Why We Must Raise Federal Income Taxes
— Hy Bershad
Today the National Debt of the United States is rapidly approaching 14 Trillion Dollars! How did it get that way and what can be done to reduce and eventually eliminate it? That question has elicited many answers, and I propose here what I consider a rational response.
I am a 90-year old with a relatively good memory so I can remember back to the Great Depression and the Second World War. When that war broke out we were a country that was basically broke, but somehow we managed to pull together and obtain the financing and/or credit that we needed to put a great armed force into motion. We also had full employment in order to pour out armaments and supplies! We were united in our effort and the fact that the highest Federal Income Tax rate for individuals was 94–1/2% was no determent to a united patriotism and cooperation!
The Federal debt soared to unbelievable heights (higher than today) and exceeded our Gross Domestic Product (GDP)! Despite these problems, we won the war and started paying off our debt. Tax rates remained high and incoming Federal Revenue was able to successfully cut down the enormous debt that we had incurred!
For the next 35 years the debt kept decreasing although the highest Federal Tax Rates kept being reduced!
Even under Republican President Eisenhower, though, the top tax rate was about 84% and the wealthy few did little complaining. However, that did not stop the movement to chop taxes for the wealthy even more!
Added to that were new codicils put into the Tax Code that started to permit certain companies to reduce their tax rates. This was accomplished through successful lobbying by large corporations and business interests who, one way or another, managed to “convince” Congressmen and/or Senators that such “exceptions” would be good for the country!
When Ronald Reagan was elected President in 1980, the Federal Debt had been reduced substantially and was the smallest it had been in 50 years! He vowed to shrink it even more. But he had an odd theory; cut taxes and the government would collect so much more money that we could spend freely and still reduce our Debt! Certain economists at the time, and others, called it “Voodoo Economics”. Some ascribe that term to George H.W. Bush, the first Bush President, prior to his election, according to “Facts.com”.
The result of Reagan’s tax cuts was that the National Debt shot upward! Starting with a debt of $ 1 Trillion, Reagan succeeded in 8 years in raising it to $ 2.8 Trillion. Tax rates continued to be sliced until today where the top tax rate is 35%, far below the 94–1/2% under President Franklin D. Roosevelt. Also, as the tax rates shrunk the wealth in the top tier of wealthiest Americans climbed upward! The disastrous tax cut by George Bush during the Iraq War was one of the deadliest for our economy.
It seems that there are several things that can and must be done if this country is to be able to rebuild its infrastructure and maintain essential services. The tax cuts that have occurred have resulted in almost all government agencies, except Defense, being forced to reduce manpower and capability. According to The New York Times (April 22, 2016) the Republicans, in the last 5 years, have cut the IRS budget by nearly one Billion dollars, forcing a loss of approximately 17,000 employees! As a result, its ability to track evaders and collect monies due has been sharply reduced, despite the fact that it was shown that for every dollar spent by the IRS for tax compliance it recovered 4 dollars in income! In the New York Times (April 29,2016) there was an article stating that the IRS stated that each year now they are unable to capture $458 Billion that is legally due!
That loss of manpower only helped the deficit to grow! Similarly, where are agencies able to get funds to help protect our water supply and foodstuffs when EPA allotments are snipped at and cut back? Republicans in Congress show great concern about issues such as lead in the water of Flint, Michigan, but have so far refused to appropriate any funds for remedial action! And, of course, some Republican Presidential candidates even wish to eliminate EPA entirely!
We need to elect a Congress and Senate that recognize that the wealthy in our country have not suffered as a result of higher taxes! In the 1950’s, 60’s and 70’s they flourished but it now seems that many of the rich have become excessively greedy and actually have Congressmen and Senators sign papers vowing never to raise taxes! Without increased taxes the U.S. cannot eradicate our National Debt and the burden of that will fall upon our grand-children and their heirs.
This is a great country, but it most also be a smart country and think about how we should prepare for the future! The only alternatives to Tax Increases are to continue to cut domestic programs for the poor like Welfare Benefits, Food Stamps, Medicare, Social Security, pensions for veterans — and to simply ignore Climate Change and the continuing decline in our aging infrastructure. Roads, bridges, dams as well as water supplies and underground, as well as above-ground, railways and piping require maintenance and planned replacement and there are simply no funds available for meaningful progress in this area without increased Federal Revenue. To me, the alternatives are unthinkable and unrealistic. If we do not raise taxes and increase the Federal Revenue substantially, we endanger the Capitalist system that we enjoy here in this country! It’s time that we faced reality!
Of course, who should pay the increased revenue required? To me it is most logical to consider that the very wealthy who have benefited from the tax cuts should now be asked to pay somewhat more. Tax rates for those who earn more than $250,000/yr. should have stepped increases so that once again the top tax rate is above 70%, where it was when Reagan took office. Tax loopholes also need to be closed so that rich U.S. corporations do not continue to escape with no tax payments despite record profits! This will only occur if the people of our country are wise enough to elect Congressmen and Senators who indicate their commitment to realistically “Make America Great Again!” by agreeing to tax increases for the wealthy portion of our nation.
