Democratic debate: Bernie Sanders really isn't as "socialist" as President Eisenhower


#1

cbsnews.com/news/democratic-debate-bernie-sanders-really-isnt-as-socialist-as-president-eisenhower/

Calling all accountants here!! Was the marginal tax rate really 90% during the Eisenhower years for the top income earners? Did they not have deductions that would offset what they would have to pay?


#2

It was high but there were also a lot of things that could be deducted.

Plus, as one commentator noted “the country knew we were footing the bill for WWII”.


#3

In all fairness, President Eisenhower labelled himself a progressive conservative, which he was. Socialism isn’t simply higher taxes.


#4

No one ever paid the top rate of income tax in the past. That is where the idea of “tax shelters” came from. Just ask the Kennedy family.


#5

Source?


#6

3-yr Income averaging, 10-yr forward averaging on profit-participation, all interest charged, and a host of other deductions removed by Reagan. Tax rates don’t tell the whole story.


#7

politifact.com/truth-o-meter/statements/2015/nov/15/bernie-s/income-tax-rates-were-90-percent-under-eisenhower-/

During the eight years of the Eisenhower presidency, from 1953 to 1961, the top marginal rate was 91 percent. (It was 92 percent the year he came into office.)

What does it mean, though? For the duration of Eisenhower’s presidency, that rate affected individuals making $200,000 or more per year or couples making $400,000 and above per year.


#8

This source doesn’t state that the Kennedy’s used this but explains the difference between marginal rate and effective rate which is what I am looking for.

mises.org/library/good-ol-days-when-tax-rates-were-90-percent


#9

I don’t dispute that there were a lot of tax shelters and income was calculated in a variety of ways back then. That is a different animal than claiming that nobody paid a 90% marginal tax rate.


#10

Oh well I guess it’s common sense then. If we had just come out of a major war everyone would agree that you need higher taxes to pay for it.

(sarcasm)


#11

Ike wasn’t stupid. He got more than $600,000 for his memoir Crusade in Europe. Rather than pay income tax he got a ruling from the Treasury Dept that let him declare it as a capital gain at a much lower rate, the difference being ~$400K.


#12

I started this thread because there are some Catholics who are rooting for Bernie Sanders and how he wants to bring back those marginal rates. They brought up the fact that the marginal rate was the same during Eisenhower years. While on the surface they were correct their point was that the marginal rate is the same as the effective rate which the link has refuted.

These Catholics also bring up that Sanders calls himself a democratic socialist and quote Pope Benedict when he spoke about democratic socialism:

In many respects, democratic socialism was and is close to Catholic social doctrine and has in any case made a remarkable contribution to the formation of a social consciousness.

firstthings.com/article/2006/01/europe-and-its-discontents

I don’t know if you ask Papal Emeritus Benedict if he thinks Sanders platform is what he was talking about.


#13

I myself would be very skeptical of anyone choosing to pay a tax rate of 90% if there existed tax shelters and ways around paying that kind of rate. People earning 200k in the 1950’s would be the ‘1 percenters’ of today, a very elite class of savvy people. If they did not know their way around the tax system, their accountants would have known.


#14

Who has claimed that the marginal rate is the same as the effective rate? I am not sure if one’s preference for the top marginal tax rate is a moral issue one way or another. We have had top rates ranging from 28% to over 90% and while we can argue the prudence of each system, there is no real moral issue.

These Catholics also bring up that Sanders calls himself a democratic socialist and quote Pope Benedict when he spoke about democratic socialism:

firstthings.com/article/2006/01/europe-and-its-discontents

I don’t know if you ask Papal Emeritus Benedict if he thinks Sanders platform is what he was talking about.

What in Sanders platform, besides abortion would he find objectionable?


#15

The top rate was 90% but nobody really paid it. There were a multitude of deductions and legitimate tax shelters that one could invest in. When the high rates went away and deductions tightened up and tax shelters eliminated most of my wealthy clients paid more tax than they did before


#16

People on FB who are supportive of Bernie Sanders are basically saying that the marginal rate is the same as the effective rate.

A 90% marginal rate with no real deductions to reduce it considerably to the effective rate would immoral in my personal opinion because while you are getting free healthcare, don’t have to pay tuition, you still have to pay food, insurance, mortgage payments, clothing, car maintenance. If a husband/father of children is making $300,000 and can only take home $30,000 he is not going to be able to provide for his family. I consider that to be immoral.

Wouldn’t that be enough?


#17

Thanks Estesbob. This is what I thought. You have to be very careful with Catholics who shill for Sanders.


#18

Nobody here has claimed that the marginal rate and the effective rate are the same, so I am not sure what your point is?

A 90% marginal rate with no real deductions to reduce it considerably to the effective rate would immoral in my personal opinion because while you are getting free healthcare, don’t have to pay tuition, you still have to pay food, insurance, mortgage payments, clothing, car maintenance. If a husband/father of children is making $300,000 and can only take home $30,000 he is not going to be able to provide for his family. I consider that to be immoral.

That is the point, in your opinion it would be immoral, but that is just your opinion. The Church has said very little about the moral desirability of various tax schemes. So while we can argue whether tax proposals are prudent or imprudent, there is not much to say definitively regarding their morality.

Wouldn’t that be enough?

Certainly it is sufficient if there is a pro-life alternative. However, if we are restricting ourselves to economic policy, there is nothing in Bernie’s proposed economic policies that violate Church teaching. (and I don’t consider abortion to be economic policy).


#19

You also have to be careful about Catholics who make vague assertions without providing any data. For example, how many people were in the 90% marginal tax bracket? Probably not many, but one poster claimed that nobody was in that bracket. That poster could not produce any evidence of that fact. I would argue that there is a lot of sloppy thinking on both sides of the issue. I am not a supporter of Bernie in any way, but we have to be careful about the arguments we use to argue against him if we want to stay true to the facts.


#20

The claim was that nobody would have paid that rate (due to tax shelters etc), not that nobody was in the bracket.


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