Screw the Clinton tax rates. Lets party like it’s 1936!
Update: *Additional numbers added
Digby wrote a few days ago about the“grown-up” people coming to town to save America from the deficit. She listed a few of those people and their annual income.
Also, a few days ago the Senate had a vote on the tax cuts. Letting the Bush cuts go (I’m all for it and we can stop the payroll tax cut too as it is all stupid policy when the problem is declining wages/income going to labor) will return us to the Clinton years rates. People have noted just how little such a rise means to those at the top.
Well, in keeping with my define rich series and my series looking at the purpose of taxation, I thought wouldn’t it be interesting to see just what these 1%’ers might be paying if we went back to the beginning of the last great period of mass prosperity: 1936.
Yes indeedy, I say go for the brass ring. Let’s show our maturity and actually implement the lesson learned from our history, that period from around 1906 to 1932 and then 1936 to 1979.
While we’re at it, let us stop pretending that global trade is something new with an unknowable to man exotic force that we just have to accept as part of the expression of our DNA. There is RNA also (look it up).
The following numbers are based on the gross incomes Digby listed. Thus we’ll have to keep in mind that there have been no adjustments made for deductions in my calculations. So in truth, the tax paid would be less and the purchasing power of the actual non-adjusted income would be much greater. After all, the deductions represent benefits received from the income that was deducted including the government handout in the form of reduced taxes for various activities taken with one’s income.
Here is what it looks like:
All these men managed to hit the top marginal rate of 79%. Not one of them paid that amount. Notice how flat the percentage paid becomes. They want a flat tax, the got it. They just had to really, really perform to get to that level of tax nirvana in 1936. They couldn’t just pull a Lawrence Garfield, or should I say a Romney? They couldn’t just negotiate payment in stock, whack labor costs to increase the stock value, take that money and buy it’s competitors to the point of oligopoly and then move on. They could not just raid a solid company like New England Wire and Cable turning all the assets into cash at the expense of all the other relationships such a company had and justify it by saying “I make you money”. Greenmail? Junk Bonds?
I wrote about Caterpillar and their approach to negotiating with the commodity of labor. The average yearly income of the labor was $55,000/year. The multiples of the above net income range from 24.8 to 147.38. (* Multiples of the gross incomes range from 104.6 to 688.)
Granted, what’s left for these gentlemen would not allow the purchase of a new Cessna Citation X, but there was a 1999 listed for $5,950,000 when I search google. I think Mr. Sherill could afford the monthly payment on this. Though Cessna is offering the 4 passenger (the X is 12 passenger) at 0% interest for the first 12 months and Wiki says they list for only $2.65 million! You know, if buying used just curls your hair.
The point? There is nothing with the 1936 marginal tax rates that these men can not have other than more of it. Nothing. Real grown-ups who developed the 1936 tax table new this along with a lot of other stuff related income how it is actually earned and it’s social effect. All you have to do is lookat the tables and graphs to see that the marginal rates were not pulled out of selfish and self serving asses. They had a desired results in mind, one of which was to prevent “economic royalists”. I am confident the other desire was to take back rent collected from other peoples collective efforts in proportion to the lack of labor performed as one rises up the economic pyramid.
Have you heard the one about job creation? The one that asks: When was the last time a poor person gave you a job? When was the last time a CEO 1%’er’s activity saved the human race? Four people at least from 1928 to the patent granted in 1948 were involved in bring penicillin to the point ofcommercial viability. It was one woman’s work that allowed the next step of developing additional antibiotics.
When was the last time a CEO/1% er’s activity resulted in a leap of human progress? I’m thinking of my favorite non-CEO/Banker/1% example of flight. No, Gates and Jobs did not do it like the Wright Brothers did it.
1936. We responded in a way that attests to a time when we did learn from history and acted on lessons from history.
With the complete lack of political moderates and statesmen bridging the chasm between the transgenerational wealth have republicans and the have-not democrats: it would be interesting to see the outcome of a presidential and congressional election held today with the following citizen ballot choices: 1. democrat, 2. republican, and finally 3. a vote of no confidence in the government.
A good government during a depression can accomplish great things.
Grand Coulee Dam produced the cheap electricity needed for aluminum production for the Boeing plants that the built the bombers for the US in WW2.
True the ‘governmental debt’ was paid off by future taxes, largely by those paying 90 percent in Ike’s 1950’s – by those who mostly did not expose themselves to the battlefield’s carnage and who had the most to lose under global Nazi domination.
But why even count it as debt? A private business pays wages and makes a profit after the payroll is met. The government directly pays wages and its profit is the creation of a dam, an educated next generation, a protected and safe environment, et. al. There is real value created in trading national currency for wage earner services and production – both directly and through augmentation facilitation of the private sector.
The current rules of the monetary, tax, and banking system is currently made by and geared for those with transgenerational wealth. If they pay less taxes, there is more wealth to be transmitted. If the wage earners have less access to earning a wage, their transgenerational wealth competes with less wage earner money and increases in value and purchasing power.
In the current depression which will enter an accelerated phase in late August 2012, why not use the Grand Coulee dam creation model sans an intention to repay the debt using established US Central Bank QE activity and policy ? Bernanke is right. Krugman is right. Keynes was right.
Federal US currency provided as wages will be traded for the services of fireman, teachers, policeman, et. al.
What is the work and services and products that needs to be done and to be produced in the US and the world? That represents true north: the valued real economy.
The big boys don’t want to pay taxes to maintain their self interest in the society whose rules have been established by themselves? Fine. Just make the value of the national currency denominated in ongoing useful societal work, services, and production.
In 10 or so years when the US central bank is finished with QE 8 and has racked up 15 to 25 trillion dollars which has maintained essential services and allowed ongoing private debt repayment and supported deteriorating asset prices to a new asset-debt equilibrium, RP’s End the Fed can occur with a minidebt jubilee. Transgenerational wealth will still be preserved for the 0.5 percent, and the US citizen wage earners will have been able to eke out a living during the depression and pay down individual private debt.
A good US government will emerge in the coming US and global asset-debt macroeconomic crises. It will because it must.
And that good government will trade its national currency for the valued labor of US citizen wage earners. The Grand Coulee dam and the maintenance of the US society, will survive as enduring national assets.
G. Lammert