In 1932, the marginal tax rate went up to 63 percent on top incomes. In 1935 Roosevelt pushed it up to 79 percent, and we started at five percent, and the exemption was lowered, so more people were paying taxes. But it starts at five percent and it goes up to 79 percent. Now, you could see why, right? All these programs had to have a payment. But here's something that is not explained. What about the work ethic of those people in those top brackets? In 1929, you were telling them, you get to keep three-fourths of whatever you make. Now you're telling them you give more than three-fourths to the government. What's your work ethic going to be with a 79 percent tax? Tax-exempt bonds, stamp collections-that was Roosevelt's personal exemption, he had a good stamp collection-coin collections, foreign investments, Swiss banks, anything to shelter that money. But do you see why the depression is prolonged? Who's going to invest to create the jobs to get us out when you're being taxed 79 percent? Do you think the revenue then is going to go up when the tax rate is 79 percent? Very good thinking, we have some supply-side thinking in the crowd. We raised in 1929 over $1 billion. It was almost $1.1 billion in income tax revenues. In 1935 when the tax rate was 79 percent, our take for the government on income tax was $527 million-less than one-half of what it was in 1929. Did you catch that? Twenty-four percent of something is something, and seventy-nine percent of nothing is nothing-because the high tax rates chased capital into tax-exempt investments.
Therefore in order to get money, Roosevelt had to tax poor people, so he instituted excise taxes-especially on whiskey and tobacco. Prohibition ceased to be law. He explicitly said I want that whiskey in there so we can tax it. Disproportionately middle-class and lower-class people drink. Roosevelt wanted their money. We therefore had a high excise tax on whiskey and tobacco. We instituted for the first time in our history a federal gasoline tax. See, the income tax hits the rich back in the twenties, now we are putting in excise taxes because we have to fund the New Deal. The money has to come from somewhere, and the rich people just sheltered their investments. We had other excise taxes on cars, taxes on tires, on telephone calls, telegrams, movie tickets, and bank checks. And they wanted to do it on soft drinks, but Coca-Cola was too strong a lobby, so they settled for grape concentrates. The revenue from excise taxes in this country went from $500 million in 1929 to $1.36 billion in 1935.
What I want you to see is these programs-WPA, AAA, and Silver-are funded by excise taxes on middle-class, lower-class people drinking, smoking, driving cars, going to movies. That is where much of the funding for the New Deal came from.
Now, with Roosevelt you say, "My gosh! How could he win elections?" Roosevelt went on the campaign trail in 1936 and said, "You poor people are doing your share, but the rich are avoiding the taxes. We should make them pay." And he recommended a tax to congress, on all income over one hundred thousand dollars. His recommendation in 1941 was for a 99.5 percent tax on all income over one hundred thousand dollars. And when the budget director said, "What!" Roosevelt's comment was, "Why not?"
When congress refused to pass that bill, Roosevelt was furious. Therefore he instituted a 100 percent income tax, by executive order, on all income $25,000 or more. I repeat, Roosevelt instituted an executive order on April 27, 1942 for a 100 percent income tax on all income over $25,000. How many of you knew about that? Oh good, somebody did. Actually, the Republicans won the next election and voted it out, and Roosevelt had to settle for 90 percent. He had to settle for a 90 percent marginal tax. Here's a quotation from Roosevelt, it was during World War II, "Discrepancies between low personal incomes and very high personal incomes should be lessened." Oh, and he used the war as a crisis, you see. "And I therefore believe that in this time of grave national danger, when all excess income should go to win the war, no American citizen ought to have a net income after he's paid his taxes of more than twenty-five thousand dollars."
It was simply designed- as with any other socialistic piece of male bovine excrement- to wind up an abysmal failure.
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