councilor.org
| Source | Robert Borosage |
| Date | 01/09/26/13:47 |
| World War III: Toward a More Equal America?
By Sam Pizzigati In 1917, at the start of America's first world war, talk about sacrifice abounded. Young men the nation over stepped front and center, eager to fight - and risk their lives - to make the world "safe for democracy." Amid the patriotic fervor, some of America's most public-spirited citizens asked Congress to enable a different sort of sacrifice. What America needed to win the war, they argued, was a "conscription of wealth." The new war, as Republican progressive Amos Pinchot told a Senate hearing, "cannot be either justly or efficiently carried on unless people who do not fight but have plenty of money are made to realize their responsibility and forced to give to the Government the use of their wealth, at least to the extent of a heavy tax on large incomes." Pinchot's American Committee on War Finance called on Congress to impose a 100 percent tax on all incomes over $100,000. One Committee activist, newspaper publisher E. W. Scripps, went even further. He urged President Woodrow Wilson to tax away, for the support of the war effort, all incomes above $50,000. That ardent plea from one of America's most noted publishers may have made an impression on Franklin Roosevelt, then the assistant secretary of the navy. A generation later, as the President at the start of World War II, FDR asked Congress to tax away all individual income over $25,000, about $285,000 in today's dollars. To prosecute the war successfully, Roosevelt told the nation four months after Pearl Harbor, the gap "between low personal and very high personal incomes" needed to be narrowed. Today, over half a century later, the United States is once again preparing for world war. A President is, for still another conflict, asking young Americans to put their lives at risk. But in this newest world war, unlike our first two, no one of any prominence in public life, inside the White House or out, appears willing to ask America's wealthy to make some sacrifices, too - unless you count having to wait in airports. Have we become that different a nation? At the start of World War I and again at the start of World War II, those Americans who demanded that the wealthy pay their fair share of the war effort struck a responsive chord with the American people. In wartime, Americans seemed to agree, everyone needed to make sacrifices. If the young were going to be asked to risk their lives, the least the wealthy could do would be to sacrifice a chunk of their fortunes. Solid majorities in Congress shared this perspective. Lawmakers in 1917 and 1942 didn't adopt the income caps proposed first by men like Pinchot and Scripps and later by Roosevelt, but they did hike taxes on the most affluent to all-time highs. In World War I, Congress upped the top marginal federal income tax rate, only 7 percent in 1915, to 77 percent. In World War II, lawmakers upped 1939's top rate - 79 percent on incomes over $1 million - to 94 percent on incomes over $200,000. By 1943, the wealthiest Americans, those who made at least $1.5 million in today's dollars, were paying 78 percent of their total incomes in federal income taxes. How stiff a bite is that? We don't have exactly comparable current figures, but consider this: In 1998, the latest year with IRS stats available, the wealthiest 1 percent of Americans - taxpayers who made at least $270,000 - paid federal taxes at a 27 percent rate. Americans who made at least $1 million paid, on average, just 31 percent of that in federal income taxes. Next year, those rates will drop considerably lower, as the huge tax cut enacted last spring kicks in big-time. Starting in 2002, notes Citizens for Tax Justice, 52 percent of the total benefits from that tax cut will go to America's wealthiest 1 percent. With war in the wind, will this generous largess for the wealthy be allowed to stand? The Monday after the Twin Towers collapsed, President Bush signaled his willingness to reduce taxes for investors. On Capitol Hill, meanwhile, no leading Democrat has come anywhere even remotely close to suggesting a tax cut about-face. The notion that America's deepest pockets ought to be asked to sacrifice some of their ample wealth remains distinctly off the mainstream political radar screen. To be sure, it's still early. Few Americans have yet started to focus on the price the nation will have to pay to wage war against a stateless foe. That staggering cost might produce some second thoughts. After all, for the first time ever, the United States is going to have to pay to both fight a war abroad and secure the nation at home. And added to the price for homefront security must go the collateral costs of bailing out the interests, most notably the airlines, that spill red ink as tight new security measures are imposed. At some point, Congress will have to stop writing the White House blank checks for all this and start making choices. Just how will this war be financed? Will taxes be raised? And who will pay these higher taxes? Or, conversely, will taxes go untouched? Will the war effort be financed instead by cutting programs and services that don't directly contribute to the war effort? And what programs will be gored? Aid to education? Medicare? Recessionary relief for working families? All these questions will sooner or later have to be addressed, and the resulting debate will, if recent history is any guide, likely prove as incomprehensible to average Americans as an Osama bin Laden email. White House and Capitol Hill leaders will talk in impenetrable budget jargon about ridiculously high numbers that overwhelm any typical American's normal frame of reference. What won't be asked in this debate, unless progressives fight to ask it, is the one question that might capture the attention of average Americans: After two decades of distinctly unshared "prosperity" in the United States, who will share the sacrifice this new world war will demand from our nation? Will the richest 1 percent of Americans - the fortunate few who have seen their inflation-adjusted incomes soar 157 percent since 1979 - be asked to make their fair share of sacrifice? Or will that sacrifice be expected to come from more average Americans, those families that spent the 1980s and 1990s running on a never-ending treadmill, working longer and longer hours for incomes that didn't nudge up enough to offset the cost of extra child care? These are not questions, the mainstream Democratic pols and pollsters will tell us, that Democrats ought to risk asking in these most bipartisan of times. Even some progressives, in this praise-the-lord-and-pass-the-ammunition atmosphere, might shrink at the prospect of challenging concentrated wealth. But now is actually the best time to take on concentrated wealth. In wartime, times when the nobility of sacrifice emerges as a dominant political value, the wealthy and their apologists walk on thin political ice. Over the last 200 years, throughout the industrial world, the wealthy have been taxed in wartime at levels that would have been unimaginable in prewar, peacetime politics. More significantly, after many of these wars, progressives were able to keep the wartime taxes in place, or nearly so, and where that happened, the postwar revenue from wartime taxes opened up new vistas for social change and progress. The high World War II tax rates on America's wealthy, for instance, largely outlasted the war, despite Republican efforts to undo them. In 1947, HR 1, the first piece of legislation introduced in that year's congressional session, would have dropped the maximum tax rate on high incomes down to 76.5 percent. That move, charged Congressman Aime Forand of Rhode Island, would have constituted "the first step in the move to shift the burden of taxation from the backs of the big taxpayers to the backs of the little people." President Harry Truman agreed. He vetoed the tax cut that Congress passed and helped set the stage for a generation of growing equality in the United States. From the end of World War II until the early 1970s, the incomes of Americans at the bottom of the economic ladder actually increased faster than the incomes of Americans at the top. For average Americans, real incomes doubled. The share of the nation's wealth held by the wealthiest Americans fell significantly. After World War I, by contrast, progressives quickly lost anything resembling the political upper hand. Led by Andrew Mellon, the multi-millionaire treasury secretary, advocates for trickle-down slashed the top marginal tax rate from 77 to 25 percent. By 1929, the eve of the Great Depression, wealth in the United States sat more concentrated than ever. On Wall Street, speculators exulted. On Main Street, families fretted. Sound familiar? The richest 1 percent of Americans today own more wealth than the bottom 95 percent. The net worth of contemporary working families is actually shrinking. We have become the most unequal developed country in the world. But we progressives suddenly have a new opportunity to change this reality. By insisting, as this war unfolds, that sacrifice ought to be expected from all Americans - especially Americans of great means - we have an opportunity to start undoing the massive inequality that eats away at our economy, coarsens our culture, and debases our democracy. Our challenge to inequality ought to target, for starters, last spring's tax cut giveaway to America's most comfortable. But that ought only be a first step. Our culture is awash in praise for the generation that fought and won World War II. Why not work to resurrect the tax rates on the wealthy that the Greatest Generation embraced, the tax rates that financed and won World War II, the tax rates that set the stage for shared prosperity once the war ended? And let's experiment with new progressive ideas of our own, like insisting on tight, anti-inequality strings for any bailouts that Congress considers. Sure, the airlines need help, but their CEOs certainly don't. Why not campaign to deny bailouts, or even wartime contracts for that matter, to any corporations that compensate their top executives at more than 50 times the pay of their lowest-paid workers. At last count, American CEO were averaging 531 times the pay of their average employees. By demanding truly shared sacrifice, by openly and aggressively challenging inequality, we can help make our world a less polarized - and dangerously unstable - place. And that, in the end, is the only sure way to keep our towers standing and our people free. Sam Pizzigati, a labor journalist outside Washington, D.C., edits Too Much, a quarterly on inequality. |
Copyright (c) 1998, Joongpil Cho