(C) Common Dreams
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Tax the Rich? We Did That Once [1]
['Sam Pizzigati']
Date: 2024-10
Once upon a time, the United States seriously taxed the nation’s rich. You remember that time? Probably not. To have a personal memory of that tax-the-rich era, you now have to be well into your seventies.
Back at the tail-end of that era, in the early 1960s, America’s richest faced a 91 percent tax rate on income in the top tax bracket. That top rate had been hovering around 90 percent for the previous two decades. In the 1950s, a Republican president, Dwight D. Eisenhower, made no move to knock it down.
The rich felt those taxes. The high life struggled. Consider what happened to one fabled emblem of that era’s excess, the nation’s first-ever penthouse.
Marjorie Merriweather Post, an heiress who had become America’s richest woman, had that penthouse built atop a new Fifth Avenue luxury tower in 1925. The top federal tax rate then in effect as builders were putting the finishing touches on Post’s spectacular three-floor, 54-room residence: just 25 percent.
The Post clan held on to that penthouse for the next 15 years and then decided to “move on.” The American people, by that time, had decided to move on as well — from bargain-basement tax rates on high incomes. In 1940, the federal tax rate on income over $200,000 started at 66 percent. By 1944, the top tax rate on all income over $200,000 — about $3.4 million in today’s dollars — had jumped to 94 percent.
Post’s fabulous penthouse would find no new takers in this new high-tax era. The penthouse went vacant all through the 1940s. In the 1950s, with the nation’s top tax rate still above 90 percent, the luxury tower’s owners threw in the towel and broke up the former Post palace into six separate units. America’s rich, most observers figured, were adjusting to living lives significantly less rich.
But the political winds were changing. In 1963, President John Kennedy, himself the product of one of America’s grandest fortunes, asked Congress to drop the nation’s top tax rate down to 65 percent. Congress would mostly oblige, and that top tax rate would sink to 70 percent in 1965. In the 1980s, Ronald Reagan and his friends on Capitol Hill would shove that rate down even further, first to 50 and then to 28 percent.
This top tax rate then inched up to 31 percent in 1991 and has been bouncing around in the 30s ever since. The current top-bracket rate: 37 percent.
What has this nosedive in tax rates on the rich meant for average Americans? Nothing good, concludes veteran tax analyst James Steele in a just-published report from the Center for Public Integrity and Bloomberg Tax. Over recent decades, says Steele, “Congress after Congress has cut taxes on the richest people and corporations — billions of dollars that would otherwise have gone to the federal till for spending that could help the rest of the public get ahead.”
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[1] Url:
https://inequality.org/great-divide/tax-the-rich-we-did-that-once/
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