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Why Increasing the Sales Tax would Harm Our Economy
Despite the corporate propaganda you read and hear in the corporate controlled mass media, telling you that American consumers “are repairing their balance sheets,” and “recovery is just around the corner,” the truth is total household debts in this country have fallen by a mere 4.5% from the record peak at the height of the bubble a few years ago. Household debt is still 20% higher than it was as recently as 2005, and twice what it was in 1999. The past decade was a financial disaster for middle class families.
And things have only gotten worse since the economic collapse in 2008. According to the Labor Department, the number of men age 25 to 54 who are out of work is officially 4 million.
The reality? Deep in the footnotes the Labor Department says there are 62 million men in America age 25 to 54, while just 47 million have full-time jobs. That leaves 15 million left over. Of these, 4 million work part-time. So seven million are the Invisible Unemployed. For more on the true unemployment rate, see our website: realwashingtonstatebudget.info.
A one penny increase in the sales tax would rob the poor and middle class of one billion dollars per year – and give that same billion dollars per year away in the form of tax breaks for billionaires. Increasing the sales tax in order to protect tax breaks for the wealthy harms our economy because it transfers the tax burden from those most able to pay to those least able to pay. This would only worsen the disparity between the rich and the rest of us.
According to former US Labor Secretary, Robert Reich,
“The top 1 percent of American earners now take home about 20 percent of total national income. In 1980, the top 1 percent took home just 8 percent. Inequality on this scale is bad for many reasons, but it is also bad for the economy. The last time the top 1 percent took home 20 percent of total income was 1928. After that, the economy caved in.”
The reason the economy caves in if the rich has too much wealth and the rest of us have too little is that consumer spending accounts for 70% of our economy. If consumers have no money, they cannot spend at local businesses and those business then fail – further worsening State revenue collections and creating an economic “death spiral.”
America and the Monopoly End Game
The increasing domination of the rich has turned our entire nation into a giant game of monopoly in which the rich own all the houses, all the property and have monopolies over basic human needs from food and energy to health care and banking. These monopolies are the primary reason that the cost of energy and health care have skyrocketed in recent years.
Increasing the sales tax would only hasten the end of the monopoly game for all but the richest one percent.
At the end of a monopoly game, one person has control of all of the wealth. In fact, the only way for the game to continue is for that person to pass out a bunch of money and hand the property and houses back to their original owners … essentially starting the game over in what FDR called a “New Deal” and Harry Truman called a “Fair Deal.”
Taxing wealthy corporations is therefore an essential part of FDR economics, while taxing the poor and middle class is Hoover Economics.
Increasing the Sales Tax would worsen the recession.
Several leading economists have opposed increases in the sales tax claiming it will worsen the recession. See for example: http://www.budgetandpolicy.org/documents/econletter021909.pdf
Given the shaky state of our economy, it is vitally important to choose an option which will improve rather than harm the economy.
This is certainly the biggest shortcoming of the sales tax option. It is the most regressive of all tax options meaning that it taxes the poor and middle class far more than the wealthy. The reason our economy is faltering is that the poor and middle class are on the edge of bankruptcy. It is hard to understand why anyone would think it is a good idea to increase the tax burden on these groups.
Meanwhile, in just the past ten years, the richest one percent have seen their wealth DOUBLE, going from owning 20% of our total wealth to owning 40% of our total wealth.
Economic Recovery only for the Rich
Transferring the Tax Burden from the rich to the rest of us leads to the greatest disparity of wealth since 1929. There will not be a real recovery until everyone who needs a job has a fair chance to go back to work and provide for their family. No Jobs means No Recovery. The only path to Real Recovery is a Fair Tax Structure and Full Employment. The Time to Act is NOW!