On April 16, the Democrats will broadside their political rivals in the Senate by forcing a vote on the so-called Buffet rule, a proposed bill that would raise the minimum tax rate to 30 percent for Americans earning at least $1 million a year.
Let’s ignore the fact that a minute 0.1 percent of Americans are in the million-dollar club and that, out of that 0.1 percent, the Buffet rule would only affect about 4,000 taxpayers. Let’s ignore that the bill would likely have a negligible effect on the U.S. economy and that it has no chance of passing Congress this side of the Rapture. The conservatives are content in pointing out that Senate Majority Leader Harry Reid’s move is mostly symbolic, a political feint.
The conservatives are right this time, but let’s ignore that.
Let’s not, however, ignore the symbolism. What the Democrats are trying to do is draw a clear distinction between progressivism and conservatism in 2012. The party’s message to the voters basically reads: the party of fairness.
Conservatives argue that any attempt at fairness by “soaking the rich” – raising taxes on their income, including capital gains – would discourage the wealthy from investing in the market (which, according to them, creates jobs) and from investing in their own companies (which, according to them, creates jobs).
There’s one thing that topples that argument: history.
Looking at the upper marginal tax rates in the past century, we see that the U.S. government has usually taken responsible action during war and raised taxes on the rich – something it didn’t do while Bush waged (and charged) two wars simultaneously.
During the First World War, the tax rate for top earners jumped from 15 percent to 77 percent in a matter of three years. What followed was a decade of hubris and deregulation, followed by – as if on cue – economic depression.
And what happened during the Great Depression? You guessed it: the top rate went from 24 percent in October 1929 to 79 percent 10 years later. The rate even got as high as 94 percent during the Second World War because, well, victories don’t grow on trees (or in gardens, for that matter).
You can imagine the charges they’d throw at the president today if he proposed any tax rate higher than 35 percent.
The rate during the Eisenhower administration of the 1950s – lovingly considered the “Golden Age of Capitalism” – was a laissez-faire 91 percent. Ponder that tonight when you’re taking the expressway home to your cozy suburb – both products of the ‘50s.
When Armstrong walked on the moon in July 1969, the wealthiest Americans were being taxed at 77 percent.
Then America waged two prolonged wars and did the unthinkable: gave tax cuts to the richest Americans. What followed was corollary.
Taxing the rich to pay for war and pull the nation out of recession is not only the fair thing to do; as it turns out, it’s also the American thing to do.