Tuesday, October 28, 2008

TR and Taxation



Barack Obama and Joe Biden have been heavily criticized for wanting to "spread the wealth" and redistributing the wealth. They've been called socialists and even Marxists. Apparently wanting to tax the wealthy (who by the way have seen their wealth increase exponentially in recent years while the lower and middle classes have at best stagnated), is anti-American.


John McCain likes to claim Teddy Roosevelt as his hero. I want to remind John that Teddy Roosevelt, though a Republican, was also a progressive. Remember that in 1912 he ran for President under the Bull Moose banner. One of TR's legacies is the Progressive Income Tax, which requires that you pay more if you earn more -- in the name of fairness. That apparently is an idea John McCain doesn't like -- but why then embrace TR?


Here's what TR had to say about taxes.



"No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar?s worth of service rendered?not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective, a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate."


Note that he believed in the value of the graduated estate tax -- what Republicans like to call the "death tax." He also put his focus on the earned income over the unearned income. John McCain is proposing lowering the capital gains tax. While that may have some value, in many ways capital gains cuts helped fuel the bubble that recently burst. Rather than encouraging companies to pay dividends, they encouraged companies to inflate value so as to take a bigger share of capital gains. So, Republicans -- listen to TR!


And read Steven Waldman's beliefnet commentary.

3 comments:

Anonymous said...

Ah.. the power of numbers.. see the time line on taxes.. amazing what government can do in such little time.


1913 - Income Tax instituted. Less than 2 percent of the population had to pay it. Income up to $20,000 was taxable at 1 percent, and above $500,000 at 7 percent. It exempted the first $3,000 earned by a single person and the first $4,000 by married couples. Since the overwhelming majority of Americans supported families on less than $1,000 a year, most were exempted from the tax.

1916 - Income tax, top rate: 15 percent.

1917 - Twenty graduated steps established for the income tax. Top rate on income over $2 million: 67 percent. Under $2,000: 2 percent. Exemptions reduced. Number of returns from 1916 to 1919 will climb from 437,000 to 4.4 million. Even so, 95 percent of all Americans will pay no income tax.

World War I - Income tax, top rate at 73 percent. Capital gains, top rate: 77 percent.

1921 - Capital gains, top rate: 12.5 percent. Income tax, top rate: 56 percent.

Mike L. said...

Great post! I'm glad you also mentioned the inheritance tax. I read recently where Thomas Jefferson was very concerned about generational wealth and the way that could potentially train wreck democracy by creating a small wealthy powerful class of elites who were out of touch with the nation's best interests.

Unfortunately, the right wing spin masters have coined the term "death tax" in an effort to recast the discussion and make it look like an attach on society. Progressive should have countered with the term "Paris Hilton tax". That would have stopped the anti-inheritance tax movement in its tracks.

Pastor Bob Cornwall said...

On the Inheritance Tax, something that most wealthy folk have figured out how to deal with, it's important to note that in 2010 it will disappear for one year. Then it will revert to where it was at before the Bush tax cuts were enacted. This will have to be dealt with at some point soon to make sure it is workable. There are issues for long term financial planning involved, including charitable giving.