It seems that a discussion of the relative degree of progressiveness in the tax structure cannot take place without an understanding of the way in which the government redistributes taxes. For instance, the proportion of income (earned and property) paid in taxes may increase as income increases, which would be considered progressive. However, if the redistribution is essentially returned to its source, by proportional payments to different income classes equal to each's original payments, then the tax system is not progressive. Conversely, a flat tax can become a progressive tax if the proportion of taxes distributed to different income classes rises as income falls. My question, therefore, is what relationship do taxes collected, by income class, have with tax redistribution? Jeff Fellows Adjunct Professor Lewis & Clark College Portland, OR 97230 On Wed, 26 Feb 1997 [EMAIL PROTECTED] wrote: > 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. > > > > > > > >
