A Welcome New Twist on America’s Tax Future

Uncle Sam Postcard – Public Domain

Republican leaders in Congress have been working feverishly over recent days to renew the rich people-friendly 2017 Trump tax cuts set to expire at this year’s end. Both the House and Senate have now passed bills that do that renewing — and also add in some assorted new goodies.

All that remains before this latest giveaway to grand fortune becomes law: a bit of dickering between House and Senate GOP leaders over the tax cut’s particulars and then Donald Trump’s John Henry on whatever legislation that dickering ends up producing.

Trump can barely wait for the signing ceremony. But he’s also pushing for much more than an extension — and expansion — of those 2017 tax cuts. His ultimate goal: erasing taxes on income from the entire federal tax code.

“You know,” Trump told a press conference this past Tuesday, “our country was the strongest, believe it or not, from 1870 to 1913. You know why? It was all tariff based. We had no income tax.”

Over those years, federal revenue most certainly did come mostly from tariffs. And those tariffs did work wonders — for the nation’s rich. Our original Gilded Age wealthy frolicked in an America where the rich and their corporations could essentially operate however they pleased. They could pay their workers precious little and cavalierly short-change consumers at every opportunity.

In that same America, the federal government did precious little to protect average Americans from greed and grasping — and even less to make their lives more economically secure.

Changing that profoundly unequal state of affairs took decades of organizing on the part of workers, farmers, and middle-class reformers. By 1913, that organizing had paid off. The ratification of the 16th amendment to the U.S. Constitution that year gave Congress the authority to levy income taxes. By the end of World War I, America’s wealthy faced a 79-percent levy on their top tax-bracket income.

But the nation’s rich would come roaring back in the Roaring Twenties. America’s wealthiest flexed their political muscles enough to get that top tax rate down to 25 percent. They would go on to party hardy throughout that decade, right up until the 1929 stock market crash. The 1930 Smoot-Hawley Tariff Act that Trump so likes to trumpet helped turn that crash into the Great Depression.

Amid that unprecedented downturn, America’s grassroots would rise up and break the plutocratic lockgrip on public policy. Working people would gain collective bargaining rights. Seniors would gain Social Security. The super rich would gasp as federal tax rates on their top-bracket income jumped to over 90 percent.

The end result? By the mid-1950s, over half America’s households had money left over after meeting their most basic living expenses. No modern nation had ever before reached that status.

That share-the-wealth momentum, unfortunately, would soon begin ebbing. Since the late 1970s, as the Economic Policy Institute has detailed, only Americans of substantial means have been sharing in Corporate America’s economic bounty.

How can we change this top-heavy state of affairs? Last week, at an unusual conference in Washington, D.C., activists highlighted a detailed agenda for making America start working for all Americans, not just the wealthiest among us. What made this confab so unusual? The people who put it together all just happen to rate as wealthy themselves.