Originally Posted by Sam Pizzigati
On April 27, 1942, Franklin D. Roosevelt went on national radio and pronounced that ?no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year.? FDR?s proposed $25,000 limit would be worth today, after adjusting for inflation, about $300,000.
How did Americans, you might wonder, react to Roosevelt?s proposal? Did members of Congress charge that the President had gone out of his mind? Did business leaders predict the end of civilization as we know it? Did pollsters report a tidal wave of public revulsion?
Nothing of the sort. George Gallup report that 49 percent of Americans supported FDR?s idea of an income cap, 37 percent opposed it, with the rest undecided.
And what about members of Congress? They didn?t, in the end, adopt FDR?s 100 percent top tax rate. But they did enact, halfway through World War II, a top tax rate of 94 percent on all income over $200,000.
Overall, in 1943, the richest 2,500 Americans, after exploiting every loophole they could find, paid 78 percent of their total incomes in federal income tax.
How does that compare to today? Last year, our richest Americans, after exploiting every loophole they could find, paid 17.5 percent of their total incomes in federal tax.
Back in FDR?s time and before, Americans saw great concentrations of private wealth as a threat to our republic. Those Americans feared concentrated wealth.
Louis Brandeis, one of greatest Supreme Court justices, put the matter simply. "We can either have a democracy in this country,? Brandeis said about a hundred years ago, ?or we can have great wealth concentrated in the hands of a few, but we can?t have both.?
Brandeis faced an America where great wealth did rest in the hands of a few.
In 1915 average Americans made less than $10 a week. America?s richest families then averaged, on a weekly basis, over $20,000. That would be the equivalent today of $370,000 a week.
America a century ago, declared Justice Louis Brandeis, had become a plutocracy. The rich ruled. They bought politicians. They squeezed workers. They built giant mansions. They totally dominated America?s political and economic life. Sounds familiar?
But average Americans, back a century ago, fought fight back. They battled to cut the rich down to democratic size. They wrote into law a steeply progressive income tax. They enacted an estate tax to prevent the inheritance of vast dynastic fortunes. They passed antitrust legislation. They gave trade unions the right to organize and challenge corporate power.
By 1950, America?s plutocracy would be no more. By 1950 America?s most opulent mansions had become museums and libraries and hospitals and schools. The American people had triumphed over America?s plutocrats, and that triumph made them incredibly proud.
Frederick Lewis Allen, then America?s most popular and widely read historian, captured that pride in his last book, a 1952 history of the first half of the twentieth century. Allen titled his book The Big Change.
And what was that big change? Americans, Allen proclaimed, had brought about a massive ?redistribution in income from well-to-do to the less well-to-do.? The United States, to its great and undying credit, had become a significantly more equal place.
Modern America, Frederick Lewis Allen and his readers believed, would forever more be a middle class nation. The plutocrats had been routed. They would never be back.
The nation?s most respected economists sent the same message. In 1955, Simon Kuznets, a future Nobel Prize winner, delivered his presidential address to the American Economic Association. His thesis: The more industrial societies like the United States mature, the more equal they become.
Who could argue with that? In the 1950s and 1960s, the United States was becoming more equal. The share of the nation?s wealth belonging to average Americans was rapidly increasing, the share belonging to the rich just as rapidly decreasing.
In the quarter century after World War II, the incomes of average Americans, after taking inflation into account, doubled.
And then, in the early 1970s, everything started changing. America stopped becoming more equal. Real wages for average Americans started stagnating. America?s biggest fortunes, meanwhile, started multiplying, slowly at first, but then, after 1980, at breakneck speed.
Between 1973 and 2000, the average income of the bottom 90 percent of the American people, after adjusting for inflation, actually dropped by 7 percent.
Over that same time period, the incomes of our top 1 percent, the folks who took home at least $337,000 last year, rose by 148 percent. And the richest of the rich, the top tenth of the top 1 percent, saw their incomes rise 343 percent.
The plutocrats were back.
In 1975, the most widely acclaimed CEO in the United States was Reginald Jones, the chief executive at General Electric. Reginald Jones took home $500,000 in 1975, a sum that equaled 36 times the income of that year?s typical American family.
In 2000, the most widely acclaimed CEO in the United States was Jack Welch, who also happened to be the chief executive at General Electric. Welsh took home $144.5 million in the year 2000, a sum that equaled 3,500 times the income of that year?s typical American family.
In 1982, in its first annual census of America?s four hundred richest individuals, Forbes magazine counted 13 billionaires. In 2000, Forbes counted 267.
The plutocrats were most definitely back.
In just twenty-five years, the United States had, in fact, witnessed the most colossal redistribution of wealth in modern world history.
But here?s the amazing part. This enormous redistribution of wealth today sits nowhere on our political radar screen.
Our nation?s top political leaders, Republicans and Democrats alike, have essentially concluded that colossal concentrations of wealth, in the grand scheme of things, need not be cause for concern. And too many of the rest of us haven't challenged that conclusion.
Oh sure, we Americans today certainly do bellyache about CEO pay excesses. And we?re not happy with tax giveaways to the rich. We may even lament, with John Edwards, that ?we live in a country where there are two different Americas.?? But our hearts and minds remain overwhelmingly focused on the absence of wealth, not its concentration.
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