[America’s billionaires pay an average of around 3.1 percent as
their functional income tax rate; America is the most unequal
developed society in the world. The last time severe poverty and
extravagant wealth coexisted was during the 1920s and 1930s.]
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WHAT HAPPENS WHEN YOU TAX BILLIONAIRES AT 90 PERCENT?  
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Tom Hartman
June 6, 2023
Economy For All
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_ America’s billionaires pay an average of around 3.1 percent as
their functional income tax rate; America is the most unequal
developed society in the world. The last time severe poverty and
extravagant wealth coexisted was during the 1920s and 1930s. _

, MarketWatch photo illustration/Getty Images

 

“Succession” is over, but spoiled, entitled billionaire
man-children are still very much with us, running social media
companies, owning newspapers and television networks, and funding
politicians and judges who then keep their taxes low and regulations
minimal.

America’s billionaires (and soon to be trillionaires) pay an average
of around 3.1 percent as their functional income tax rate; as a
result, America is the most unequal developed society in the world.
The last time severe poverty and extravagant wealth coexisted in such
extremes as today in this country was during the 1920s and 1930s.  

Today we read about roving gangs doing
[[link removed]]smash-and-grab
operations against retailers like Nordstroms and Home Depot; in Red
states our schools are falling apart, defunded to pay for vouchers to
all-white “Christian” academies; gun violence plagues our nation
with particularly high homicide rates in rural Red states; and
homelessness stalks city-dwellers at every turn.

The last time we saw the consequences of such inequality was  during
the Republican “Roaring ‘20s” 100 years ago, when Warren Harding
dropped the top income tax rate from 91 percent to 25 percent, the
morbidly rich openly bought our politicians, and gangs whose names are
still known today roamed the country robbing and killing with
impunity.

Franklin D. Roosevelt’s New Deal put an end to all that, and we need
to repeat his example today.

FDR raised the top income tax bracket from 25 to 90 percent. Wealthy
people in America screamed and yelled, claiming it would crash the
economy, but instead that top tax rate kicked off the first middle
class to encompass more than half a nation’s population in world
history.

As Roosevelt noted
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1936:

“A number of my friends who belong in the very high upper brackets
have suggested to me on several occasions of late, that if I am
reelected president, they will have to move to some other nation
because of high taxes here.

“Now, I will miss them very much...” (audience breaks into
laughter)

FDR created America’s first widespread middle class with a
combination of high taxes on the rich and strong unions for working
class people. He broke the politically corrupt power of organized
wealth for two generations.

Abraham Lincoln was the first president to use the word _unions_ to
describe labor organizations; it was such a novelty that newspapers of
the day put the word in quotation marks. By the 1920s the union
movement had seized the nation, but employers and Republican
politicians were still using police, the army, and private armed
militias to kill union leaders and intimidate people who wanted to
join them.

Franklin Roosevelt put an end to that with the Wagner Act in 1935,
fully legalizing unions. By the time Reagan took office in 1981 about
a third of Americans had a good union job, and as a result fully
two-thirds of American workers had union-level wages and benefits
(because unions created the local wage and benefit floor for
employers).

The people who were obscenely rich throughout the era from the 1930s
to the 1980s had mostly inherited their money from their 19th century
Gilded Age ancestors (the Rockefellers, Vanderbilts, DuPonts,
Carnegies, etc.), because the combination of the 90 percent income tax
bracket and union demands for meaningful wages kept inequality at
reasonable levels.

Rich people were still rich, but that top income tax bracket combined
with the power of unions kept the average CEO from taking much more
than 30 times what their lowest-paid worker made every year. (Today,
some CEOs make more than a thousand times
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their workers make.)

FDR’s and LBJ’s social safety nets caught Americans before they
could fall into the dire poverty that characterized earlier eras when
Republicans ran the show. Social Security and unemployment benefits
— both rolled out by FDR in the 1930s — lifted the elderly and the
jobless out of poverty, and LBJ’s Medicare and Medicaid (1960s) kept
Americans healthy.

The result of this was that crime went down and lifespans increased.
When the grinding inequality of the Roaring ‘20s and the Republican
Great Depression went away in the 1940s and 1950s, the crime sprees
and hate-promoting demagogues went with it. Working people with decent
wages and benefits, after all, have neither the time nor the need to
engage in criminal activity.

Corporate executives lived and worked in normal — albeit upscale —
neighborhoods (watch an episode of _Bewitched_ or _The Dick Van
Dyke Show_ from the 1960s to see the homes Madison Avenue executives
and media bigwigs lived in), and workers made enough to sustain a
decent lifestyle.

Nonetheless, the morbidly rich campaigned relentlessly to take us back
to the oligarchic 1920s, demanding tax cuts and union-busting. They
funded media campaigns, think tanks, publications, judges and
politicians.

In 1981 they got their guy into office; Reagan dropped the top tax
rate all the way down to 27 percent and destroyed the nation’s air
traffic controllers union as his opening salvo in the modern-day
Republican War Against Workers.

Reaganism kicked off a 42-year-long explosion of wealth at the very
top of our economic hierarchy, making today’s billionaires richer
than the pharaohs. They compete with each other to see who can own the
largest private jets and mega-yachts, multiple mansions all over the
world, private islands, and even their own spaceships.

Disney’s old Scrooge McDuck comics (that I’m now reading to my
grandkids) and their unfathomable money bins have come to life.

Simultaneously, the middle class began its collapse from two-thirds of
us in 1980 all the way down to today’s 45 percent (and today it
takes two incomes to sustain the same middle class lifestyle that
could be done with just one when Jimmy Carter was president).

As the middle class collapsed, lifespans in America followed the same
trajectory, unlike other countries in the world that rejected
Reaganomics.

Reagan wasn’t alone in destroying the American Dream, however. He
had big-time help from the nation’s highest court.

Five Republican appointees on the Supreme Court initiated the process
with their _First National Bank_ decision in 1978, which said that
billionaire and corporate money wasn’t money but instead was a form
of “free speech” and that corporations weren’t a legal fiction
but instead were “persons” with full rights under the Bill of
Rights, including the right to use their “free speech” to own
politicians.

That decision, authored by the infamous Lewis Powell himself, made
possible the purchase of the Republican Party by the morbidly rich in
1979, floating Reagan into office in 1980 on a tsunami of corporate
and billionaire (in today’s dollars) cash, much of it from the oil
and banking industries.

Reagan then rewarded the GOP’s affluent paymasters with lower taxes,
more tax-code loopholes, and a campaign of massive industrial and
banking deregulation, giving particular preference via his EPA
Administrator — the disgraced Anne Gorsuch (Neil’s mom) — to
fossil fuel and other polluting industries.

So, here we are in a situation much like the one that FDR faced when
he first came into office in 1933. Homelessness stalks the nation;
three morbidly rich individuals own more wealth than the bottom half
of Americans; gun crime is at Bonnie and Clyde levels; and workers are
terrified of their employers, who force them to sit through anti-union
indoctrination sessions or lose their jobs.

To solve this crisis, we must gather and gain the political strength
and will to once again raise the top income tax rate up to 90 percent;
to overturn the Taft-Hartley Act and restore the right to unionize
without interference; and to strip the poison of big money out of our
political system.

The morbidly rich will squeal at even the mention of these
tried-and-tested solutions, just like they did in the 1930s. They’ll
warn that the country will collapse, or that communism will take us
over and we’ll become Venezuela or Cuba. They’ll say that the
“job creators” will go on strike like in an Ayn Rand novel and
take the economy with them to Gault’s Gulch.

And, like FDR, we need to call them on their bullsh*t.

As President Roosevelt once told America
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“In 1776 the fight was for democracy in taxation. In 1936 that is
still the fight. Mr. Justice Oliver Wendell Holmes once said: ‘Taxes
are the price we pay for civilized society.’ One sure way to
determine the social conscience of a government is to examine the way
taxes are collected and how they are spent. And one sure way to
determine the social conscience of an individual is to get his
tax-reaction.”

Roosevelt noted that as society became more modern and complex, the
demands on government increased along with the need to pay for its
services through taxes. The need for our commons had expanded as our
population and our technologies grew.

“But,” he noted
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“I am afraid we have many who still do not recognize their
advantages and want to avoid paying their dues.

“It is only in the past two generations that most local communities
have paved and lighted their streets, put in town sewers, provided
town water supplies, organized fire departments, established high
schools and public libraries, created parks and
playgrounds—undertaken, in short, all kinds of necessary new
activities which, perforce, had to be paid for out of taxes.”

He framed the need to raise taxes on the morbidly rich into the 90
percent region (between 1932 and 1936 he _cut_
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taxes on people making _less_ than $50,000 a year) as
a _patriotic_ thing to do.

It was, Roosevelt claimed, in the finest of American traditions:

“Ever since 1776 that struggle has been between two forces. On the
one hand, there has been the vast majority of our citizens who
believed that the benefits of democracy should be extended and who
were willing to pay their fair share to extend them. On the other
hand, there has been a small, but powerful group which has fought the
extension of those benefits, because it did not want to pay a fair
share of their cost.”

And that small but powerful group had more than their share of front
men back then — the Fox “News” hosts of that day — who claimed
that giving workers power, or raising taxes on the morbidly rich, was
somehow against the natural order of things. That it would
“distort” the nation’s economy and end CEOs ability to run their
businesses, leading to either communism or economic disaster.

Again, FDR took the truth right to them:

“You would think, to hear some people talk, that those good people
who live at the top of our economic pyramid are being taxed into rags
and tatters. What is the fact? The fact is that they are much farther
away from the poorhouse than they were in 1932. You and I know that as
a matter of personal observation.”

Like today, there were Republican politicians and media commentators
who warned about a “welfare nanny state” and predicted that if
people weren’t kept in near-poverty they’d lose their incentive to
work.

Like today, it was a lie. And FDR called it out:

“Once more this year we must choose between democracy in taxation
and special privilege in taxation. Are you willing to turn the control
of the nation’s taxes back to special privilege? I know the American
answer to that question. Your pay envelope may be loaded with
suggestions of fear, and your dividend letter may be filled with
propaganda. But the American people will be neither bluffed nor
bludgeoned.”

Republicans act like raising taxes on the morbidly rich, enforcing
anti-monopoly laws, returning the right to unionize to workers, and
ending the “right” of billionaires and corporations to buy
politicians and Supreme Court judges is some sort of radical, untried
experiment that will ruin our nation.

It’s a lie. When you tax billionaires at 90 percent, they’re still
fabulously rich _and_ you have the resources to rebuild a healthy
and happy middle class across the nation.

We did it before, and the result was the creation of the world’s
first and largest middle class, a life expectancy never before seen in
all of history, and a level of peace and prosperity that held its own
until Ronald Reagan took a meat-axe to it.

We can do it again. If we want to preserve our democracy, in fact,
we _must_ do it again.

This may be our last chance to wake our nation up before the
oligarchic takeover is complete. It’s time for all of us to emulate
Paul Revere — and Franklin D. Roosevelt — and tell our friends and
neighbors of both the threats we face and the promise that our nation
once embraced and can again achieve.

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AUTHOR BIO: Thom Hartmann is a talk-show host
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of Neoliberalism_
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and more than 30+ other books in print
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fellow at the Independent Media Institute
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at hartmannreport.com [[link removed]].

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