By Paul G. Kengor
Editor’s note: This article first appeared at Investor’s Business Daily.
Maybe it’s a measure of progressives’ refusal to look back, to always move “forward.”
Otherwise, they should be celebrating right now. In fact, President
Obama and fellow modern progressives/liberals should have been ecstatic
all this year, rejoicing over the centenary of something so fundamental
to their ideology, to their core goals of government, to their sense of
economic and social justice—to what Obama once called “redistributive
change.”
And what is this celebratory thing to the progressive mind?
It is the progressive income tax. This year it turned 100. Its
permanent establishment was set forth in two historic moments: 1) an
amendment to the Constitution (the 16th Amendment), ratified
February 3, 1913; and 2) its signing into law by the progressive’s
progressive, President Woodrow Wilson, October 3, 1913. It was a major
political victory for Wilson and fellow progressives then and still
today. By my math, that ought to mean a long, sustained party by today’s
progressives, a period of extended thanksgiving.
President Obama once charged that “tax cuts for the wealthy” are the
Republicans’ “Holy Grail.” Tax cuts form “their central economic
doctrine.” Well, the federal income tax is the Democrats’ Holy Grail.
For progressives/liberals, it forms their central economic doctrine.
As merely one illustration
among many I could give, former DNC head Howard Dean and MSNBC host
Lawrence O’Donnell were recently inveighing against Republican tax cuts.
Dean extolled “what an increase in the top tax rate actually does.” He
insisted: “that’s what governments do—is redistribute. The argument is
not whether they should redistribute or not, the question is how much
we should redistribute … The purpose of government is to make sure that
capitalism works for everybody … It’s government’s job to
redistribute.”
What Dean said is, in a few lines, a cornerstone of the modern
progressive manifesto. For Dean and President Obama and allies, a
federal income tax based on graduated or progressive rates embodies and
enables government’s primary “job” and “purpose.” They embrace a
progressive tax for the chief intention of wealth redistribution, which,
in turn, allows for income leveling, income “equality,” and for
government to do the myriad things that progressives ever-increasingly
want government to do.
And so, in 1913, progressives struck gold. The notion of taxing
income wasn’t entirely new. Such taxes existed before, albeit
temporarily, at very small levels, and for national emergencies like
war. The idea of a permanent tax for permanent income redistribution
broke new ground. The only debate was the exact percentage of the tax.
In no time, progressives learned they could never get enough.
In 1913, when the progressive income tax began, the top rate was a
mere 7 percent, applied only to the fabulously wealthy (incomes above
$500,000). By the time Woodrow Wilson left office in 1921, the great
progressive had hiked the upper rate to 73 percent. World War I (for
America, 1917-18) had given Wilson a short-term justification, but so
did Wilson’s passion for a robust “administrative state.”
Disagreeing with Wilson were the Republication administrations of
Warren Harding and Calvin Coolidge, his immediate successors. Along with
their Treasury secretary, Andrew Mellon, they reduced the upper rate,
eventually bringing it down to 25 percent by 1925. In response, the
total revenue to the federal Treasury increased significantly, from $700
million to $1 billion, and the budget was repeatedly in surplus.
Unfortunately, the rate began increasing under Herbert Hoover, who
jacked the top rate to 63 percent. It soon skyrocketed to 94 percent
under another legendary progressive, FDR, who, amazingly, once
considered a top rate of 99.5 percent on income above $100,000 (yes, you
read that right).
Appalled by this was an actor named Ronald Reagan, himself a
progressive Democrat—though not much longer. Reagan often noted that
Karl Marx, in his “Communist Manifesto” (1848), demanded a permanent
“heavy progressive or graduated income tax.” Indeed, it’s point two in
Marx’s 10-point program, second only to his call for “abolition of property.”
The upper tax rate wasn’t reduced substantially until 1965, when it
came down to 70 percent. Alas, President Ronald Reagan took it down to
28 percent. And despite claims to the contrary, federal revenues under
Reagan increased (as they did in the 1920s), rising from $600 billion to
nearly $1 trillion. (The Reagan deficits were caused by excessive
spending and decreased revenue from the 1981-3 recession.)
The upper rate increased again (to 31 percent) under George H. W.
Bush and under Bill Clinton (39.6 percent). George W. Bush cut it to 35
percent. Barack Obama has returned it to the Clinton level of 39.6
percent.
Here in 2013, 100 years henceforth, the wealthiest Americans—the top
10 percent of which already pay over 70 percent of federal tax revenue—will be paying more in taxes
this year than any time in the last 30 years. For progressives, this is
justice. But it is also bittersweet: As progressives know deep inside,
it still isn’t enough. For them, it’s never enough.
To that end, my enduring question for progressives is one they
typically avoid answering, especially those holding elected office: In
your perfect world, where, exactly, would you position the top rate? I
routinely hear numbers in the 50-70 percent range.
Democrats like President Obama complain about Republican intransigence in
raising tax rates but, truth be told—and as any liberal really knows—if
it wasn’t for Republican resistance, progressives would rarely, if
ever, cut taxes. America would remain on a one-way upward trajectory in
tax rates, just like under Woodrow Wilson and FDR, and just as it has
been in its unrestrained spending for nearly 50 years.
Like their refusal to cut spending (other than on defense),
progressives are dragged kicking and screaming into tax cuts. They need
high income taxes for the government planning and redistributing they
want to do; for Obama’s sense of redistributive justice.
This year, the progressive income tax turns 100. For progressives,
getting it implemented was a huge triumph. Their success in making it a
permanent part of the American landscape is a more stunning achievement
still.
Dr. Paul Kengor is professor of political science at Grove City College, executive director of The Center for Vision & Values, and New York Times best-selling author of the book, “The Communist: Frank Marshall Davis, The Untold Story of Barack Obama’s Mentor.” His other books include "The Crusader: Ronald Reagan and the Fall of Communism" and "Dupes: How America’s Adversaries Have Manipulated Progressives for a Century."
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