A Brief and Partial Tax History of the United States One legacy of the French Revolution was that progressive income taxation was thought to be unequal and therefore unfair. All should be taxed proportionately at the same rate, the French thought. Only later did we all come to realize that proportional taxation was quite regressive because of tax avoidance and evasion by the rich and the burden of necessities on the poor. The inheritance tax also came to be progressive in the US and elsewhere. The highest rate on the largest estates was 70 percent in 1980, but by 2013 this had been whittled down to 35 percent by conservative interests and even further since then. The highest income tax rate in the US, with lower rates progressively tiered below it, has a similar history. Before WWI, it was de minimus, but during the Depression the top rate rose substantially, from 25 percent in the late 1920s, to 63 percent in 1933, then to 79 percent in 1937, and to 88 percent in 1942 and after the war, to 94 percent in 1944, including certain surtaxes. It stabilized thereafter around 90 percent and stayed there until about 1965. There was tax avoidance, but little evasion during this period. From 1932 to 1980, the average top federal income tax rate averaged about 81 percent. Since then, it has taken a nose dive, first to 70 percent in the early 1980s, then to 55 percent by the mid to late 1980s, to 45 percent by 2008 and to 35 percent by 2010. What is clear is prosperity in the US was greatest when income tax rates were highest in the US and prosperity has declined as the top marginal rates have fallen. The push by conservatives and representatives of the oligarchy to lower taxes has been quite successful since the Reagan era and the push to starve government movement has gained momentum. Indeed, now, with a much reduced rate of growth in federal spending, cuts in federal deficits, fewer federal employees and cuts in state government spending, our economy remains in the doldrums, unemployment properly measured (percentage of the working age population unemployed, 42 percent) is abysmal and there are no prospects of anyone doing anything about either at hand. This Republican, conservative legacy injures all of us but the top 10 percent or so who can benefit from the lower top income tax rates and also reap the benefits of global capitalism and income tax avoidance and evasion. What conservatives never seem to learn are these facts and the further fact that yesterdays spending by governments and consumers is todays national income.
Posted on: Wed, 23 Apr 2014 04:05:55 +0000
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