Progressive Voices

GOP, Dems can agree: taxes are historically low

Finally, here's something Republicans and Democrats can agree on: taxes are shockingly low.

Wait, you thought I was talking about today's Republicans and Democrats? Sadly, no: I'm referring to people across the ideological spectrum throughout most of the past 100 years. 

An all-too common narrative these days casts President Barack Obama as a backer of expensive social programs paid for with tax dollars. 19 months into his presidency, though, Obama's record on taxes is to the right of nearly every Republican chief executive since Herbert Hoover.

First off, it's important to realize that our public programs – keeping cops on the street and teachers in the classroom, protecting public safety and keeping kids healthy and learning – pave the way for American economic prosperity.

But it's just as important to know that taxes are at historically low levels.

This leaves programs underfunded and our economy bereft of its lifeblood: capital. For much of America's history, presidents across the ideological spectrum backed more robust, more progressive tax policies than those we have today – and our economy performed better than it does now.

You don't have to look far back to see examples. If you ask a Tea Party conservative about tax policy, they'll praise Ronald Reagan up and down while reviling Obama. Most, if the option was offered to them, would happily endorse going back to Reagan's tax policies.

These folks would then be surprised to learn that almost everyone would be paying more in taxes. Yes, average familiescorporations — and even most of the rich – would face higher rates.

What about investors and business leaders paying dividend and capital gains taxes? Yes, they'd be paying more under Reagan too. That's why Reagan administration officials are saying there is "not one iota of evidence" that the economy is suffering from overtaxation. 

The story is broader than Reagan and Obama: that's just a recent historical comparison. This divide between perception and reality is a long-term trend.

Over the centuries, radical right-wingers have waged a ruthless and successful campaign to demonize government – and the taxes we need to fund vital public investments that pave the way to our prosperity.

They've done so based on ideology, not evidence.

That's how we went from a Republican president, Dwight Eisenhower, implementing popular progressive tax policies that built a robust, thriving middle class to now — where cutting taxes to record-low levels on a median family of four is called "socialism."

When candidate Obama proposed a top marginal rate of 39 percent for people earning $250,000 or more, he was smeared as an un-patriotic wealth-spreader. But Obama's plans were centrist and modest compared to most 20th century leaders.

From 1932 until 1986 – every single year for more than five decades, through presidents Republican and Democrat alike -  that top marginal tax rate was 50 percent or higher.

If Obama is considered a liberal, by those standards, Richard Nixon was Ho Chi Minh.

As conservatives (rightly) like to remind us, the country is at war. But they wrongly use this rhetoric to divide the country and provide cover for laws that limit American freedoms.

Worse, some try to imply that defending the public safety, education and health care programs funded by taxes is somehow unpatriotic. Since the founding of the Republic, the opposite has been true – especially during wartime.

The top marginal tax rate for the rich was over 90 percent in 1944 and 1945 and again from 1950 through 1963. During the war years, it was acknowledged that the country had to pull together to fund crucial programs to help the troops and keep the home front strong.

We are currently at war in Iraq and Afghanistan. Yet the top marginal tax rate, the part of the federal code that asks prosperous Americans to support the country, is at its lowest rate since the Great Depression.

If you asked any president of the last 100 years for a reaction to this, they'd be shocked how far we've drifted. And if that diverse bunch could agree on ways to fund our troops, police and schools then, why can't we now?

Jeff Shaw is Director of Communications at the North Carolina Justice Center