There’s no money! Cut, cut, cut! So go the mantras of austerity. The second exclamation follows on the first, but the first is not so. Where then is the money?
Much of the money is hiding in tax havens; both corporations and the top executives and financiers who rake in fabulous wealth on the backs of the employees of the enterprises they control make full use of such havens. U.S. elites are encouraged to do this is because U.S. tax law, through mind-numbing complexity, allows profits and income to be shifted offshore, where they remain untaxed.
Such accounting legerdemain is openly acknowledged (although the details and scale are always hidden), and most often justified by another oft-repeated mantra: That U.S. tax rates are simply too high. But a simple lesson in history demonstrates that is not so, either.
The highest personal tax rate was 91 percent during the 1950s and early 1960s. The latter decades were not periods of U.S. economic hardship, nor did the wealthy by and large fail to remain wealthy. But as neoliberal ideology became dominant, those tax rates fell sharply — from 70 percent at the start of Ronald Reagan’s two presidential terms to 28 percent by the time he was done.
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