Thursday, February 07, 2008

America's Divided Tax History

America's tax history is apparently unAmerican, at least in the eyes of tax cutters. During World War I the top marginal tax rate reached 77%. During World War II it rose to 94% and fell only slightly afterwards, remaining at 91% until 1963.

During the Second World War, Encyclopedia Britannica made a film about despotism. It targeted Adolf Hitler and his ilk. The video cited one mark of a despotic society, control of power by a select few. Around the six minute mark, the narrator cites a regressive tax structure as unfair to the poor and a clear sign of despotism.

This despotic tax structure of yesterday is widely hailed as the fair tax of today. But is it really fair? Today during the time of a long war, our government continues to lower tax rates. Conflicts in Iraq and Afghanistan are off budget, driving up debt but not held against the federal money manager.

To recap, America's top tax rate for individuals at key points in time:

Vietnam War-70-77%
War on Terror-35%
Great Depression (bdeginning)-24%
Stock Market Crash 1989-28%

This does not mean low tax rates cause economic crashes. Our economy is much more complex than that. But it does show leaders' unwillingness to ask Americans to sacrifice during a time of "war". Our history shows something very different.

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