Did you know that the rich used to pay 94% of their income? So if they made $1 million, $940,000 would go to the people (The rich still lived like kings). (source).
But in 1964, Lyndon B. Johnson started the trend of lowering the tax on the rich again. This was the first time in 20 years the tax rate as under 90% and the first time in 28 years being under 80%. The tax rates were gradually going down. It was 70% until 1981 when Reagan was elected then went to 50% and then in 1987 dropped it to 38.5% and then 28% in 1988. This was also the introduction of the Capital Gains Tax that was 15%, meaning that the super rich now had a 15% tax liability while someone making $29,750 was at 28%.
In 1914, the tax rate was 7%, that also gave birth too many famous names, Rockefeller, Morgan, Ford, Carnegie, Vanderbilt and much more. The richest human ever on earth (when adjusted for inflation) is Rockefeller, he was worth in today’s dollars, $380 Billion, he paid horrible wages, worked his people to death, literally and would send in thugs to beat his employees to submission. Now keep in mind that from 1867-1915 the tax rate was single digit but in 1916, the richest paid 15% but then in 1917 it was 67%.
The last time the 1% paid such low taxes and had more money than the other 90% was also when we went into “The Great Depression” that lasted for a decade.
Now the things that FDR (’33-’45) did lead us to things like NASA, our whole infrastructure, roads, bridges, freeways and one of the most abundant times in American History. Unemployment was around 4-5% (source) and the median income was $33,000 (adjusted for inflation) and the average home would cost about $73,000 (adjusted for inflation). He wanted to even make the “Second Bill of Rights” to ensure that every American had the basics one needs to live a life. Now I have seen people saying that they have addressed these things in one way or another but I have to say this is not the case. If they were addressed we would not have had 10% unemployment, record levels of income inequality and school is no longer “free”, especially higher education, something that has been slowly robbed from us.
Now in today’s tax rate of 39.5%, someone making $450,000 pays $177,751 to the people but that is only earned income. Many also have stock options and hold equity in their business. Now that tax rate is much lower today but in 1988 those short term gains were no longer taxed at the rate of income. So many of these guys who would pay almost 40% now really pay around 15%. And that is not to mention all the loopholes and tax credits they get. Some pay much lower.
Raising the tax rate of the richest people, people making $450,000 need to have a higher tax rate. We need to get rid of the Capital Gains tax and tax that income at their earned income rate. The rich will still be rich, we just won’t have as many, if any, Billionaires and believe me when I say that is a good thing.