In this third of a 4-part series, retired IEA member Tom Suhrbur examines the labor movement and how its successes improved individual and family prosperity.
Republican tax policies have provided the rationale to cut the federal safety net. They have slashed federal taxes for the top income earners. When Reagan took office, the top income tax bracket was cut from 70 percent to 39.6 percent. In 2001, Bush tax cuts temporarily dropped the rate to 35 percent In addition, Bush reduced the top capital gains tax from 28 percent to 15 percent, enriching hedge fund managers and other financial manipulators. The Estate Tax (aka Paris Hilton tax break) was temporarily phased out*. Along with the numerous tax loopholes, these reductions helped create a new class of billionaires in the financial services industry. The inequality of income and wealth today rivals that of the early 1900s Gilded Age. Bush tax cuts, coupled with trillion dollar wars in Afghanistan and Iraq, have greatly increased the federal deficit feeding into long standing Republican calls for cutting social programs like Social Security, Medicare and Medicaid.
Republicans have tried to convince the public that Social Security is not sustainable and that its benefits need to be reduced. To address the issue, they want to reduce Social Security benefits by changing the cost of living calculation, raising the retirement age and other so-called “reforms.” Many Republicans even want to privatize Social Security turning it into a 401(k)-type program. If my father had to work until 70, he would not have lived as long. After 26 years working in a factory, his body was spent. Working until 70 would have taken years off his life. Raising the retirement age for Social Security is a simple solution; you work longer, pay more taxes into the system, die sooner and collect less benefits.
Social Security could be made solvent simply by lifting the Social Security salary tax cap; currently all income above $117,000 is not taxed. A person making $60 million pays the same amount of Social Security tax as someone making $117,500. Such an approach would be a tax increase for higher income earners. Republicans totally oppose this solution.
*During the Obama Administration, the top income rate was restored to 39.6 percent the top capital gains set at 20 percent and a modest Estate Tax was enacted.