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Yeah! Sure! Bring back the 92% income tax rate!

I recently read a Facebook post where someone wrote:

"In the 1950s & 1960s when the top tax rate was 70-92%, we laid the interstate system, built the Internet, put a man on the moon, defeated Communism, our education system was the envy of the world, our middle class thriving, our economy unparalleled. You want that back? Raise taxes on the rich."

Wow! First of all, in 1952 and 1953 – believe it or not -- the top federal income tax rate was actually 92%. 92 cents of every dollar earned above $200,000 (in 1952 dollars) went to the U.S. Treasury. Now, indexing that income amount for inflation shows us that, if the same 92% rate was in effect today, it would only apply to those earning over $1,680,746 a year. Do you know many people earning that much? Probably many of them are very liberal actors, athletes and celebrities. Do you think they are eager and willing to pay 92% of their income to the government? If there was a 92% tax rate in effect today, don’t you think many individuals would be putting pressure on Congress to reduce it? Does such an exorbitant rate even seem fair? But, let’s analyze that 1952 tax table further. The starting rate on that table was 22%. Everyone earning any income up to $2,000 a year paid 22% of that amount in taxes. Translating that income amount into today’s dollars shows that individuals earning up to $16,807 would be paying 22% of their income in taxes. The 2011 tax table used last year provided that the lowest rate of taxation was 10% on income earned up to $17,000. Now, tell me: Are there more people earning $16,807 a year or more earning $1,680,746 annually? To be fair, the 2011 tax table reflected that individuals earning more than $189,575 paid taxes at a top rate of 35%. In 1952, the 34% rate (there was no 35% rate) applied to income between $6,000 and $8,000, which translates into today’s inflation-adjusted dollars of $50,803 and $67,737. Are people today earning between $50,803 and $67,737 ready to pay 34% of their income to Uncle Sam? If these rates were in effect now, do you think there would be outrage? You see, the writer wants to claim that the relative “prosperity” of the 1950s and 1960s could be revived with a 92% tax on the wealthy. However, they fail to realize that the 92% tax was only a small part of a tax system that taxed EVERYONE more. Remember, during this same period, the federal estate tax maximum rate was 77%.

Let’s look at each of the triumphs of that earlier time period which the Facebook writer wants to attribute to the fact that we taxed the rich at 92%: The writer pointed out that we “defeated Communism” during the 1950s & 60s. Actually, most people will attribute the defeat of Communism to the fall of the Soviet Union, which history will credit to Ronald Reagan and both our strong, capitalist economy and a very strong and aggressive defensive position which he created and promoted, not to the fact that we oppressively taxed our citizenry at 92% in 1952 and 1953. We “put a man on the moon” because Congress operated on a budget back then! They allocated funds to NASA for that project because Congress worked together and had a budget! It was not because we were “taxing the rich” at 92%. In fact, by 1969 when we landed on the moon, the maximum tax rate was down to only 70% on income over $200,000, which translates to current income of $1,222,777. Again, I ask you: How many people today earn more than $1,222,777 a year? As another note, the Apollo program was curtailed after Apollo 17 in 1972, due to the cost of the program and the fact that people had lost interest in the moon landing program.

In 1952 a greater percentage of the entire population was paying taxes. We did build the interstate highway system in that time period. That was and is a tremendous capital improvement to our infrastructure! Yes, tax dollars were used for that. But that is what tax dollars are supposed to be used for! Infrastructure, defense, transportation and other basic services. (NOTE: Cell phones are not a necessary “basic service.” Yet, our government is now handing out free cell phones to lower income people) Did the interstate highway system happen just because we were taxing the rich? No!

The writer next pointed out “our middle class [was] thriving, our economy [was] unparalleled.” Tell me what sorts of government regulations there were in 1952 through 1970 (or even later) on businesses in this country? How many businesses back then provided health insurance (or were forced to provide health care – including contraception) to their employees? How many had to pay worker’s compensation insurance? How many were cited by OSHA for workplace violations and had to expend capital to improve their working conditions? How many had to spend millions on EPA required pollution control? How many oil companies back then were restricted from drilling and how many had to jump through the tedious hoops of getting permission to drill, refine or pipe their product so as not to disturb the habitat of some small woodland creatures? How many retirees were those same businesses paying? Nationally, how many people were on welfare, social security, or government retirement back then? How much were we paying federal government workers then? How many people were working for the government back then? I know that when my father retired from federal civil service in 1975, he was earning around $18,000 a year. When he passed away in 2006, his retirement check from civil service was over $40,000 a year. Regardless of where anyone wants to lay the blame, the dysfunctional nature of our present economy is not caused by the fact that we are no longer taxing the rich at 70 - 92%. In fact, I have no doubt that if we were taxing them at 92% we would STILL be operating in a deficit because Congress refuses to reign in entitlements and spending!

Do you know what the federal deficit was in 1952 even with a 92% tax rate? It was 4/10ths of 1% of the gross domestic product (GDP). In 1953 -- still with a 92% maximum rate -- it was 1.8% of GDP. In other words, even with a 92% top income tax rate, the government was spending more than it took in. In 2008, that deficit was 3.2% of GDP. In 2009 it was 10.1% -- the highest percentage ever! In 2010 it was 8.9%. In fact, the last time we operated with a federal government surplus was 1999 – through 2001. Now, who was in charge back then? I know that Democrats will point out that President Bill Clinton was in the White House – a Democrat! However, the budget balancing and surpluses came because of the Republican-controlled Congress, along with the President’s position not to interfere (mainly because he was being impeached!). Finally, recall that during 1999 through 2001, tax rates were coming down, not going up.

Until Congress and the President agree to balance the budget, we will never have a federal budget surplus. Until Congress and the President stop trying to “stimulate” the economy by spending tax dollars on government projects, we will never create economic growth. How did those last two stimulus bills that President Obama, House Speaker Nancy Pelosi and Senate Leader Harry Reid ram through Congress help you? Did anyone’s fortunes increase? Did anyone develop a successful small business because of them? I dare say not.

Finally, the commentator wrote that, back in the 1950s and 60s, “Our education system was the envy of the world.” Do you really want to blame the failure of our education system on the failure to tax the rich? I will place the blame squarely on the lack of parental responsibility. What about parental involvement? What about changes to our education system since the 1950s and 60s? I know there are a lot of good, moral and ethical teachers out there who are doing the job the best they can. I sincerely thank them for their efforts and I do not want in any way, shape or form for any of them to think I am being critical of them. I am not! However, there are also teachers who are not so ethical. Regardless of the job the teachers are doing, do you want to lay the blame on the rich not paying more taxes when students are allowed to literally get away with murder in the schools, and then have their bad, criminal, or immoral behavior blamed on the education system, not their parents or guardians? When my children were still in elementary school, there was the movement rumored as coming to our school system for “outcome-based” education. Fortunately, it never got here! That was the system where everyone in a student’s peer group received the same grade, regardless of the effort of any one or more of them. So, students could progress without taking personal responsibility. I would have been furious if, after my child studied (and they would have studied with my encouragement and assistance, if necessary) and did the very best he could, he only got a C on a project because one or more of the other students just didn’t do their work at all, usually because they were not encouraged by their parents. When I was in school, several of my friends were held back a grade because they didn’t perform at the correct level. The parents were usually accepting of that action because they wanted what was best for their child. In fact, the disclosure that a child was held back usually resulted in the child being punished by the parents for not working hard enough! Now there are federal lawsuits when students are held back a grade. When I was in school, occasionally students got “licks” or spankings for bad behavior. Now, a teacher and/or principal would be arrested, charged with aggravated assault and battery and the superintendent of schools -- along with the entire board of education -- would have to resign just for endorsing or considering endorsing such a policy! Seriously? You want to blame the failure of our educational system on the failure to tax the rich?

I have often told friends that our current society started declining when our children stopped being allowed to keep score in basketball games. In the third grade, my son played in a city basketball league. He had NEVER thrown a basketball before, never knew the basketball rules, and never played in a real basketball game. He just wanted to join this league because his friends were joining. Even though he was willing, he just wasn’t able to succeed and, as a result, he sat on the bench most of the season. My wife and I didn’t like that at all! The next year, we put him into a church-league program where EVERYONE got to play. It was fun for him. He had a BLAST! However, the league’s policy was not to keep score. They just played for fun. Similarly, both of my sons played in little league T-ball. As with the basketball league, everyone got to play and they didn’t “officially” keep score either. Once again, it was fun! They both had a great time. However, even though both of the non-scoring programs boosted my children’s confidence and taught them how to play the sports, the programs were misguided. My son who was tall and did really well in the non-scoring program would have been “eaten alive” if he went back to the competitive program, thinking he was a basketball star. What would that have done to his confidence? One of the other shocking factors that my wife and I were horrified with in the competitive program was the fact that the parents and other spectators were actually yelling at these young, 8-year old children demanding that they play better. I heard parents cursing. I saw parents pulling their sons aside and berating them when they didn’t play well (or play up to the parent’s expectations). I would never have thought to do that to my son!

Let’s replace the sports scenario above with education. If everyone gets to go to school, and we don’t keep score (we don’t assign performance grades) and everyone plays (they get passed to the next grade, regardless of performance), what happens when our children enter the real world? Do they just expect to be able to succeed when they were never permitted to fail before? I certainly do not endorse parents berating and cursing at their children for not performing, but what is wrong with being critical of our children when they don’t succeed, instead of blaming it all on the school? Actually, before we should be critical with our child, we need to find out why the child failed. If part of the blame should be placed on the child (e.g., they didn’t study, they didn’t take the class seriously enough, they cheated, etc.), then the child should have to suffer the consequences of his or her actions. If the child did study and did take the class seriously but still failed, then it is incumbent on the parents and/or the school to get the child additional help or change the program. To simply “kick the can down the road” by passing the child to the next grade so that they do not socially fall behind or suffer the stigma of being a failure, is not acceptable.

Now let’s replace the sports and education scenarios above with business and adult living. Not everyone will be successful in business. It seems to be the philosophy of liberalism, progressivism and socialism that if someone is poor, it is because someone else became rich. In other words, the success of the rich person was created at the expense of the poor person. To translate it into a popular perception: “You got rich by taking my money!” There is a complete refusal to think that the rich person’s success came from his or her own hard work, dedication and creativity. He or she must have gotten rich by doing something wrong. Most recently, President Obama even endorsed that sentiment by stating that even if you are a successful business person, you didn’t do that on your own. It was because of the government, not because of what you did. Therefore, the demand is that, because you were successful, you need to pay more to the government in taxes. I queried after the President made his statement whether, if I later fail in business, I can get a refund on all of the taxes I paid when I was successful.

When a person is not successful in business and adult life, just as with sports and education, we need to ask why. Sometimes it is the fault of the system. Of course, if that person was raised under the belief system that they ARE a success (even when they are not), that they ARE entitled to win (even when they shouldn’t), that they can ALWAYS participate (even though they are unqualified to do so), they just don’t know how to react when they actually fail. When they do inevitably fail, they (as well as some of society) decide it has to be someone else’s fault. As a lawyer, I regularly get calls from people wanting to sue someone over something. A man recently told me that his two young kids were running through the garden department of a store and tripped over a wooden pallet and cut themselves. No stitches required, just a lot of crying and the need for Band-Aids. He asked me, “How much would a lawsuit like that be worth?” No thought about something like, “Wow! I need to watch my children better.” or “Well, my kids will now know why they’re not supposed to run through the store!” No! No personal responsibility -- just an inquiry of where to place the blame. Of course, part of the reason for the inquiry was that the store is big and rich! I remember a tragic situation several years ago where a daycare worker took two young children in a minivan to go to the casino, and then left the two children in the closed van and they suffocated to death. The parents didn’t sue the daycare worker or the daycare provider. They sued Ford Motor Company!

Until Americans are willing to accept responsibility for their position in life and try and make the best of it instead of blaming someone else, we will never heal as a nation. The rhetoric of the left – blaming everything on the “evil” rich and the Conservatives – does nothing to help their followers succeed. The incendiary statements are only designed to cause anger and division. It is my belief that a person is poor or unsuccessful for one of three reasons: (1) they are disabled; (2) they are uneducated (or under-educated); or (3) they have given up on themselves. Disabilities can be vast and brutal. However, I have even seen severely disabled people become very successful. Disabilities often impede the ability of a person to succeed and, as a result, they are individuals who seriously need our help. Their disabilities were not a choice they made!

People who are uneducated or under-educated (not as a result of a disability) might be also categorized as lazy. They chose not to better themselves. All of us remember those students in high school who just couldn’t wait to graduate so they could get out of all of “book work.” They didn’t want to learn! Some, on the other hand, got that high school diploma and decided that was enough to get ahead. Now, they are some of the ones complaining that they can’t get a better paying job or any kind of job that they want to do. They complain they are stuck doing menial jobs. The “under-educated” also need to include some seemingly “over-educated” people. A lot of the protests these days are by people who demand that their student loans be forgiven or reduced. How is it my fault that you chose to go to Princeton, Berkley, or some very expensive Ivy League school to get a doctorate degree in Art? What skill set does a degree in art appreciation, Ancient languages or philosophy give you in the business world? You have a $100,000 or larger student loan and can’t find a good paying job. Did you possibly consider the fact that the reason you can’t get a good paying job IS THAT YOUR DEGREE IS IN ART? Now, let me assert right here that there are a lot of successful artists out there. There are a lot of people with graduate degrees in art who run museums, art schools and theaters. There are a lot who have transferred that skill set into business operations and are being successful. However, there are also a lot of them who work at Starbucks and Wal-Mart too. Why do I have to pay to forgive your student loan, when it was you who chose a field where you aren’t going to be paid well? You need to take responsibility for your actions! Did you even consider working a semester then going to school for a semester and using your earnings to pay for your schooling instead of borrowing money with a student loan? Or was the fun and thrill of being in school more alluring to you than the reality that someday you will need to pay the loan for your fun?

People who have given up on themselves encompass a very broad segment of the country. They include the people on the street corners begging for help, they include addicts who prefer to spend their time in a bottle or with other “comfort” drugs, and they include people who want to place the blame for their poor position in society on someone else. People who have given up on themselves also must include those people who refuse to conform to get ahead. Newt Gingrich was chastised by the left when he admonished the Occupy Wall Street group to “Go get a job right after you take a bath.” Many individuals feel they are being discriminated against in employment opportunities because they either (a) smell; (b) have visible body piercings and tattoos; or (3) they have no appropriate social skills. You will not work in my law office if you have visible piercings or tattoos! Again, did you consider the limitations you placed on your employment possibilities when you got that nose ring or the face tattoo or radical hair style? You may consider it an expression of your “freedom.” However, as an employer, I still have the ‘freedom” to decide whether or not to hire you and, if you come to my office smelly, pierced, and with an entitlement attitude, you won’t be joining our workforce!

My wife and I like to travel with our family. I’d go on a cruise every MONTH, if I could afford it! However, I can’t. When we do take a nice vacation, we plan for it. We save for it. If we don’t save enough, we don’t go. Of course, it would be easy just to charge it on a credit card. However, then we would end up paying interest and other charges as well. I like nice cars. However, I’m not going to spend $50,000 or more on a car when one that costs $15,000 will suffice. I know people who HAVE to start each morning with a $5.00 cup of coffee. I start with a $1.00 cup. I know people who HAVE to eat out every night. I cook at home and spend time with my family there. People make choices. As a society, we need to re-instill in people the understanding that there are consequences to actions. I have seen people using food stamps to buy groceries who then pull out a wad of cash to buy their cigarettes and beer. I see people whose children are in tattered clothes who sport all sorts of body art and piercings. I’ve had beggars with their “Anything will help! God Bless!” signs curse at me, when I hand them a card for a free ride to the local homeless shelter where they can get food, instead of giving them cash.

Much like with many addictions, you can’t get better until you decide to help yourself. Don’t blame me for your problems. Don’t blame the rich! Develop yourself into the kind of person you want to be. Sure, you’ll falter some. Everyone does! However, if you WANT to succeed, you will. It just takes time.

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