My guest today is Mark Karlin, editor of BuzzFlash at TruthOut. Welcome back to OpEdNews, Mark.
JB: We last spoke in September. There's been a lot going on in the interim. I'd like to talk about your recent OpEd, Under Eisenhower, the Top Tax Rate Was 91 Percent. Was He a Socialist?[1.20.16] First of all, let's talk about that headline. Surely, that 91% top tax rate figure is hyperbole, no? President Eisenhower was a lifelong Republican, after all.
MK: No, it is not hyperbole. This is fact. It's not debatable.
Remember, however, that the US has marginal tax rates, which means that the 91 percent tax was applied only to income earned above a certain level. As my recent commentary noted, PolitiFact stated, "A look through the records shows that top earners in the eight years of Eisenhower's presidency paid a top income tax rate of 91 percent. It was even a bit higher before he took office." The reality is that it sounds so unbelievable that the most wealthy in the United States paid more than 90 percent federal tax for their higher income earnings because the US has moved so far to the right in cutting top marginal rates. Obviously, Eisenhower was not a socialist, but the tax rate of above 90 percent on upper end earnings during his two terms is just not disputable. It's a matter of public record.
JB: So, if that's the case and the whole discourse has taken a rightward turn, then, that would still make Bernie along with his proposals an outlier compared to the other candidates, correct?
MK: Anyone running for president who proposes raising taxes is an outlier, yes. The US has been brainwashed by the well-financed efforts of the right wing oligarchy - the strategic use of think tanks the media - to believe that low taxation and the privatization of public services that taxes pay for will lead to some sort of Ayn Randian utopia of wealth for "hard working" individuals. However, as Thomas Pikkety documented in the seminal book, Capital in the 21st Century, wealth in the Western world is becoming increasingly concentrated in the hands of those who inherit it. These people, such as the Kochs and the Trumps of the world, then advocate for lower taxes on the wealthiest. As a result, we have descended from a 94 percent top marginal rate during World War II - for income earned above $200,000 during 1944-45 (not adjusted for inflation) - to 39.6 percent for income earned above $413,000 in 2015. Of course, this does not include the use of loopholes and the lower taxation on capital gains earned from investments. The latter accounts for much of the income of the wealthy, resulting in a much lower tax rate for gains in the stock market, for example.
That is why Warren Buffett famously said that he paid a lower overall tax rate on his yearly income than his secretary.
JB: Now that's a jarring factoid.
MK: Elizabeth Warren has been brilliant in explaining that the government pays for so many services and programs that subsidize corporations and support individuals, yet the right wing oligarchs have convinced so many Americans that taxes aren't necessary. What the Paul Ryans of the world basically are selling is snake oil, that citizens of the United States can get government services and support without having to pay for them, particularly those in the upper brackets who most benefit from the public purse. Just ask the defense industry barons.
It's ironic that Eisenhower, a dyed-in-the-wool Republican who had Nixon as his vice president, ended his second term with the warning that the military-industrial complex could consume the US.
JB: Talk is cheap. Too bad Ike didn't actually do something about it before he left office. So, let's take a look at Bernie's tax proposals. How do they stack up with, say, the policies in the various Scandinavian countries, for instance?
MK: Bernie's got several tax proposals. Overall, his campaign has been kicking around a proposal for a top marginal income tax rate in the low 50 percent range. That would hardly be a dramatic increase from the current rate, and it would be 40 percent or so below what was the rate under Eisenhower.
Sanders has a number of tax proposals, including re-structuring of many taxes. He is for, as Elizabeth Warren is, a tax on financial transactions. He is also for other Wall Street taxes. Of course, he just released his universal health care plan that includes some taxes that are far less, in general, than premiums - even under Obamacare - to private insurance companies. Of course, he also supports cost restraints on health care services and pharmaceutical companies. Eliminating for-profit health care and the private insurance companies - along with putting price controls on big pharma - would cut billions and billions of dollars in medical costs.