A New York Times reader from South Carolina who identifies himself as "Jumper" wrote this in response to a David Brooks column, in which Brooks had called for cutting middle class entitlements as a way to stimulate economic growth:
Mr. Brooks, before I'd start cutting middle class entitlement programs, I'd start cutting the upper class entitlement program.
From 1918 through 1921 the top tax rate was in the 70% range. Then it dropped to the 50% range through 1924.
From 1925 through 1931, the top tax rate was in the 25% range - lower than what we have today.
From 1932 through 1981, the top tax rate was never less than 70%.
(During the Truman through Eisenhower years, the top tax rate was in the 90% range - largely to pay the WW II debt.)
In 1982, under Reagan, the top tax rate dropped to 50%.
In 1987, still under Reagan, it dropped to 38.5%.
In 1988, still under Reagan, it dropped to 28%.
Since 1991, the top tax rate has averaged in the mid-to-high 30% rate.From the late 1930s through 1982, the American middle class enjoyed prosperity and a steadily growing standard of living. The wealthy still made money and increased their wealth.
Since the first Reagan tax cut, the standard of living of the American middle class has steadily declined. Today, the top tax rate is hardly pay more the rate for the middle class.
That means that the great percentage of the costs of running this nation have been dumped on the middle class.
There it is. That's the wealthy elite entitlement. They've got trillions of dollars of nearly untaxed money and contribute next to nothing, compared to the middle class, for the governmental functions and services that any civilized nation requires.
We in the middle class have virtually no money for disposable income so raising taxes on us would definitely harm the economic growth.
Consequently, why not raise the highest tax rate back up to 70%? That will fund the costs currently being borne by the middle class, much of which is used to benefit the business of the wealthy elite. Simultaneously, this will cause more money, (middle class disposable income), to go into circulation. That will increase demand for product and increase hiring.
Now, go back to my first numbers. The top tax rate was 25% starting in 1925, which was the start of a period of runaway prosperity until the crash in the autumn of 1929. Notice the parallel to the huge cuts to the top tax rate and prosperity in the 1980s and 1990s followed by plummet into economic depression.
Note also that the top tax rate was actually raised to 63% in 1932, one of the darkest years of the Depression. It never fell below 63% for fifty years - fifty years of growing prosperity.
Our goal is national prosperity to benefit everyone including the wealthy. The key to this is getting money into circulation,(without devaluing the currency), not helping the wealthy elite hoard it.
Put the top tax rate back up where it has proven historically necessary for a national prosperity.
Some of this tax will be used to pay down the national debt or to fund the entitlements found in civilized nations.
Last, slash military spending by 30% and use that to also pay down national debt.
That's how to grow the American middle class, traditionally the United States engine of growth. That's not what needs pruning.
I haven't posted here in a long time, and it's interesting that a reader comment to a David Brooks column is what jogged me back into the liberal/conservative dialog.
This is great.
