An interesting fact about the wealthy and taxes.

[Bluerthanblue]

America’s richest households in 1943, after exploiting all available loopholes, paid nearly 78 percent of their total incomes in federal tax.

All Americans were asked to pay more in taxes during World War II, and the wealthy were asked to pay the most of all, more in taxes than any Americans had ever before paid. In 1943, America’s most affluent households faced a 93 percent tax rate on all their income over $200,000. The next year, 1944, the nation’s top tax rate would rise even higher, to 94 percent on income over $200,000—the highest rate in American history.

A 94 percent tax? We scan this figure today with no small measure of disbelief. We who live in an era where politicos routinely equate taxes with tyranny cannot imagine a Congress of the United States ever imposing a tax rate so lofty. But here’s the truly incredible part. Back during World War II, many Americans, including the president of the United States, wanted our nation’s top tax rate to rise even higher.

How high? In 1942, only a few months after Pearl Harbor, President Franklin D. Roosevelt proposed a 100 percent top marginal tax rate. At a time of “grave national danger,” the president advised that April, “no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year. Roosevelt was proposing, in effect, what amounted to a maximum wage—at an income level that would equal, in our contemporary dollars, about $300,000.

more at:http://www.tompaine.com/articles/shared_sacrifice_shared_glory.php

This article was written back in 2004- but is as relevant today if not more so I believe.

A good read with some interesting facts.

[JDPriestly]

1. Now that is how you win a war -- through sacrifice.

If a war is important enough to justify killing innocent people somewhere far away then it is worth asking all Americans, especially the most affluent among us, to make real sacrifices.

We would have fewer wars (and, on edit, a healthier economy) if we required the wealthy among us to pay for our wars.

[Bluerthanblue]

4. what really hit me was the shared sacrifice and tangible things

that citizens were asked to do and participate in back then. The encouragement to work together, make the best use of our resources and help each other get by.

The explanation of why the "greatest generation" deserved the label was one I'd never heard before.


After 9/11 people wanted to help- what were we encouraged to do? SHOP. Get on a plane and go do disney world. Spend money.

Were we asked to conserve? To draw together for the good of everyone? To sacrifice anything individually?

Not that I recall.

The idea that a nation can engage in war without personal sacrifice from all its citizens in some way or another is stupidity- and as you say, makes waging war seem too painless.

[raouldukelives]

24. Indeed. That was an actual "war" though.

Anything in my lifetime has felt like a glorified police action. I firmly believe if we are ever faced again with a threat of real war, an enemy that truly threatens our continued existence, the people of this country will rally together and make many sacrifices to head off the threat.

[Bluerthanblue]

27. I used to feel that way too-

but I'm not so sure anymore.

Our indifference to suffering around us and the way the media is able to capture and manipulate public opinion on such a massive scale and twisted way has caused me to doubt that feeling.

The concept of "me" "mine" and "I" - is legion. We reject those who are struggling as being at fault for not succeeding, and justify greed and selfishness because sharing and having enough isn't ...'enough'.

We are being threatened by our own greed and consumerism.

The industrialized nations of the world are experiencing the same thing imo. Somethings gotta change.

[AnotherMcIntosh]

2. "after exploiting all available loopholes" -- How could the author have possible determined this?

Isn't the author claiming to have special expertise and knowledge which he cannot possibly have?

How can the author, or anyone, know all available loopholes for the year at issue? Or any other year? Is there a source where all the available loopholes for 1943 can be identified?

[Thor_MN]

3. I'd find it hard to believe that the 1943 tax code is not documented.

Even if it wasn't, I think we can assume that that the top earners did exploit every availble loophole and calculate what the average actual top rate was from the data. The government generates mountains of documentation. Trashing as much data as possible when you leave office is a recent GOP development.

[AnotherMcIntosh]

5. There was not a 1943 Tax Code, but there was a 1939 Tax Code which was amended.

At no time has any Congress codified, documented, or identified all the possible loopholes that might be applicable to the tax laws.

No group of tax practitioners have ever agreed as to what "all the possible loopholes" are or might be.

What does it mean to "exploit every available loophole," exactly. If, for example, a person owned a corporation in the Bahamas in 1943 which owned a New York office building and collected rent from tenants, and then made a loan to the corporate owner, can it be said by the author of any article who has not examined the corporate books and records that the rental income did not belong to the corporation but that the corporate owner was exploiting a loophole?

No author could determine that. Even the IRS could not determine that without examining the books and records. And the IRS has never audited the books and records of all corporations, or even all corporations located in the Bahamas.

[Bluerthanblue]

7. the same argument you are making applies to the percentages

that are used to determine what the wealthy are paying today.

What is it that you are getting at?

Do you NOT believe that the wealthy of '43 paid an amazingly higher tax rate than todays wealthy do?

[AnotherMcIntosh]

8. Re your question, "What is it that you are getting at?," I am getting at exactly what I said.

If this will make it more clear:
The author of the article (Sam Pizzigati) wrote, "America’s richest households in 1943, after exploiting all available loopholes, paid nearly 78 percent of their total incomes in federal tax." He claims to have special knowledge which he cannot possibly have. No one can know the extent to which the richest households exploited loopholes.

Tax attorneys and tax accountants don't even agree as to what "loopholes" are. It is a category that is not defined in the Internal Revenue Code, the Treasury Regulation, or the Revenue Procedures or Revenue Rulings. What one person might call a "loophole," e.g., another person might call it nothing more than a legitimate deduction. Another person might call the act of using certain creative thinking, which others might overlook, as a "loophole."

The richest households paid nearly 78 percent of total incomes in federal tax after exploiting all available loopholes? Excuse me, but I don't believe it. The claim is inherently incredible.

[Bluerthanblue]

10. do you also find it incredible that

the tax rate for the wealthy rose a year later to 94%?

What is the tax rate for the wealthy today- before loopholes?

[hfojvt]

33. I find it to be quite logical

First, the 78% is just the percentage of what was actually paid by rich people. It is assumed that they used every available loophole - just like they always do. Are you asserting that there were loopholes in existence which could have lowered their average rate to 65% or 60% or lower, but they didn't take them because of patriotism? That may be true of some people, but why isn't it a fair assumption, a reasonable assumption to assert that everyone exploits all available loopholes every year?

That seems like a reasonable assuption. Do you really think that they paid 50% of their income in taxes and then said "you know what, I am not gonna take this deduction or that one or that one, because I want to pay 78% of my income in taxes to support the war effort?" I highly doubt it. Probably instead they would take the extra 28% and support the war effort all right - by buying war bonds that paid tax free interest.

[Thor_MN]

14. So you are claming that in 1943, there were absolutely no IRS regulations in place.

That a stack of tax forms were just blank paper, people wrote down whatever they felt like writing...

I think you are being quite too literal - I think we can safely assume that each and every year that people will take advantage of every deduction that they can find or as the writer chose to put it, using every possible loophole. At the end of the tax season, all that matters is what one got away with, the final bill. Some take deductions that should not be allowed and don;t get audited or corrected, others miss an allowed deduction and pay more than required.

You are choosing to be pedantic and define that phrase as requiring every person to do a perfect tax return and pay the absolute minimum possible. Since that is obviously an impoosible situation, as you have pointed out, it becomes obvious that the intended meaning refers to what was actually paid, not what was the theorhetical perfect outcome. On payday, it only matters what one collected. One can piss and moan about what one should have been paid, but that will not put a single grain of rice on the table.

[AnotherMcIntosh]

16. I'm claiming exactly what I am claiming. You are creating a strawman when you mischaracterize

what I have said and wrote, for example:

So you are claming that in 1943, there were absolutely no IRS regulations in place.

If you have a comprehension problem, or just want to disagree to be disagreeable, too bad.

[Solomon]

18. LOL. You're the one creating a straw man.

Hilarious.

[AnotherMcIntosh]

21. Obviously, you cannot identify any purported straw man that I created because I did not do so.

The words that I posted speak for themselves. They don't need to be mischaracterized by anyone except by those who either genuinely do not comprehend what was said or are merely pretending to not do so.

[AnotherMcIntosh]

23. Have you found a "1943 tax code" yet?

"I'd find it hard to believe that the 1943 tax code is not documented."

Or have you figured out that

There was not a 1943 Tax Code, but there was a 1939 Tax Code which was amended.

[Bluerthanblue]

25. there is this-

http://www.irs.gov/pub/irs-prior/f1040--1943.pdf
http://www.irs.gov/pub/irs-prior/i1040a--1943.pdf
http://www.irs.gov/pub/irs-prior/i1040--1943.pdf
http://www.irs.gov/pub/irs-prior/f1040a--1943.pdf

[AnotherMcIntosh]

26. That has nothing to do with whether there was a 1943 Tax Code or not.

See, e.g.,

The tax statutes were re-codified by an Act of Congress on February 10, 1939 as the "Internal Revenue Code" (later known as the "Internal Revenue Code of 1939&quot . The 1939 Code was published as volume 53, Part I, of the United States Statutes at Large and as title 26 of the United States Code. Subsequent permanent tax laws enacted by the United States Congress updated and amended the 1939 Code.
http://en.wikipedia.org/wiki/Internal_Revenue_Code

[Bluerthanblue]

28. wtf?

There was a CODE in place in 1943- you are straining at a gnat.

[AnotherMcIntosh]

31. If you don't understand, you should read and inform yourself.

There was, as said, earlier above, in response to Thor_MN who claimed that there was a 1943 tax code (and specifically "I'd find it hard to believe that the 1943 tax code is not documented.&quot : "There was not a 1943 Tax Code, but there was a 1939 Tax Code which was amended."

The statement is either true or not true re "There was not a 1943 Tax Code, but there was a 1939 Tax Code which was amended."

Let's make it simple. There was a 1939 Tax Code. In 1943, there was a 1939 Tax Code that was in place. There was never a 1943 Tax Code. If you go to Wiki or another source, you can understand this. If you don't, you won't.

There either was or was not a 1943 Tax Code. There wasn't. No straining is involved. As said above, "There was not a 1943 Tax Code, but there was a 1939 Tax Code which was amended." The 1939 Tax Code with amendments was used in 1943. There is no 1943 Tax Code which you or anyone else can pull from the shelves because there wasn't one. There never has been a 1943 Tax Code.

[Thor_MN]

32. Wow, just wow... I apologize for not stating things in your choice of language..

I ammend my comment to say I find it hard to believe that the tax regulations which were used in 1943 are not documented. Satisfied? Will that comment allow you to stop objecting to words that don't fit your rigid mindset?

Don't look now, but I think there is a fork in the spoon bin of your silverware drawer...

[Bluerthanblue]

6. when he makes the comparison between the rates paid in 43 and those paid in '04

by the wealthiest citizens he's using the same kinds of informations sourcing I believe.

here's a link that might help you-

http://www.irs.gov/app/understandingTaxes/teacher/whys_thm02_les05.jsp

[AnotherMcIntosh]

9. Thanks, I guess. I don't see how the source of information is the same in '43 and '04.

Certainly, it is relatively common knowledge that more people have set up trusts in recent years than ever before. It is also common knowledge that many individuals in professional occupations, such as physicians and others, have incorporated their businesss. In addition, they have regularly set up deferred compensation plans so that they don't account for certain amounts as being income in the years in which funds are received by their corporations and set aside for future years.

The sources of information for '43 and '04 cannot be the same. We're not just dealing with apples and oranges, we're dealing with apples and basketballs.

[Bluerthanblue]

11. the point you are making only makes my argument about

how little the wealthy are paying today as compaired to in the '40's more credible.

[AnotherMcIntosh]

12. Of course that is the situation. The author's credibility, imo, is somewhat undermined when he

purports to know with a mathematical certainty something which he cannot possibly know. Why doesn't he just say what you said, but do so without the exaggerated certitude?

[nadinbrzezinski]

20. Every historian I know accepts that the top marginal rate during the

war years was 90 percent... and that there were yes, loopholes.

I have no idea what the problem is here.

[AnotherMcIntosh]

22. Unless there is someone claiming that the marginal rate was not that high and that there

were not loopholes, there should be no reason for the confusion.

As far as I can tell, no one has said or implied that. If you know of anyone who has, who is that person?

Also, as far as I can tell, no person other than the author of the article (Sam Pizzigati), has ever claimed to know the percentage of income paid by "America’s richest households in 1943,"

"after exploiting all available loopholes,"

If there is any historian who can claim to know the extent to which "America’s richest households in 1943" exploited all available loopholes, what's the name of that historian? Or historians?

[Egalitarian Thug]

13. K&R Estate Tax was changed in 1943 as well. The rich have hated America for a long time. n/t

[dmosh42]

15. WW2 was a true "survivor" struggle across both the Atlantic and Pacific....

Every war since was a war of choice, and mostly steered by the rich who benefitted the most. Only in WW2 did you see the children of the wealthy being in the military as a patriotic duty. Now it's the offspring of the poor and lower middle class shouldering the military duties while the rest of the country shops, if they have money.

[Sgent]

17. I can't speak for WWII

But 90% rates stayed in place until the early 60's when Kennedy dropped them to (I think) 70%.

Its important to realize however, that NO ONE actually paid anywhere near those rates due to tax loopholes that just don't exist today.

Passive Activity Losses, basis limitations and the like didn't exist, there was no listed equipment for accelerated depreciation, etc. This meant that I could invest 10,000 into a partnership and get a 100,000 tax write-off.

It wasn't until the 1986 reform that huge gaping loopholes were closed. Talk to anyone who was an accountant at that time, and most wealthy people's tax bills went up even though the marginal rate was lowered.

[aquart]

19. We were also drafting their kids.

You're more willing to pay for a gun if your kid has to carry it.

[dtom67]

29. Ding, ding , ding ...

The best step toward saving America, that will never be taken ...

[dtom67]

30. They're asking for it ...

perhaps they have forgotten the lesson from 1789-1799 ?