I wrote:>in the US, if I am not mistaken, the big increases in
the progressiveness of the tax system coincide with wars. <
Nathan Newman writes >>I don't think this is accurate. THe really
progressive nature of our tax system was created during the
depression.<<
I don't have a table or graph indicating when major increases
and decreases in the progressiveness of the tax system over the
years, but that point sounds right to me. It also doesn't
contradict the more complete & sophisticated version of my
hypothesis that is not captured by the snippet above: during
the Depression, there was a dramatic increase in social unrest
(remember the way that the army was used to disperse the
veterans' bonus march, etc.) Groups such as the CPUSA actually
became mass organizations, while workers were sitting down in
factories in Detroit! (The list could go on.) This kind of
thing, together with the demoralization of the capitalists
after the 1929 crash, encouraged our rulers to make concessions
such as an increase in the progressiveness of the tax system
even without a war.
>>Wars may allow some increases, but it is as likely to be general
tax increases for shared sacrifice.<<
Except for the idea of a general tax increase, that's basically what
I said. We need to have some measure of the overall progressiveness
of the tax system in order to see whether taxes became more
progressive or not during World War II.
But I try to get beyond the official rhetoric of "shared sacrifice"
(or the use of such rhetoric by those outside the establishment to
pressure the elite). Trying to look at things more objectively, I
think it's better to see tax increases on the rich as a way of
keeping the troops happy (and also the people at home who suffer
from shortages, rationing, illegal-market activities, and war
profiteering). Rather than employing rhetoric, it's best to look at
the actual class and other struggles.
>>Vietnam had tax increases but they wer not particularly
progressive.<<
According to Joseph Pechman's FEDERAL TAX POLICY, table A-1 (1977:
298), while the tax rate on the lowest tax bracket (below $500)
fell a little from 1964 to 1965 and then stayed constant, the tax
rate on the upper tax bracket (above $100,000) rose from 1965-67 to
1968 to 1969, going from 70% to 77% (before falling during the
Nixon years). That is, LBJ's war-era tax surcharge hit the high
brackets more than the low brackets.
Of course, this story does NOT tell us anything about the over-all
progressiveness of the tax system or about that of the entire
package of income and spending.
It's the latter package that should be central. During the Vietnam
war, LBJ was afraid to cut civilian programs such as the "war on
poverty" because of the increasing popular discontent with the war
and the social situation (cf. the wave of "riots" in 1968) while he
didn't want to cut war expenditures for obvious reasons. This
pushed him to raise taxes via a tax surcharge which hit the rich
most. Because he didn't want to offend them, his main constituency,
he also engaged in increased deficit spending, which in this
context encouraged inflation to get worse. It's true that the
inflation tax hurts the poor and those on fixed incomes, but it
also hits lenders, who are typically rich. So maybe those two can
be seen as washing out. (The "tax" on soldiers (being drafted to
risk their lives) is hard to quantify.) If this story is right, it
seems that the overall package became more progressive as the
individual income tax became more progressive.
>>BTW the 1993 tax bill was a moderate but significant increase
in tax equity with tax increases on the wealthy matched with tax
cuts for the working poor (EITC). No war in sight.<<
Of course, that was not the kind of spike in progressiveness
(a "big increase") that I was talking about. It seems a
long-overdue reaction to the radically increasing
regressiveness of the tax system in the years before, which
had spawned major anger, though usually not expressed out of
"normal" channels. It was also one of the last efforts of the
Clinton administration to act like traditional Democrats
before totally succumbing to sleaze.
in pen-l solidarity,
Jim Devine [EMAIL PROTECTED]
[EMAIL PROTECTED]
Econ. Dept., Loyola Marymount Univ.
7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"Segui il tuo corso, e lascia dir le genti." (Go your own way
and let people talk.) -- K. Marx, paraphrasing Dante A.
