America has had a long history of changes to its tax rates. The number of income brackets has been changed though American history and the definition of “top earning bracket” has been changed many times. In 1917 there was a large hike in income taxes for the top-earning bracket from 7% to 67%. This tax rate applied to those who made more than two million dollars per year. (Many were able to find loopholes and ways of not paying, however.) This tax increase was used to fund WWI. There was a reduction in 1925 after the war, but in 1932 the top tax rate was increased to 63%. It only applied to those who made one million or more dollars. The top tax rate saw steady increases after this date and in 1944 the individual income tax act of 1944 made the top tax rate 91%, the highest it has ever been in US history and it applied to people making $200,000 or more.
There was a tax reduction to 77% in 1964 during the Vietnam War under LBJ. Reagan cut the top tax rate to 38.5%. By 1988 the top tax rate was only 28%, and the top bracket was redefined to include those who made only $29,750 or more. There were only two income brackets. The lower bracket paid 15%. George Bush Sr. lowered the top tax rate to 31%. This resulted in a high unemployment rates and an increasing deficit. Clinton increased the top tax rate to 39.6% and George Jr. decreased it to 35%. Obama increased it back to Clinton’s rate.
If FDR’s financial regulations and tax rates still applied we would not have such economic disparity in America. Reagan did more than nearly halve the top tax rate. When he became President, he made Don Regan, chairman of Merrill Lynch, (the richest retail brokerage firm in America) his treasury secretary, so that he could work for the corporations and enact tax cuts for rich. He later became White House Chief of Staff. Reagan also ensured wages for working people stayed about the same, even as their productivity increased and bankruptcies increased by 610%. This had many devastating effects on the working Americans and the poor.
CEOs were paid 35 times as much as their workers on average during Reagan’s term, but today they are paid 380 times as much on average, and the richest 1% of households in America now have more than the bottom 95% collectively. The richest have so much more than the rest of us because corporations have become even more entrenched in governments. Politics is a business of diversion and deceit. The Federal Reserve and private banks still control US currency, and corporate executives have worked their way into the government by running for office and influencing people already in power.
Henry Paulson, former President of the Treasury Department, was also the CEO of Goldman Sachs, one of the largest investment banks in the country. (Goldman Sachs had $850 billion dollars in assets in 2010.) Henry authored the legislative proposal called the “Troubled Asset Relief Program” (TARP) under the “Emergency Stabilization Act of 2008” in October of 2008 to give the banks the $700 billion dollar bailout. This proposal waived all laws and said explicitly “it may not be reviewed by any court.” George W. Bush approved it.
President Obama supported this bail-out. He also made Tim Geithner and Stuart A. Levey Treasury Secretary. (Jack Lew, current incumbent, was a very well-paid COO of Citigroup from 2006 to 2008.) Geithner was President of the New York Federal Reserve from 2003 to 2009 and in January 2012 Levey was made CLO of HSBC, one of the largest banks in the world. It had $2.556 trillion in assets in 2011. The bank is also neck-deep in drug cartel money. Geithner did not propose any laws that would regulate the banks. He had authority over $350 billion of the TARP money and he gave billions to failing major corporate executives at companies like the American International Group, (AIG). These corporations were not required to say what they did with this money and executives gave themselves billions in bonuses. Other rich countries like the United Kingdom followed suit. The 2008 UK Bank rescue package served similar purposes and the government of Greece especially suffered from their own similar measures. The “bail-out” model is also used in poor countries as well. Iceland is one country that has not used this model and jailed its criminal bankers, and their economy has improved as a result.
Henry Paulson is not the only former CEO on the Treasury board. In fact, the Bush and Clinton Treasury departments had 11 former Goldman Sachs executives. These executives made their careers even more profitable as board members by abolishing financial regulations and increasing capital for banks and Wall Street.
TARP passed even though there was a democratic majority in congress at the time that was allegedly opposed to crony capitalism. In America republican politicians openly and boastfully work for corporations, (aside from fringe, “libertarian republicans” like Ron Paul). Meanwhile, democratic leaders often condemn corporatism and express concern about economic inequality, but most also support corporations secretly because their elections are funded by them too. Very few politicians are not on the side of big business alone, despite their rhetoric. However, there are a few exceptions. Dennis Kucinich, for example, voted no on the bail-out and asked during the debate:
“Why aren’t we asking Wall Street to clean up its own mess? Why aren’t we putting up new regulatory structures to protect investors?…Why aren’t we reducing debt for Main Street instead of Wall Street? Isn’t it time for fundamental change in our debt based monetary system, so we can free ourselves from the manipulation of the Federal Reserve and the banks? Is this the United States Congress or the board of directors of Goldman Sachs?”
These were powerful words that few people there wanted to hear. The Obama administration is nearly as corrupted by corporate influence as previous administrations. Goldman Sachs contributed almost one million dollars to the Obama administration, more than any private contributor. (UBS, Morgan Stanley and Citigroup also made contributions.) Although the Obama administration did pass the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010 that put some restrictions on the practices of banks and corporations, it hardly reformed Wall Street. It created a vice chairman of supervision position to oversee the Federal Reserve and ensure it serves public interests, but to do this all of the board of directors would need to be changed.
The ongoing financial crisis in America has had devastating effects on many Americans who lost their homes and their jobs. The only “recovery” that has since occurred to the economy has benefited primarily top earners. In November of 2008 alone, there were 597,000 job losses. Some of these people lost employment because their employers went bankrupt, but many were just laid off just to increase profits. (GM and General Electric have cut more than 200,000 jobs collectively.) Laying off workers benefits corporate executives in a short-term period, (because they have less people to pay), but it ultimately hurts them in the long-run if the layoffs are unnecessary. Skilled workers are also left jobless as a result and the rest of the economy often suffers.
The real criminals of the 20th and 21st century are the CEOs, the politicians, the bankers, the lobbyists for corporate interests, and the greedy actors in charge. The CEOs of large corporations make far more money than average criminals robbing liquor stores or selling dime bags on street corners, because executives have the law on their side and the politicians in their pockets. Corporate executives stay away from the workers they exploit and the harm they do, and as long as they can mold public opinion, few see their global social impacts.
Large corporations talk about corporate responsibility in their advertisements to increase sales and public trust, and people often fall for it. For example, in 2010 Toyota equipped millions of their cars with faulty accelerators. Some jammed, causing about a dozen drivers to die from collisions. Following the scandal, they made a commercial thanking Americans for their business. It was intended to improve public relations. But their phony gratitude was insensitive and inappropriately timed. They never acknowledged their mistakes publicly nor did they make large changes to oversight in the production of their cars.
Due to a law that limits the amount of money car companies can be fined for producing faulty cars, Toyota was only fined $16.4 million dollars, which is like a slap on the wrist, considering its vast revenue. Despite all of the recalled cars, Toyota still had a profit of $2.3 billion in 2010, and their fine was less than one hundredth of their profits that year.