Decatur, Ala. | Thursday, May 23, 2013
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Editorial
Raising tax rate sensible

The fundamental debate that has Washington in turmoil is whether the top marginal rate of the highest-income Americans should rise from 35 to 39.6 percent.

No one can doubt the pressure on some in Congress to oppose the increase. Many elected representatives would personally be affected, and even more are receiving contributions from donors who would lose money if the rate goes up.

Political contributions increasingly are an investment, and a common purpose of the investment is to avoid taxes.

It is not politically wise for a congressman to say the reason for opposing a tax increase — that has no impact on 97 percent of his constituents — is to protect contributors who are among the 3 percent who would pay a little more.

Such an explanation would be especially unwise for Alabama politicians. With a median per-capita income of $22,711, an increase in the top marginal tax rate is an annoyance that will never have any relevance to the vast majority of Alabamians.

One way for politicians to oppose the increase is to proclaim it as socialism. The label seems to resonate in Alabama, but it makes no historical sense. From 1932-87, the top marginal rate never fell less than 50 percent. During most of those years, it was at least 70 percent, and for many it was more than 90 percent.

Moreover, some of America’s greatest boom times have been when top tax rates were far higher than 35 percent. The United States had a surplus — and economic growth — from 1998 through 2001, when the top marginal rate was 39.6 percent. It had a surplus in 1969, when the top rate was 70 percent. It had surpluses in 1956 and 1957, when the top rate was 91 percent.

Since 1940, the United States has had a surplus in 12 years. In seven of those years, the top marginal rate was 91 percent; in one it was 70 percent; and in four it was 39.6 percent.

The point is not that the high rates created the economic growth, but obviously they did not prevent it. And partly because of the high rates, economic activity created a surplus and curbed debt.

A slight tax increase on Americans who have benefited most from the U.S. economy should not be a partisan issue. Excessive taxes can inhibit growth, but a top marginal rate of 39.6 percent is well within the zone of safety.

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16 comments on this item

I wouldn't expect any thing else from the Decatur Democrat!!!

Lowering tax rates increases government revenue by creating new taxpayers. Raising taxes stifles economic growth and decreases government revenue. Raising rates on the "rich" will not remedy our fiscal problems, but, it will make the poor "feel" better. The Decatur Daily has for long advocated a tax system based on envy rather than sound economic principles. This editorial is part of the lead-up to endorsing an increase in the debt ceiling which the Daily will do in the coming days. Those who desire to read Friday's news on Thursday may return to the comment section tomorrow, or, wait until Friday and read it in the Decatur Daily.

Certainly, unlike the poor, the rich can actually pay more without reducing the number of jobs created. Most of the rich actually DO NOT create jobs, the just hoard the wealth. The problem with the Decatur Daily theory is that there is never enough as far as rasing taxes. They want to raise taxes when times are tough, when people can actually less afford to pay more taxes. And, when times get better, the opportunity to do a REDUCTION IN TAXES RARELY HAPPENS. So, over the long haul, the tax burden grows & grows. Enough is NEVER enough.

The one thing Nancy Reagan had right is, "Just say NO" TO NEW TAXES!

Smart people NEVER give more money to people who can't manage the money they already have....especially people who continually live outside their means. Raising tax rates is a non-solution until Congress can wisely manage spending.

HA HA HA HA HA HA HA HA....whew...even I think that's hilarious!

They're never going to do it. Never.

Taking the majority of the tax burden of the middle class or excuse the the lower working class american would help , there is no middle class american since Obamie took over he has destroyed the american dream and all that it stands for , for the life of me I will never figure out other than by voter fraud he could have gotten elected again ,to finish destroying America

The 90% tax rate is near-mythical. Very few people paid it since there were a LOT of deductions (which Libs now call "loopholes") that don't exist today. It also had nothing to do with having a gov't surplus. Back then, our economy was roaring due to the U.S. being the world's center of industry and production. We also didn't have the massive entitlements and gov't spending that we have today. We could institute a 91% tax rate today on EVERYONE and it's not going to change a thing in Washington. Spending is the problem, not revenue.

*sigh*- i wonder if a couple of you even bothered to read the editorial before you jumped in here with your knee-jerk 'dont raise taxes on the rich cuz they's JOBS CREATORS' bs.

at charles: tax rates have been cut more often than not. the editorial even cites former rates of 39.6%, 70% and 91% (all during surplus years). these are all substantially higher than current rates. hmm, wonder how we got here?

at tbone, if that is your real name: i'm sure obama ran for office and then carried through with his nefarious scheme to 'destroy the american dream', for no reason you or anyone else can name. guess he's just an evil black muslim kenyan socialist democrat, huh? that explains everything. and it has NOTHING to do with the previous white house occupant's complete fabrications to start TWO unpaid for, EXTREMELY expensive wars abroad and have no plan to pay for them or even a plan to get out of them. while simultaneously cutting taxes on his fan base, the 1%ers and racking up enornous fiscal, monetary and social policy blunders that it appears we as a nation will be years in digging out from under.

nope, nothing at all to do with all that.

James you are right on.... we can move forward

Bubba says Otis hit the road with your hate

TBone, I assure you the lowest incomes pay little if ANY taxes. Ever hear of EARNED INCOME CREDIT? I've worked at a tax office and there are low income families getting back everything they paid in and thousands...that's right THOUSANDS more, especially if there are children in the family. That means they are paying ZERO taxes and getting money on top of what they didn't pay. That's been happening for decades because I was eligible for that as a single parent 20 years ago.

Flat tax. It's the way to go. And I'm not opposed to additional taxes on luxury items like boats, diamonds, designer shoes, furs and private planes. But the only way we're ever going to have everybody contributing their fair share is to go the Flat Tax route.

It would also totally eliminate the need for the IRS. Oh wait...except for those 1600 Insurance Nazis Obamacare requires.

And would somebody explain to me how SAVINGS suddenly became HOARDING? I think that's just another feeble attempt to make people who like to be responsible for their own well being look like horrible creatures.

We are paying to take care of 20,000,000 illegal immigrants. That's why we have to raise taxes.

falkville the solution is not raising taxes is is to stop wasting what revenue we have. raising taxes will not generate enough revenue to last six months. stop the wastful spending and be accountable to those whom you represent.

CUT spending over seas and government Waste.. shrink government! then raising taxes would be a non-issue,

If you dont think those that want to raise taxes don't mean eveyone's income taxes...think again. Just like Bob Rielly (sp) that wanted to "shift" tax burden, no one was going to pay less. Additionally, they are softening the people up for a local sales tax increase. If you don't believe that, you aren't paying attention.

"Pay a little more". I chuckle when I see that Obama rhetoric regurgitated. You could tax the top folks 100% and not make a dent in our annual $1 trillion plus deficit. And yes Virginia, low income folks are greatly affected when tax rates go up. Less investment, less profitable companies, less employed.

Dear Editorial writer,

How much extra do you plan on giving? You don't have to wait until a law is passed raising taxes, you can do it voluntarily.

Awaiting your responce.

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