print this pageThis is a book of fact and opinion. The facts are extracted from governmental and expert sources hyperlinked in the text where appropriate in the digital version. The data on which my conclusions are based was taken largely from sources that used data obtained from government sources, as follows:
Bureau of the Census (Census) – website: https://www.census.gov/
Bureau of Economic Analysis (BEA) – website: https://www.bea.gov/
Bureau of Labor Statistics (BLS) – website: https://www.bls.gov/
Congressional Budget Office (CBO) – website: https://www.cbo.gov/
Department of the Treasury (Treasury) – website: https://www.treasury.gov/
Federal Reserve System (FED) – website: https://www.federalreserve.gov/
General Accounting Office (GAO) – website: http://www.gao.gov/
Internal Revenue Service (IRS) – website: https://www.irs.gov/uac/tax-stats
Joint Committee on Taxation (JCT) – website: https://www.jct.gov/
Office of Chief Actuary of Social Security (Chief Actuary SS) – website: https://www.ssa.gov/oact/
Office of Management and Budget (OMB) – website: https://www.whitehouse.gov/omb
Organization for Economic Co-operation and Development (OECD) – website: https://www.oecd.org/
The following major sources of data are included in full length:
- Historical Statistics of the United States 1789-1945, Bureaus of the Census;
- Wealth Inequality in The United States Since 1913: Evidence from Capitalized Income Tax Data, Emmanuel Saez and Gabriel Zucman;
- Online Appendix of Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data, Emmanuel Saez and Gabriel Zucman;
- The Fading American Dream: Trends in Absolute Income Mobility Since 1940, Raj Chetty, David Grusky, Maximillian Hell, Nathaniel Hendren, and Jimmy Narang;
- Fiscal Year 2016 Historical Tables Budget of The U.S. Government, Office of the Management of the Budget;
- The 2015 Annual Report of The Board of Trustees of The Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds;
- 2015 Annual Report of The Boards of Trustees of The Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds;
- The Distribution of Household Income and Federal Taxes,2008 and 2009, Congressional Budget Office;
- The following tables supplement information provided in the Congressional Budget Office’s July 2012 report The Distribution of Household Income and Average Federal Tax Rates, 2008 and 2009, Congressional Budget Office;
- Table 3. Number of Households, Average Income, and Shares of Income for All Households, by Before-Tax Income Group, 1979 to 2009, Congressional Budget Office;
- The Distribution of Major Tax Expenditures in the Individual Income Tax System, Congressional Budget Office;
- Corporate Tax Expenditures, Information on Estimated Revenue Losses and Related Federal Spending Programs, General Accounting Office;
- Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945, Congressional Research Service; and
- The Moment of Truth, The National Commission on Fiscal Responsibility and Reform (Simpson/Bowles).
These sources provide historical context, highlight demographic and income disparity issues, explain flaws in the existing use of tax preferences, and warn of future challenges for taxing and spending policies. Although some of these reports are several years old, for the most part, they are as relevant to tax policy today as when written.
Since this book has been written over an extended period of time, many changes that significantly affect tax policy have occurred. For the most part, this book was written after the Great Recession of 2008/2009 and before the pandemic of 2020. No post-pandemic data has been added, but it is important to note that most trends discussed in the book have been exacerbated in recent years.
For the past 40-plus years, America’s economic, social, and political fabric has been torn by the trends I discuss in the book, including the intense concentration of income and wealth at the top, the number of families verging on poverty reaching dangerous levels, education and health care becoming less and less available to most Americans, a dignified and secure retirement becoming a mirage for many in upcoming generations, growing anxiety among more and more Americans arising from job insecurity, and an out-of-control national debt that threatens America’s easy access to world credit markets and low-interest rates. These trends are not only continuing, but most are accelerating. At some point, still unknown but looming, the continuation of these trends will force a fundamental change in tax policy. I believe that America needs a tax policy that contributes to reversing these trends, not continuing them. To me, this is a matter of patriotism, not ideology.
My opinions are based on what I have inferred from the factual data included in this book. While I believe my opinions are reasonable, I am aware that what is reasonable is itself a subject of debate among reasonable people. Despite its many flaws and limitations as the forum for discovering the closest approximation of truth that can be reasonably found, I agree with J.S. Mill’s views on the merits of a vigorous and honest debate within the marketplace of ideas. Fact and reason almost always win out over time, but that can be a very long time that rarely occurs within an election cycle.
In lieu of using traditional footnotes or endnotes, and in place of a bibliography, I used hyperlinks in the digital version because I wanted as much raw data to be available to readers as reasonably possible. In most instances, the hyperlinks should themselves show the data on which I have relied, except for Chapter III, “What History Should Have Taught Us,” I have not hyperlinked my interpretation of the Social War in ancient Athens to any authors. I relied primarily on Plutarch’s Lives for the lives of Solon and Aristotle and on Aristotle’s Politics, as published in the Great Books, as well as years of reading the ancient history of Greece and Rome.
As to how two of history’s leading conservatives dealt with the need of their conservative societies to change to meet the threats at hand, I relied primarily on Plutarch for Lycurgus. As to Bismarck, I relied primarily on Emil Ludwig’s biography, as well as other secondary references. While I could have used any number of historical examples to make my points, I chose these because I thought them especially pertinent to the time.
As to an overriding lesson from history, I am especially mindful of Will Durant’s observation in several of his volumes in The Story of Civilization that the concentration of wealth and income in a few is natural and inevitable, but, if it gets out of hand, it can tear a society apart. So, history and my personal experience have taught me that some people are smarter, harder working, and luckier than others, and that it is natural and inevitable that they will have more, but if they take too much, it can lead to disastrous consequences.
With respect to Chapter IV, as it relates to the pre-20th Century American economy, government spending, and government taxing, I have based most of my comments on what I gleaned from two major sources: first, Historical Statistics of the United States 1789-1945, as published online by the Bureau of the Census at https://www2.census.gov/, and second, The Tax History Project History of Taxation in the United States, as published online by The Tax History Museum online at http://www.taxhistory.org/, both of which are included in Major Sources of Data. For the rest of the chapters, the hyperlinks should suffice to show what data I used.
With all that out of the way, I invite readers to have at it and make of it what they will. My best hope is that this book will spark a serious and honest debate about taxes. God knows the country needs it.