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Federal Tax Increases Are Justified In 2021, History Tells Us Why

April 26, 2021

With the death of Walter Mondale last week we were reminded of the honest, and required dialogue, that our leaders should have with the citizenry. In 1984, the Democratic presidential nominee told the nation that if he were elected there would be a tax increase. While some saw that honesty with the nation as a political blunder I saw it as needed candor about the necessity for more tax revenues.

Over the decades I have continuously rejected the notion that there is never to be any new tax hikes or ways to reap revenue. That is just a most absurd and untenable position from which to govern.  For far too long there has been a line of rhetoric that cutting government is the only way to move either the nation (or a state) forward.  We have seen the limits, and pure folly of such a political argument when following policy needs on the national level.

Since becoming an adult I have felt it not only an obligation but a responsibility to pay taxes. I have argued that the nation should raise taxes to pay for our wars, and also advocated on the local level for a wheel tax. Though I have been disheartened Congress has not in recent years adhered to the actions from the war of 1812, and up through the Vietnam War where special taxes were levied, I was pleased when Madison enacted a wheel tax.

This spring the nation is embarking upon another major discussion about new taxes that are needed to pay for national programming. The rhetorical volume is sure to increase following President Biden’s address to a joint session of Congress and his proposal for trillions in spending for infrastructure needs and family support bills.

Biden laid out his plans repeatedly during the long presidential campaign. At the center of the revenue plan is an increase in the corporate tax rate from 21% to 28%, implement a minimum corporate tax, nearly double taxes on investment gains for the wealthiest, and the tweaking of inheritance laws.

The announced plans for corporate taxes would cover the $2.3 trillion infrastructure plan dealing with transport, broadband, drinking water, ports, and electricity grids. Capital gains and other proposals will create the needed revenue streams for family infrastructure which deals with early education and home care. The estimated price tag for that portion of the larger plan could reach over $1.5 trillion. 

We could cut and paste the same tired rhetoric from conservative Republicans when it comes to government spending or the needs of the citizens. Saying no and doing even less is simply what they have come to stand for over the years. That same lingo is what they will offer going forward. All the GOP can offer is claiming that any new government action is socialism. The current batch of angry white males in the party could never even pretend at fostering policy ideas akin to how former congressman Jack Kemp once labored! 

For the rest of us, however, there is history that we can look back on as a way to gauge our path forward.

Aggressive federal power has always been an active ingredient for progress. President George Washington had an industrial policy so to build and enhance a much-needed manufacturing economy. No prudish Federalist, but rather a determined nationalist.

Sidney Blumenthal writes in his volumes about the strong feelings Abraham Lincoln had for federal dollars on behalf of infrastructure projects, and a deep understanding as to why increased spending on public education was a necessity.

The list could go on and on about the leaders who knew the power of government, and the wise use of harnessing it for the greater good. As one reads about President Teddy Roosevelt or later President Franklin Roosevelt the battles were not about big government or small. That is due to the way they acted as leaders. As with the others through our nation’s narrative, they grasped the fact that government is the means of getting big things done for the people that matter.

The conservatives will snark endlessly this year about taxes but the rest of us have history on our side.

On April 8, 1789–three weeks before George Washington will be sworn into office for the first time–James Madison stood up in the House of Representatives and introduced a tax bill.  It was the first bill ever introduced under the new form of government outlined in the U.S. Constitution. 

The very first order of business in the very first session of Congress was a bill to make sure that the economy was placed in a more sure-footed path, and that manufacturing would be promoted.  The means to do that were duties, and tariffs on a whole range of products from rum, beer, molasses, sugar cocoa, and coffee. 

There was a clear sense of the need for revenue, and while there was a lively debate about the taxes, the bill passed.

That must be the same frame of mind and outcome in 2021.

And so it goes.

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