Taxes in America, Continued

Wednesday, August 10, 2005 at 07:52 AM

Grover Norquist, head of Americans for Tax Reform, is one of the most powerful behind-the-scenes people in Washington.  The base of his power is the anti-tax movement--Grover came up with the idea of having politicians sign a pledge never ever ever to raise taxes for any reason if they want the financial and electoral support of his organization.  You can find copies of the pledge for federal and state officials at

And Norquist is only one of many right wingers who think we are being taxed to death.

Continuing an earlier which detailed how America compares to the rest of the indutrialized world in the share of our GDP that goes to taxes, here's a kind of "The Anti-Anti-Taxers Guide" on the federal income tax.

In 2003, the top marginal federal income tax rate was only 35%.  It has not risen, as far as I know, despite the fact that we are now trying to fund two wars, have a future problem with funding Social Security, even more imminent problems with Medicare and Medicaid, and a massive public debt.

In fact the conservatives, led again by Norquist, are fighting an intense battle to make the Bush massive TAX CUTS permanent.

Yet from 1940 through 1963, the top marginal federal income tax rate was at least 80%. Several years it was over 90% (1944-45, 1951-1963). Of course, that rate is not paid on anyone's entire income; it applies only to the income over a specified amount--from 1948 - 1963, the highest rate was paid only on income exceeding $400,000. And I assume it did not apply to capital gains.

By the theory of most anti-taxers, these historically huge rates should have crippled our economy, destroyed all incentive to accumulate wealth, brought us to the brink, if not the midst, of socialism.  Did it?

Not only did this not send the country spinning into financial disaster, but our economy was likely the world's strongest during this period. And I believe our budget deficits then were smaller than what they are now.

All figures above are from

So what's the explanation for the anti-taxers' ardor for cutting taxes, and for cementing the Bush cuts into permanent place?  A good way to start that discussion is with an analysis of how much money the various economic strata of our country will be saved through those tax cuts.

Citizens for Tax Justice (which tries to counteract the propaganda of the anti-taxers) has compiled charts of the Effects of the Bush Tax Cuts enacted through 2004 by Income Group, Per Calendar Years--

If the tax cuts eventually expire as they are now scheduled to do, during the years 2001 thru 2010, the country's top 1% of incomes saves $578.5 billion, while the bottom 20% saves a total of $21.8 billion.  If the tax cuts are made permanent, the top 1% of incomes saves $641.2 billion, while the bottom 20% saves $22.7 billion.

But the biggest issue, by far, is how in the world a democratic nation of some 300 million could function when it is already in serious financial difficulty, and is about to deprive itself of trillions of dollars of tax revenues.

The answer is that it can't; it can only perform basic functions of self-defense and policing.  And, frankly, wasn't that the goal of Mr. Norquist all along, as indicated by his now famous quote "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub."