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Welcome to the Tax History Project, a public service initiative from Tax Analysts. Established in 1995, the Project provides scholars, policymakers, journalists, and the general public with information on the history of U.S. public finance. Please take a look at our features, send us your comments, and sign up for our free newsletter.
- FDR's Unlikely Prescription: Tax Hikes for Recovery
In this corner, Amity Shlaes, senior fellow at the Council of Foreign Relations, Bloomberg columnist, and conservative slayer of liberal dragons. To her left, Paul Krugman, Nobel Prize winner, New York Times columnist, and spiritual leader of the Ancient and Hermetic Order of the Shrill (no kidding -- do a Google search). In recent weeks, Shlaes and Krugman have squared off on a key question: Did the New Deal work? In a series of articles and blog posts, they've traded insults and analysis. For my money, Krugman has gotten the better of the exchange, successfully defending Franklin Delano Roosevelt from charges that he prolonged the Great Depression with a decade of incoherent and often misguided policy improvisation.
But are Shlaes and Krugman asking the right question? It's certainly relevant, given the prospect of a New Deal do-over in the Obama administration. But a myopic focus on the bottom line -- New Deal: success or failure? -- can obscure other important questions. And get in the way of useful lessons.
[Read More] - New Deal Taxes: Four Things Everyone Should Know
"Suddenly, everything old is New Deal again," according to Paul Krugman. And he's right: As darkness descends on the U.S. economy, almost everyone is reaching for Roosevelt. Newspapers are replete with Depression speculation, and pundits are pondering the prospects of a new New Deal. But much of today's New Deal nostalgia is deeply ahistorical. Liberals have engaged in more than a little romantic recollection, while conservatives have waged a dubious rearguard action to discredit New Deal achievements. So let's set the record straight on at least one key element of the New Deal: taxation. Here are four things that everyone should know about New Deal taxes. [Read More] - News Analysis: Mandate Matters
Does Barack Obama have a mandate? Yes. Does it extend to taxes? Probably. Can Democrats agree on what it means? We'll see.
Every election is followed by a mandate debate. Losers minimize their failure and winners exaggerate their success. Even close elections follow this pattern. When George W. Bush lost the popular vote in 2000, his partisans still claimed a mandate, albeit a slightly tarnished one. "Governor Bush after all received more votes than Bill Clinton, and we didn't see Bill Clinton be the least bit shy about advancing his agenda," one supporter told The New York Times. Obama enjoys a more plausible claim to a mandate. And many observers seem ready to grant him one. "His presidency is probably going to mark the end of the Reagan era," historian Robert Dallek told Newsweek. "I think you're going to see a whole new era of federal progressive activism." [Read More] - The Meaning of a Tax Revolt
Thirty years ago, California voters approved Proposition 13, capping property taxes and recasting the fiscal landscape for decades to come. It was a crucial victory for the conservative movement and a watershed in American political history. The success of Proposition 13 signaled the end of the New Deal order and the start of a Republican ascendancy.
Or maybe not. For decades, the passage of Proposition 13 has served as a creation myth for the modern conservative movement. And not without cause: The ballot initiative certainly presaged a new era in American politics. But Proposition 13 was not a grass-roots revolt against big government, at least not originally. As sociologist Isaac Martin points out in his outstanding new book, The Permanent Tax Revolt, it arose from a heterogeneous movement populated by liberals and conservatives.
[Read More] - The Rhetoric of Redistribution: Lessons From the 1930s
Joe the Plumber is a late-breaking star of the presidential campaign. Since confronting Democratic presidential nominee Sen. Barack Obama of Illinois during a campaign stop earlier this month, Joe Wurzelbacher has become a media darling, a stand-in for "average Americans" everywhere. In the process, he's given a star turn to a key policy issue: redistributive taxation. In their six-minute exchange, Wurzelbacher challenged Obama on his plan to raise taxes for those making more than $250,000 a year. The nominee began by noting his promised tax breaks for small business. Eventually, however, he took the bait. "I think when you spread the wealth around, it's good for everybody," he said. It's been a while since a leading Democratic nominee promised to share the wealth (hat tip to Huey Long). But it's about time.
[Read More] - Too Much: The Historical Link Between Bailouts and Pay Caps
Complaints about outsized executive pay have prompted Congress to include compensation limits in the recently passed Wall Street bailout measure. Are the limits a good idea? Maybe. Will it work? If history is any guide, probably not. In dollar terms, executive compensation is trivial. Even the huge paychecks common on Wall Street shrink to insignificance when compared to the size of the proposed bailout (or the liabilities of financial firms now in peril). To be sure, some compensation schemes reward short-term profit at the expense of long-term prudence. But the most salient arguments for executive pay caps -- at least in the political arena -- are moral, not practical. [Read More]
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