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To revive the economy, follow FDR's sage advice — tax the wealthy

America's economy is in the midst of a Great Stagnation that almost rivals the Great Depression of the 1930s.
America's economy is in the midst of a Great Stagnation that almost rivals the Great Depression of the 1930s.

WASHINGTON — America's economy is in the midst of a Great Stagnation that almost rivals the Great Depression of the 1930s, and the nation is fighting a costly and prolonged worldwide war against relentless Islamic terrorism.

While the federal budget is hemorrhaging red ink, the wealthy in America not only are not paying their fair share — they quite often pay a lower percentage of their income than those in the struggling middle class.

Yet neither Republicans nor Democrats in Congress seem to have much stomach to correct this glaring inequity.

None has stepped forward to push legislation that comes close to mirroring legendary investor Warren Buffett's call for moving immediately to implement minimum taxes of 30 percent on incomes of $1 million to $10 million and 35 percent above that.

"A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultra-rich paying rates well below those incurred by people with income just a tiny fraction of ours," Buffett wrote last year in a New York Times op-ed.

"Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy," he added.

I'd go a giant step further. In this time of economic turbulence and travail, we ought to temporarily return to the high marginal tax rates that pulled us out of the Great Depression and made us the "Arsenal of Democracy" during World War II.

In 1939, President Franklin D. Roosevelt persuaded Congress to raise the top income tax rate to 75 percent applied to incomes above $5 million. During 1944 and 1945, the top rate rose further to an all-time high of 94 percent applied to all income above $200,000.

Surprisingly, few among the wealthy complained at the time. Most emerged as true patriots with many corporate executives, including CEOs, accepting $1-a-year salaries to help the war effort.

And why not? Most of their less fortunate fellow citizens were engaged in brutal combat abroad or working full throttle in the nation's round-the-clock defense factories — many with their wages frozen for the duration.

Yet supply-siders adamantly insist that such high tax bites on the well-off are a recipe for economic disaster.

That's simply not true as evidenced by America's flourishing post-war economy. The United States — despite those seemingly astronomically high tax rates on the rich — emerged from World War II as the globe's leading economy.

No one is suggesting that we institute a permanent and confiscatory tax on the nation's wealthy today. But this is a time of emergency, and surely an extra few percentage points of tax on the upper portion of the incomes of the very rich would evoke no real hardship.

And it would provide the extra billions the nation desperately needs to shore up its crumbling roads and bridges, and provide the advanced scientific and technical educations we need to keep pace with China and other emerging rivals in today's global economy.

And, oh yes, offer the state-of-art care and aid that a grateful nation should provide the legions of traumatized and battle-scarred troops returning from more than a decade of ill-advised misadventures in the Middle East.

As FDR noted during our Great Depression, "The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little."

It's past due time for America's most fortunate to help us achieve FDR's dream of "a country in which no one is left out."

Wayne Madsen is a contributing writer to the Online Journal and an author of several books with a progressive perspective.