Rob Kall: When we talked about the middle class, we talked about the poor. Now what makes us wealthy? The wealthy people? The rich? The.. Your...
James Steele: We talk about" the only month we really quantify in the book are what IRS calls the "richest American'. "The 400 richest tax payers." And we make the point in the book that in the mid '50s the richest Americans paid 51% of their income in federal taxes. By 2007 on the edge of the meltdown, that percentage was down to 16%. And that's the richest ones. I mean there's obviously tons of very, very wealthy people who aren't in that top 400. But that's one quantifiable group that shows very dramatically how taxes have lowered floors to the very wealthiest in this country.
Rob Kall: Now I wanted to ask you about this, because back in the '50s when Dwight Eisenhower was President, there was a 92% tax category.
Donald Barlett: That's exactly right. [James inaudible in background]
Rob Kall: Now what's the story with that? Where does that fit in?
James Steele: Here's how it fits in. Years ago, and for many, many years, the personal income tax in this country had graduated rates. So that you had multiple rates. And the more you made, the more you paid on that last segment of your income. And that's why things were so much different then than now! I mean right now people making, I think it's around $375k, $380k, that last segment of their income, well that top rate, 35%, is the same as somebody making $50 million dollars a year. That's what's different now, then what used to be back in the days of Eisenhower. In Eisenhower, you paid more and more as you went up and up, and in that category. You very often hear comments from Conservatives that there was a "discouragement to work." Well there's absolutely no evidence of that in terms of employment numbers. You will hear some person here or there say, "it's not worth my time because I'm going to pay this tax." But the real story was, people continued to work and they paid their taxes. That's why back in the '50s, you had your overall effective rate, 51% for the richest, and why now it's so low because the taxes have been progressively cut for years and years. So young people have no idea of how the rates used to be so different. And the amazing thing about them is that they were not discouraged. They were not discouraging the economic activity, but I mean we had some of the most robust economic times in this country's history in the '50s, '60s, and into the '70s, when rates were much, much higher than they are today.
Rob Kall: Right. Now I've already digressed from my plan. So I want to get back to it.
James Steele: Okay! [laughing]