Digby’s discussion of the multifarious tax code changes that serve to lock in the new American aristocracy shouldn’t be missed. It’s not just preserving the low marginal rates for people earning millions a year, it’s also about wealth preservation, and even lower marginal rates for unearned income.
When you add this to the stealth attack on Social Security, it adds up to an acceleration of the accumulation of productivity improvement in the hands of the top half a percentile. (It’s worse in 2010, by the way.)
The American deal has always been that as workers get more skilled, and work in more productive environments (better tools) their wages reflect that productivity growth. That has entirely stopped happening. Real wages, despite enormous increases in productivity over the period, are about the same as they were in 1974. The increase in productivity has gone almost entirely to the holders of capital, not wage earners.
The tax code that has emerged in the President’s compromise locks in these transfers. And by funding, for the first time, contributions to the SS trust fund through general revenues, the administration sets the stage for rebutting the argument that social security benefits are prepaid, and earmarked, through at least the mid 2030s.
All in all, the tax code changes continue to move us to Versailles on (or about) the Potomac.