Why is [72.4 and 76.8 percent top marginal income rate]s insane? In the 1950's, a time of prosperity, the top rate was 90%. Were Eisenhower and Nixon insane? No Ms. Marcus, you do have to be a Grover Norquist to find 70+ rates insane. There is nothing insane about it at all. The government needs money. Rich people have plenty of it. Why rob banks? Because that's where the money is. This isn't insanity. In fact, it's sanity.Aside from the fact that the question "Was Nixon insane?" could easily be answered with a "Yes" under a different context, I'm taken aback a little by the impracticality and selective reasoning of this suggestion.
I have no problem with the general premise of the argument that the wealthy has, over time, increased their share of national wealth and income, while reducing their tax burdens by reducing their marginal tax rates. I have no problem thinking that the wealthy can and should pay more. But a 70+ percent marginal tax rate? It makes even a liberal like me irk a little unless we're talking about windfall profit taxes on banks or oil companies.
But never mind my irking. Let's say I forgot the fact that a liberal blog was equating taxing the rich with robbing a bank, and let's say a 70% marginal income tax rate for the highest income earners (this is for people making $250,000 and up) was... sane. OK. Who's going to pass it? In what Congress? And how are we going to elect that hypothetical Congress?
Politics is the art of the possible. And doubling the marginal tax rate for even the wealthiest Americans (from 35% to 70%) is just not possible. Not today, and not in any foreseeable future.
But so long as our standards of fair, sane tax rates are those under Eisenhower and Nixon, we can't just compare one end of the tax brackets. We have to also keep in mind that taxes for nearly everyone was higher then. Let's do some quick calculations given US income tax rates over time and adjusting for inflation:
Under Eisenhower (1953 - 1961): In 1958, the lowest income tax rate was 20%, compared to 10% today. A married couple, filing jointly, making the equivalent of $50,000 in taxable income in 2010 ($6,575.63 in 1963) would have paid a 22% marginal rate. Today the same couple filing jointly would pay a 15% marginal rate.
Under Nixon (1969 to 1974): In 1972, the lowest income tax rate was 14%, compared to 10% today. A married couple filing jointly making the equivalent of $50,000 in taxable income in 2010 ($9,516.14 in 1972) would have also paid a a 22% marginal rate. Once again, today, the same couple filing jointly would pay a 15% marginal rate.
So, should everyone return to the Nixon or Eisenhower era rates? I am pretty much willing to bet that the same people bragging about the Eisenhower and Nixon tax codes would scream about "balancing the budget on the backs of the middle class" if the all of the tax rates (including those for the poor and middle class) were returned to the eras of Nixon or Eisenhower. If that's the case, maybe extolling the virtues of the Eisenhower and Nixon tax rates isn't such a great idea.
I seem to remember when Howard Dean in 2004 wanted to return everyone's tax rates to the Clinton era rates (repealing ALL of the Bush tax cuts, for the rich and for the not-so-rich), it was the Democratic party insiders that tore him up over it. I supported the proposal then.
Ideology Over Solutions
The point is, we are not going to go back to the 70% marginal tax rates - whether you think it's a good idea or a bad one. And we don't have to. We progressives ought not be arguing over whether the top marginal tax rate should be 70%+. We ought to be looking at several other progressive systems of taxation and fiscal responsibility:
- Return the tax rates (of at least the wealthy) to that under Clinton.
- Cut the waste and outsourcing (defense contracting to the likes of Blackwater) out of the bloated Defense budget.
- Close tax loopholes and make corporations pay their fair share. Stop subsidizing a corporation moving jobs overseas.
- Make coal and oil interests at least pay us fairly for the use of our natural resources.