We will take this week to speak to what the 'fiscal cliff' deal means. It was definitely a devastating blow to the citizens of America. Sadly, not unexpected as we voted all Third Way incumbents back into office.
I saw a conversation in the financial professional's chat room that went like this.....A southern journalist asks a waitress what she thinks of the 'death tax' and whether there should be one and the waitress says 'no, no one should be taxed for dying'. The death tax is the estate tax and it was included into the system of government by founding fathers that wanted to make sure that the aristocracy and autocracy of 17th and 18th century England would not show a face in America. That is why America is called a Republic.
The estate tax is meant to bring back most of the wealth accumulated during a lifetime so no one family accumulates vast wealth and each succession of generations are equally charged with making their own wealth. That is what has kept America from having Royalty and gentry of an elite class. It also always brings large sums of money back to government coffers to be distributed in public programs and services. Allowing the estate tax to stay this low at such a time of huge wealth inequity means your Third Way corporate politician has instated this empire building social structure and eliminated the means of bringing that wealth back to public coffers. This is part of why they are dismantling all that is public. The great wealth accumulated never comes back.
The estate tax is now PERMANENTLY set at 40%. I don't know what that means as a law should always be allowed to change....but that is what I hear. So, what is 40% of 100 billion dollars? It is gazillions instead of bazillions. One can see that this amount of money will not pay even that. Europe has a 60-70% tax at for the top earners for all tax categories. FDR had 70-90% tax at the top to reverse wealth inequity after the Depression. WE HAVE ELECTED A SET OF LEGISLATORS THAT ARE CHOOSING TO TAKE AMERICA FROM A REPUBLIC WRITTEN TO BE OF THE PEOPLE, BY THE PEOPLE, AND FOR THE PEOPLE TO ONE THAT IS RULED BY ARISTOCRACY......WE CALL IT PLUTOCRACY.
Wikipedia:
Republic:
Today the term republic still most commonly means a system of government which derives its power from the people rather than from another basis, such as heredity or divine right. This remains the primary definition of republic in most contexts.
This bipartite division of government types differs from the classical sources, and also the earlier of Machiavelli's own works, which divided governments into three types: monarchy, aristocracy, and democracy. As Machiavelli wrote, the distinction between an aristocracy ruled by a select elite and a democracy ruled by a council appointed by the people became cumbersome. By the time Machiavelli began work on The Prince, he had decided to refer to both aristocracies and democracies as republics.[10]
This is what has happened as a result of your Third Way corporate democratic incumbent. Now we will have to see what is meant by 'permanent'.....I suspect they were referring to the inability of the people to elect pols that will change this.
VOTE YOUR INCUMBENT OUT OF OFFICE!!!!
Here is a discussion on estate tax:
Wikipedia:
Proponents of the estate tax argue that it serves to prevent the perpetuation of wealth, free of tax, in wealthy families and that it is necessary to a system of progressive taxation.[29] Proponents point out that the estate tax affects only estates of considerable size (in 2011, over $5 million USD, and $10 million USD for couples) and provides numerous credits (including the unified credit) that allow a significant portion of even large estates to escape taxation. Proponents note that abolishing the estate tax will result in tens of billions of dollars being lost annually from the federal budget.[30]
Furthermore, supporters argue that many large fortunes do not represent taxed income or savings, that wealth is not being taxed but merely the transfer of that wealth, and that many large fortunes represent unrealized capital gains which (because of a step up in basis at the time of death) will never be taxed as capital gains under the federal income tax.[31]
Another argument in favor of the estate tax relates to comparative incentives. Proponents argue that the estate tax is a better source of revenue than the income tax, which is said to directly disincentivize work. While all taxes have this effect to a degree, some argue that the estate tax is less of a disincentive since it does not tax money that the earner spends, but merely that which he or she wishes to give away for non-charitable purposes. Moreover, some argue that allowing the rich to bequeath unlimited wealth on future generations will disincentivize hard work in those future generations.[30] Winston Churchill argued that estate taxes are “a certain corrective against the development of a race of idle rich”. Research suggests that the more wealth that older people inherit, the more likely they are to leave the labor market.[32]
Proponents of the estate tax tend to object to characterizations it operates as a double or triple taxation. They point out many of the earnings subject to estate tax were never taxed because they were "unrealized" gains.[33] Others note double and triple taxation is common (through income, property, and sales taxes, for instance) or argue the estate tax should be seen as a single tax on the inheritors of large estates.
Supporters of the estate tax argue there is longstanding historical precedent for limiting inheritance, and note current generational transfers of wealth are greater than they have been historically. In ancient times, funeral rites for lords and chieftains involved significant wealth expenditure on sacrifices to religious deities, feasting, and ceremonies. The well-to-do were literally buried or burned along with most of their wealth. These traditions may have been imposed by religious edict but they served a real purpose, which was to prevent accumulation of great disparities of wealth, which, estate tax proponents suggest, tended to avoid destabilizing societies and prevented social imbalance, eventual revolution, or disruption of functioning economic systems.
________________________________________________
BELOW YOU SEE A DISCUSSION ON THE EXTENSION OF THE BUSH ERA ESTATE TAX CUTS AND IN PARTICULAR THE FACT THAT THE FIRST THING A SUPERMAJORITY OF DEMOCRATS DID AFTER THEY TOOK OFFICE IN 2009 WAS TO LOWER ALL KINDS OF TAXES ON THE RICH AND CORPORATIONS. THEY DID NOTHING TO PROTECT LABOR/PENSIONS/RETIREMENTS/ENTITLEMENTS/POVERTY SAFETY NETS.
THIS IS WHEN WE KNEW WE WERE DUPED....THESE POLS WERE CLINTON THIRD WAY CORPORATE LIBERALS AND NOT FISCAL PROGRESSIVES AS THEY SOLD THEMSELVES. THAT IS WHY WE ARE WATCHING AS THEY DISMANTLE ALL THAT IS PUBLIC AND INSTITUTIONALIZE WEALTH INEQUITY.
Bob Greenstein Founder and President, Center on Budget & Policy Priorities
Further Estate Tax Cut Would Be a Disgrace
Posted: 12/18/2012 12:05 pm
Policymakers hope to cut federal deficits by trillions of dollars over the next decade, requiring wrenching choices and likely imposing painful sacrifices on millions of Americans. So it's astonishing that they're also considering million-dollar tax cuts for a few thousand of the nation's wealthiest heirs and heiresses by extending an extravagant 2010 cut in the tax on inherited estates that's set to expire at year-end.
The cost: $119 billion over the next decade, compared to restoring the estate tax rules in effect in 2009, as President Obama has proposed and the Bowles-Simpson fiscal commission assumed. This lavish new tax break would confer a $1.1 million average tax cut per estate on the estates of the richest three out of 1,000 people who die.
If policymakers blithely toss away $119 billion, then other Americans will have to sacrifice more as part of the deficit-cutting effort. To put the figure in perspective, policymakers could raise roughly the same amount over the next decade by raising the age at which seniors qualify for Medicare from 65 to 67 (affecting more than five million people by 2021) or shutting both the FBI and Food and Drug Administration.
The 2009 estate tax rules were already quite generous. Between 2001 and 2009, the threshold under which an estate was fully exempt from taxation more than tripled. By 2009, all estates worth up to $3.5 million in the case of an individual who dies - effectively, up to $7 million for a couple when they both pass on - were entirely exempt.
Consequently, a wealthy couple with two children could pass on a trust fund worth $3.5 million for each child completely tax-free. That's more money than a middle-class family earning $70,000 a year makes in a lifetime.
The Urban Institute-Brookings Tax Policy Center reports that, under a reinstatement of the 2009 rules, only the estates of the top three out of 1,000 of Americans who die would face any estate tax. And, for them, the tax would apply only to what's above the first $7 million (per couple) of assets. Because those are the only estates that would face any tax under the 2009 rules, they are the only estates that benefit from the more generous rules that are due to expire at year-end.
The other 997 of every 1,000 Americans who die would pass on all of their assets tax free under the 2009 rules - so, they get no additional benefit under the more generous rules that are due to expire.
Nor would the estate tax be excessive for the small number of large estates that would face it under the 2009 rules. That top three out of 1,000 estates would owe a tax equal to 19 percent of the estate's value in 2013, on average - far below the top statutory estate tax rate of 45 percent because it reflects the large exemption and numerous deductions.
Despite proponents' claims that small businesses and farms are heavily burdened by the 2009 rules, the Tax Policy Center estimates that only 60 small farm and business estates nationwide would owe any tax next year if those rules were in effect. Moreover, due to special provisions that extend substantial relief from the tax to the tiny number of taxable farm and business estates, such estates face much lower effective tax rates than do other taxable estates. Under the 2009 rules, the tiny number of small business and farm estates that would owe any tax would face an average effective tax rate of less than 12 percent next year.
Extending the additional estate-tax break that's now in effect - under which the exempted amount rose from $3.5 million under the 2009 rules to $5.1 million (and from $7 million to $10.2 million per couple) while the tax rate fell from 45 to 35 percent - is especially indefensible in light of stunning increases in income inequality. It's also indefensible as policymakers consider cuts in programs from Medicare and Social Security to assistance for the poor to health care for returning veterans.
Between 1979 and 2007, average after-tax income quadrupled among the top 1 percent of households. It grew by 304 percent after inflation, while rising just 39 percent (about 1 percent per year) among the middle 60 percent of households.
Wealth is even more concentrated than income. The top 1 percent now own a third of the nation's wealth, while the bottom half of the population owns less than 2 percent.
Those who want to extend the rules that are scheduled to expire at year-end are essentially saying that - despite exploding deficits, widening inequality, and surging incomes at the top - the 2009 rules just aren't generous enough for America's wealthiest heirs.
The fact is, however, that this lavish new tax cut for the heirs and heiresses of the nation's hugest estates wouldn't just be ill-advised fiscal and tax policy. It would be a disgrace.
___________________________________________________
THIS IS FOR WHAT WE WILL BE LOOKING IN OUR CANDIDATES NEXT ELECTION. WE MUST HEAR LOUDLY AND STRONGLY THAT PROGRESSIVE TAXATION IS TOP PRIORITY. WE HEARD OBAMA SAY THAT HE WAS GOING TO REDISTRIBUTE THE WEALTH AND MAKE THE RICH PAY.......AND HE DID JUST THE OPPOSITE....WE WILL BE LOOKING MORE CLOSELY NEXT TIME AROUND!!!
VOTE YOUR INCUMBENT OUT OF OFFICE!!!!
THIS IS TO WHAT WE ARE WORKING!!!!
When Income Was Taxed at 94%: How FDR Tackled Debt and Reckless Republicans
August 14, 2011
FDR in Florida in 1926. (FDR Library)
How much can a U.S. president committed to greater equality hope to accomplish when lawmakers devoted to helping the rich hold the upper hand?
Advocacy for equality must take a backseat, Obama administration insiders insist, when fanatical friends of the fortunate in Congress recklessly endanger our nation.
But in 1943, a U.S. president confronted a debt ceiling crisis just like Obama’s — and came up with a different answer. Facing rabid lawmakers every bit as opposed to taxing the rich as ours today, Franklin D. Roosevelt didn’t let up on the struggle for a more equal America. He doubled down.
Roosevelt’s debt ceiling battle actually began right after Pearl Harbor. The nation needed a revenue boost to wage and win the war.
FDR and his New Dealers wanted to finance the war equitably, with stiff tax rates on high incomes. How stiff? FDR proposed a 100 percent top tax rate. At a time of “grave national danger,” Roosevelt told Congress in April 1942, “no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year.” That would be about $350,000 in today’s dollars.
The year before, steel exec Eugene Grace had grabbed $522,537, over $8 million today, in 1941 salary.
But conservative lawmakers would quickly reject FDR’s plan. Four months later, Roosevelt tried again. He repeated his $25,000 “supertax” income cap call in his Labor Day message.
Sam Pizzigati
The Live Commentary
Congress shrugged that request off, too. FDR still didn’t back down. In early October, he issued an executive order that limited top corporate salaries to $25,000 after taxes. The move would “provide for greater equality in contributing to the war effort,” Roosevelt declared.
Infuriated conservatives saw red, literally. The “only logical stopping place for this movement,” fumed Princeton economist Harley Lutz, would be “a completely communistic equalization of incomes.”
Rich-people-friendly lawmakers vowed to kill FDR’s executive order by any legislative means necessary. They ended up attaching a rider repealing the order to a bill that would give the wartime debt ceiling a desperately needed lift. FDR tried and failed to get that rider axed, then let the bill with it become law without his signature. He had no choice. Our troops needed financing.
Roosevelt had definitely lost the debt ceiling battle over the salary cap, as he no doubt knew he would. But sometimes a leader can win by “losing.” FDR didn’t prevail on the cap. He did prevail in his far broader struggle to shape the wartime finance debate.
Roosevelt’s relentless campaign to cap top incomes kept that debate focused on taxing the rich. Conservatives didn’t want to do that taxing. They wanted a national sales tax, as do many conservatives today. But FDR’s aggressive advocacy for equity never let that regressive sales tax notion get traction.
The war revenue debate would be fought on Roosevelt’s terms — not on whether to tax the rich, but on how much. And, in the end, that “how much” would turn out to be quite a great deal. By the war’s end, America’s wealthy would be paying taxes on income over $200,000 at a 94 percent statutory rate.
Americans making over $250,000 in 1944 — over $3.2 million today — paid 69 percent of their total incomes in federal income taxes, after exploiting every loophole they could find. In 2007, by contrast, America’s 400 highest earners paid just 18.1 percent of their total incomes, after loopholes, in federal taxes.
The debt ceiling “solution” that White House and congressional leaders bargained does not ask these top 400 — or any other rich Americans — to pay a penny more in taxes than they do now. In the 2011 debt ceiling struggle, inequality has clearly triumphed.
So what does FDR’s debt ceiling battle teach us? Maybe this: We really can have a more equal America. We just need to fight for it.
Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies.
I saw a conversation in the financial professional's chat room that went like this.....A southern journalist asks a waitress what she thinks of the 'death tax' and whether there should be one and the waitress says 'no, no one should be taxed for dying'. The death tax is the estate tax and it was included into the system of government by founding fathers that wanted to make sure that the aristocracy and autocracy of 17th and 18th century England would not show a face in America. That is why America is called a Republic.
The estate tax is meant to bring back most of the wealth accumulated during a lifetime so no one family accumulates vast wealth and each succession of generations are equally charged with making their own wealth. That is what has kept America from having Royalty and gentry of an elite class. It also always brings large sums of money back to government coffers to be distributed in public programs and services. Allowing the estate tax to stay this low at such a time of huge wealth inequity means your Third Way corporate politician has instated this empire building social structure and eliminated the means of bringing that wealth back to public coffers. This is part of why they are dismantling all that is public. The great wealth accumulated never comes back.
The estate tax is now PERMANENTLY set at 40%. I don't know what that means as a law should always be allowed to change....but that is what I hear. So, what is 40% of 100 billion dollars? It is gazillions instead of bazillions. One can see that this amount of money will not pay even that. Europe has a 60-70% tax at for the top earners for all tax categories. FDR had 70-90% tax at the top to reverse wealth inequity after the Depression. WE HAVE ELECTED A SET OF LEGISLATORS THAT ARE CHOOSING TO TAKE AMERICA FROM A REPUBLIC WRITTEN TO BE OF THE PEOPLE, BY THE PEOPLE, AND FOR THE PEOPLE TO ONE THAT IS RULED BY ARISTOCRACY......WE CALL IT PLUTOCRACY.
Wikipedia:
Republic:
Today the term republic still most commonly means a system of government which derives its power from the people rather than from another basis, such as heredity or divine right. This remains the primary definition of republic in most contexts.
This bipartite division of government types differs from the classical sources, and also the earlier of Machiavelli's own works, which divided governments into three types: monarchy, aristocracy, and democracy. As Machiavelli wrote, the distinction between an aristocracy ruled by a select elite and a democracy ruled by a council appointed by the people became cumbersome. By the time Machiavelli began work on The Prince, he had decided to refer to both aristocracies and democracies as republics.[10]
This is what has happened as a result of your Third Way corporate democratic incumbent. Now we will have to see what is meant by 'permanent'.....I suspect they were referring to the inability of the people to elect pols that will change this.
VOTE YOUR INCUMBENT OUT OF OFFICE!!!!
Here is a discussion on estate tax:
Wikipedia:
Proponents of the estate tax argue that it serves to prevent the perpetuation of wealth, free of tax, in wealthy families and that it is necessary to a system of progressive taxation.[29] Proponents point out that the estate tax affects only estates of considerable size (in 2011, over $5 million USD, and $10 million USD for couples) and provides numerous credits (including the unified credit) that allow a significant portion of even large estates to escape taxation. Proponents note that abolishing the estate tax will result in tens of billions of dollars being lost annually from the federal budget.[30]
Furthermore, supporters argue that many large fortunes do not represent taxed income or savings, that wealth is not being taxed but merely the transfer of that wealth, and that many large fortunes represent unrealized capital gains which (because of a step up in basis at the time of death) will never be taxed as capital gains under the federal income tax.[31]
Another argument in favor of the estate tax relates to comparative incentives. Proponents argue that the estate tax is a better source of revenue than the income tax, which is said to directly disincentivize work. While all taxes have this effect to a degree, some argue that the estate tax is less of a disincentive since it does not tax money that the earner spends, but merely that which he or she wishes to give away for non-charitable purposes. Moreover, some argue that allowing the rich to bequeath unlimited wealth on future generations will disincentivize hard work in those future generations.[30] Winston Churchill argued that estate taxes are “a certain corrective against the development of a race of idle rich”. Research suggests that the more wealth that older people inherit, the more likely they are to leave the labor market.[32]
Proponents of the estate tax tend to object to characterizations it operates as a double or triple taxation. They point out many of the earnings subject to estate tax were never taxed because they were "unrealized" gains.[33] Others note double and triple taxation is common (through income, property, and sales taxes, for instance) or argue the estate tax should be seen as a single tax on the inheritors of large estates.
Supporters of the estate tax argue there is longstanding historical precedent for limiting inheritance, and note current generational transfers of wealth are greater than they have been historically. In ancient times, funeral rites for lords and chieftains involved significant wealth expenditure on sacrifices to religious deities, feasting, and ceremonies. The well-to-do were literally buried or burned along with most of their wealth. These traditions may have been imposed by religious edict but they served a real purpose, which was to prevent accumulation of great disparities of wealth, which, estate tax proponents suggest, tended to avoid destabilizing societies and prevented social imbalance, eventual revolution, or disruption of functioning economic systems.
________________________________________________
BELOW YOU SEE A DISCUSSION ON THE EXTENSION OF THE BUSH ERA ESTATE TAX CUTS AND IN PARTICULAR THE FACT THAT THE FIRST THING A SUPERMAJORITY OF DEMOCRATS DID AFTER THEY TOOK OFFICE IN 2009 WAS TO LOWER ALL KINDS OF TAXES ON THE RICH AND CORPORATIONS. THEY DID NOTHING TO PROTECT LABOR/PENSIONS/RETIREMENTS/ENTITLEMENTS/POVERTY SAFETY NETS.
THIS IS WHEN WE KNEW WE WERE DUPED....THESE POLS WERE CLINTON THIRD WAY CORPORATE LIBERALS AND NOT FISCAL PROGRESSIVES AS THEY SOLD THEMSELVES. THAT IS WHY WE ARE WATCHING AS THEY DISMANTLE ALL THAT IS PUBLIC AND INSTITUTIONALIZE WEALTH INEQUITY.
Bob Greenstein Founder and President, Center on Budget & Policy Priorities
Further Estate Tax Cut Would Be a Disgrace
Posted: 12/18/2012 12:05 pm
Policymakers hope to cut federal deficits by trillions of dollars over the next decade, requiring wrenching choices and likely imposing painful sacrifices on millions of Americans. So it's astonishing that they're also considering million-dollar tax cuts for a few thousand of the nation's wealthiest heirs and heiresses by extending an extravagant 2010 cut in the tax on inherited estates that's set to expire at year-end.
The cost: $119 billion over the next decade, compared to restoring the estate tax rules in effect in 2009, as President Obama has proposed and the Bowles-Simpson fiscal commission assumed. This lavish new tax break would confer a $1.1 million average tax cut per estate on the estates of the richest three out of 1,000 people who die.
If policymakers blithely toss away $119 billion, then other Americans will have to sacrifice more as part of the deficit-cutting effort. To put the figure in perspective, policymakers could raise roughly the same amount over the next decade by raising the age at which seniors qualify for Medicare from 65 to 67 (affecting more than five million people by 2021) or shutting both the FBI and Food and Drug Administration.
The 2009 estate tax rules were already quite generous. Between 2001 and 2009, the threshold under which an estate was fully exempt from taxation more than tripled. By 2009, all estates worth up to $3.5 million in the case of an individual who dies - effectively, up to $7 million for a couple when they both pass on - were entirely exempt.
Consequently, a wealthy couple with two children could pass on a trust fund worth $3.5 million for each child completely tax-free. That's more money than a middle-class family earning $70,000 a year makes in a lifetime.
The Urban Institute-Brookings Tax Policy Center reports that, under a reinstatement of the 2009 rules, only the estates of the top three out of 1,000 of Americans who die would face any estate tax. And, for them, the tax would apply only to what's above the first $7 million (per couple) of assets. Because those are the only estates that would face any tax under the 2009 rules, they are the only estates that benefit from the more generous rules that are due to expire at year-end.
The other 997 of every 1,000 Americans who die would pass on all of their assets tax free under the 2009 rules - so, they get no additional benefit under the more generous rules that are due to expire.
Nor would the estate tax be excessive for the small number of large estates that would face it under the 2009 rules. That top three out of 1,000 estates would owe a tax equal to 19 percent of the estate's value in 2013, on average - far below the top statutory estate tax rate of 45 percent because it reflects the large exemption and numerous deductions.
Despite proponents' claims that small businesses and farms are heavily burdened by the 2009 rules, the Tax Policy Center estimates that only 60 small farm and business estates nationwide would owe any tax next year if those rules were in effect. Moreover, due to special provisions that extend substantial relief from the tax to the tiny number of taxable farm and business estates, such estates face much lower effective tax rates than do other taxable estates. Under the 2009 rules, the tiny number of small business and farm estates that would owe any tax would face an average effective tax rate of less than 12 percent next year.
Extending the additional estate-tax break that's now in effect - under which the exempted amount rose from $3.5 million under the 2009 rules to $5.1 million (and from $7 million to $10.2 million per couple) while the tax rate fell from 45 to 35 percent - is especially indefensible in light of stunning increases in income inequality. It's also indefensible as policymakers consider cuts in programs from Medicare and Social Security to assistance for the poor to health care for returning veterans.
Between 1979 and 2007, average after-tax income quadrupled among the top 1 percent of households. It grew by 304 percent after inflation, while rising just 39 percent (about 1 percent per year) among the middle 60 percent of households.
Wealth is even more concentrated than income. The top 1 percent now own a third of the nation's wealth, while the bottom half of the population owns less than 2 percent.
Those who want to extend the rules that are scheduled to expire at year-end are essentially saying that - despite exploding deficits, widening inequality, and surging incomes at the top - the 2009 rules just aren't generous enough for America's wealthiest heirs.
The fact is, however, that this lavish new tax cut for the heirs and heiresses of the nation's hugest estates wouldn't just be ill-advised fiscal and tax policy. It would be a disgrace.
___________________________________________________
THIS IS FOR WHAT WE WILL BE LOOKING IN OUR CANDIDATES NEXT ELECTION. WE MUST HEAR LOUDLY AND STRONGLY THAT PROGRESSIVE TAXATION IS TOP PRIORITY. WE HEARD OBAMA SAY THAT HE WAS GOING TO REDISTRIBUTE THE WEALTH AND MAKE THE RICH PAY.......AND HE DID JUST THE OPPOSITE....WE WILL BE LOOKING MORE CLOSELY NEXT TIME AROUND!!!
VOTE YOUR INCUMBENT OUT OF OFFICE!!!!
THIS IS TO WHAT WE ARE WORKING!!!!
When Income Was Taxed at 94%: How FDR Tackled Debt and Reckless Republicans
August 14, 2011
FDR in Florida in 1926. (FDR Library)
How much can a U.S. president committed to greater equality hope to accomplish when lawmakers devoted to helping the rich hold the upper hand?
Advocacy for equality must take a backseat, Obama administration insiders insist, when fanatical friends of the fortunate in Congress recklessly endanger our nation.
But in 1943, a U.S. president confronted a debt ceiling crisis just like Obama’s — and came up with a different answer. Facing rabid lawmakers every bit as opposed to taxing the rich as ours today, Franklin D. Roosevelt didn’t let up on the struggle for a more equal America. He doubled down.
Roosevelt’s debt ceiling battle actually began right after Pearl Harbor. The nation needed a revenue boost to wage and win the war.
FDR and his New Dealers wanted to finance the war equitably, with stiff tax rates on high incomes. How stiff? FDR proposed a 100 percent top tax rate. At a time of “grave national danger,” Roosevelt told Congress in April 1942, “no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year.” That would be about $350,000 in today’s dollars.
The year before, steel exec Eugene Grace had grabbed $522,537, over $8 million today, in 1941 salary.
But conservative lawmakers would quickly reject FDR’s plan. Four months later, Roosevelt tried again. He repeated his $25,000 “supertax” income cap call in his Labor Day message.
Sam Pizzigati
The Live Commentary
Congress shrugged that request off, too. FDR still didn’t back down. In early October, he issued an executive order that limited top corporate salaries to $25,000 after taxes. The move would “provide for greater equality in contributing to the war effort,” Roosevelt declared.
Infuriated conservatives saw red, literally. The “only logical stopping place for this movement,” fumed Princeton economist Harley Lutz, would be “a completely communistic equalization of incomes.”
Rich-people-friendly lawmakers vowed to kill FDR’s executive order by any legislative means necessary. They ended up attaching a rider repealing the order to a bill that would give the wartime debt ceiling a desperately needed lift. FDR tried and failed to get that rider axed, then let the bill with it become law without his signature. He had no choice. Our troops needed financing.
Roosevelt had definitely lost the debt ceiling battle over the salary cap, as he no doubt knew he would. But sometimes a leader can win by “losing.” FDR didn’t prevail on the cap. He did prevail in his far broader struggle to shape the wartime finance debate.
Roosevelt’s relentless campaign to cap top incomes kept that debate focused on taxing the rich. Conservatives didn’t want to do that taxing. They wanted a national sales tax, as do many conservatives today. But FDR’s aggressive advocacy for equity never let that regressive sales tax notion get traction.
The war revenue debate would be fought on Roosevelt’s terms — not on whether to tax the rich, but on how much. And, in the end, that “how much” would turn out to be quite a great deal. By the war’s end, America’s wealthy would be paying taxes on income over $200,000 at a 94 percent statutory rate.
Americans making over $250,000 in 1944 — over $3.2 million today — paid 69 percent of their total incomes in federal income taxes, after exploiting every loophole they could find. In 2007, by contrast, America’s 400 highest earners paid just 18.1 percent of their total incomes, after loopholes, in federal taxes.
The debt ceiling “solution” that White House and congressional leaders bargained does not ask these top 400 — or any other rich Americans — to pay a penny more in taxes than they do now. In the 2011 debt ceiling struggle, inequality has clearly triumphed.
So what does FDR’s debt ceiling battle teach us? Maybe this: We really can have a more equal America. We just need to fight for it.
Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies.
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