One interesting fact is that despite all the swings of tax cuts and tax increases since 1977, the effective tax rate on the middle 20% of Americans has remained almost rigidly the same - at just under 20% of income. Largely due to the Earned Income Tax Credit, the botton 20% of Americans have seen their federal taxes drop to just under 5% of income.
The top 1% of income groups saw their effective tax rate plunge from about 35% in 1977 down nearly to the same rates at middle income taxpayers by 1985 (at about 24%) and then shoot up again in the 1990s to the same effective tax rate as before 1977 by 1995. The last couple of years have seen a small erosion in that tax rate for those high income makers, but not that much.
Which is the frustration of the GOP and their wealthy backers. A relatively large minority of poorer folks are paying very little federal taxes, while any serious tax cut for the middle income folks would have to also confront Social Security taxes - a can of worms that the GOP sure don't want to tangle with.
So their proposal of a 10% rate cut or almost any other variation will inevitably do little to cut the taxes for average folks - a fact unlikely to be lost on them. Which is why polls have been showing that the GOP is not even that trusted on tax issues any more - once their core political strength.
Worse, as the ECONOMIST even notes, "Nor is it clear that a broad-based tax cut makes good policy." If the present tax distribution is fueling a surplus, delivering goodies for the rich at the expense of Social Security or just plain paying off the debt (for the Perotista in the audience) will be a real political loser.
Which probably expains the drawn out Monica trial. The GOP is scared of dragging the trial out, but they are probably more scared of a serious discussion of issues where they have a very weak hand.
The only question is how progressives can use the situation to move the debate from the center back to a progressive tilt.
--Nathan Newman