I suppose if I had your attitudes (but still had my political beliefs), I'd just dismiss the article because it was written by Spitzer, or posted by you...
But I won't do that. I'll respond.
Until a generation ago, many Americans and their representatives argued vehemently that the wealthy ought to pay more in taxes
They pay more in taxes, as a percentage of taxes paid (and obviously as simple dollar amount) than they did a generation ago.
President Woodrow Wilson called paying taxes "a glorious privilege.
That's just ridiculous. Also he may have said it but I doubt even he really felt it, if he did most others in his time didn't. And the tax impact was lower than than it is now. Even if he felt paying taxes was glorious, I doubt he'd want twice as much "glory".
Supreme Court Justice Oliver Wendell Holmes Jr. observed that "taxes are what we pay for civilized society."
That is true, in the sense that anarchies tend not to be very civilized. However you can prevent such a situation with a tiny fraction of the taxes that are currently collected.
President Franklin Roosevelt said, "In this time of grave national danger, when all excess income should go to win the war; no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000."
In other words he supported 100% taxation off all income over $25K. Apparently with no deductions/credits/loopholes.
If he meant that seriously he was off his rocker. Not only are such rates highly unjust, and greatly damaging to the economy, they also reduce the intake of the government, and thus harm the war effort.
Can you conceive of a modern president suggesting that no American should earn more than $323,000 after taxes?
No, because even Obama and Nixon (included because of his price controls) where not as ignorant of economic realities as FDR.
A caveat—obvious but critical—is in order. Simultaneity does not equal causation. Annual growth rates are a consequence of many factors, macro and micro, and the isolated impact of marginal tax rates on growth is hard, if not impossible, to discern from these numbers alone.
That shouldn't just be a minor caveat, casually tossed aside. Its a vital point in understanding what's going on here.
Another point which he doesn't mention is that the tax intake as a percentage of national income was not generally higher than it is now, and a larger percentage of that tax intake was paid for by the middle class.
During the period 1951-63, when marginal rates were at their peak—91 percent or 92 percent—the American economy boomed, growing at an average annual rate of 3.71 percent.
Almost no one paid that tax rate. Not only did it apply only to very high incomes, there where all sorts of ways for even high income people to avoid it.
Of course that meant that they put some of their energy in to avoiding taxes rather than making more productive investments or time, skill, money, and other resources, and so we probably would have had slightly more growth, and more revenue (both because of the extra growth, and because of less tax avoidance), with lower marginal rates, but generally the top rate then was not nearly as likely to impact people as the top tax rates are now.
And again the government taxes a bit more, and spends noticeably more, as a portion of the economy than it did when marginal tax rates where much higher, and the rich pay a higher percentage of the tax burden now than they did then. |
