Yes­ter­day Rab­bi Shmu­ly Yan­klowitz wrote about Hur­ri­cane Sandy, FEMA, and the Need for Big Gov­ern­ment. He will be blog­ging here all week for Jew­ish Book Coun­cil and MyJew­ish­Learn­ing. 

If one lis­tened only to the avalanche of polit­i­cal ads dur­ing the recent elec­tion cam­paign, one might believe that Amer­i­cans were being crushed under the heav­i­est fed­er­al tax bur­den ever, and that rais­ing tax­es on the wealthy (the ​“job cre­ators”) was tan­ta­mount to nation­al eco­nom­ic sui­cide. This view, bol­stered by much of the record $4 – 6 bil­lion raised for the Pres­i­den­tial and Con­gres­sion­al cam­paigns, was heav­i­ly sup­port­ed by a small group of bil­lion­aires, per­haps topped by casi­no mag­nate Shel­don Adel­son, who report­ed­ly made con­tri­bu­tions of a record $150 mil­lion him­self. In total, bil­lions of dol­lars were spent by peo­ple who claimed that they were forced to spend too much in fed­er­al tax­es.

In real­i­ty, Amer­i­cans today have the low­est fed­er­al tax bur­den since 1950. His­tor­i­cal­ly, in the 1950s and ear­ly 1960s the econ­o­my was very healthy, and the top income tax brack­et paid around 90 per­cent. When tax rates were dra­mat­i­cal­ly reduced for the wealth­i­est Amer­i­cans, as in the 1920s and over the last decade and a half, brief pros­per­i­ty result­ed, fol­lowed by a cat­a­stroph­ic eco­nom­ic crash and the great­est inequal­i­ty in wealth between the very rich and the rest of the pop­u­la­tion.

The Jew­ish tra­di­tion has much to say about fair­ness in tax­a­tion, and con­sis­tent­ly endors­es the prin­ci­ple that those who ben­e­fit the most from soci­ety have the great­est oblig­a­tion to pay for the sup­port of the com­mu­ni­ty. For exam­ple, Deuteron­o­my 15:4 states: ​“And there shall be no needy among you.” In addi­tion, farm­ers were instruct­ed to go over their fields and vine­yards only once, and not to reap the cor­ners of their fields: ​“Leave them for the poor and the for­eign­er” (Leviti­cus 19:9 – 10). Accord­ing to the Mish­nah, the com­mu­ni­ty was expect­ed to sup­port a com­mu­nal kitchen, bur­ial soci­ety, and oth­er need­ed infra­struc­ture (Peah 8:7). Lat­er, more defined funds presided over by promi­nent mem­bers of the com­mu­ni­ty were set up to deal with the poor. In order to achieve this, cit­i­zens were taxed in pro­por­tion to their abil­i­ty to pay. Thus, Jew­ish law has con­sis­tent­ly upheld the idea that a fair tax­a­tion is nec­es­sary for the main­te­nance of the com­mu­ni­ty.

We can see this trend in the 1979 – 2005 peri­od, which was espe­cial­ly unique for its low­er tax­es on the wealthy. Con­gres­sion­al Bud­get Office data indi­cate that among Amer­i­cans:

• The top one-hun­dredth of one per­cent had an income growth of 384 per­cent, while their tax bur­den decreased by 11.4 percent
• Medi­an income increased by 12 per­cent, and the tax bur­den for the mid­dle quin­tile decreased by only 4.4 percent

In addi­tion, from 2000 – 2007, the top 0.1 per­cent of Amer­i­can earn­ers saw a 94 per­cent increase in income, com­pared with a 4 per­cent increase in income for the bot­tom 90 per­cent of earn­ers. As for­mer Sec­re­tary of Labor, Robert Reich observed, cit­ing 2011 data, pover­ty – espe­cial­ly among the young – is on the rise, and there are delib­er­ate efforts to cre­ate even greater eco­nom­ic inequality:

• 21 per­cent of Amer­i­can school-aged chil­dren lived in poor house­holds, a 4 per­cent increase since 2007
• Near­ly one out of every four chil­dren lived in a fam­i­ly that had dif­fi­cul­ty obtain­ing a suf­fi­cient food sup­ply at some point dur­ing the year
• In spite of this, about 60 per­cent of all cuts in the pro­posed 2011 Repub­li­can bud­get tar­get­ed child food, nutri­tion, school pro­grams, food stamps, and Medicaid

In the past, this trend toward low­er tax­es for the wealthy and greater inequal­i­ty of wealth led to a pat­tern of booms and busts. The worst eco­nom­ic down­turn occurred after one such peri­od, cul­mi­nat­ing in the stock mar­ket crash in 1929 and the ensu­ing Great Depres­sion. The sec­ond worst eco­nom­ic down­turn came at the end of George W. Bush’s sec­ond term in 2007, also fol­low­ing a peri­od of tax cuts for the rich and great eco­nom­ic inequal­i­ty. Dur­ing his Pres­i­den­cy, the stock mar­ket lost about 25 per­cent of its val­ue, and the NAS­DAQ lost near­ly half its val­ue. In con­trast, Pres­i­dent Bill Clin­ton, who raised income tax­es for the high­est earn­ers, presided over a boom­ing stock mar­ket, with the Dow Jones aver­age climb­ing more than 7,000 points over his two terms. Thus, rais­ing tax­es on the wealthy appears to aid eco­nom­ic growth, while cut­ting tax­es for the rich only exac­er­bates income inequal­i­ty and encour­ages reck­less finan­cial schemes that can lead to deep eco­nom­ic reces­sion.

This year has offered stark evi­dence of how low­er­ing tax­es for the wealthy tends to increase eco­nom­ic inequal­i­ty. In one 3‑month peri­od in 2012, ExxonMobil’s prof­its were $16 bil­lion, the high­est ever record­ed by an Amer­i­can cor­po­ra­tion. In spite of this, the oil indus­try will receive an aver­age of more than $15 bil­lion of sub­si­dies annu­al­ly from the fed­er­al gov­ern­ment. On the oth­er hand, most Amer­i­cans con­tin­ued to strug­gle. For exam­ple, the great­est num­ber of jobs cre­at­ed was in retail sales, where the aver­age annu­al salary was less than $21,000. In addi­tion, the num­ber of those unem­ployed, work­ing part-time but try­ing in vain to get full-time work, and those who gave up look­ing for work reached more than 23 mil­lion. In a cal­lous ges­ture, the extend­ed ben­e­fits peri­od (the last 20 weeks) of unem­ploy­ment insur­ance was cut off this sum­mer due to con­gres­sion­al fail­ure to renew the pro­gram, throw­ing mil­lions of peo­ple off unem­ploy­ment ben­e­fits. If Con­gress fails to act by the end of 2012, an addi­tion­al 2 mil­lion Amer­i­cans will lose their unem­ploy­ment ben­e­fits.

The 2012 Pres­i­den­tial elec­tion cam­paign offered Amer­i­cans the oppor­tu­ni­ty to choose whether to con­tin­ue the Bush tax pol­i­cy or return to Clin­ton-era pol­i­cy of a slight increase on the tax rate of income above $250,000. Repub­li­can Pres­i­den­tial nom­i­nee Mitt Rom­ney stat­ed that he paid a 14 per­cent rate on his income tax in the one year for which he released his returns. How­ev­er, his effec­tive tax rate was around 10 per­cent — far less than the rate most mid­dle class Amer­i­cans pay. In Novem­ber, the Amer­i­can peo­ple vot­ed to re-elect Pres­i­dent Barack Oba­ma, thus vot­ing to raise tax­es on the wealthy. As Amer­i­cans, as Jews, and as activists for jus­tice, we must con­tin­ue to press Con­gress to car­ry out this policy. 

Bend the Arc, the great Jew­ish social jus­tice orga­ni­za­tion, is lead­ing the way on this cause and oth­ers can join their fight by sign­ing on to their peti­tion.

Find out more about Rab­bi Shmu­ly Yan­klowitz here.