The Middle Class Tax Cut

President-elect Obama's promise of a middle class tax cut is needed more now than ever before.  It is estimated that consumer spending represents 70% of the economy and with the economy in free fall, retail sales down big time and still falling and the unemployment reaching 10.1 million people, the middle class is in a bind with too few dollars to spend.

 

The people who have benefited the most from republican trickle down economics are holding all the cards now.  These are the people who were supposed to use the money to grow the economy and create jobs.  Yet so far this year through October the economy has lost 1,179,000 jobs and the economy is in its second recession in 8 years.

 

A substantial tax cut for the middle class will go a long way to help revive the economy and put the middle class back in the ball game to some degree.  The big problem is that the middle class has fallen so far behind, part of their tax savings will have to go to pay off debt and to replenish savings.  That is good also but it means less money to use for buying to keep our economy running and hiring people.

 

In addition to the tax cuts, the middle class needs better paying jobs and a larger share of the profits they help create.  Corporate America must no longer be able to reap the benefits of what their workers produce without sharing those benefits with the worker.

 

The tax cut should be only the first step to help the middle class advance its economic power and Obama and his administration should keep that as a priority.  That would be the greatest foundation for a sustained economy and job creation.  President Kennedy said over 40 years ago business needs customers to have a productive economy.  It should be obvious that has never changed and it is playing out today.

 

It should be noted the 10.1 million workers without jobs is the highest since 1983 when Reagan was in office.  Republicans have run the country 20 of the last 28 years, yet it was the democratic administration of Bill Clinton who achieved the greatest economy and job creation and where the middle class did better.  President-elect Obama's administration will turn things around for the middle class, the economy and job creation.  Twenty years of trickle down economics should be put to bed with good reason.

Tax Facts

The following information was published by Parade Magazine in its October 12 issue.  The below covers income from less that $19,000.00 (the bottom 20% of earners) to $111,600.00.  I think everyone will agree those brackets cover the "middle class" that both candidates talk about.  The readers can judge for themselves just what plan helps the "middle class" the most.

  Obama's Plan:

 

If you make:                                                 Your average tax savings would be:

Less than $19,000.00                                                                            $567.00

$19,000.00 - $37,600.00                                                                         892.00

$37, 600.00 - $66,400.00                                                                       1118.00

$66,400.00 - 111,600.00                                                                        1264.00

 

McCain's Plan:

 

Less than $19,000.00                                                                               $21.00

$19,000.00 - $37,600.00                                                                           118.00

$37,600.00 - $66,400.00                                                                           325.00

$66,400.00 - $111,600.00                                                                         994.00

The Wealth Parade Continues

Because of what is happening on Wall Street and in the financing industry, lets take a look back at the May 5 issue of Forbes Magazine where Forbes ran a story on the top 20 individual earners of hedge and private equity funds.  Those top 20 earned a combined total of $18.7 billion last year, up 43% from 2006.  Part of the headline reads, "crumbling home prices and $100 oil helped wall street's highest earners to pull in $19 billion last year."  If you averaged out what those 20 earners made, their average earnings would be $935 million each in 2007.  

 

T. Boone Pickens was one of the 20, earning $1.2 billion.  His hedge fund, BP Capital Equity, grew 24% while his commodity fund grew 40% due to large positions in Suncor Energy, Exxon-Mobil, and Occidental Petroleum.  This is the same T. Boone Pickens who now wants to replace gasoline with natural gas as the fuel for automobiles.  

 

Those 20 earners are only a drop in the bucket of the wealthy; their power is so great as to be able to manipulate the financial markets for their own personal gain.  When the market loses 700 points, and price shares are dropping, they are the ones with the financial resources to scoop up those shares.  There is nothing wrong with being wealthy, but when 1% of the people own 50% of stocks, that's called a monopoly.

 

To make matters worse for Americans, the following headline appeared in a major newspaper on September 30.  "Three institutions have been gobbling up financial giants as fast as they fall, building unprecedented market power."  The three to which the headline referred were Bank of America, Citigroup, and J.P. Morgan Chase --- just what the average American needs, another powerful monopoly to control money and wealth and to stick it to the average working American. 

 

If ever our country needed people power, middle class people power at that, it is now.  We have the votes to change things this November, and it is our duty to do so.