The taxing reality of history

What if you lived in a country that taxes its wealthiest citizens 92 percent of their income?

Because the country’s tax system is extraordinarily progressive, there are more than 20 different marginal tax rates. But those making less also have to surrender a substantial amount of their income.

Someone earning roughly $250,000 in 2009 dollars would turnover 68 percent of their earnings.

The name of this unfamiliar place is not the Union of Soviet Socialist Republics.

Nor is it a Scandinavian social democracy, one of the oft-derided “nanny states.”

Even so, many Americans would surely not want to live in such a country. The Tea Party would shout 18th-Century anti-tax slogans while making plans to “take back” America.

Glenn Beck already says we’re on “the road to socialism,” and capitalism is in its last throes because banks bailed out by taxpayer dollars are forced to limit executive compensation.

In fact, it is none other than the United States of America itself.

The year was 1953, and taxes were sky-high. Republican Dwight D. Eisenhower assumed the presidency in January.

Taxes remained consistently high throughout his presidency.

Despite the current conservative notion that more taxes will be the downfall of personal liberty and a capitalist society, Americans in the 1950s apparently saw little contradiction in paying taxes and embracing capitalism.

Americans in the ’50s would have been shocked to learn that they could be considered even vaguely socialist. Communists were hardly considered friends and, at the height of McCarthyism, they were persecuted enemies.

In 1953, Senator Joe McCarthy conducted his famous hearings to uncover an alleged communist spying ring in the U.S. Army.

But today’s Republicans are apparently hoping Americans will forget most of the 20th Century, even the Republican Eisenhower Presidency. They are increasingly appropriating this country’s history even as they warp it to support an entirely modern agenda.

Rick Barber, running for Alabama’s second congressional seat in the past elections, released a commercial in which he appears sitting in a rustic tavern suggesting that the IRS’s progressive income tax system violates the Constitution.

The commercial’s rather unconvincing George Washington dramatically lends his support, instructing the potential congressman to “gather your armies.”

But this vision of a low-tax America ignores the linear historical development of this country. It conveniently forgets that the modern era of low income taxes only began in the last three decades.

When Reagan came into office, he cut taxes by a massive 25 percent.

It would seem nearly insignificant if the Bush tax cuts had been allowed to expire, raising marginal tax rates 3 to 5 percent.

So, why has the Tea Party been so successful in their historical heist?

Our generation might be particularly susceptible to misinformation.

We are the first generation born after the Reagan Revolution, and we have no personal memory of a time when the American middle class flourished because personal income taxes were used as a tool for creating social equality.

With a little 20th Century history, however, we can challenge the Tea Party to rethink their implicit claim that “the Greatest Generation” was somehow un-American.


E-mail: wallacen@indiana.edu