BEYOND THE NUMBERS
Required Reading on the Payroll Tax Cut — and Much More
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.Our post on this “great income shift” last year included the table below, which shows how the shift has benefited those at the very top of the income ladder.
|Impact on Average Incomes of Change in Income Distribution Between 1979 and 2007|
|Income Group||Actual Average Income in 2007||Average Income if All Income Levels Had Enjoyed Equal Growth Since 1979||Gain or Loss From Income Shift Since 1979|
|Top 1 Percent||$1,319,700||$537,100||$782,600|
|Source: CBPP Calculations based on CBO data|
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy.Finally, he debunks the argument that policymakers’ top priority should be to advance the tax interests of the nation’s wealthiest households:
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.Hanauer’s op-ed contains a number of other points and is a must-read in full.