Raising taxes on the rich not new

Raising the taxes of the wealthiest Americans to meet a crisis — soaking them, if you will — is a grand, old, bipartisan tradition, almost as old as the income tax itself.

In fact, the federal income tax was only 4 years old in 1917 when Woodrow Wilson raised the tax rate on the rich from 15 to 67 percent to help pay for the war.

The first president to increase taxes on the rich to deal with a depressed economy and high unemployment wasn’t, as one might suppose, Franklin Roosevelt. It was his predecessor, the conservative Republican Herbert Hoover.

But unlike Barack Obama, Herbert Hoover didn’t simply increase taxes on the rich by a few percentage points. He raised the Harding and Coolidge era top rates from 25 to 63 percent. It remains the second largest tax hike for the wealthy in our history, only surpassed by Wilson’s. Hoover also doubled the estate tax, known in Republican circles as the death tax, and increased corporate taxes by 15 percent.

There wasn’t a word from his fellow Republicans about class warfare or soaking the rich or socialism, but his opponent, Roosevelt, did accuse Hoover of reckless and extravagant spending, and John Garner, the reactionary Texan running for vice president, said he feared the country was heading down the path to socialism.

But the Depression worsened and near the end of Roosevelt’s first term, Americans were losing hope. As he would say in his second inaugural address, one-third of the nation was ill-housed, ill-clad and ill-nourished, one out of five was unemployed and there were growing doubts that the economy could be fixed.

In addition, Roosevelt was threatened by a group far more dangerous than the Tea Party movement, Huey Long’s 27,000 Share Our Wealth clubs, which were attracting millions with the promise to make every man a king with a guaranteed annual income of $2,500, free education through college, a $5,000 homestead grant with a car, radio and washing machine, and old age pensions of $200 a month.

Roosevelt’s response to Long’s demagoguery was the Revenue Act of 1935, which raised the Hoover rate on the wealthiest to 79 percent and financed many New Deal reforms, including Social Security and its old age pensions.

And, incidentally, saved capitalism.

I bring up these numbers to point out Obama’s alleged assault on the rich is miniscule compared with Roosevelt’s or Hoover’s or most others’. It would make you wonder what the fuss is about if you didn’t already know it was about 2012.

The president is calling for a modest increase from 35 to 39.6 percent in the rate paid by those earning more than $250,000. This would restore the rate to where it was during the Clinton presidency and, as the former president has noted, the nation — and especially the rich — prospered during his two terms. To achieve that goal, Obama would do no more than end the Bush administration’s “temporary” tax cuts that he was forced to extend last year.

Since World War I, the nation’s wealthiest taxpayers have usually been taxed at a much higher rate than they are today. It reached a high of 94 percent during World War II, a time when we paid for our wars and expected all of the people, rich and poor alike as we liked to say, to make sacrifices.

Roosevelt’s taxes also financed the greatest and most successful entitlement program in American history, the GI Bill of Rights, which created and educated a prosperous middle class that endures to this day.

The high rate for the rich was reduced for a time after the war, but the Korean War brought it back up to the 90 percent range, where it remained until it was lowered to 77 percent by, of all people, the Democrat John Kennedy.

It got all the way down to 70 percent in the Johnson and Nixon years and was reduced — to 50 percent — by Ronald Reagan. Imagine. Reagan had his richest supporters paying half of their income to the federal government until he got the rate reduced to 28 percent in his last year in office.

Finally, it should be noted that of all the presidents since Harding and Coolidge, only Reagan in that one year, the two Bushes, Clinton and Obama maintained tax rates of under 40 percent for the wealthiest. The rest — Republicans and Democrats — soaked the rich and, in good times and bad, the rich did quite nicely.

Simsbury resident Dick Ahles is a retired journalist. Email him at dahles@hotmail.com.