The problem isn't necessarily the rates themselves. The problem is that changing the rates has real consequences. At least that's what I'm coming to believe.
Reagan solved a short-term problem with a long-term change. In the end, I'm not sure the change was for the better, as the income inequality we see today is really troubling (and it's only getting worse). People should be able to work hard and climb up the ladder, yes... but there's no reason why a CEO should earn 400 times the amount of his workers. Unfortunately, when the economy settles into a tax structure, readjusting is hard. There's no way to erase what Reagan did without suffering through job losses and the like. It's a bit of a catch 22: leave things be and the situation gets worse; change things and the situation gets worse. In the end, I feel like people are kind of at the mercy of the tax code that has been set out before them. If I was a lawmaker, I don't think I'd be proposing any hikes or any cuts. It's tricky business.
In theory, 50% rates aren't terrible. Getting there is what's terrible.
Maybe soon, because I've definitely been thinking a lot about income inequality lately. I'm also way more pro-labour than I let on. I guess I just don't really think the Democrats have the solutions here. I do still believe that raising taxes is destructive. I'm kind of at the pessimistic point where I really can't see
any solutions to the mess we're in.
Maybe the answer is to have way more tax brackets than we currently have and get "extremely progressive" on the very, very high end of the income scale (so high that we're far away from small business territory)... but I'm not sure. I am a jealous person, so the class warfare stuff
does work on me, at least from an emotional angle ("those people don't deserve a sailboat any more than I do!"). So while saying "let's tax people who make $10 million a year at 75%" may seem like an easy and poignant "let's stick it to him—he doesn't deserve it," in my head, I know it's not necessarily "right." When you look at this idea in the abstract, taking away 75% of someone's income is just terrible. I don't know if I could live with condoning that,
even if the people paying that rate would be "just fine." So I'm just very torn on what's right. I see the social arguments for the higher rates, but I also see some of their broader negative economic consequences.
Maybe the "progressive" rates on ridiculously high incomes would encourage CEOs to take a lower salary and offer larger chunks of money to their workers. I don't know. If that were to happen, the higher rates could potentially
grow the middle class. But then I think of the consequences of getting to those higher rates and I start to doubt it.
That's where I circle back around to labour and unions. When the labour movement is strong, income inequality is low. Where government and the tax code fails, these groups should be there to pick up the slack. To me, unions play an integral role in the economy, and I really don't like the idea of totally gutting their power. I don't mind if the unions lose from time to time when they're being ridiculous, but they've got to have a place in our society. So what if they take away our competetive edge with the Third World? Why in the Hell would we want conditions to be so bad here that we
could compete with the Third World? The solution isn't to make things worse here; it's to make things better there.
Anyway, my post is losing focus, but whatever. Maybe more brackets on the very high end would be good. But I still completely disagree with raising taxes smack-dab in the middle of where small businesses are operating. And that's what the Democrats seem to want to do.
