Thursday, February 26, 2009

Tax history lesson

Republicans continue to elicit furor over President Obama's plans on raising taxes on U.S. couples making more than $250,000 per year. I'm sure the right-wing talking heads have been doing their level best to incite their brain-addled followers to fits of collective apoplexy because our new president is "redistributing the wealth."

John Boehner, a regular practitioner in the art of misinformation and Republican spin offered his usual loyal opposition insights, lacking in any factual basis. Commenting on the president's plan for higher taxes for the wealthy and the first steps toward guaranteed health care for all, Boehner offered the following bromide:

"We can't tax and spend our way to prosperity," said House GOP leader John Boehner of Ohio. "The era of big government is back, and Democrats are asking you to pay for it."

I'd like to remind Mr. Boehner, and his fellow Republicans that permanent tax cutting for the wealthiest Americans hasn't worked too well, either.

While Mr. Obama is proposing a mere raising of the top income tax bracket from 35 percent to 39.6 percent for those taxpayers, while increasing their capital gains rate from 15 to 20 percent, this is a much smaller percentage than what the top U.S. bracket was just after WWII.

While Republicans struggle with reality-based approaches to policy, in fact, the top U.S. tax bracket had reached 94 percent during World War II, on income over $200,000 (approx. $2.49 million in today's dollars). It dropped down to 91 percent in 1946 and remained there until the Kennedy tax cuts in 1962-64. Brackets weren't inflation adjusted back then, so it still applied on income over $200,000, which by then had reached $1.41 million in today's dollars. (courtesy of The Tax Foundation). You can view U.S. tax brackets from 1913 to today, here.

Recommended reading for anyone who really wants the truth on tax policy in the U.S. is David Cay Johnston's Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich–and Cheat Everybody Else. Johnston was interviewed by Amy Goodman about tax breaks for corporation, on her Democracy Now program, in early February.

If you choose to read Johnston's book, you'll learn that since the mid-1970s, the tax burden in the U.S. has steadily shifted from the wealthiest 1 percent of taxpayers, to those in the middle income brackets. Of course, I've tried using that tack with the pro-Limbaugh crowd, and they just deny, since all they need to know emanates from the mouth of El Rushbo. Here's the Limbaugh Lie of the Day for Thursday.

No comments: