When you speak to baby-boomers, most of them remember the 1950s as the Golden Age of America. Besides the racism and Jim Crow laws, it was 'Leave it to Beaver' for a thriving and white middle class. There is a reason for this, and it was America's tax system that propped up the infrastructure of our once great country.
First, a short history. In 1913 the highest marginal tax rate was almost 80% for the wealthiest. Again, this was progressive, so you were taxed a smaller percentage on the lower portion of your annual income than you were at your highest. By 1926, the highest marginal tax rate dropped to around 25%. What happened next? The Great Depression.
By 1955, the highest marginal tax rate was up to 91%. From 1935 to 1963 or so, the highest marginal rate never dropped below 75%. The middle class thrived and there were still plenty of wealthy people with big boats, vacation homes, private jets, and mansions.
In 1980, when Reagan became President, the highest marginal tax rate was around 75% as well. Our government was able to outspend, out produce, and bankrupt Russia, making us the world's only superpower. By the end of Reagan's term, the highest marginal tax rate dropped to almost the same level as the pre-depression era, or 25%. Remember the Black Monday Market crash of 1987?
Soon, the highest marginal rate made it back up to almost 40% through the 90s during an economic boom and technological growth, including 19 million new jobs added to the private sector.
Then came the election of George W. Bush. Soon after he was elected, he cut the highest marginal tax rate again and took us into two wars. One a war of necessity, the other a war of choice. What came next? The Great Recession of 2007 that hit its trough in February of 2010.
It doesn't take a genius to figure out what's going on here. Do you want a thriving and brilliant 21st Century American Dream? If people were as rational and self-interested as the 18th century economic philosopher Adam Smith thought we were, we would work toward returning this country to 1950s era tax rates.
That's not class warfare, it's common sense for a common dream...opportunity for all.