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The progressive income tax turns 100

Dr. Paul Kengor's picture

[Editor’s note: A version of this article first appeared at Investor’s Business Daily.]

Maybe it’s a measure of progressives’ refusal to look back, to always move “forward.” Otherwise, they should be celebrating right now.

In fact, President Obama and fellow modern progressives/liberals should be ecstatic all this year, rejoicing over the centenary of something so fundamental to their ideology, to their core goals of government, to their sense of economic and social justice — to what Obama once called “redistributive change.”

And what is this celebratory thing to the progressive mind?

It is the progressive income tax. This year it turns 100. Its permanent establishment was set forth in two historic moments: 1. an amendment to the Constitution (the 16th Amendment), ratified Feb. 3, 1913; and 2) its signing into law by the progressive’s progressive, President Woodrow Wilson, Oct. 3, 1913.

It was a major political victory for Wilson and fellow progressives then and still today. By my math, that ought to mean a long, sustained party by today’s progressives, a period of extended thanksgiving.

President Obama once charged that “tax cuts for the wealthy” are the Republicans’ “Holy Grail.” Tax cuts form “their central economic doctrine.”

Well, the federal income tax is the Democrats’ Holy Grail. For progressives/liberals, it forms their central economic doctrine.

As merely one illustration among many I could give, former DNC head Howard Dean and MSNBC host Lawrence O’Donnell were recently inveighing against Republican tax cuts. Dean extolled “what an increase in the top tax rate actually does.”

He insisted: “that’s what governments do — is redistribute. The argument is not whether they should redistribute or not, the question is how much we should redistribute. ... The purpose of government is to make sure that capitalism works for everybody. ... It’s government’s job to redistribute.”

What Dean said is, in a few lines, a cornerstone of the modern progressive manifesto. For Dean and President Obama and allies, a federal income tax based on graduated or progressive rates embodies and enables government’s primary “job” and “purpose.”

They embrace a progressive tax for the chief intention of wealth redistribution, which, in turn, allows for income leveling, income “equality,” and for government to do the myriad things that progressives ever-increasingly want government to do.

And so, in 1913, progressives struck gold. The notion of taxing income wasn’t entirely new. Such taxes existed before, albeit temporarily, at very small levels, and for national emergencies like war.

The idea of a permanent tax for permanent income redistribution broke new ground. The only debate was the exact percentage of the tax. In no time, progressives learned they could never get enough.

In 1913, when the progressive income tax began (and the first 1040 form, with instructions, was only four pages long), the top rate was a mere 7 percent, applied only to the fabulously wealthy (incomes above $500,000).

By the time Woodrow Wilson left office in 1921, the great progressive had hiked the upper rate to 73 percent. World War I (for America, 1917-18) had given Wilson a short-term justification, but so did Wilson’s passion for a robust “administrative state.”

Disagreeing with Wilson were the Republican administrations of Warren Harding and Calvin Coolidge, his immediate successors. Along with their Treasury secretary, Andrew Mellon, they reduced the upper rate, eventually bringing it down to 25 percent by 1925.

In response, the total revenue to the federal Treasury increased significantly, from $700 million to $1 billion, and the budget was repeatedly in surplus.

Unfortunately, the rate began increasing under Herbert Hoover, who jacked the top rate to 63 percent. It soon skyrocketed to 94 percent under another legendary progressive, FDR, who, amazingly, once considered a top rate of 99.5 percent on income above $100,000 (yes, you read that right).

Appalled by this was an actor named Ronald Reagan, himself a progressive Democrat — though not much longer. Reagan often noted that Karl Marx, in his “Communist Manifesto” (1848), demanded a permanent “heavy progressive or graduated income tax.” Indeed, it’s point 2 in Marx’s 10-point program, second only to his call for “abolition of property.”

The upper tax rate wasn’t reduced substantially until 1965, when it came down to 70 percent. Alas, President Ronald Reagan took it down to 28 percent. And despite claims to the contrary, federal revenues under Reagan increased (as they did in the 1920s), rising from $600 billion to nearly $1 trillion. (The Reagan deficits were caused by excessive spending and decreased revenue from the 1981-3 recession.)

The upper rate increased again (to 31 percent) under George H.W. Bush and under Bill Clinton (39.6 percent). George W. Bush cut it to 35 percent. Barack Obama has returned it to the Clinton level of 39.6 percent.

Here in 2013, 100 years henceforth, the wealthiest Americans — the top 10 percent of which already pay over 70 percent of federal tax revenue — will be paying more in taxes this year than any time in the last 30 years.

For progressives, this is justice. But it is also bittersweet: As progressives know deep inside, it still isn’t enough. For them, it’s never enough.

To that end, my enduring question for progressives is one they typically avoid answering, especially those holding elected office: In your perfect world, where, exactly, would you position the top rate?

I routinely hear numbers in the 50-70 percent-plus range.

Democrats like President Obama complain about Republican “intransigence” in raising tax rates but, truth be told — and as any liberal really knows — if it wasn’t for Republican resistance, progressives would rarely, if ever, cut taxes.

America would remain on a one-way upward trajectory in tax rates, just like under Woodrow Wilson and FDR, and just as it has been in its unrestrained spending for nearly 50 years.

Like their refusal to cut spending (other than on defense), progressives are dragged kicking and screaming into tax cuts. They need high income taxes for the government planning and redistributing they want to do; for Obama’s sense of redistributive justice.

This year, the progressive income tax turns 100. For progressives, getting it implemented was a huge triumph. Their success in making it a permanent part of the American landscape is a more stunning achievement still.

[Dr. Paul Kengor is professor of political science at Grove City College, executive director of The Center for Vision & Values, and author of the book, “The Communist: Frank Marshall Davis, The Untold Story of Barack Obama’s Mentor.” His other books include “The Crusader: Ronald Reagan and the Fall of Communism” and “Dupes: How America’s Adversaries Have Manipulated Progressives for a Century.”] © 2013 by The Center for Vision & Values at Grove City College.


Dr. Kengor, as usual, advances an argument to demonstrate the inadequacies of Progressive thinking and policies. His facts are accurate and support his proposition if one adheres to his basic assumptions about fairness. However, as usual, he fails to address the philosophical underpinnings of Progressive thought which render his editorial merely “preaching to the choir.”

Progressives assume basic inequity in people as a consequence of skills, intelligence, heredity, inheritance, station in life, etc. They see a weighted redistribution of wealth from the winners to the losers as a reasonable strategy to balance these inequities. Taxes provide the vehicle for this balancing strategy.

Conservatives assume that the world is a meritocracy. The best strategy to ensure equity is to provide equal rules and a level playing field. Capitalism (an economic evolution of survival of the fittest) will reward merit and punish sloth. Minimal government intrusion and free markets provide the platform for this strategy.

Until the basic assumptions of these philosophies are addressed, even brilliant arguments will have little persuasive effects on adherents to either position. The Grove City College bunch merely deliver homilies to robed vocalists. Thoughtful conservatives will be much more effective if they “evangelize” beyond the confines of the “church house.”

S. Lindsey's picture

... Progressives believe in re-distribution of wealth... a handout not a hand up...

Conservatives believe you own what you earn.. and believe the playing field should be equal and level... Equal Justice not Social Justice.

One philosophy keeps people dependent on the one giving the handouts.. the other philosophy allows personal responsibility of your own actions.

I believe he is correct...

"Whoever claims the right to redistribute the wealth produced by others is claiming the right to treat human beings as chattel."

-Ayn Rand

The problems with Progressive practices are hammered continually on this blog, so I will not repeat them here. I am very aware of the handout problem.

Conservatives do not address the problems with a practical application of their basic assumptions very well. Many people do not see the playing field as equal and level. In a true meritocracy, every bright person would have the same access to Harvard or even the University of Georgia. Every good communicator would have the same access to a television career. Every good writer would have the same access to a publisher. Only merit and effort would separate one from the other. It is unrealistic to posit that the playing field is totally equal for all (humans can’t achieve this because of our flaws, prejudices, inheritances, etc.). Conservatives should be more vocal about how they are ensuring this leveling (outside of government intervention) instead of merely chiding losers for not working as hard as the winners.

This is merely one example of how we can talk to people with opposing views instead of talking at them or dismissing them altogether. Kengor and the Grove City College faculty never take the next step.

S. Lindsey's picture

... everyone does have an equal chance... What you are looking for is an equal chance with others more then equal..

Life sucks.

Sometimes people through no fault of their own lose.

Most of the time, however, it was their poor choices that placed them on the path.

What you and others want is to bring others down in an attempt to raise the takers up. Sorry no where in History has that ever worked.

It never will. The only thing that you will accomplish is to make everyone equally miserable and impoverished.

If that's your goal then no thanks.

You want solutions... return to a real Free Market system... Get Business out of bed with Government and get Government out of the business of business. End Crony Capitalism.

That's a start stf...

"Whoever claims the right to redistribute the wealth produced by others is claiming the right to treat human beings as chattel."

-Ayn Rand

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