Let’s get a few things out of the way before we get started:
- Government overreach is bad
- A government that grows too big, over taxes, or puts too much burden on the people rather than protecting their rights, is a problem
Now that we have those out of the way, let me get to the subject of this post. I think the title is absurd. It should be a given that taxes are okay. But more and more I see people who talk about how taxes are theft, or how the government shouldn’t be allowed to steal our money. I have a problem with that idea. And I feel I need to explain why.
Before I get into my explanation of why taxes are okay, and why, sometimes, MORE taxes are okay (*GASP) let me make a couple of concessions. First, I feel like the U.S. government does have many cases of excess. Congress gets paid way too much (there’s no reason a congressperson should make 5 times what your typical teacher makes, and 3 times as much as the median american worker’s income. Government agencies could all trim a little fat. I’m with you there. But the answer to these issues is not reducing taxes. let me explain.
Let me reference that weird carrot man who keeps talking about “making America great again.” Okay. lets do that. let’s talk about when America was greatest… so… when was it greatest exactly… well… it couldn’t have been the 30’s, when the great depression hit, and anything before that… well… given all the changes in society that have occurred over the last 100 years make that comparison completely negligible… soooooooo…. was it the 40’s when we came together to fight fascism and helped save the world from tyrant rulers? What paid for that war that we had to win? that’s an interesting question. let’s take a look at this handy PDF that provides tax rates every year going back to the 19th century!
If you notice first of all the tax rate for the highest income bracket in 1939, when the war started, the tax rate for the highest income bracket was 79%. That’s pretty dang high! especially compared to the rate of 39% for the highest income bracket today (as a caveat, the highest income bracket in 1939 was $5 million, as opposed to $450,000 being the highest income bracket today.)
now, look at the lowest income brackets from 1939 compared to today: 4% in 1939 vs 10% today. so in 1939, the rich paid a vastly higher proportion of taxes than the poor.
So what happened in 1944, when the US officially entered the war? well in the years between 1939-44, the rates went steadily up from year to year. by 1944, the highest income bracket was anyone who made at least $200,000 (that’s a big change from the biggest income bracket being $5 million!) the tax rate for the lowest income bracket also jumped up to 23% by 1944. So why the change? I don’t think you need a history book to assume that the responsible government knew that a world war would be extremely expensive, and raising taxes to generate revenue would be the responsible thing to do (instead of doing what our government today does; borrow all the money to pay for programs and watch the debt soar!) During 1944 and 45, the highest nominal tax rate was a whopping 94%. WOWZA! after the war ended, it dropped to 91%
They say the WWII generation was the greatest generation, but with taxes that high, that can’t be the “great” America that we’re talking about. but a 94% tax rate for the richest members of society screams socialism to me… so what about the next decade?
Many people look back on the 50’s back on as a prosperous time. The government began building the interstate highway system in the 50’s. economies boomed. Rock and roll became all the rage! you started to see the beginning of the space program Surely tax rates were lower then, right? After all, the thieving government didn’t need to steal all that money after the second great war ended, right?
well, in the 1950’s, the nominal tax rate for earners basically remained the same throughout the decade, with income earners of $200,000 or higher being taxed at that same 91% rate. The lowest earners were still taxed at a rate of 20%
Well really, the 50’s weren’t that great… it was pre-civil-rights, and everyone was so terrified of everyone else being a communist, plus all that cold war fear… couldn’t have been that great…
the 60’s! We put a man on the moon! civil rights started to kick into gear! well, in 1964, the tax rates saw their first cut in nearly two decades, with the highest income bracket taxed at 77% and the lowest at 16%, but still, far higher than today’s tax rates. Interestingly at that time, in addition to a very expensive space program we were kicking up our arms race with Russia, and paying for many programs people might consider unnecessary… but somehow we were able to pay the bill without the soaring deficit like we see today (BTW, you can find more info about the history of our deficit here. There was still a deficit, it just wasn’t absurdly high like we’ve seen in more recent decades)
Then, from 1967, all the way to 1981, the tax rates were maintained at 70% on the high end, and 14% on the low end (noting that in 1977 a new low-income bracket was created, where people who basically made nothing paid zero taxes)
Then, REGAN! yahoo!!!! Regan took office in ’81, and in ’82, dropped the highest tax rate all the way down to 50%. he also changed the highest tax bracket from around $200,000 to around $85,000. did it help the economy? Well, of course there will always be debate about that, but one thing is interesting to note. Going back to that website that discussed the deficit, you’ll notice that a slow increase in the deficit coincided with the tax cuts… and it pretty much continued rising until it got to the point it’s at today.
See, here’s the problem. here’s where we get to my long-winded point. in the 80’s is apparently where the “taxation is theft” rhetoric (or something similar) began to take hold. We didn’t want the government stealing our money. But here’s the problem. We also got comfortable having so many things we take for granted. We took for granted having good public schools and schoolteachers. we took for granted having firefighters and police that would come whenever we called. We took for granted having a strong national defense. We took for granted our incredible network of interstate highways, and our other infrastructure. We took for granted research and development programs like the space program, that helped us to believe that America was great. and in the 80’s the Arms race was going stronger than ever.
All of those things cost money. We didn’t want to cut them. So the process of having a completely unbalanced budget unlike anything we’ve ever seen (except in the World War II years) began to be the norm.
So here’s what I’m getting at. America has always done “great” things. We still have the potential to do more great things. But unfortunately we have a decision to make. The “taxation is theft” mantra has taken hold, and as a result, we have some of the lowest tax rates the U.S. has ever seen. Has it benefited the economy? again, I leave that up to you to debate, but this is what I can tell you. cuts have been made to try to stem that deficit. And you know what have suffered? those public programs we take for granted. Education is getting worse and worse. other public programs are vastly underfunded.
Just speaking of education, I live in a state where teachers are paid so poorly that they are having to do tons of emergency teacher certifications, because the people with actual education degrees are getting out of the state as quickly as possible. With all these emergency certifications, it’s all but guaranteed that education’s quality will suffer.
when it comes to police, we’ve seen recently what happens when they are not properly trained. I’m sure you saw the video of the cop who shot a guy laying down with his HANDS IN THE AIR! I’m positive better training programs would stem pathetic incidents like this one and others that occur regularly.
But we don’t have the money to do that. Teachers are paying for classroom supplies out of their own pockets. Parents with school children sometimes have to pay a significant amount for their “free” public education. Cops clearly aren’t getting the training they need to be effective, especially in dangerous situations.
I get that there are other issues in play here, and there aren’t time to get into them in one post. We could talk more about people who take advantage of welfare, people who hoard money overseas, a complex tax system with an absurd amount of loopholes, not to mention government programs that are too large, but this post is already too long. The bottom line for me is, I think many public institutions work IF they have the proper funding. And that takes revenue.
So we have a decision to make. We can call taxation “theft” and have lower taxes and bad public servants (or worse, lose those public employees altogether), or we can have higher taxes and strong public programs. It’s that simple. I see infrastructure crumbling in my town. I drive through potholed streets. I’ve driven over bridges and wondered if they would crumble. We can continue to cut taxes and watch these public programs that have historically served us well erode, or we can make a different decision. As a parent who is concerned for his children’s future, I know what I would decide. I think that’s what it takes to be “great.”