Published: November 04, 2009 03:57 pm      

Tax burden falls on poor

To the Editor:

There has been much discussion about executive compensation, especially for those companies that received taxpayer funding. There has also been a lot of discussion regarding paying for universal health care without increasing taxes or the deficit (recall the Obama campaign wanting to raise taxes on those earning more that $250,000 per year?).

At the instigation of a noted Hendricks County officeholder, I looked into the historic tax rates going back to 1913, and the results were thought-provoking. Initially, the lowest tax bracket was taxed at 1 percent, and the highest at 7 percent. During World War I, taxes were increased to 2 percent, then 6 percent for the lowest bracket, and to 67 percent and 77 percent for the highest bracket.

It is interesting that following the first world war, taxes were reduced to as low as 0.375 percent for the lowest bracket and 24 percent for the highest bracket in 1929, then increased slightly during the Depression to 1.125 percent and 25 percent respectively in 1930-31. During the peak part of the Depression, taxes were increased to 4 percent and 63 percent respectively, then leading into WW II to 10 percent and 81 percent. In 1944-45 they were at their highest, 23 percent and 94 percent. After the second world war, rates decreased slightly, and then increased to 22.2 percent and 92 percent during the Korean conflict.

There were gradual decreases in the following years to 14 percent and 70 percent respectively from 1971-81, and then in 1982 the lowest rate decreased to 12 percent, while the top bracket decreased to 50 percent. If your adjusted gross income was $20,000 in 1981, your income tax decreased $200, but if your AGI was $500,000, your tax decreased $100,000. The benefit was mostly for the wealthy then, but in 1988 the bottom bracket increased 3 percent to 15 percent, while the top bracket decreased to 28 percent! The person with $30,000 AGI saw their tax increased from $3,300 to $4,500, while the person with $500,000 AGI saw their tax decreased from $192,500 to $140,000, a saving of $52,500 per year.

The burden for financing the government falls disproportionately on those who can least afford it, while those who reap the most benefit of capitalism are asked to pay proportionally less than their share. If these executives are to receive billions of dollars in compensation, they should take on a larger share of the cost of capitalism. If we went back to the tax rates of the Nixon years, we could fund universal health care and rub out the deficit!

Nicholas G. Schmutte

Avon