What's driving this new interest in capping income? Three pivotal trends stand out.
First, inequality has become significantly worse. Income and wealth have concentrated to a degree unimaginable in the early 1990s.
In the 1992 U.S. presidential primaries, candidates from both major parties railed against CEO pay excess. At that time, CEOs were averaging 86 times average American worker pay. Today's top execs are averaging over 360 times worker pay.
The second key factor: We now have a much better sense of how much maldistributions of income and wealth endanger every aspect of social decency.
Societies that let income and wealth concentrate at the top, research over recent decades has made abundantly clear, don't work particularly well. Inequality distorts our democracy, erodes our economy, and coarsens our culture. Researchers have linked rising inequality to nearly every social malady that afflicts us, from traffic congestion to mental illness.
The third reason why serious people have begun talking maximum wage: We now have a politically plausible path to an income cap. Here in the United States, we've actually started down that path. We've entered the age of a new "pay ratio politics."
This year, for the first time ever, U.S. corporations must disclose the ratio between their CEO pay and the pay of their company's median -- most typical -- worker. Many of us working for a more equal America believe this disclosure could turn out to be a real game changer in the struggle against inequality, the first step toward a maximum-wage America.
Corporate America, on the other hand, has been bellowing "foul" against this ratio disclosure mandate, at times almost implying that disclosure will bring the end of civilization as we know it. In fact, disclosing data on the gaps between corporate execs and what they pay their typical workers will help us become more civilized.
What makes, after all, for civilization? Limits. In civilized societies, we set limits all the time. We limit how fast motorists can drive. We limit how many ducks hunters can shoot. We limit how much noise our neighbors can make. We set limits like these to make our societies better places to live. We set limits because we understand excess -- in anything -- never does us any good.
But we have no limits at all on how rich people can become -- and that's not good for anyone.
What might an appropriate limit on income be? In 1942, Franklin Roosevelt, the President of the United States, had one answer. After paying federal income tax, FDR proposed, no individual American should have an annual income greater than $25,000, about $375,000 in today's dollars.
In effect, FDR was proposing a 100 percent tax rate on income over $25,000.
Congress didn't buy Roosevelt's 100 percent top rate, but Congress did set a top tax rate at 94 percent on income over $200,000, and that top rate would hover around 90 percent for the next 20 years, years that would see the United States become the first mass middle class nation in the history of the world.
But those steeply progressive tax rates in the United States did not last. They could not withstand the fierce political pushback from the rich. The wealthy simply had more of a direct stake in slashing high rates than average Americans had in keeping those high rates in place.
So those top rates fell, to 70 percent in the mid 1960s, to 50 percent in 1982, to 28 percent in 1988, before jumping up a bit. The current top rate: 37 percent, and that's only for paycheck income. On income from investments, America's richest pay taxes at just a base 20 percent rate.
Progressive taxes, as traditionally structured, proved unsustainable in the 20th century. We need a new structure. We need a tax system that gives average Americans a clearer personal stake in keeping tax rates on high incomes high -- and the wealthy a reason to care about those without wealth.
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