By Carolyn Cullen of the Chatham Democrats

As COVID-19 has continued to ravage our nation, it has shown how unstable our economy and nation were and still are.

One of the main causes of such instability comes from intense wealth disparity, with the top 1% owning more wealth than the bottom 99%. As such, we believe it is imperative to increase taxes on the wealthy, as well as address any loopholes the wealthy may be exploiting to receive tax exemptions. It is through these actions that the United States will be able to begin to stabilize what is soon to be a failing economy.

This wealth gap is not necessarily a new phenomenon. In fact, the cause of such a gap comes from the Reagan administration in the 1980s. During his presidency, Ronald Reagan gave two different tax cuts for the rich, which lowered their top marginal income tax rates. The tax rate cuts coincided with wage stagnation. The wage stagnation had begun in 1970, when the real wages of workers (or wages adjusted for inflation) discontinued to rise with national production. Through this coincidence, there was a rise in the share of income going to the 1% and not throughout all workers. As the years have passed, not enough has been done to address the damage these tax cuts and wage stagnation have done, leaving the wealth disparity to be a lingering problem.

In Peter Temin’s book “The Vanishing Middle Class: Prejudice and Power in a Dual Economy,” he addresses how what he calls the “capitalists” of the FTE sector (finances, technology and electronics) prefer to keep wages of workers low as it provides “abundant cheap labor for their businesses.” Additionally, he examines how the disruption of wage distribution between workers is a prevalent cause for the weakening of the middle class. While this doesn’t immediately connect to taxation of the wealthy, the burden of taxes falls predominately to the middle class when the wealthy experience tax cuts.

However, the middle class is weakening and decreasing in size – meaning it can no longer handle this burden. By removing the burden from the middle class and back to the wealthy, this will help address the problem of the vanishing middle class.

Coming from a middle-class family, I have seen firsthand how being middle class isn’t as stable as before. We are one disaster, one major cost, one job loss away from falling to lower-class or even below the poverty line. Additionally, the country’s social services are inadequate when it comes to providing for everyone who needs them. A way to fix this is to strengthen the classes so they don’t need to rely so much on social services, as well as an increase of funding to those social services. Both of these options could be addressed in some aspect by increasing taxation of the wealthy.

However, this hasn’t been the case. In fact, the Tax Cuts and Jobs Act in 2017 gave further tax cuts to the wealthy. This has resulted in our tax code no longer following the principle of the ability to pay – or the thought that a person’s taxes are based on their capacity to pay taxes. Instead, the wealthy are able to accrue high amounts of wealth while having to pay few taxes on the wealth. The 1% are then able to use their wealth to pay for lobbying on more tax cuts – especially for them.

Overall, we of the Chatham Democrats are in favor of increasing taxation on the wealthy. The amount they pay in taxes currently is not only no longer following the principle of ability to pay, but it has caused our economy and country to become highly unstable. If we want to fix the instability, the tax system should be rewritten so the wealthy are taxed in accordance to their wealth and they aren’t using loopholes to avoid paying taxes. Increasing taxes on the wealthy will open gateways to addressing other problems within the country. This will hopefully help to stabilize the turbulence we as a nation are facing.

Sources for additional reading: “Capital in the Twenty-First Century” by Thomas Piketty and Arthur Goldhammer (The Belknap Press of Harvard University Press, 2017) and “The Vanishing Middle Class: Prejudice and Power in a Dual Economy” by Peter Temin (The MIT Press, 2018).

Carolyn Cullen is the current president of the Chatham University College Democrats and Western VP of the Pennsylvania College Democrats. She is also a senior political science major double minoring in history and economics.