America in 1955 was settling into the Cold War against Communism. The Warsaw Pact was formed that year; West Germany joined NATO. Disneyland opened. Illinois passed a Loyalty Oath Act, requiring all state employees to take an oath or be fired. GM became the first U.S. corporation to make a billion dollars.
Good times, the essence of America. And as Chuck Collins and Sam Pizzigati point out in a piece in the Christian Science Monitor, back in 1955, the 400 highest-earning Americans “paid more than 50 percent of their incomes in federal tax, almost triple the rate of today’s top 400.”
Of course, anybody who suggested such a tax structure today, in 2009, would be attacked as a Marxist, socialist, damn Commie, etc. But back in the ’50s, when Americans had actual, real-life Commies to worry about, such charges would have been considered ridiculous.
Write Collins and Pizzigati:
“America’s super-rich are paying far less of their incomes in taxes than average Americans who punch time clocks. This is grossly unfair. The good news: Under Mr. Obama’s new plan to cut the deficit in half, the very richest Americans will start paying something closer to their fair tax share.
It’s been a while since they’ve done that. As recent IRS data show, these elites are paying less in taxes – much less – than their deep-pocket counterparts used to pay. In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each.
Having trouble visualizing that? To pocket $263 million a year, you would have to take home over $60,000 an hour – and work 12 hours a day, seven days a week, for an entire 12 months. Sounds tiring, doesn’t it? But most of the top 400 make their fortunes buying and selling assets, everything from stocks and bonds to the exotic paper that helped inflate the housing bubble.
Uncle Sam taxes income from those assets – whether that income be capital gains or dividends – at a much lower rate than income from work.
The current top tax rate on “ordinary” work income sits at 35 percent. But dividends and capital gains from the buying and selling of most assets face only a 15 percent top rate. That’s why in 2006, America’s top 400 paid just 17.2 percent of their $263 million average incomes in federal tax.
Millions of middle-class American families, once you tally income and payroll taxes, pay far more of their incomes in tax. One particularly striking example from billionaire investor Warren Buffett: In 2006, he paid 17.7 percent of his income in total taxes. His secretary, who made $60,000, paid 30 percent of hers.”
Why should a working man or woman who puts in 50 hours a week and makes $60,000 a year pay a lot more in taxes than the person next door who does nothing and collects $60,000 a year in dividends and capital gains? I never understood the justice of that. Why penalize working people like that?