Never Mind the Fiscal Cliff, the ‘Reverse Subsidy’ Is the Real Crisis

Contrary to popular myths in both political parties, the dramatic gains in wealth by the super rich are underwritten by everyone else as a result of skewed values embedded in the U.S. tax code. This means that the top 1 percent of America’s wealthiest households—97 percent of whom are white—are subsidized by the rest of the tax base, which is disproportionately black and brown when compared to this elite group at the top.

This “reverse subsidy”—which reached a crescendo under George W. Bush—was brought about through fundamental changes in America’s tax policy over the past three decades. These changes lowered the overall tax burden for the rich more than for everyone else. Most importantly, they taxed income from work at up to twice the rate as income from wealth.

This legacy of inequity is key to understanding the reverse subsidy’s role in the current fiscal debate. That’s because as wealth piled up for the rich, less revenue flowed into government coffers. In order to make ends meet, the U.S. Treasury borrowed huge sums of money. These annual deficits, up to the tune of $1 trillion a year, formed into an enormous debt. The consequence of these debts and deficits is what we’re grappling with right now.

For complete article go to http://colorlines.com/archives/2012/12/never_mind_the_fiscal_cliff_the_reverse_subsidy_is_the_real_fiscal_crisis.html