Apr 2, 2007
April 16 is when federal taxes are due this year. And as workers around the country dig even deeper to pay our tax bills, let us remember how much bigger the share of the tax burden is that ordinary workers are now paying..
Corporations have been paying steadily less. In the 1940s, corporations paid 33% of federal taxes. Today they pay around 7%.
So, the tax burden is being shifted from corporations to individuals. At the same time, the burden of taxes on individuals is also being shifted off of the wealthy onto the shoulders of working people.
The taxes paid on income earned by wealthy people have been cut tremendously. The tax rate on capital gains, that is, investment income, has dropped from 28% to 15% since 1980. The top dividend tax rate was cut from 70% to 15%. A recent study by the Citizens for Tax Justice showed that 43% of the dividend tax cuts are going to people with incomes over 1 million dollars, the top one-tenth of one%.
Wealthy people pay a lot less on inheritance taxes. The top estate tax rate has decreased from 70% to 48%. The amount exempted from estate taxes has increased steadily for the last five years from $600,000 to 2 million dollars in 2006, and it will increase to 3.5 million dollars in 2009.
To make up for the tax cuts going to the corporations and the wealthy, the government turns to taxes that hit working people harder. As incomes go up, workers pay more in regressive taxes like Social Security and Medicare, whose rates are fixed and are paid from the first dollar earned. A greater burden for paying for social services, infrastructure and education has been shifted to the states and local governments. And their taxes are even more regressive than the federal government. For example, state and local governments have increased all kinds of sales taxes and fees.
Both parties have given their stamp of approval to this shift in the burden of taxes. The Democrats like to blame Bush for tax cuts for the wealthy, but every time they come to a vote, just enough Democrats vote with the Republicans to allow them to pass.
Marx and Engels called for a progressive income tax in the Communist Manifesto 160 years ago, and it would still be an advance today.