Even now in her 98th year, my mother remembers the Depression. As a 25-year-old, my grandmother remembered when WWI began and how it affected Americans. She also marveled as an 80-year-old when men walked on the moon in July 1969.
Such historical events sear into memory like branding irons. Yet small but important details about America’s past elude us — details about taxation, for instance. That’s why politicians can tell us — with a straight face — that Americans are overtaxed. Politicians can spout almost any nonsense about taxation knowing a gullible public will succumb to assertions that are just plain lies.
Let’s begin with the truth. We are not overtaxed. Not by the federal government.
Overtaxed? Pity the wealthy wage earners of 1952. In 1952 there were 26 separate tax brackets. The lowest imposed a 22.2 percent income tax and the highest was 92 percent. That’s correct. Ninety-two percent was the marginal tax rate for any earnings more than $400,000 ($3.7 million in 2017 dollars). Imagine a 92 percent tax rate for 2017 CEOs who earn $20 million annually. Now imagine the good we could do with that $15 million for America.
Guess what? Those tax rates crippled no one and the middle class thrived. During 1951, 1956 and 1957 America did NOT run a deficit or have to borrow money to pay its bills. There was a fiscal surplus. The income tax situation in 1956 was largely the same as I described it in 1952, and that’s when America began building the Interstate highway system — an enormous investment — because we finally had a reliable tax source: the American taxpayer and American corporations.
Second, we are not overtaxed. Our national debt and annual deficits prove that.
Few people remember that we ran four consecutive years of tax surpluses from 1998 to 2001 and began paying down our enormous national debt. What a concept! That all changed when George Bush decided we needed a tax cut.
So in 2017, with tax reform on the front burner, we should fulfill two obligations: 1) Meet our present fiscal obligations without borrowing and 2) Pay down the national debt. Which of these obligations will the current Congressional or Senate tax bills fulfill? Neither. We’ll sink further into debt while Congress abets the rich’s desire to get richer.
When will common sense prevail?
John R. Scannell and Wendy L. Kelling,