“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.” Thomas Jefferson, 1785.
We’ve been hearing a lot lately about what tax rates are fair, what cuts should be made, and why any increase in tax rates means we are doomed to become Venezuela. With the tax filing deadline approaching, it might be instructive to briefly review the history of tax rates in our country and how they affect the economy.
For decades, Republicans have pushed the idea that reducing taxes is the solution to all our problems. That’s a slight exaggeration, but not much. One of the biggest lies Republicans spread is that low taxes are the path to prosperity.
Republican Dwight Eisenhower was president from 1953-1961. During that time, America was a prosperous country with a growing economy. Also during that time, the top marginal tax rate was 92 percent in 1953, and 91 percent for the rest of his administration. Some Republicans wanted to reduce those rates, but Eisenhower said, “We cannot afford to reduce taxes, reduce (government) income, until we have in sight a program of expenditure that shows that the factors of income and outgo will be balanced.”
Eisenhower knew that government needed income to operate. Cutting taxes would impair government functions. One program he initiated was the interstate highway system, a project that cost about $500 billion in 2016 dollars, but gave a return on investment of $6 in economic prosperity for every $1 it cost.
Today, Republicans would scream that this was runaway spending, and they would vote it down in favor of more tax cuts for the wealthy. Eisenhower proved that using tax money wisely benefits everyone.
The Bill Clinton administration is another example of higher taxes resulting in prosperity. Democratic President Clinton raised taxes on the wealthy. Subsequently, American economic growth averaged 3.65 percent GDP a year for eight years, creating a record 23.6 million net new jobs. The federal budget was balanced, and we had a surplus for three years. These results perfectly prove Eisenhower’s philosophy.
Rep. Alexandria Ocasio-Cortez, D-N.Y., recently proposed a top marginal rate of 70 percent. Republicans erupted, saying a rate like that would cause terrible hardship. Not surprisingly, Republicans are ignorant about the history of taxes. From the 1940s through the 1970s, the top tax rate never went below 70 percent. Then Ronald Reagan was elected president.
When Reagan cut taxes, the national debt tripled. The debt and deficits increased under the next two Republican presidents, while decreasing under Clinton. President Barack Obama’s two tax cuts were larger than President Donald Trump’s recent tax cut, but Obama was able to slow the rate of federal spending to its lowest level in decades. The deficit under Obama was reduced by about two-thirds.
In contrast, Trump’s tax cut created the largest budget deficit in six years, and the deficit is growing to historic highs, increasing the debt. The cuts are not paying for themselves as promised. The benefits of Obama’s tax cuts went to 95 percent of the population. Trump’s tax cut benefited the corporations and already wealthy.
With reduced federal income, spending cuts must be made. Trump wants these cuts to come from programs such as food stamps, Medicaid, children’s health care, and other programs that actually benefit the American people. Republican leaders hate these programs, screaming that they’re socialism, even though Red states tend to be the ones which benefit the most. Clearly socialism is in the eye of the beholder.
As Jefferson’s quote above shows, the Founders believed in a progressive tax system. They understood the dangers of accumulated wealth. They knew taxes were necessary and should be fair. On Dec. 25, 1783, Benjamin Franklin clarified this when he wrote the following:
“All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition.
“He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”
Jeanette Strong, whose column appears every other week, is a Nevada Press Association award-winning columnist. She may be reached at news@lahontanvalleynews.com.
-->“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.” Thomas Jefferson, 1785.
We’ve been hearing a lot lately about what tax rates are fair, what cuts should be made, and why any increase in tax rates means we are doomed to become Venezuela. With the tax filing deadline approaching, it might be instructive to briefly review the history of tax rates in our country and how they affect the economy.
For decades, Republicans have pushed the idea that reducing taxes is the solution to all our problems. That’s a slight exaggeration, but not much. One of the biggest lies Republicans spread is that low taxes are the path to prosperity.
Republican Dwight Eisenhower was president from 1953-1961. During that time, America was a prosperous country with a growing economy. Also during that time, the top marginal tax rate was 92 percent in 1953, and 91 percent for the rest of his administration. Some Republicans wanted to reduce those rates, but Eisenhower said, “We cannot afford to reduce taxes, reduce (government) income, until we have in sight a program of expenditure that shows that the factors of income and outgo will be balanced.”
Eisenhower knew that government needed income to operate. Cutting taxes would impair government functions. One program he initiated was the interstate highway system, a project that cost about $500 billion in 2016 dollars, but gave a return on investment of $6 in economic prosperity for every $1 it cost.
Today, Republicans would scream that this was runaway spending, and they would vote it down in favor of more tax cuts for the wealthy. Eisenhower proved that using tax money wisely benefits everyone.
The Bill Clinton administration is another example of higher taxes resulting in prosperity. Democratic President Clinton raised taxes on the wealthy. Subsequently, American economic growth averaged 3.65 percent GDP a year for eight years, creating a record 23.6 million net new jobs. The federal budget was balanced, and we had a surplus for three years. These results perfectly prove Eisenhower’s philosophy.
Rep. Alexandria Ocasio-Cortez, D-N.Y., recently proposed a top marginal rate of 70 percent. Republicans erupted, saying a rate like that would cause terrible hardship. Not surprisingly, Republicans are ignorant about the history of taxes. From the 1940s through the 1970s, the top tax rate never went below 70 percent. Then Ronald Reagan was elected president.
When Reagan cut taxes, the national debt tripled. The debt and deficits increased under the next two Republican presidents, while decreasing under Clinton. President Barack Obama’s two tax cuts were larger than President Donald Trump’s recent tax cut, but Obama was able to slow the rate of federal spending to its lowest level in decades. The deficit under Obama was reduced by about two-thirds.
In contrast, Trump’s tax cut created the largest budget deficit in six years, and the deficit is growing to historic highs, increasing the debt. The cuts are not paying for themselves as promised. The benefits of Obama’s tax cuts went to 95 percent of the population. Trump’s tax cut benefited the corporations and already wealthy.
With reduced federal income, spending cuts must be made. Trump wants these cuts to come from programs such as food stamps, Medicaid, children’s health care, and other programs that actually benefit the American people. Republican leaders hate these programs, screaming that they’re socialism, even though Red states tend to be the ones which benefit the most. Clearly socialism is in the eye of the beholder.
As Jefferson’s quote above shows, the Founders believed in a progressive tax system. They understood the dangers of accumulated wealth. They knew taxes were necessary and should be fair. On Dec. 25, 1783, Benjamin Franklin clarified this when he wrote the following:
“All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition.
“He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”
Jeanette Strong, whose column appears every other week, is a Nevada Press Association award-winning columnist. She may be reached at news@lahontanvalleynews.com.
