by Randolph T. Holhut
Chief of AR Correspondents
January 23, 2011
WEALTHY AMERICANS MAY PRESERVE OUR DEMOCRACY
DUMMERSTON, Vt. -- The problems our nation faces in January 2011 pale by comparison to the world of January 1941.
The forces of Nazi Germany had swept through Europe and had come close to conquering England. Japan was poised to conquer the Pacific. And the United States was barely exiting the Great Depression and woefully unprepared to fight a global war.
Into this, President Franklin Delano Roosevelt stood before Congress and the nation on Jan. 6 1941, and the State of the Union address became known as "The Four Freedoms" speech, for the template he laid out for the defense of democracy at a time when it was in danger all over the world.
Here is what FDR said:
"In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.
"The first is freedom of speech and expression - everywhere in the world.
"The second is freedom of every person to worship God in his own way - everywhere in the world.
"The third is freedom from want - which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -everywhere in the world.
"The fourth is freedom from fear - which, translated into world terms, means a worldwide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor - anywhere in the world.
"That is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our own time and generation. That kind of world is the very antithesis of the so-called new order of tyranny which the dictators seek to create with the crash of a bomb."
But an often overlooked passage of FDR's 1941 State of the Union address is what immediately preceded these stirring words. In this section of the speech, he pointed out another very obvious fact - we cannot fight for these principles of democracy abroad without upholding them at home.
"There is nothing mysterious about the foundations of a healthy and strong democracy.," Roosevelt said. "The basic things expected by our people of their political and economic systems are simple. They are:
"Equality of opportunity for youth and for others.
"Jobs for those who can work.
"Security for those who need it.
"The ending of special privilege for the few.
"The preservation of civil liberties for all.
"The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.
"These are the simple, the basic things that must never be lost sight of in the turmoil and unbelievable complexity of our modern world. The inner and abiding strength of our economic and political systems is dependent upon the degree to which they fulfill these expectations.
"Many subjects connected with our social economy call for immediate improvement. As examples:
"We should bring more citizens under the coverage of old-age pensions and unemployment insurance.
"We should widen the opportunities for adequate medical care.
"We should plan a better system by which persons deserving or needing gainful employment may obtain it.
"I have called for personal sacrifice, and I am assured of the willingness of almost all Americans to respond to that call. A part of the sacrifice means the payment of more money in taxes.
"In my budget message, I will recommend that a greater portion of this great defense program be paid for from taxation than we are paying for today. No person should try, or be allowed to get rich out of the program, and the principle of tax payments in accordance with ability to pay should be constantly before our eyes to guide our legislation.
"If the Congress maintains these principles the voters, putting patriotism ahead pocketbooks, will give you their applause."
In 1941, the top tax rate was raised to 81 percent on income in the highest tax bracket. That top rate would increase to 88 percent on income over $200,000 in 1942 and 94 percent in 1944 and 1945. That's what helped pay for the cost of creating the military force that defeated the Axis.
Those are rates that are unthinkable today. But when you consider the long list of unmet needs, from a crumbling infrastructure to the cost of creating a post-fossil fuel economy, the inescapable conclusion is that our wealthiest Americans must be taxed more.
A few weeks ago, Sam Pizzigati from the Washington, D.C.-based Institute for Policy Studies reported that the National Archives released a document from 1943, when FDR asked the Internal Revenue Service to compile a list of how many taxpayers collected income over $67,000, or about $1 million in today's inflation adjusted dollars.
The IRS identified the 2,090 taxpayers who fell into that category in 1941, and also showed how much of each wealthy taxpayer's reported income had gone to federal income tax. The difference between then and now is astounding.
For example, IBM chairman Thomas Watson, reported income of $517,221 in 1941, or about $7.7 million in current dollars. Watson paid 69 percent of his total 1941 income in federal income tax. By comparison, the top executive at today's IBM, Sam Palmisano, took home $24.3 million in 2009.
No data is available for how much income above that sum Palmisano reported, or exactly how much of that total he paid in taxes. We do know, however, that 13,374 Americans who reported incomes over $10 million in 2008, the latest year that IRS stats are available, paid an average 24.1 percent of their taxable incomes in federal income tax.
Or take Carl Swebilius, the CEO at High Standard Manufacturing, a major defense contractor in 1941. Swebilius that year made the contemporary equivalent of $9.4 million, and paid 73 percent of his total overall income in federal taxes. By comparison, Robert Stevens, the CEO at defense contractor Lockheed Martin - one of many firms profiting from the Iraq and Afghanistan wars - made $21.6 million in 2009.
Again, we don't know how much Stevens paid in taxes, but it was likely at the 24 percent level that his peers paid, or about one-third of what Swebilius paid in 1941.
Today's "economic royalists" (as FDR liked to call the oligarchs of his time) are taking home a far greater share of the national wealth than their counterparts 70 years ago. Yet the talk in Washington is still about more tax cuts for the wealthy and more austerity and budget-cutting for everyone else.
The blueprint for a healthy democracy outlined by President Roosevelt on the eve of our nation's entrance into World War II is still a workable plan for prosperity. What's lacking is the courage of today's leaders to apply it, and the recognition by today's CEOs that they cannot get away with paying so little in taxes and still expect to have a country that is strong and vibrant socially, economically and politically.
Chief of AR Correspondents Randolph T. Holhut has been a journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at email@example.com.