The I Like Ike Petition for True Tax Fairness

It's no secret-- we're now in the midst of the worst recession in many decades-- since the Great Depression of the 1930's. As the Economic Policy Institute reported in April, "unemployment is at its highest level since 1983; since the start of the recession in December 2007, the economy has shed 5.1 million jobs, including over two million jobs lost in the last three months alone; there are now over 13 million unemployed workers in this country-- 5.6 million more than at the start of the recession (and that number, as large as it is, actually understates labor market slack because it only counts jobless workers actively seeking work)."
[see: www.epi.org/publications/entry/jobspicture20090403/]

Most economists agree the best way to turn our economy around is to put people back to work and put money back in our pockets with a true Keynesian spending program. The February stimulus was a good start, but the federal government still needs to do much more to get us out of the serious slump our economy is in, and extra revenue to do that-- not just to put Americans back to work with real Green New Deal jobs paying a living wage installing energy efficiency retrofits, solar, geothermal, etc., along with needed investment in our health care system, our schools (including pre-K, afterschool, child care), housing, water/sewer upgrades, protecting farmland from development, effective alternatives to incarceration (like drug treatment) for nonviolent offenders-- but also a new revenue stream to drastically slash unfairly regressive property taxes (while many services like senior home care right here in Dutchess County remain drastically underfunded as well-- recall www.petitiononline.com/stopcuts).

Where will the money come from to fund these needs? A brief primer on the history of taxes in the U.S. is in order.

Fact: Under President Eisenhower the top income tax rate was 91\%; under Nixon it was 70\%, and under Reagan it was 50\%; the top income tax rate in the U.S. was 50\% or much higher every single year from 1932 through 1986 (Obama has merely proposed a top marginal rate of 39\% for folks earning $250,000 or more).

Also, with Republicans in control of the White House, Senate, and House of Representatives in the 1950's, Ike rebuffed the efforts of many in his party towards slashing taxes for the rich-- saying, "We cannot afford to reduce taxes, reduce income,until we have in sight a program of expenditure that shows that the factors of income and outgo will be balanced."

Moreover, the Institute for Policy Studies reported the following April 15th:

"In 1955, the year April 15 became the IRS tax-filing deadline, America's top 400 taxpayers paid three times more of their income in taxes than the top 400 of 2006, the most recent year with IRS data available. If the top 400 of 2006 had paid taxes at 1955 rates, the federal treasury would have collected - from these 400 taxpayers alone-- an additional $35.9 billion more in revenue in 2006. The 139,000 U.S. taxpayers who made over $2 million in 2006 averaged $5.9 million in income. They paid 23.2 percent of their total incomes in federal income tax. The comparable rate for equivalent high-income Americans in 1955: 49 percent. If the over-$2 million set in 2006 had paid taxes at the same rate as their 1955 counterparts, the federal treasury would have collected $202 billion."

The Institute for Policy Studies report, "Reversing the Great Tax Shift," advances three specific steps that would generate over $450 billion in annual revenue, dollars that would help finance our recovery fairly:

-- Tax income from capital gains and dividends at the same rates as wage income. Under current law, income from investments gets taxed at 15 percent. Income from work gets taxed at up to 35 percent. No coherent moral justification exists for such an enormous tax preference for income from wealth. According to Citizens for Tax Justice, taxing all forms of income the same would generate $80 billion a year.

-- Create a new top tax rate for incomes over $2 million. Presently, a person with an income of $300,000 faces the same tax rates as a person with an income of $3 million. Instituting a top tax rate of 50 percent on incomes over $2 million would generate more than $60 billion a year.

-- Levy a progressive estate tax on large fortunes. The federal estate tax, our nation's only levy on grand accumulations of private wealth, will expire in 2010 and revert to the 2000 status quo. Lawmakers aren't going to let that happen -- if, for no other reason, to take inflation into account-- and that reality creates an opportunity to make the estate tax more progressive. One reform would be to institute graduated tax rates on large estates, while exempting estates worth less than $2 million, $4 million for a couple. Such an approach would generate over $100 billion a year a decade from now-- while taxing no more than 1 of every 200 estates."

Also-- it's a fact that "the total federal, state and local effective tax rate for the richest one percent of Americans (30.9 percent) is only slightly higher than the average effective tax rate for the remaining 99 percent of Americans (29.4 percent)-- and from the middle-income ranges upward, total effective tax rates are virtually flat across income groups," according to a Tax Day report this year from Citizens for Tax Justice. According to CTJ-- "Many politicians, pundits and media outlets have recently claimed that the richest one percent of American taxpayers are providing a hugely disproportionate share of the tax revenue we need to fund public services. New data from Citizens for Tax Justice show that this simply is not true. Claims that the richest one percent are paying far more than their fair share usually focus only on one type of federal tax paid (the federal income tax) while ignoring other regressive federal taxes, like the payroll tax, which is more significant for most taxpayers. They also ignore state and local taxes, which tend to tax low- and middle-income families more heavily than well-off families. As these figures make clear, the richest Americans are not being overtaxed relative to other Americans or relative to their share of national income."
[see: www.ctj.org/pdf/taxday2009.pdf]

Clearly there's plenty of money around to fully fund a recovery-- and slash our local property taxes as well.

So-- do you like Ike? I like Ike.

The time is now to start seriously working towards the truly progressive tax system we had here in this country under Eisenhower.

Sign on to this petition, pass it along to all you know, and call Congress at (800) 828-0498 to move on this now.

Joel Tyner
Dutchess County Legislature Environmental Committee Chair
County Legislator (Clinton/Rhinebeck)
324 Browns Pond Road
Staatsburg, NY 12580
DutchessDemocracy.blogspot.com
[email protected]
(845) 876-2488

p.s. A few more bon mots here below from Eisenhower...(even more reason for us to like Ike):

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex...The potential for the disastrous rise of misplaced power exists and will persist...Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed...This world in arms in not spending money alone...It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children...This is not a way of life at all, in any true sense...The world must learn to work together, or finally it will not work at all...I hate war as only a soldier who has lived it can, only as one who has seen its brutality, its futility, its stupidity...All of us have heard this term 'preventative war' since the earliest days of Hitler. I recall that is about the first time I heard it. In this day and time...I don't believe there is such a thing; and, frankly, I wouldn't even listen to anyone seriously that came in and talked about such a thing...The people of the world genuinely want peace. Some day the leaders of the world are going to have to give in and give, it to them...Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history...There is a tiny splinter group, of course, that believes you can do these things...Their number is negligible and they are stupid...Here in America we are descended in blood and in spirit from revolutionists and rebels-- men and women who dare to dissent from accepted doctrine...As their heirs, may we never confuse honest dissent with disloyal subversion...Only a fool would try to deprive working men and working women of their right to join the union of their choice...Workers have a right to organize into unions and to bargain collectively with their employers, and a strong, free labor movement is an invigorating and necessary part of our industrial society."
[see: www.imdb.com/name/nm0252032/bio; www.youtube.com/watch?v=qdrGKwkmxAU]

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As MoveOn.org recently pointed out:

[see http://www.democracyprevails.org/democracyprevails/tax-rate-rich-under-eisenhower.aspx ]

"This is ridiculous. The media has been obsessing about President Obama's plan to roll back the Bush tax cuts for the wealthiest Americans-from 35\% to 39.6\%-even asking if that makes him a socialist.

But do you know what tax rate the wealthiest Americans paid on the top portion of their earnings at the end of Ronald Reagan's first term? 50\%.

Under Richard Nixon? 70\%. Under Dwight Eisenhower? 91\%!

Shocking, right?

And for all the whining about rolling back Bush's irresponsible tax cuts, the truth is that Obama's plan cuts taxes for 95\% of working Americans. Further, it closes huge tax loopholes for oil companies, hedge funds and corporations that ship jobs overseas so that we can invest in the priorities that will get our economy back on track."

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From http://www.huffingtonpost.com/dave-johnson/bring-back-the-90-top-tax_b_99018.html ...

Bring Back the 90\% Top Tax Rate!
by Dave Johnson

Posted April 18, 2009 | 05:52 PM (EST)

When Eisenhower was president the top income tax rate was 91\%. But you had to have already made a LOT of money before you hit that rate. (Eisenhower, by the way, supported that 91\% top tax rate.)

That 91\% tax rate is what got us out of the depression, and helped create a middle class (with the help of strong labor unions). It payed for fighting World War II and the GI Bill, and helped build our highway system, education system and other infrastructure that is in place today (albeit crumbling now from maintenance deferral resulting from tax cuts.) We did all that without borrowing, and the rich still got richer.

Think about this: If tax rates at the top were 91\% today, hedge fund managers would STILL be bringing in over $300 million EACH YEAR - but the rest of us would be able to get health care, fix the roads, good schools, and the other benefits that were the reason we - yes, we - enabled this economic system in the first place.

And think about this. If that top rate is 91\% it reduces the incentive for corporate CEOs to bribe politicians to put policies in place that funnel all the wealth up to the top.

Who is our economy FOR, anyway?

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"Tax Rates for America" by Katrina vanden Heuvel
http://www.thenation.com/blogs/edcut/426431?rel=hp_picks

"Obama Joins Adam Smith, Eisenhower, Nixon, Ford, and All Those Other Damned Socialists" by Lee Russ http://watchingthewatchers.org/news/1476/obama-joins-adam-smith-eisenhower-nixon

"Dwight D. Eisenhower: Flaming Liberal" by Manny Goldstein
http://blueworksbetter.com/EisenhowerFlamingLiberal

"Reagan the Socialist, Nixon the Commie, Eisenhower the Quisling" by Tom Hall [3/30/09]
http://www.laprogressive.com/2009/03/30/reagan-the-socialist-nixon-the-commie-eisenhower-the-quisling/

"Reagan, Eisenhower More Socialist Than Obama"
http://www.dailykos.com/story/2008/10/25/181312/80/541/642221

[note-- also from Citizens for Tax Justice-- April 2009 Gallup poll: 61\% of Americans feel federal income tax they pay is fair-- see http://www.ctj.org/pdf/taxdaypoll.pdf ]

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Note-- though New York just agreed to temporarily have a top income tax rate at the same level as New Jersey-- the fact is that California, Vermont, Oregon, and Iowa all still have higher income tax rates on the rich-- and all four of those states gained in job growth over the last eight years with those tax systems in place;
New York's top income tax rate (8.97\%) is still far lower than the 15\% under G.O.P. Gov. Nelson Rockefeller.

["A Little Bit of Tax History" by Frank Mauro of Fiscal Policy Institute http://www.fiscalpolicy.org/taxhistory2.htm ;
also "Back on Track: Why Progressive Tax Reform is an Essential Part of New York's Budget Solution"
(report released jointly by the Center for Working Families and Fiscal Policy Institute Mar. 22nd)
http://www.fiscalpolicy.org/CWFandFPI_BackOnTrackPersonalIncomeTaxReform_20090323.pdf -- and--
"Albany Agrees on a Plan to Raise Taxes on Top Earners" by Nicholas Confessore (3/29 NYTimes)
http://www.nytimes.com/2009/03/29/nyregion/29tax.html?_r=1&hp ]

Also-- from the Mar. 22nd CWF/FPI report above--

"Concerns have also been raised in some quarters about the effects of a high-end income tax increase on small business owners since many forms of small business income flow through to and are taxed on PIT returns. Yet, according to the respected Tax Policy Center, a joint project between the Urban Institute and the Brookings Institution, 98.6 percent of all small business owners nationally make less than $250,000 a year.53 (Some of the proposals for progressive PIT reform in New York would add one or more tax brackets at income levels of
$250,000 or more.) As a result, the overwhelming majority of small business owners would not see their income taxes rise under progressive PIT reform. In fact, if revenue from a permanent PIT increase is dedicated to reducing property tax after the economy recovers, it would prove to be beneficial for tens of thousands of small businesses in New York.

Furthermore, a progressive restructuring of the income tax code may also benefit the business environment in the State. Business location decisions are driven by several factors. In the 2008 Area Development Annual Corporate Survey, the primary factors that influence a business location decision include transportation infrastructure, the cost and quality of labor, and the cost of occupancy and construction. Interestingly, the survey noted that for industries that are dependent on a highly-educated workforce, quality of life issues are
extremely significant. For instance, the survey finds that some of the most important quality of life issues include public schools, low crime rates, access to healthcare, and affordable housing.

Budget cuts threaten adequate funding for services and public goods that affect business location decisions. As a result, New York can enhance its business climate and the productivity of business operating here by directing revenue from progressive income tax reform to making specific infrastructure and quality of life investments."

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From http://www.toomuchonline.org/articlenew2006/Feb13a.html ...

Taxing the Rich, 1957-Style
Worried about deficits and budget cuts? We could ease those worries considerably if we had a radical in the White House someone, say, as radical as Dwight D. Eisenhower.
February 13, 2006
The new federal budget for fiscal 2007 released last week surprised no one. The Bush administration proposed, as expected, tax cuts for our nation's most fortunate and program cuts for our least. Tax cuts for the rich have, of course, defined the Republican governing credo ever since Ronald Reagan. But once upon a time, we ought to remember, Republicanism in the White House didn't automatically translate into ever lower tax rates on our nations highest incomes.

Indeed, a half century ago, the White House hosted a GOP President Dwight D. Eisenhower who refused to push tax rate cuts for the high-income set. Throughout Ike's Presidency, the top tax rate on income over $400,000 stood at 91 percent. Our current top marginal rate: 35 percent.

What if Ike's spirit still set the tone? What if our federal revenues today reflected the tax rates on high incomes in place during the Eisenhower years? How much of a difference, in the budget for next year unveiled last week, would these Eisenhower rates make?

Let's crunch some numbers.

In 2007, according to the Brookings/Urban Institute Tax Policy Center, the 148,000 taxpayers with Americas top 0.1 percent of incomes will average $5,505,607 in take-home.

In 2003, the latest year with IRS statistics available, taxpayers who made at least $5 million after taking advantage of all the tax loopholes they could find actually paid 26.7 percent of their incomes in federal income taxes.

If Americans in the top 0.1 percent pay their income taxes at this same rate in 2007, a not unreasonable assumption since the Bush tax cuts in effect in 2003 remain in effect, the federal treasury would collect about $218 billion in 2007 from Americas most affluent 0.1 percent.

Now $218 billion certainly isnt chump change. But lets compare this $218 billion the total income tax the IRS stands to collect next year from our very richest to the total these rich would be paying if Eisenhower tax rates were still on the books.

Back 50 years ago, at the midpoint of the Eisenhower administration, far fewer Americans averaged incomes that would equal, after adjusting for inflation, todays $5 million a year. Those taxpayers who did make the equivalent of over $5 million a year in 1957 actually paid taxes at nearly twice the rate of their deep-pocketed counterparts today.

Americans who earned over $750,000 in 1957 the equivalent of $5.2 million today paid 51.6 percent of their total incomes in federal income tax, according to IRS records, and that was after exploiting every loophole they could find.

If we were to apply this 51.6 percent rate to todays top 0.1 percent of incomes, then the federal treasury would collect $420.5 billion from Americas super-rich in 2007, about $203 billion more than the U.S. Treasury will collect under our current tax rates.

How much is $203 billion? Thats nearly three times what the Bush administration is proposing to spend in 2007 on education and the environment. Or well over half the $354 billion federal budget deficit the Bush administration now predicts for 2007.

And that brings us to what may be the ultimate taxing irony of our times.

The federal government will fill that $354 billion deficit hole in the fiscal 2007 budget by borrowing. The government borrows by selling Treasury bills, notes, and bonds. The people who buy these Treasury securities, naturally, eventually get paid back with interest.

And who buys these Treasury securities? Average American families don't buy Treasury securities. High-income people do.

Fifty years ago, in other words, Eisenhower-era America taxed the very rich. Today we borrow from them.
In the process, we have solidified our place as the most unequal society in the entire developed world.

A note on sources:

The most detailed rundown of mid 20th century tax rates in the United States appears in an IRS research paper authored by Janet McCubbin and Fritz Scheuren, Individual Tax Shares and Average Tax Rates, Tax Years 1951-1986 (Statistics of Income Bulletin, Volume 8, Number 4). From this papers Table 1 (Returns with Adjusted Gross Income: Number of Returns, Income, and Federal Income Tax, by Size of Adjusted Gross Income, Tax Years 1951-1986), we identified those Eisenhower-era taxpayers who took home at least $750,000 in 1957 dollars, the equivalent of $5.2 million in 2005 dollars, and computed from the table the tax rate these taxpayers paid on their adjusted gross incomes.