I'm delighted to report that my colleagues Steve Bank and Kirk Stark will be guest-blogging next week about their new book (cowritten with Joseph Thorndike), War and Taxes. Both Steve and Kirk are top tax law scholars, and in particular among the few scholars of tax history. Here's a brief description of their topic:
During World War II, Americans were urged to ration food, save money, and pay higher taxes. After September 11, 2001 they were told to go shopping, keep spending, and enjoy a sweeping tax cut. Have political leaders abandoned America’s noble tradition of homefront sacrifice? Or have they simply adapted to economic and social realities that make sacrifice unnecessary?
In a new book from the Urban Institute Press, authors Steven A. Bank, Kirk J. Stark, and Joseph J. Thorndike tell the story of taxation during wartime, beginning with the Revolutionary War and continuing through the War of 1812, the Civil War, World Wars I and II, and the undeclared wars in Korea, Vietnam, Afghanistan, and Iraq. Bank, Stark, and Thorndike conclude that recent tax cuts mark a break with tradition: never before have so many Americans enjoyed sweeping tax cuts in the midst of a war. But the authors warn against any temptation to mythologize the nation's fiscal history. Past generations accepted heavy wartime taxes as the price of freedom and security. But they also resisted and complained about those taxes. Politicians of the past made room for self-indulgence amid the sacrifice. While today's politicians seem more focused on the self-indulgence than the sacrifice, they also operate in a different climate and under different constraints. It remains to be seen whether continued neglect of the fiscal sacrifice side of the equation is sustainable.
I much look forward to Steve's and Kirk's posts.
Most of those advocating war taxes only want upper income Americans to pay higher taxes, a policy they advocate come war or no war.
The Iraq War (and some other recent wars), aren't really being fought that way. Part of this is because we have a greater standing army/military infrastructure. But part of this is also that the nation is basically fighting the war part-time, instead of making it our central (and more or less only) national priority.
I dunno if our ancestors would have deigned to call the conflict in Iraq a reg'lar old war. The British Empire used to indulge in these kinds of spanking expeditions without elevating the process into a war. Maybe this is just the logical continuation of the postmodern tendency to call many struggles that fall far short of existential "wars," e.g. the wars on drugs, cancer, poverty, obesity.
I hope they also investigate the possibility that the previous traditions of sky-high tax rates and centralized economic control during wartime have something to do with the previous tradition of economic depression and malaise immediately post-war.
The true cost of the government (including the war) is its spending. I see no reason to disinctivize productive work (which makes or allows us to trade for war materiel) by increasing marginal tax rates to the right of the peak on the Laffer Curve. I don't know where the peak is, but I'd guess that 91% is well to the right of it.
Lastly, I can't believe so many people actually seem nostalgic for rubber and aluminum shortages. If you desire personal sacrifice, join the military, donate blood, or send a check to the US Treasury. Or channel that drive in another direction... become a Penitente or join your local S&M club.
Heck, though politicians fall over themselves to thank the troops, I don't even see a wide-spread campaign encouraging service as a "civic duty".
I don't think they are nostalgic for rationing, I think they are nostalgic for winning wars. They note that our current approach is to put it most charitably giving decidedly mixed results and can't help but wonder if we knew what we were doing before.
I suppose you do have a point. Obviously, the Axis powers' heft ran over and above anything that Iraq (which our military's commander-in-chief, bless his heart, has named a member of another "axis," albeit, I assume, an axis-lite). Still, how do we pay for this war (or, as the United Kingdom might have called it, "spanking expedition.")?
See page 6 of
It's hard to say about the bottom 50%, because the data is broken into quintiles, but other reports say that the bottom 50% overall pay around 0-3% of total income taxes.
Its important to remember that we are shelling out truck loads of good currency for the current wars, we're just borrowing it from the Chinese rather than actually paying for it ourselves.
Nah. I think the worst estimates are roughly $1 trillion over 5 years, or $200 billion a year, which is a mere 10% of the Federal budget and maybe 1.5% of the GDP.
Would you worry yourself sick if you took on some new household expense that amounted to 1.5% of your income? Or even 10%? C'mon now.
The whole issue of "paying for the war" is just a distraction (deliberate in many cases) from the real fiscal disasters looming, which are the SS and Medicare entitlements. Or maybe they're the work of Democrats and their media fifth-columnists laying the groundwork for the massive tax increases necessary to fully fund those entitlements, plus spread some cash around to their tax-eating constituents.
See? We had to crank up your taxes 40% to pay for the war! Oh...and, er, of course, while we're doing that we might as well make a teeensy additional adjustment to make sure Grandpa doesn't have to take a hit on his monthly SS check and start eating dog food...and also fund some wonderful new education initiatives...solar synthetic green biofuel research programs...hire 2,000 additional government staff to research global climate change...
Y'all are going to fall for it, too. They have you so pegged, like the master con men they are.
The original estimate by Paul Wolfowitz was that the Iraq War would cost only $50 Million, which would be paid for out of Iraq's oil revenues. Spending 10% of this country's annual budget simply to rebuild another country is unacceptable. Alternatively, if we are going to use 10% of the annual budget to wage the Iraq War, then it is unacceptable for the current commander in chief to so incompetently general this war the way he has.