History lesson from Sam Pizzigati
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

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.

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