In the aftermath of the Great Depression of the 1930s and the world war that followed, the United States understood the need to genuinely “pull together.” The task was to rebuild an economy that had been badly damaged by those two historic tragedies. So taxes on corporations were raised and taxes on the wealthy were raised. They had more than average people. They had suffered less from the ravages of the Depression. They could contribute more to rebuilding the economy. And the country demanded that they do so.
Democrats and Republicans agreed to make the top income tax rate for the wealthiest Americans 91% in the 1950s and 1960s and 70% in the 1970s. That compares to a top rate of 39.6% today. Yet we are now in a deep and long-lasting depression yet again. But this time with already heavy accumulated debts – especially because of the economic crisis that hit in 2007. The huge bailouts and stimulus packages rapidly increased the national debt.
One obvious way to give the government what it needs to rebuild our now badly hobbled economy would be to raise the top income tax bracket back to what it was the last time economic crisis hobbled our economy. Doing so would also sharply reduce the government’s need to borrow and so ease the debt problem. Another obvious way to the same ends would be to raise tax rates on corporate profits to what they were in the decades right after the world war.
Instead of taking these steps for the same reasons that applied after the world war, both parties are now choosing an altogether opposite policy approach. They are cutting corporate tax rates while refusing to consider, let alone implement, a serious increase in top income tax brackets to their earlier levels. That approach reflects neither the history of the U.S. economy nor the needs of the vast majority of citizens. It reflects instead the narrow self-interest of major corporations and the small part of the population they make rich.
For these reasons, I have agreed to serve in the new Green Shadow Cabinet, a project designed to show that “another government is possible.” Together with Dr. Jill Stein and Cheri Honkala, who were the 2012 Green Party presidential nominees, and many others, I will contribute to building the political alternative our economy so desperately needs. Join me and us at http://www.GreenShadowCabinet.us
~ Richard Wolff is Chairman of the Federal Reserve System in the Green Shadow Cabinet.