserves, and have had the ability to create over $20 trillion in new loans. Still, the weather has remained fairly dry down here in Trickletown.
In the entire history of the United States, there has never been so much money stuck way, way up there, available for trickling. If the Republican's Trickle-Down Theory had any validity at all, our economy would be going gangbusters, but as they delight in pointing out, our economy is growing very slowly, thereby nullifying their own absurd "theory." The wealthy and their corporations are doing just fine, but our economy is struggling because they don't need to spend their money. The money of the rich, just sits.
By contrast, the 90% of us at the bottom typically spend much more than we save. Any dollar we get is quickly gone and if we ever got real raises and tax breaks, those dollars would fly and our economy would soar. While the politics, programs, and propaganda needed to make Trickle Down a reality are very well known, there are no blueprints to construct a Trickle Up economy. However, higher taxes at the top, not lower, will stimulate spending and expansion. Let's start there.
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