The very first year the U.S. began taxing there were 7 tax rates beginning with the minimum tax rate of 1% and a maximum tax rate of 7%. It appears our founding fathers expected the rich to pay seven times more than the poor in taxes. By 1916 – only three years after the beginning of taxation, the rates were changed so there were 14 tax rates. The minimum tax became 2%, while the maximum tax was increased to 15% or 7.5 times the minimum.
If those percentages were extrapolated across time, what do you think the multiplier would be in 2010?
The highest rate after 1913 occurred in 1918. Then the rates moved downward until 1925 when it reached 25% and stayed there until the market crashed in 1919. Since 1944, the trend has been downward for a period of 66 years.
Taxes were high during World War II and stayed that way until the Kennedy tax-cut which came just as the war in Vietnam was getting under way when taxes should have been raised to pay for the war. As huge as the deficit and national debt had become relative to GDP, both shrank very quickly after the war ended.
In 1964, the tax rate was reduced to 70% from 91%. This was the famous Kennedy tax-cut proposed by President Kennedy who was assassinated in 1963. Republicans have been talking about this tax-cut ever since. They liked it so well that they’ve cut it from 70% down to 35%!
What happened after 1964 was the war in Vietnam when the tax-cut was taking effect resulting in loss of revenue at the same time government spending dramatically increased because of the war.
Reagan’s Reign of tax-cuts for the Rich began. If 7 to 1 was the intent of our founding fathers, we were doing just fine with President Eisenhower when the top rate was 90+%. We need to follow in the footsteps of our founding fathers who wrote the constitution–7 to 1.
Reagan’s Reign of Tax-cuts for the Rich was interrupted, briefly, during Clinton’s two terms of office. Clinton raised them, but Bush more than made up for that.
By 2010 the minimum rate was reduced (through the 2001 and 2003 Tax Cuts put into place by the Bush administration) to 10%, while the maximum tax rate was reduced to 35%, in other words taxes were reduced from 7.5 times the minimum in 1916 to 3.5 times the minimum under the Bush administration. These are the tax-cuts set to expire on December 31, 2010.
The biggest tax-cuts and the fewest jobs created occurred during the years 2001-2008, followed by the worse recession since the great depression.
The chairmen of the deficit commission, the committee, and the media don’t want their taxes raised. That is what this whole thing about the deficit comes down to–the Republicans, the media; and the deficit commission don’t want their taxes raised. They’ll do all they can to see that that doesn’t happen. So, they come out with all this garbage to make people think the deficit is the people’s fault.
Contrary to what most people think, the country has done better when tax-rates are high on the highest incomes, not when they are low. Low tax-rates for the rich are worse than kids’ playing with matches in the kitchen–lots of trouble is what you can expect and get.
The rich have had the use of hundreds and hundreds of billions of dollars free of charge for many years. It’s time for them to pay it back – pay it all back.
© 2010 Richard E Walrath and Patricia L Johnson