Daivd Leonhardt has a good piece in today's Times on the death of Fordism -- that oh-so-comforting economic philosophy that productive workers should be paid expansive wages and the middle class should drive the country's economic growth. As he notes, what we've seen is a shift towards what I'll call Hiltonism -- that the economy should be driven by growth at the top, and the middle class should be squeezed so the rich can amass ever more riches. This is trickle down economics, it started with Reagan, it continues today. It's why we pass things like the dividend tax cut:
Americans with annual incomes of $1 million or more, about one-tenth of 1 percent all taxpayers, reaped 43 percent of all the savings on investment taxes in 2003....The analyses show that more than 70 percent of the tax savings on investment income went to the top 2 percent, about 2.6 million taxpayers.
By contrast, few taxpayers with modest incomes benefited because most of them who own stocks held them in retirement accounts, which are not eligible for the investment income tax cuts. Money in these accounts is not taxed until withdrawal, when the higher rates on wages apply.
It's why our marginal tax rates are so low. We, as a society, have elected a series of presidents who believe growth best driven by the extremely wealthy, and economic policy should be aimed at making them wealthier. In that context, middle class stagnation is hardly the sort of problem that merits the interruption of afternoon tea, much less a restructuring of our tax system. And this wasn't an accident; it was the inevitable result of the economic policies explicitly advocated by Ronald Reagan, both George Bush's, and even Bill Clinton. Leonhardt's right to say that Fordism is dead, but for whatever reason, he never mentions that we're the ones who killed it.
