I’ve always considered the progressive income tax was a fair way to pay for the benefits of a civilized society. Those who can afford to pay more are taxed more, and those who can least afford it, pay lesser amounts. Since there-but-for-the-grace-of-the-gods-go I, I have nothing but empathy for those who have the lowest taxes bills…or even those who receive credits because their income is so little.
What I don’t understand, however, is why those who can afford to pay their proportionate share will do almost anything to avoid paying it – and they feel no shame in admitting it.
For the purposes of this article, I will call them the “Lucky Folks.” These Lucky Folks seem to approach responsibility to society as if it were a board game, and once they reach a certain level of wealth, it’s over! They’ve won! They want to cash out their playing pieces and let the other poor schmucks keep playing and paying.
This attitude reflects a surprising lack of awareness that – even while they may be extremely talented or lucky (or both) – their accumulation of great wealth is due in great part to the fact that they don’t live in a world of chaos and warring tribes, rapers and pillagers. They fail to realize that their wealth is largely attributable to a government that maintains a legal system, methods of transportation and communication, currency and exchanges, an office of patents and trademarks, various agencies ensuring the safety of foods and medicines, just to mention a small part of the infrastructure for creating and safeguarding markets for their goods and services. And that’s without considering that our government involves itself in wars that just happen to help our military industrialists join the ranks of Lucky Folks.
But until Congress acts on the upcoming expiration of the Bush tax cuts, we will hear the Lucky Folks (through their reps in Congress and in the media) regale us with stories of the impending disaster that would be caused by a return to the pre-Bush tax rates for the wealthiest taxpayers. In other words, a return to a 39.6% tax rate from the 35% they’ve enjoyed for the last 10 years would put the brakes on the job creation they’ve been doing for the last decade. And now, when we need jobs the most, would be most inopportune.
Only one problem with that argument, Lucky Folks. It’s not true. As reported in the Wall Street Journal in January, 2009, the Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration. And as Erin Burnett mentioned on Morning Joe yesterday (Monday), most of the job were in government! Way to go Lucky Folks!
Not only have they not been producing more jobs while enjoying their tax cuts, they complain about benefits for the unemployed (that they have not employed) because such assistance would add to the deficit (that they’ve been getting a break from alleviating).
And the Lucky Folks maintain this position by casually sweeping aside the reality of two wars that were started and continually pursued during their “tax holiday.” Of course, our former shopper-in-chief saw no reason for them to pay any extra, since he felt the country’s bills could be paid if we just used our personal credit cards more. Current officeholders of the same persuasion are now suggesting that future retirees wait to retire for another few years in order to pay for our wars-without-end.
I guess the big question is this: When did “It’s all about me” become America’s prime directive? When did it become acceptable to suggest that our children, our children’s children, and older folks (needing a fixed income since savings and home values went down the drain) pay for the nation’s wars so the Lucky Folks could enjoy their tax cuts?
Considering that the Afghanistan war costs us taxpayers $2 billion a week, I wondered about tax rates during our major 20th century wars? Doing a little internet research, I saw a picture of shared financial sacrifice that is quite different from anything we’ve seen recently.
Below is a table including the lowest bracket and the highest with their corresponding tax rates. Included is the pre-war year of 1941, to show how much it changed with the onset of war. In 1941, the lowest tax rate was 10% for taxpayer incomes up to $2,000. Many brackets existed in between, but the highest one was 81% for those folks making over $5,000,000. For 1942, the first full year of the war, the lowest tax rate almost doubled to 19% at the lowest income bracket, and increased to 88% for those at a much lower income level than before: The highest bracket that had started with incomes of $5,000,000, was lowered to tax those with incomes of a mere $200,000 or more at 88%..
Here is my attempt at depicting the rates during our three major wars (and the aftermath of WWII):
World War II 1941 (December)-1945
Years Lowest Ceiling Highest Floor
1941 10% $ 2,000 81% $ 5,000,000
1942-43 19% 2,000 88% 200,000
1944-45 23% 2,000 94% * 200,000
1946-47 20% 2,000 91% 200,000
1948-50 20% 4,000 91% ** 400,000
*effective rate was limited to 90%
**limited to a 77% effective rate in 1948-49, 87% in 1950 and 87.2% in 1951.
The Korean War 1950-53
Years Lowest Ceiling Highest Floor
1951 20.4% $4,000 91%* $ 400,000
1952-53 22.2% 4,000 92%** 400,000
* limited to an 87.2% effective rate
**limited to an 87% effective rate
Vietnam War 1961-75
Years Lowest Ceiling Highest Floor
1961-75 14% $1,000 70%* $ 200,000
*War surcharges effectively increased this rate to 75.25% in 1968, 77% in 1969, and 71.75% in 1970. The tax rate was limited to a 60% effective rate in 1971, and 50% in 1972-76.
The bottom line is that tax rates such as these would have the Lucky Folks rioting in the streets, but it was a different mentality back then. I think those Americans just wanted to win, bring the troops home, and continue making a better world for their children and children’s children. Seems like a long, long time ago.
***Quoting Scarlett O’Hara in Gone with the Wind.
Sources:
http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/
http://staff.jccc.net/swilson/businessmath/taxes/fit.htm
Now and Thenadays 