Conservative blindness to tax history


While it’s patently obvious that many on the extremes of conservative American politics openly rebuke science books, the last few years indicate that many more moderately-minded folks have also abstained from history books. The prime example of this is found in the no-new-taxes orthodoxy promulgated by people like self-appointed enforcer-in-chief Grover Norquist.

We can take it on notice that nobody wants to pay more taxes than required, but the current furor over proposed taxes increases for America’s wealthiest citizens bucks historical, economic and ethical sense. There was a time when our nation’s wealthy openly acknowledged their obligation to pay far higher rates than others. Looking back to 1913 when the income tax was first regularly put into place, the most affluent were the only ones required to pay it.

A few years earlier, in 1909, President Theodore Roosevelt lobbied for both inheritance and income taxes. He characterized them as “promoting equal opportunity.” Four years later, 88 percent of the states agreed that it was time to tax the income of its citizens. Even so, taxes didn’t fall on everyone, just couples who made over $4,000 (in today’s terms, around $88,000). Those who made less paid nothing. If you made more, you paid more.

Thus was set in place a tax scheme that stood for the next six decades. While the elite likely did not relish their tax rates, they were largely contented by the knowledge that such was part of their civic duty.

Flowing out of the era of robber barons, there was a great conjoining of American economic and political elites. Most presidents came from affluent families. Bristling to conservatives as such quotations will be, Franklin Delano Roosevelt argued that, “Taxes shall be levied according to ability to pay. That is the only American principle… Taxes, after all, are the dues that we pay for the privileges of membership in an organized society.”

Given that some have much greater privilege, is it not fair that their taxes should be commensurate with their privilege? Supreme Court Justice Oliver Wendell Holmes — the son of an old money Boston dynasty — agreed with a quip to one of his law clerks, “I like to pay taxes. With them I buy civilization.”

This then sets up a fundamental question about our civic priorities: What kind of civilization do we want to purchase? Do we want one where people roam the streets un-fed, uneducated, un-medicated and adrift; or do we embrace the humanity and social contract incumbent upon all of us to be our brother’s keeper? Apparently, many who unquestioningly carry the no-tax orthodoxy’s water feel they should have no such fetter. They falsely believe that whatever they have, they got solely by their own tug at their own bootstraps. They do not recognize the great web of social support that facilitated whatever personal triumphs fate has afforded them.

When the patriarch of the Rockefeller clan, John D. Rockefeller Sr., died in 1937, his heirs were yoked with an estate tax rate of almost 70 percent. Even so, there was no great hew and cry about the horrid travesty of such draconian tariffs.

By the 1970s the wealthy had begun to sing another song, but they knew in order for the rest of us to pick up the verse, they’d have to sell it as a cause in our own best interests. Enter Ronald Reagan.

Economists validate their success. Between 1970 and the middle of the last decade, the wealthy cut their overall effective tax rate from 75 percent to 35 percent. During that time, the vast chasm between rich and poor has become more deep. Wealth has become so concentrated in the U.S. that our Gini Index score (a measure of wealth distribution) places us between Bulgaria and Guyana. Iran, Cambodia, Ghana and a host of other notoriously corrupt nations have much greater equality of income distribution than we do.

To this we need only quote Billionaire Warren Buffet’s remarks to his new bride in 1952. Buffet told her that they were going to be rich, but that those riches came with a caveat: “We agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society.”

Were it only so.