Inflation can be explained by the growth in the infrastructure and professional credentials everyone needs these days. Suburban sprawl, professionalism creep, and over-consolidation. This is gone over in books like Asphalt Nation, and Turbo Capitalism.

There are limits to what the United States can achieve in the world. We can undoubtedly demolish the conventional militaries of developing countries like Iraq. but force feeding them democracy seems to have a poor track record of success. And it seems to get more expensive each time we try. World on Fire by Amy Chua documents and analyzes this pretty thoroughly.

According to the “Budget of the United States Government, Historical Tables, FY 2006.” In 1953 the Corporate Income Tax as a Share of GDP was 6 % and in 2004 it was down to 1.3 %. Senator John McCain’s tax plan will reduce the maximum corporate tax rate to 25 percent. A study by the Government Accountability Office said that two-thirds of U.S. corporations paid no federal income taxes, and about 68 percent of foreign companies doing business in the U.S. avoided paying corporate taxes between 1998 and 2005.

According to “Effective Tax Rates for Taxpayers with the Top 400 Adjusted Gross Income”

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm

When we look at the effective tax rates for the top 400 we find the number of top 400 taxpayers paying less than 20 % was: 1995 – 25; 2000 – 136; and in 2005 – 255. The number of top 400 taxpayers paying less than 15 % was: 1995 – 12; 2000 – 40; 2005 – 144. This is much less than the average middle class worker. Over half of the top 400 taxpayers pay less than 20 percent and over a third pay less than 15 percent. Part of good citizenship is paying one’s fair share of the cost of running the country. Because successive GOP administrations have promoted the culture of the rich freeloader, the refusal of folks such as Warren Buffet to freeload was greeted with shock. (Buffet pointed out that the tax laws allow him to pay less tax than his secretary; an example of correctable inequity.)

The United States is the most economically stratified society in the western world. As THE WALL STREET JOURNAL reported, a recent study found that the top .01% or 14,000 American families hold 22.2% of wealth — the bottom 90%, or over 133 million families, just 4% of the nation’s wealth. Steve Fraser said on Bill Moyers Journal said that the 50 top hedge fund managers had accumulated 29 billion dollars in 2007. That is an average of more than $500 million each taxed at a capital gains rate of 15 percent. Only the wealthy have benefited from these tax breaks and in the process we also take from the many to enrich the few.

The standard Republican response to problems is to recommend a tax break. If the Republicans get their way, revenue will shrink to zero and government will shrink to anarchy. This undermines confidence that no one can beat the system and the system is fair for all. To build an inclusive society, Congress must structure the tax system to do the greatest amount of good for the largest number of people, not just big business and the super wealthy. Sooner or later, we have to clean up from the economic decisions of the past eight years. That’s a burden that should be borne by business as well as individuals.