Why America needs to go back to taxing the wealthy

(This article originally appeared in the San Jose Mercury News)

While
America has always been a place where a person could get rich, it used
to be that you got rich a bit more slowly, and everyone benefited in
the process. This is because we used to have very high tax rates at the
top.

A person could do very well, but income that came in above a
certain level was highly taxed and used to pay for the teachers,
police, courts and roads that enabled businesses to thrive. Just how
high were taxes? During America’s “golden years” of 1951-1963, tax
rates were over 90 percent on income over $400,000. Then through the
1960s and 70s, they were 70 percent on income above $200,000.

This
had many beneficial results — especially for the people who paid higher
taxes. Back then, government could afford to invest in programs that
improved everyone’s standard of living, including health, knowledge and
technology, all without borrowing. History recalls these as the years
we created and grew our prosperous middle class, built our public
universities, conducted our economy-changing scientific research and
developed a culture of thriving entrepreneurial businesses.

Back
when it took time to make a fortune, business people had to rely on the
health of the greater community to nurture their own enterprises. They
had to think and act long-term. They had to carefully build solid
businesses that satisfied their customers. They had to hold on to
workers because their experience was valuable.

Meanwhile, the roads and bridges used by their trucks
were kept in repair, our schools provided excellent education to their
potential employees, and our courts were well funded to properly
enforce contracts. Businesses and communities depended on each other to
do well.

But once top tax rates were lowered, vast personal
fortunes could be realized from a single quick deal. This created
incentives for people to engage in activities that we can now see
helped make our country a worse, and less prosperous, place.

Corporations
became predatory, caring little for the community because executives
planned to get rich quick and leave soon. Short-term business models
that cut employees to the bone and took advantage of customers began to
make sense.

Because of reductions in tax revenue, we cut spending
on schools and infrastructure. Yet even with all these cuts, our
federal government had to borrow to make up a shortfall. Now we have a
massive debt that costs us hundreds of billions in interest each year.

Once
businesses’ interdependence with the community went out the window, it
became more profitable to outsource or sell off our manufacturing
capacity. Then, as communities fell apart, those few who benefited from
such business practices could just fly away in their private jets. The
greater community was of no use to them except as a crop to be
harvested.

We can see the effects of this quick-buck, short-term
thinking all around us today. Our roads and bridges and schools are
falling apart. The experiment in low taxes has nearly destroyed our
economy, too, and may yet if we don’t stop borrowing instead of asking
the wealthy to pitch in.

So it is time to change the formula. It
is time to make our businesses part of our communities again. The way
to do this is to continue to help people become wealthy — just a bit
more slowly, please, and bring us all along. Bring back the top tax
rates of our golden years so we can all enjoy the benefits of our
economy again.

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