By Ande Jacobson
There’s a serious misconception driven by decades of GOP propaganda regarding taxes. While there is a group of pro-business/anti-regulation Republicans who see tax cuts as the cure all solution to what ails us, the vast majority of Americans don’t see tax cuts and elimination of all regulations (or protections) as a positive thing. People understand that the government services they need have costs that we all must share. What upsets the vast majority of people is that the morbidly wealthy and corporations keep finding ways to avoid paying their fair share. Additionally, the Reagan, George W. Bush, and Trump administrations have seriously hurt the vast majority of Americans with their blatant market manipulation and tax cuts while at the same time creating the most extreme wealth gap in American history. It’s not that the country lacks wealth. It’s that under modern Republican administrations wealth has been systematically been moved from the lower 90% of the population and concentrated at the top 1% at the expense of the services that we all need since around 1981. The result has been the destruction of the middle class and the creation of a small group of billionaires who have benefited.
It doesn’t have to be this way. After World War II, the US grew a strong middle class as the economy grew. The standard of living for average Americans improved as wages grew, and while there were some very wealthy people, they didn’t have such outsized influence or control over everyone else. Also, in the 1950s while the country was thriving, the top marginal tax rate was 91% for the highest earners. The tax system was progressive, so the more money you made, the higher the percentage of taxes that you paid past certain thresholds.
One misconception is that high marginal tax rates meant that the highest rate applied to all of a person’s income. It didn’t and still doesn’t. Marginal tax rates then as now only applied to income above a certain threshold – in the 1950s, that upper threshold was income over $200,000 which is equivalent to income over about $2 million today. Between the 1950s and 1980, that top marginal tax rate was lowered to about 73%, but then by the end of the Reagan administration, that top rate dropped to only 28%. That skewed the distribution of wealth significantly shrinking the middle class.
Several things have contributed to this intentional skewing of financial resources, though a few have had an outsized effect. Massive Republican tax cuts for the wealthy, the Citizens United Supreme Court decision giving monied interests outsized influence over elections at all levels, and the Republican focus on reducing the social safety net while pursuing various forms of market manipulation have all done serious damage to the US economy and the standard of living for the vast majority of Americans.
During FDR’s administration, safeguards were put in place to prevent what happened in 1929 from reoccurring. The Reagan administration sparked changes to roll back those protections making market manipulation far easier with changes such as allowing congressional personnel to trade stocks and allowing companies to engage in stock buybacks which had previously been illegal. That combined with the massive tax cuts for the wealthy during subsequent Republican administrations facilitated the movement of money upward.
The interesting thing is that historically, contrary to popular belief, even in colonial times the colonists didn’t hate taxes. Even then they objected to corporations not paying their fair share, something that continues to plague us to this day. The Boston Tea Party wasn’t entirely about taxation without representation although that was a concern. The primary driver was the fact that the East India Trading Company that cornered the market on tea in the colonies was given a pass on taxes by the crown. The colonists resented the fact that while the company made incredible amounts of money, they paid nothing in taxes while the colonists were forced to pay exorbitant amounts of taxes on all manner of supplies, including the tea that the East India Trading Company supplied and sold.
Taxes and democracy go hand in hand. To have a say in where our tax dollars are spent, we are dependent on our Congressional representation. That means that we need to elect representation that shares our financial preferences to fund what’s important to us. That’s where democracy comes in. In a healthy democracy, the electorate chooses their representation through free and fair elections. Unfortunately, since Citizens United and its predecessors, monied interests have gained far too much influence on how our representation is chosen by funneling unlimited amounts of money into campaigns of those they prefer. In a healthy democracy, every member of the electorate should have an equal say. Nobody should be able to buy an election.
Another misconception peddled by monied interests is that tax cuts are necessary because our taxes are too high. The reality is that in the developed world, the United States has some of the lowest tax rates compared to peer nations. As a result of chipping away at the services we need, especially healthcare, the US now has a much lower life expectancy and worse quality of life than many of those peer nations.
While many taxpayers would like to be able to direct their tax dollars to the things we all need, like healthcare, infrastructure, disaster relief, food and water safety, education, and so much more, while eschewing things like exorbitant military spending or luxurious federal perks, we don’t get that choice directly. Again, this is where choosing our representation wisely is crucial. Congress appropriates and allocates federal funding which is drawn largely from our taxes. Ensuring that everyone pays their fair share should be a priority as part of that mix, but for those solely focused on reducing taxes for the wealthy it’s not. That needs to change.
To change things to be more equitable requires several things including educating the electorate more widely. Unfortunately in the current information age, while technology has greatly increased the ease of access to information, it’s also ushered in an unprecedented level of misinformation, and worse, disinformation. Beyond having an engaged and educated electorate for democracy to work, the electorate also needs to understand the same reality. With the technological advancements comes an added responsibility on the information consumer to vet that information carefully. That takes both skill and the will to do so which goes back to education to develop those skills. What does that have to do with taxes? It’s crucial for voting responsibly in choosing representation who will work for the electorate in appropriating and allocating our tax dollars. It’s all related.
References:
https://www.youtube.com/watch?v=aBcPKrweqGE
The Price of Democracy, by Vanessa Williamson
https://heathercoxrichardson.substack.com/p/july-2-2025
https://heathercoxrichardson.substack.com/p/february-15-2025
https://rooseveltinstitute.org/blog/effective-progressive-tax-rates-in-the-1950s/
https://agoodreedreview.com/2023/08/25/wear-a-raincoat/
A Good Reed Review 
Taxes, while unnecessary, serve several sound objectives. Since the U.S. Government has the exclusive right to print money, taxes are not necessary for it to function. Every time it needs to pay a bill, it could simply create the necessary money.
Taxes exist so the government has cash flow between it and the private sector: its citizens and their businesses. This cash relationship allows it to execute social policy and effect commercial transactions directly. It can thus tax rich people more and poor people less. It could tax dirty fuels like coal and shale oil and subsidize solar or wind. Alcohol and cigarettes use could be taxed to help pay medical costs imposed on society.
The government does not need taxes to run its operations. It needs taxes to be more effective at implementing its policies.
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While it’s technically true that governments could just print more money as you suggest, doing so would cause catastrophic increases in inflation through devaluation. Taxes are necessary for the government to function if we want the value of our currency to have any true economic basis. Money in itself has no intrinsic value. It’s value is based on the economic system behind it which in turn is dependent on the goods and services available therein.
How taxes are levied is a matter of policy, and doing things to encourage beneficial environmental changes and healthful living are certainly possible. It is possible to tax in ways other than based solely on income or level of wealth such as through use taxes, but using income and/or wealth as a baseline ensures a fairer distribution of the government’s expenses, something to which all members of society must contribute, but fairly.
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Yes, inflation is the key element. All public expenditures need to be evaluated against that risk. However, the mere creation of money bears no risk unless it would contribute to inflation. This is key. Our government creates money for every purchase it makes, every salary it pays. It destroys the money you send it in taxes. The end results seem the same on the surface, but the underlying mechanism is entirely different. Understanding that mechanism is important to understanding that many of the things we think we know don’t work like we think. Again, read Stephanie Kelton’s book.
Don’t misunderstand me either. Taxes are critically important to maintaining our society and inflation is the risk to be constantly wary of as you say. Kelton would add that the principal role of Congress in setting budgets and authorizing expenditures should be to evaluate the risk any particular budget expenditures would add to inflation, rather than the false and irrelevant concern that it (and the financial media) currently pretends is important, the impact a budget will have on the “debt”.
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