* * Pondering taxation

Taxes are a necessary evil of running a government. All governments spend money, ostensibly to benefit the citizenry by providing defense..., measured security, and the “general welfare.” To obtain that money, they tax. Simple.
All money is created from “scratch” and loaned into existence, and except for the rare occasion where it finds its way to a collector, and is ultimately destroyed. Since we de-coupled it from the gold standard, it has no intrinsic backing, either. Money is an exchange on human labor and is only valuable by virtue of the promise it holds in the minds of the people who exchange it. Why will a store exchange lots more merchandise for the piece of paper you give them with “$100” on it than they will for the same looking piece of paper with “$1” on it? Because they believe the former is worth 100 times as much. Otherwise, there is no value in a small piece of paper other than perhaps the BTU value if you burn it (in which case I’d surely rather have 100 pieces marked “$1” than one piece marked “100”).
So the question then becomes, who pays the taxes and how much?
There have been periods in our history when tax rates were higher and lower than now for all income brackets. A friend wrote on a blog, “From 1950 through 1980, the tax rate for the top bracket was 70% or higher.” This chart shows taxation rates for the last hundred years or so: http://en.wikipedia.org/wiki/File:Chart_1.png
As you can see, the taxation rate for the wealthiest is near the historically lowest levels.
Much of today’s zeitgeist regarding taxation began with the doctrines of Ronald Reagan. I’m beginning to read this book:
http://www.amazon.com/Man-Who-Sold-World-Betrayal/dp/1568584105
about how Ronald Reagan, through his personal magnetism, sold our nation on the notion that feeding riches to the top would “trickle down” and benefit everyone. His soon to be running mate, George H.W Bush called Reagan’s policies “Voodoo Economics.” I think it is a fair statement that the money we’ve channeled to the top hasn’t benefited everyone because the money has trickled not down but rather out – to the rest of the world.
President Obama said when he ran for president that he was in favor of greater taxation to those people in society making more than $250,000. But congress won’t let that happen. The amount of money flowing from the richest Americans to the political process is increasing and appalling. The uber-wealthy have used their focus groups and their market research studies to learn how to manipulate public opinion to the point where it astounds me how many millions of people in this country habitually vote against their own economic well-being. Last year’s “Citizen’s United” Supreme Court decision that gives corporations unlimited ability to influence the political process is likely to mean nothing less than the end of democracy.
Illustrative of the power now held by the uber-wealthy is the bail-outs of Wall Street in the past 3 years. I was furious when Bush did it and was furious when Obama did it. The masters of Wall Street, through their own ignorance, mischief, greed, and in some cases illegal malfeasance, slit their own throats. Then the federal government, with out tax money, bailed them out and made them rich again! And what did we get for our money? We likely saved the economy from complete collapse. But as the narrative goes, a crisis is a terrible thing to waste. AIG never put food on my table, a roof over my head, or educated my child, but I bailed them out because they were “too big to fail.” If they were too big to fail, then they were too big, and we should have used the opportunity to split them into 20 separate operating units to compete with one another. We should have insisted all the firms that received bail-out money paid back the taxpayer, with interest. We should have brought criminal prosecution against the criminals. We should have installed meaningful and significant regulations to prevent the next collapse. It is my impression that little of this was done. We’re back to business as usual; the rich are even richer and the system is as vulnerable as it was before.
This recession has been hugely damaging to millions of people (myself included), but the uber-rich have emerged almost unscathed.
The strength of this nation has always rested on the fact of a significant middle-class. Not only does this enhance our notions of fairness, equality and self-esteem, it builds stability. Where nations have a small group of hugely wealthy people and millions of impoverished people, mayhem and turmoil are inevitable (See Egypt and President Mubarek.).
The “Robin Hood Doctrine” of taking from the rich and giving to the poor doesn’t work well, either. The rich don’t want to work because their wealth will be taken from them. The poor don’t want to work because they will be fed anyway. So there needs to be a balance.
In my humble opinion, the pendulum has swung too far towards a system that benefits the uber-wealthy, in agreement with the essay that spawned this thread. Our nation will be stronger if it starts swinging the other way for awhile. Asking the wealthy for a greater sacrifice seems entirely fair to me. For the reasons I indicated earlier, I’m not optimistic.