It never gets old. As this chart shows, the stock market does so much better when we elect Democrats. And going forward, why wouldn’t that rule of thumb hold? Romney and Santorum want to plunge the country into austerity – now, before the economy has recovered. Why would that help the stock market? Obama wants to invest in the future – in education and innovation and infrastructure and energy independence. Why wouldn’t that help the stock market?
As much as I join everyone else in wanting us to repeal stupid regulation (yesterday’s post), let’s not forget what a relatively good job the Obama Administration has been doing on that front. (As I pointed out here a couple of months ago.)
Taxes should be proportioned to what may be annually spared by the individual. – Thomas Jefferson to James Madison, 1784
So how much might a guy who makes, say, $20 million annually spare?
The answer that Eisenhower gave: $18 million. We had just come off an expensive war (sound familiar?), deeply in debt (sound familiar?), and so the top federal tax bracket was set at 90% on earned income, dividends, short-term capital gains, and interest; at 77% on estates; and at 36% on long-term capital gains. (On corporations, the rate was 52%.)
The answer today’s Republicans give: certainly not more than $7 million, and preferably less. Where Eisenhower’s top rate was 90%, today’s is 35%. Where his estate tax rate was 77%, today’s is 45% – which Romney and Santorum would cut to . . . zero. Where the top rate on dividends was 90%, today’s is 15%. Where the top corporate rate was 52% (on income above $25,000), today’s is 35%. And where the top long-term capital gains rate was 36%, today’s is 15%.
How – today’s Republicans ask – could a man or woman with a $20 million capital gain spare more than $3 million of it? Even that, they fear, is too much.
Jefferson had further thoughts:
As [taxes] fall principally on the rich, it is a general desire to make them contribute the whole money we want, if possible. And we have a hope that they will furnish enough for the expenses of government and the interest of our whole public debt, foreign and domestic. – Thomas Jefferson to Comte de Moustier, 1790. ME 8:110
Our revenues liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings. – Thomas Jefferson to Thaddeus Kosciusko, 1811. ME 13:41
☞ Thanks to Allen Brand for sending me these. My point is not that we should go back to Eisenhower’s rates. Or to Jefferson’s idea that taxes would be paid by the rich alone.
My point is that those who believe the Founding Fathers would have been on the side of Tea Party may be misguided. Taxation without representation is indeed an outrage. But when Eisenhower and Congress passed the rates they did, we had representation. And when Bill Clinton raised taxes on the best off (to a 39.6% top rate), it wasn’t all that bad for the rich. The country enjoyed tremendous prosperity – the rich, too – the stock market did well (see the first item above) and our national balance sheet was strengthened. Have a nice day.
Quote of the Day
Market economics as currently practiced often ... includes only what's countable, not what counts.~Rocky Mountain Institute
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