Commentary
Why the Working and Middle Classes Need a Major Tax Cut
By David Demers*
During the early 1950s, my father worked as a printer but his modest salary was enough to support his family of five, buy a new car every two years, and build a 3-bedroom home, which only cost $4,000.
Local, state and federal taxes were low on the working class back then, about 17 percent.
Our family was living the American Dream.
But by the late 1960s, after taxes increased 35 percent (from 17 to 23 percent) and wages began to stagnate, my father's income was no longer enough to pay all of bills. So my mother went to work as a waitress and later as an insurance underwriter.
My father worked modest-paying jobs for the rest of his life. He paid off his double-wide mobile home and is debt-free but never made enough to build up a retirement fund. Now, in his 90s, he lives alone, supported mainly by his social security check.
He is content but, like many other working-class Americans of his generation, he struggled to pay the bills throughout most of his life.
Chances are you struggle, too.
Two-thirds of middle-class Americans (those making 200% more than the poverty level) struggle to pay their bills, according to a 2024 True Cost of Living Coalition poll.
Nearly 50 percent of all Americans don't have $500 saved for a rainy day, and 40 percent are unable to plan beyond their next paycheck.
The bottom 50 percent of Americans have an average of only $14,000 in wealth, which includes equity in their homes and motor vehicles, savings, and retirement funds. The next 50 to 90 percent have only about $140,000. In contrast, the top 1 percent have an average of $17.6 million in wealth; the top 10 percent, $3.6 million.
Many working- and middle-class Americans are angry.
And why shouldn't they be?
They work hard and can't seem to get ahead.
Republican voters often blame the gaps on poor life choices, a weak work ethic, and illegal immigrants. Democrats blame discrimination, lack of corporate regulation, birth right (inheritance), a regressive tax system, and a poor educational system. Others believe wealth stems from luck or being in the right place at the right time. And some, especially the wealthy, believe they are smarter than everyone else.
Many of these factors contribute to wealth gaps.
But the real problem is that working- and middle-class Americans are paying a higher percentage of their income in taxes while the wealthy are paying a lot less.
From 1950 to 2018, the bottom 90 percent of Americans in terms of income saw their total tax bill (local, state and federal taxes) increase 59 percent, while the wealthiest 400 billionaires saw their tax rates decline 67 percent. The top 1 percent saw their rates drop 17 percent. Since 1980, federal taxes on the top 10 percent have been cut about 50 percent. These cuts are widening wealth and income gaps and the national debt.
America is going into debt to make the wealthy wealthier.
In 1980, the national debt was $900 billion. Today, it's more than $34 trillion, 36 times higher. The debt is growing by about $1.5 trillion every year.
Some politicians blame government spending for the debt.
But even with the $6.2 trillion spent to combat the 2008-2009 Great Recession and the 2020-2023 COVID pandemic, inflation-adjusted federal government spending has only grown at an annualized (compounded) rate of 2.3 percent since 1980.
The problem isn't spending — it’s a failure to raise enough tax revenue to reduce the debt caused in large part by tax breaks that benefited the wealthy.
The solution to the debt crisis and to save the American Dream is simple.
Turn the clock back to the 1950s.
Cut taxes back to 17 percent on the working and middle classes and raise taxes on the wealthy, who have resources to pay off the debt they created.
*Dr. David Demers is author of Falling Behind: Why Wealth Gaps Are Preventing You and Half of America from Getting Ahead, which will be published in 2025. He has written two dozen books and worked as a professor of communication and sociology at Washington State University before retiring to spend more time writing books. He lives in Phoenix.
Why the Working and Middle Classes Need a Major Tax Cut
By David Demers*
During the early 1950s, my father worked as a printer but his modest salary was enough to support his family of five, buy a new car every two years, and build a 3-bedroom home, which only cost $4,000.
Local, state and federal taxes were low on the working class back then, about 17 percent.
Our family was living the American Dream.
But by the late 1960s, after taxes increased 35 percent (from 17 to 23 percent) and wages began to stagnate, my father's income was no longer enough to pay all of bills. So my mother went to work as a waitress and later as an insurance underwriter.
My father worked modest-paying jobs for the rest of his life. He paid off his double-wide mobile home and is debt-free but never made enough to build up a retirement fund. Now, in his 90s, he lives alone, supported mainly by his social security check.
He is content but, like many other working-class Americans of his generation, he struggled to pay the bills throughout most of his life.
Chances are you struggle, too.
Two-thirds of middle-class Americans (those making 200% more than the poverty level) struggle to pay their bills, according to a 2024 True Cost of Living Coalition poll.
Nearly 50 percent of all Americans don't have $500 saved for a rainy day, and 40 percent are unable to plan beyond their next paycheck.
The bottom 50 percent of Americans have an average of only $14,000 in wealth, which includes equity in their homes and motor vehicles, savings, and retirement funds. The next 50 to 90 percent have only about $140,000. In contrast, the top 1 percent have an average of $17.6 million in wealth; the top 10 percent, $3.6 million.
Many working- and middle-class Americans are angry.
And why shouldn't they be?
They work hard and can't seem to get ahead.
Republican voters often blame the gaps on poor life choices, a weak work ethic, and illegal immigrants. Democrats blame discrimination, lack of corporate regulation, birth right (inheritance), a regressive tax system, and a poor educational system. Others believe wealth stems from luck or being in the right place at the right time. And some, especially the wealthy, believe they are smarter than everyone else.
Many of these factors contribute to wealth gaps.
But the real problem is that working- and middle-class Americans are paying a higher percentage of their income in taxes while the wealthy are paying a lot less.
From 1950 to 2018, the bottom 90 percent of Americans in terms of income saw their total tax bill (local, state and federal taxes) increase 59 percent, while the wealthiest 400 billionaires saw their tax rates decline 67 percent. The top 1 percent saw their rates drop 17 percent. Since 1980, federal taxes on the top 10 percent have been cut about 50 percent. These cuts are widening wealth and income gaps and the national debt.
America is going into debt to make the wealthy wealthier.
In 1980, the national debt was $900 billion. Today, it's more than $34 trillion, 36 times higher. The debt is growing by about $1.5 trillion every year.
Some politicians blame government spending for the debt.
But even with the $6.2 trillion spent to combat the 2008-2009 Great Recession and the 2020-2023 COVID pandemic, inflation-adjusted federal government spending has only grown at an annualized (compounded) rate of 2.3 percent since 1980.
The problem isn't spending — it’s a failure to raise enough tax revenue to reduce the debt caused in large part by tax breaks that benefited the wealthy.
The solution to the debt crisis and to save the American Dream is simple.
Turn the clock back to the 1950s.
Cut taxes back to 17 percent on the working and middle classes and raise taxes on the wealthy, who have resources to pay off the debt they created.
*Dr. David Demers is author of Falling Behind: Why Wealth Gaps Are Preventing You and Half of America from Getting Ahead, which will be published in 2025. He has written two dozen books and worked as a professor of communication and sociology at Washington State University before retiring to spend more time writing books. He lives in Phoenix.