By Robert Pembroke
During my lifetime, there have only been two meaningful tax cuts for the middle class. The first was under Kennedy, a Democrat, and the second was under Reagan, a Republican. Both tax cuts grew the economy and put a lot of money in the pockets of the middle class.
The Democrats have always said that they represent the middle class and the Republicans have suggested that they represent business. The Republicans in Congress are now attempting to overhaul the tax code. And most of what I have read has been about tax reform and not tax cuts.
The colonists went to war with England over taxes and for the first 123 years of our country’s history, America did not have an income tax. But as the Civil War raged on, Abraham Lincoln needed more revenue and pushed a tax on income through Congress in 1862. Congress repealed the tax in 1872. Then in 1913, Congress ratified the 18th Amendment, which allowed lawmakers to impose an income tax. Since then there has not been a single effort to eliminate income taxes.
Enough about history — it’s time we got to the present. As stated above, the Democrats have always postured that they are for the little guy. Well, troops, it sure looks like they’re not for the little guy anymore. Instead they are siding with the environmentalists, big business, socialists and minorities. There’s nothing wrong with the aims of these groups, but what has happened to the plight of the little guy? They’re still hurting — and the election of Trump showed it.
The present Democratic policy of increased spending financed by higher taxes and rising debt are a direct threat to the middle class prosperity according to Charles Kadlec in a Forbes article on Oct. 22, 2012.
So, what is the evidence that Kadlec uses to support his claim? In the elections of 2000, 2004 and 2008, the 18 Democratic states plus the District of Columbia that went for Democratic elected officials spent more than the 22 states won by the Republicans and had a higher effective tax on the middle class. The other 20 states are classified as swing states.
Another tax that directly affects the middle class is the sales tax. Again, according to Kadlec, the sales tax in Democratic states is 5.4 percent while in Republican states it’s 5.0 percent. So, when looking at the combined income and sales tax, the sheer magnitude is startling. The combined tax imposed on families with medium incomes averaged 11 percent in Democratic-leaning states while only 9 percent in Republican-leaning states.
Higher spending, higher debt and higher taxes have hurt the middle-class in blue states — a loss of 1.3 million jobs, including government jobs, compared to a gain of 1.6 million in red states and a loss of 1.9 million private-sector jobs compared to a gain of 671,000 jobs in Republican states. And there was a greater decline in real median-family income in both absolute and percentage terms than in Republican states.
It’s a shame that more American citizens don’t realize what is happening to them. As I mentioned, those who voted for Trump have an inkling of what is going on.
As our elected officials in Washington are now pondering tax reform, how can we bring this message to the electorate so they will put pressure on Congress and the president to put forth meaningful tax cuts?
The Republican elected officials are not without blame. Like the Democrats, they have used spending our money to buy votes. Yes, the old is forever new when it comes to tax reform. Not one word in the Republican tax plan addresses spending. If you were to freeze spending for one year, it would generate $143 billion in middle-class taxes paid, which equates to about $800 per middle-class household.
Savings by the American citizens has dropped to a dangerously low level. Today, it is about 5 percent of a person’s income as compared to 13 percent of a person’s income in 1970. If we can get the middle class some more shekels, maybe they’ll put them under the mattress for a rainy day.
Robert Pembroke is the chairman of Pembroke’s Inc. He considers himself on a permanent sabbatical and can be reached at pembroke894@gmail.com.