http://en.wikipedia.org/wiki/File:Chart_1.png
This chart may have a clue as to why inequality is so rampant in american society today. If you look at it you will also notice that our current tax rate is quite similar to the tax rates in the late 20's. From other accounts it can be noted that their where several small recessions in the two decades leading up to 1929. Little was done at that time except to juice (discounted borrowing etc.) the economy onward, kind of like what we're doing now. Very little structural changes where made. During the great depression and in the lead up and aftermath to world war 2 we made huge changes in tax structure and incentive programs, such as VA loans, the creation of Fannie may TVA, etc. Now I'm not sure how I feel as a free market about subsidized house purchase, as that is what got us into part of our current mess. Though it did work quite well during the first 50 years it was around before large scale abuses set in.
Another problem; many view the government as counter cyclical, able to carry the slack when businesses fail. This does not mean to bail them out like what happened on wall street, but to institute programs for he citizens that help to soften the harsh bottom of a recession. Cutting government spending is often seen as a bad idea. Currently they are using the fed in a sort of "trickle down" attempt to spur the economy, but we all know how trickle down economics comes out, richer rich. It will also lead to wide scale inflation, which is a tax that falls heavily on the poorest. However if you've got 1 billion dollars and the price of everything doubles, you're still doing alright because it's like you still have 500 million. However if you have say 100,000 and that suddenly becomes 50,000 you're going to have trouble paying for college.
There are many other problems, but a low tax rate for the rich, combined with a government structure which protects capital while vilifying labor and ignoring the common man is not a sustainable system.
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