I'm gonna ask my questions again, since they were ignored:
1. How does reducing taxes on the richest take money away from the middle and lower classes?
That question reflects a high degree of economic illiteracy, whatever your skills as a CPA.
Books can be and have been written on the topic. I'll mention just a couple basic answers of many answers.
For one, money has relative value. Ultimately, it's about assigning shares of wealth.
If you and another guy are competing to buy a house, then his going up twice or 10 times or 100 times in wealth has a big effect on the to you for the house.
Before Reagan, IIRC the top 1% owned about 8% of the wealth; that's since increased to close to 25%.
That has a very long list of effects on everyone else's wealth, for the worse. Some are more direct, like everything that makes money being owned by fewer people.
That in turn denies profit, and opportunity, to most.
Others are less direct - things like the billionares being able to more easily buy public opinion, to spread propaganda, for their own interests - like funding propaganda 'think tanks' to come up with advertising campaigns to sell lies, and armies to spread the lies as 'pundits' and direct media ownership etc.
Yet another way is that hundreds of billions in tax cuts for the top 1% is a transfer of wealth off of their share of the debt and placing that debt on the public - which if it doesn't mean higher taxes for the public, means a devaluation of the currency that takes from everyone else.[/quote]
2. How does increasing taxes on the richest translate into higher wages for the middle and lower classes?
Again, there are a number of things, but again one is basic political influence and you should understand that who has the money influences political power.
The more the middle class has the more its political power; the more the rich have the more their political power. Hence 'the rich get richer and the poor get poorer'.
And ultimately, while blind ideologues throw out the word 'redistributionist' like it makes a point, who pays the taxes benefits some more and some less.
The rich are only manufacturing public outrage against taxes to the degree they are because they have things rigged in part so their low taxes while we run up the deficit help them increase their share of the wealth. As soon as the public says "wait a second, with these big deficits we can't give rich people who are already skyrocketing with increases to wealth more big tax cuts", and since they can't just say 'give us all the money', they get people not to want to raise the rich's taxes.
One thing you should understand is that the rich almost always want everyone else to get lower wages - and even moreso from the view of multinational corporations.
So you have a rich class with a corporate agenda against the interests of the American people - and using global wage competition can be a strategy, not a problem to them.
They don't admit their agenda, but they give the poor and middle class propaganda to yell at liberals about. 'Nancy Pelosi gets fancy booze!!'
3. How has wealth redistribution through taxes directly helped middle class people?
Fern
Look at the explosion for the middle class doing better by pretty much every metric from the beginning of the 20th century (right-wing) to the middle (liberal).
FDR led the policies that are called 'the great compression' where things got a lot more equal in the country - and pretty much everyone (white) thrived as a result.
Heck, it did even help lift the boats of the minorities and pave the way for civil rights - moving from Plessy v. Ferguson to Brown v. Board of Education.
A one-income blue-collar household could do just fine, buying a home, having a family and a car or two, college for the children. Economic growth was fine, deficit near zero.
Many other things were the case - business culture was different, with more 'sense of public obligation', a tiny fraction of lobbyists without hundreds or thousands in Congress and staff planning on lucrative lobbying, without the massive spending for campaigns, without propaganda nearly as much.
Read the link below of an almost decade-old Paul Krugman article, here's an excerpt.
He explains how there are not well understood benefits to society of less of a concentration of wealth, that answer you.
http://query.nytimes.com/gst/fullpage.html?res=9505EFD9113AF933A15753C1A9649C8B63&pagewanted=3
Some -- by no means all -- economists trying to understand growing inequality have begun to take seriously a hypothesis that would have been considered irredeemably fuzzy-minded not long ago. This view stresses the role of social norms in setting limits to inequality. According to this view, the New Deal had a more profound impact on American society than even its most ardent admirers have suggested: it imposed norms of relative equality in pay that persisted for more than 30 years, creating the broadly middle-class society we came to take for granted. But those norms began to unravel in the 1970's and have done so at an accelerating pace.
Exhibit A for this view is the story of executive compensation. In the 1960's, America's great corporations behaved more like socialist republics than like cutthroat capitalist enterprises, and top executives behaved more like public-spirited bureaucrats than like captains of industry. I'm not exaggerating. Consider the description of executive behavior offered by John Kenneth Galbraith in his 1967 book, ''The New Industrial State'': ''Management does not go out ruthlessly to reward itself -- a sound management is expected to exercise restraint.'' Managerial self-dealing was a thing of the past: ''With the power of decision goes opportunity for making money. . . . Were everyone to seek to do so . . . the corporation would be a chaos of competitive avarice. But these are not the sort of thing that a good company man does; a remarkably effective code bans such behavior. Group decision-making insures, moreover, that almost everyone's actions and even thoughts are known to others. This acts to enforce the code and, more than incidentally, a high standard of personal honesty as well.''
He goes on:
Studies that try to do a better job of tracking high incomes have found startling results. For example, a recent study by the nonpartisan Congressional Budget Office used income tax data and other sources to improve on the census estimates. The C.B.O. study found that between 1979 and 1997, the after-tax incomes of the top 1 percent of families rose 157 percent, compared with only a 10 percent gain for families near the middle of the income distribution. Even more startling results come from a new study by Thomas Piketty, at the French research institute Cepremap, and Emmanuel Saez, who is now at the University of California at Berkeley. Using income tax data, Piketty and Saez have produced estimates of the incomes of the well-to-do, the rich and the very rich back to 1913.
The first point you learn from these new estimates is that the middle-class America of my youth is best thought of not as the normal state of our society, but as an interregnum between Gilded Ages. America before 1930 was a society in which a small number of very rich people controlled a large share of the nation's wealth. We became a middle-class society only after the concentration of income at the top dropped sharply during the New Deal, and especially during World War II. The economic historians Claudia Goldin and Robert Margo have dubbed the narrowing of income gaps during those years the Great Compression. Incomes then stayed fairly equally distributed until the 1970's: the rapid rise in incomes during the first postwar generation was very evenly spread across the population.
Since the 1970's, however, income gaps have been rapidly widening. Piketty and Saez confirm what I suspected: by most measures we are, in fact, back to the days of ''The Great Gatsby.'' After 30 years in which the income shares of the top 10 percent of taxpayers, the top 1 percent and so on were far below their levels in the 1920's, all are very nearly back where they were.
And the big winners are the very, very rich...
And he goes on:
Well, no. Although America has higher per capita income than other advanced countries, it turns out that that's mainly because our rich are much richer. And here's a radical thought: if the rich get more, that leaves less for everyone else.
That statement -- which is simply a matter of arithmetic -- is guaranteed to bring accusations of ''class warfare.'' If the accuser gets more specific, he'll probably offer two reasons that it's foolish to make a fuss over the high incomes of a few people at the top of the income distribution. First, he'll tell you that what the elite get may look like a lot of money, but it's still a small share of the total -- that is, when all is said and done the rich aren't getting that big a piece of the pie. Second, he'll tell you that trying to do anything to reduce incomes at the top will hurt, not help, people further down the distribution, because attempts to redistribute income damage incentives.
These arguments for lack of concern are plausible. And they were entirely correct, once upon a time -- namely, back when we had a middle-class society. But there's a lot less truth to them now.
First, the share of the rich in total income is no longer trivial. These days 1 percent of families receive about 16 percent of total pretax income, and have about 14 percent of after-tax income. That share has roughly doubled over the past 30 years, and is now about as large as the share of the bottom 40 percent of the population. That's a big shift of income to the top; as a matter of pure arithmetic, it must mean that the incomes of less well off families grew considerably more slowly than average income. And they did. Adjusting for inflation, average family income -- total income divided by the number of families -- grew 28 percent from 1979 to 1997. But median family income -- the income of a family in the middle of the distribution, a better indicator of how typical American families are doing -- grew only 10 percent. And the incomes of the bottom fifth of families actually fell slightly.
Let me belabor this point for a bit. We pride ourselves, with considerable justification, on our record of economic growth. But over the last few decades it's remarkable how little of that growth has trickled down to ordinary families. Median family income has risen only about 0.5 percent per year -- and as far as we can tell from somewhat unreliable data, just about all of that increase was due to wives working longer hours, with little or no gain in real wages. Furthermore, numbers about income don't reflect the growing riskiness of life for ordinary workers. In the days when General Motors was known in-house as Generous Motors, many workers felt that they had considerable job security -- the company wouldn't fire them except in extremis. Many had contracts that guaranteed health insurance, even if they were laid off; they had pension benefits that did not depend on the stock market. Now mass firings from long-established companies are commonplace; losing your job means losing your insurance; and as millions of people have been learning, a 401(k) plan is no guarantee of a comfortable retirement.
Still, many people will say that while the U.S. economic system may generate a lot of inequality, it also generates much higher incomes than any alternative, so that everyone is better off. That was the moral Business Week tried to convey in its recent special issue with ''25 Ideas for a Changing World.'' One of those ideas was ''the rich get richer, and that's O.K.'' High incomes at the top, the conventional wisdom declares, are the result of a free-market system that provides huge incentives for performance. And the system delivers that performance, which means that wealth at the top doesn't come at the expense of the rest of us...
The moral of this comparison is that even if you think that America's high levels of inequality are the price of our high level of national income, it's not at all clear that this price is worth paying. The reason conservatives engage in bouts of Sweden-bashing is that they want to convince us that there is no tradeoff between economic efficiency and equity -- that if you try to take from the rich and give to the poor, you actually make everyone worse off. But the comparison between the U.S. and other advanced countries doesn't support this conclusion at all. Yes, we are the richest major nation. But because so much of our national income is concentrated in relatively few hands, large numbers of Americans are worse off economically than their counterparts in other advanced countries.
And we might even offer a challenge from the other side: inequality in the United States has arguably reached levels where it is counterproductive. That is, you can make a case that our society would be richer if its richest members didn't get quite so much.
I could make this argument on historical grounds. The most impressive economic growth in U.S. history coincided with the middle-class interregnum, the post-World War II generation, when incomes were most evenly distributed. But let's focus on a specific case, the extraordinary pay packages of today's top executives. Are these good for the economy?
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