As the deadline for the fiscal cliff quickly approaches, Colorlines editor Imara Jones says that it is not America’s biggest financial worry. Instead, he suggests that people look at “reverse subsidy” laws, which allow the country’s wealthiest to benefit from the finances of the 99 percent.
This “reverse subsidy”—which reached a crescendo under George W. Bush—was brought about through fundamental changes in America’s tax policy over the past three decades. These changes lowered the overall tax burden for the rich more than for everyone else. Most importantly, they taxed income from work at up to twice the rate as income from wealth.
This legacy of inequity is key to understanding the reverse subsidy’s role in the current fiscal debate. That’s because as wealth piled up for the rich, less revenue flowed into government coffers. In order to make ends meet, the U.S. Treasury borrowed huge sums of money. These annual deficits, up to the tune of $1 trillion a year, formed into an enormous debt. The consequence of these debts and deficits is what we’re grappling with right now.
Though the benefits of tax cuts overwhelmingly flowed to America’s economic elite and helped boost their wealth to stratospheric levels, the debt to which they contributed is held collectively by everyone. Therefore, as a matter of right and wrong the “reverse subsidy” is a pure and simple economic injustice.
Read Imara Jones’ entire piece at Colorlines.
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