As the House considers a bill to extend the Bush tax cuts for the top 2%, slash corporate taxes and potentially make the Estate Tax more generous to billionaires than ever before, it's instructive to put the move into a larger cultural/historical context. And thanks to newly released IRS documents, we can do just that.
As the Institute for Policy Studies reports, officials at the National Archives recently released a 67-year-old U.S. Treasury Department report detailing what the richest Americans once paid in taxes in the middle of the 20th century. IPS notes that "We have simply never had clearer evidence of just how much America used to expect out of individual wealthy Americans - and just how little, by comparison, we expect out of our wealthy today." Here are some of the details:
We learn, for instance, that 1941's top executive at IBM, Thomas Watson, collected $517,221 in compensation that year, about $7.7 million in current dollars. Watson paid 69 percent of his total 1941 income in federal income tax.
Last year, today's chief exec at IBM, Sam Palmisano, took home $24.3 million for his executive labors. We don't know how much income above that sum Palmisano reported in 2009, or exactly how much of that total he paid in taxes.
But we do know that the 13,374 Americans who reported incomes over $10 million in 2008, the latest year with IRS stats available, paid an average 24.1 percent of their taxable incomes in federal income tax.
In other words, IBM CEO Palmisano last year took home, after adjusting for inflation, over three times more than his predecessor Thomas Watson took home in 1941. Yet Watson in 1941 paid almost three times more of his income in federal income taxes than Palmisano likely paid in 2009.
So assuming that Palmisano pays roughly what his fellow millionaires pay in taxes, we've seen IBM CEO tax rates go from 69 percent down to 24 percent. That's a massive tax cut, and it's no coincidence that it came over the very same period we saw an explosion in federal deficits. And remember, these numbers compare the data that exists before this week's expected passage of even more new deficit-expanding tax cuts for the super-rich.
Save for being referenced in Bernie Sanders' 9-hour-long quasi-filibuster, these new numbers weren't a part of the debate about the new tax cuts - and they certainly didn't play a decisive role for White House and congressional policymakers. That's because the numbers represent a deeper cultural/attitudinal shift toward wealth deification in this, a radical new greed-is-good epoch (by "new" I mean the last 30 years in our country's 200+ year history). Embedded in our tax and budget debates is the bipartisan assumption that the super-rich shouldn't pay the tax rates they paid during the mid-20th century - aka. the tax rates that existed when our economy boomed.
Somehow, this assumption goes unquestioned at a time when we simultaneously wonder why we have huge deficits and why our economy is now faltering. We are so enthralled with preserving the riches of the so-called Masters of the Universe that we have become willfully ignorant of history's lessons about taxes - even the lessons that are as crystal clear as this new IRS data.