14 Ways a Return to Eisenhower-era 90% Top Tax Rates Helps Fix Our Economy:

 1) - It makes it take longer to end up with a fortune. 

In fact it makes people build and earn a fortune, instead of shooting for quick windfalls. This forces long-term thinking and planning instead of short-term scheming and scamming. If grabbing everything in sight and running doesn’t pay off anymore, you have to change your strategy.

2) - It gets rid of the quick-buck-scheme business model. 

Making people take a longer-term approach to building rather than grabbing a fortune will help reattach businesses to communities by reinforcing interdependence between businesses and their surrounding communities. When it takes owners and executives years to build up a fortune they need solid companies that are around for a long time. This requires the surrounding public infrastructure of roads, schools, police, fire, courts, etc., to be in good shape to provide long-term support for the enterprise. You also want your company to build a solid reputation for serving its customers rather than cheapening the product, pursuing quick-buck scams, cutting customer service, etc. The current Wall Street/private equity business model of looting companies, leaving behind an empty shell, unemployed workers and a surrounding community in devastation will no longer be a viable business strategy.

3) - It will lower the executive crime rate. 

Today it is possible to run scams that let you pocket huge sums in a single year, and leave behind the mess you make for others to fix. A high top tax rate removes the incentive to lie, cheat and steal to grab every buck you can as fast as you can. This reduces the temptation to be dishonest. If you aren’t going to keep the whole dime, why risk doing the time? When excessive, massive paydays are possible, it opens the door to overwhelming greed and a resulting compromising of principles.

4) - Taxing the wealthy ends budget deficits

Combined with badly-needed cuts in military spending – we spend more on military than all other countries on earth combined – taxing the wealthy ends budget deficits and starts paying off the massive Reagan/Bush debt. This reduces and ultimately eliminates the share of the budget that goes to pay interest. The United States now has to pay a huge share of its budget just to cover the interest on the borrowing that tax cuts made necessary.

5) - Brings in revenue to pay for improvements in infrastructure

It will bring in revenue to pay for improvements in infrastructure that then cause the economy to explode for the better. Investing in modern transit systems, smart grid, energy efficiency, fast internet and other improvements leads to a huge payoff of increased prosperity for all of us – especially for those at the top income levels. Infrastructure improvement and maintenance is the “seed corn” of economic growth. We have been eating that seed corn since Reagan’s tax cuts.

6) - [related] Revenue for improving schools colleges universities. 

Not only will this help our competitiveness, but it will improve each of our lives and level of happiness.

7) - Boosts economic growth and rebuilds a strong middle class. 

A consumption-based economy does better when consumers have more to spend. Perhaps not cause-and-effect, though I suspect so, but after FDR raised top tax rates the economy grew dramatically. The 90% top rate years under FDR, Truman, Eisenhower and the beginning of the Kennedy years were the years when we built the middle class. And remember, after Clinton raised top tax rates only modestly the economy grew. How's it been doing since Bush's tax cuts for the rich? A look at economic growth rate charts shows a steady decline in the decades since top tax rates began to fall. 

8) - Increased government spending for benefit of regular people

It is good for business because increased revenue will enable increasing government spending for the benefit of regular people. This recirculates money into the economy more productively than the current system of putting huge fortunes into a few hands and hoping for a resulting consumption of high-end goods. The wealthy can only spend so much so more disposable income in the hands of regular people is good for business. 

9) - It protects working people. 

Exploiting workers with long hours, low pay or lack of pay increases, lack of worker protections, firing union organizers and schemes that call employees “contractors” will no longer pay off as it does today. The era of extreme union-busting came in at the same time as the tax cuts.

10) - Redistributes income and wealth in ways that help all of us. 

Currently a few people receive most of the income and own most of everything. A very high top tax rate reduces this concentration of wealth.

11) - Fights instability resulting from concentration of wealth. 

Great inequality in a society and the resulting loss of opportunity results in political instability that can lead to extreme ideologies, rebellion, etc. We are seeing all the signs of a resurgence of these problems today.

12) - Rebuilds our sense of democracy and belief in equality. 

As we have seen and are seeing, when too much is in the hands of too few, they have too much power and influence and use it to get even more.

13) - Provides all equally with benefits of our joint efforts.

It will strengthen the government that We, the People have worked hard to build, and strengthen its ability to enforce the laws and regulations that protect all of us and the resources we hold in common. It will increase its ability to provide all of us equally with the benefits of our joint efforts and our economy.

14) - Those affected work harder to make up the difference. 

Taxes are how we all pitch in to enjoy the benefits and protections of modern society. Those benefits and protections are what enable people to become wealthy, and we ask that they give some back so others can prosper as well. 

14 Ways Return to Eisenhower-era 90% Top Tax Rates Helps Fix Economy:
http://www.huffingtonpost.com/dave-johnson/14-ways-a-90-percent-top_b_551802.html

---

EISENHOWER’S TAX POLICIES INVESTED IN THE FUTURE, NOT THE FEW

His Administration's Push For High Taxes and High Public Investment Helped Build the Mid-Century Middle Class

It's a tax bill for the middle class. It’s a tax bill for jobs. It’s going to bring a lot of companies in. It’s a tax bill for business, which is going to create the jobs,” President Donald Trump told business leaders earlier this fall as the Republican Congress pushed through sweeping tax legislation.

None of that’s true, but it does beg the question: What would a tax policy need to look like to accomplish all this? Going back to an earlier Republican administration provides a striking example.

During the administration of President Dwight D. Eisenhower, from 1953 to 1961, the top income bracket in the United States climbed to a marginal tax rate of 91 percent. Taxes on corporate profits were two times as great as they are in 2017, and that’s before the current proposal to cut that rate to 21 percent. The tax on large estates rose to more than 70 percent. Businesses operated under a relatively high tax burden, and they employed a labor force in which one-third of the workers were unionized and bargained with executives as equals. Corporations served a diversity of stakeholders as opposed to stockholders. The result was a booming economy that benefited most Americans.

In 1955, Fortune magazine noted approvingly that the incomes of the top 0.01 percent of Americans were less than half what they had been in the late 1920s, and their share of total income was down by 75 percent. In the 1950s, the average corporate CEO received 20 times more compensation than the firm’s typical employee; by 2016, CEOs’ salaries averaged more than 200 times those of the average worker.

Americans in the 1950s enjoyed what economists called “the virtuous circle of growth”: Well-paid workers fueled consumer demand, which, in turn, generated business expansion and hiring, raising corporate profits, which produced higher wages and more hiring. A consumer culture flourished and, therefore, so did the economy. Fortune noted that, by the mid-1950s, the number of middle-class families was increasing by 1.1 million a year.

A key part of the prosperity equation of the 1950s was public policy—what the federal government accomplished with its tax revenues. The Eisenhower administration invested in human capital, not in corporate welfare. It expanded Social Security. It raised the minimum wage by $1 an hour, or $8.85 per hour in 2017 dollars. (The federal minimum wage is currently $7.25 an hour.) And Eisenhower initiated the greatest public works project in American history, the interstate highway system, a program funded by a gas tax.

Eisenhower’s 1958 budget nearly doubled the federal budget from that of the Truman era, and raised the national debt by billions of dollars. But it also provided jobs and education for millions of Americans who, in turn, would repay the nation many times over.

It would have been politically expedient in the Cold War era for Eisenhower to have spent more of the government’s largesse on military hardware and less on human capital. But he didn’t. His response to the Soviet Union’s launch of the Sputnik satellite in October 1957 is instructive. Eisenhower sponsored the National Defense Education Act to promote the study of science, foreign languages, and area studies in universities. He established the President’s Science Advisory Committee to fund both research and infrastructure. Federal funding for research and development increased from less than 0.7 percent of the GDP in 1953 to 1.8 percent of the GDP by 1959.

That earlier era of tax policy is long gone and is about to recede even further into the past. Instead of the virtuous circle of growth, we have devolved into a vicious cycle of decline as tax and spending cuts, along with deregulation, have skewed federal policy toward the benefit of the few. More than 90 percent of Americans born in 1940 at the start of the baby boom earned more than their parents; only 50 percent of those born in 1980 will do so. By 2011, 51 percent of the population was middle-class, compared to 61 percent in 1971.

The decline in federal support for higher education has corresponded with tuition hikes at public colleges and universities; those hikes make it harder for low-income students to complete their studies and enjoy the “college premium,” the increase in pay that accrues to university graduates. In the 1970s, Pell grants for low-income students covered nearly 80 percent of the costs at a public university; by 2013-14, they covered just 31 percent. Federal research spending is once again roughly at pre-Eisenhower levels.

Lower taxes on the wealthy are irrelevant to solving these problems, and may worsen them. The decline in the marginal tax rate and in the top capital gains tax rate over the past six decades has not, according to the nonpartisan Congressional Research Service, correlated with economic growth. Instead, it is “associated with the increasing concentration of income at the top of the income distribution.” Most economists discredit the notion that lower taxes will lead to greater growth and employment. Sweden, with a top marginal tax rate of 56.4 percent, experienced a GDP growth rate of 3.2 percent in 2016, more than double the U.S. rate of 1.5 percent.

Corporations today are sitting on record levels of capital, deploying it often only to buy back their own shares rather than investing to grow the economy. Investment in the national interest is clearly and historically the role for government. Eisenhower was fond of quoting another Republican, Abraham Lincoln, on the proper role of government: “The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do at all, or cannot so well do, for themselves, in their separate and individual capacities.”

Taxes are the means to this end. That burden, shared widely, will indeed make America great again. It is our best investment in the future.

DAVID GOLDFIELDis the Robert Lee Bailey Professor of History at the University of North Carolina, Charlotte, and the author of The Gifted Generation: When Government Was Good.

EISENHOWER’S TAX POLICIES INVESTED IN THE FUTURE, NOT THE FEW https://www.zocalopublicsquare.org/2017/12/19/eisenhowers-tax-policies-invested-future-not/ideas/essay/

---

---

Ike disliked high taxation, but thought tax cuts should be deferred until after the national debt was reduced.  Otherwise the deficit would grow and cause inflation, deteriorating people’s money and negating the benefit of the tax cut.

He would not agree to a tax cut if it reduced government revenue. He opposed House Speaker Sam Rayburn’s plan to cut taxes for every dependent a family had because it would reduce revenue.

Ike ended the Korean War in July 1953. The war’s end caused the government to decrease its armament purchases. Unemployment rose from 2.6% to 6.1% by September 1954. Arthur Burns, an economic advisor, said Ike should cut taxes and expand public works programs to reverse the economic downturn. Secretary Humphrey objected.  Ike sided with Burns and pushed for a $7 billion tax cut.  He also signed legislation extending unemployment benefits for four million workers. This deficit spending ended the small recession in less than a year.

Ike credited the confidence of the American people in the economy for the 1954 recovery. The government was ready to use spending programs, but those would not have been put into effect until after the recovery had occurred. Implementing them then would have caused inflation.

Ike’s tax cut targeted middle and lower class families.

Ike said that anyone with a high income ($7 million in today’s dollars for this example) doesn’t get to complain about high taxes. 

He rejected the Democrats’ proposal for a tax cut in 1960 because he wanted to balance the budget one last time before leaving office. He hoped Nixon would succeed him and could get the credit for the tax cut.

Ike didn’t believe in an extra tax on capital gains.

Ike vetoed a bill giving tax relief to movie theaters for their tickets. Ike thought the movie industry’s problems came from spending too much on actors whose “only qualification were good looks.” Ike thought he was informed on this issue because, “I have personally met a number of these stars; those with whom it is a pleasure to talk informally constitute a very small portion of the whole. I think one of ten would be an exaggeration.” In addition, Hollywood had a monopoly on in-door entertainment after outcompeting its alternatives. It grew careless in its monopoly and could not compete with television. Ike ignored their begging and vetoed the bill.

The Eisenhower Encyclopedia (each paragraph has speech reference)
https://www.dwighteisenhower.net/economic-policy

Eisenhower right on higher corporate tax rates 
https://www.dailyadvance.com/opinion/editorial_columnists/eisenhower-right-on-higher-corporate-tax-rates/article_eb44cad4-5598-5d14-8bd7-dceb42dc7cc7.html

Radio and Television Address to the American People on the Tax Program. 
https://www.presidency.ucsb.edu/documents/radio-and-television-address-the-american-people-the-tax-program