April 18, 2022 (Monday)
Today is tax day, since public workers in Washington, D.C., got April 15, our usual tax day, off to celebrate Emancipation Day. That holiday honors April 16, the day that President Abraham Lincoln in 1862 signed the law emancipating enslaved Black Americans in the nation’s capital.
The Biden administration used the occasion of tax day to highlight the difference between its tax policies and those of the current Republican Party. Biden is calling for making “billionaires and large corporations pay their fair share” and “ensur[ing] no one making under $400,000 a year pays a penny more in taxes.”
The Republicans have offered only Florida senator Rick Scott’s “11-Point Plan to Rescue America,” which calls for imposing taxes on the 57% of Americans who made too little during the pandemic to pay income taxes, as well as getting rid of all legislation after five years, including Social Security, Medicare, Medicaid, and the Affordable Care Act, popularly known as Obamacare. The nonprofit, nonpartisan Institute on Taxation and Economic Policy estimates that Scott’s tax policy would increase taxes on the nation’s poorest 40% by more than $1000 on average. The states hit hardest are in the South: Mississippi, West Virginia, Arkansas, Louisiana, Alabama, Kentucky, Oklahoma, Georgia, New Mexico, South Carolina, and Florida.
Since the American Civil War, deciding who pays taxes—and for what—has been shorthand for who belongs in our nation and what we care about. Curiously, Biden’s policies echo those of the early Republican Party.
The Republicans invented our national income taxes during the Civil War. As costs for uniforms, guns, food, mules, wagons, bounties, and burials rose to as much as $2 million a day, Congress recognized the need to raise money to cover the debts the United States was incurring. Ordinary Americans, who were terrified of the inflation that had come with the “rag paper” money of the American Revolution, told the government that there was “not the slightest objection raised in any loyal quarter to as much taxation as may be necessary.”
So Congress turned to manufacturing taxes, which essentially turned into sales taxes, of 3% on all manufactured goods. Those taxes would not be enough to stabilize the economy, and members of Congress knew the taxes could not be raised higher without unduly burdening farmers and workers. So, to make sure that tax burdens would “be more equalized on all classes of the community, more especially on those who are able to bear them,” they invented the U.S. income tax to be collected by a national agency—the precursor to the Internal Revenue Service.
By the end of the war, Congress had imposed 5% taxes on manufactured goods, and income taxes of 5% for incomes between $600 and $5,000, 7.5% for incomes from $5,000 to $10,000, and 10% for incomes of more than $10,000.
These taxes were enormously popular, in part because they demonstrated the health of the national treasury and the ability of ordinary Americans to support their government, but also in part because Congress recognized that if it was going to levy tax money from ordinary people, it needed to make sure ordinary people had the money to pay those taxes.
Shortly after imposing taxes, Congress stopped selling the “public lands”—Indigenous lands in the West—to land speculators to raise money and instead gave them away to poor men to farm. “Every smoke rising from a new opening in the wilderness marks the foundation of a new feeder to Commerce and the Revenue,” wrote newspaper editor Horace Greeley.
In 1862, Congress also created the Department of Agriculture to spread knowledge about modern farming practices and provide seeds to poor men. In exchange for “seed money,” Senate Finance Committee chairman William Pitt Fessenden (R-ME) said, the country would be “richly paid over and over again in absolute increase of wealth. There is no doubt of that.” It then turned to public colleges, which were “demanded by the wisest economy” because they would help men to work more efficiently, which would enable them to accumulate wealth, which would, in turn, enable them to buy from others, creating prosperity for the whole economy.
On the same day that Lincoln signed the Land-Grant College Act, he signed a bill creating the Union Pacific Railroad, claiming for the government the power to develop the country’s economy.
The early Republicans believed that a democratic government should guarantee education and equality of opportunity to all men, rather than turning the country over to an oligarchy that made its fortunes in a hierarchical economic system based on human enslavement.
Today, the White House echoed this worldview when it released a fact sheet titled “This Tax Day, the President Is Fighting to Reward Work, Not Wealth, While Republicans Want to Increase Taxes on the Middle Class.” It pointed out that the 2017 Trump tax cuts gave a $1.5 trillion tax cut to the very wealthy, and now Republicans are turning to working Americans to make up the budget shortfalls. “Republicans complain that middle-class Americans don’t have ‘skin in the game’ and don’t pay enough in taxes,” the White House said. “But the truth is that middle-class Americans are the back bone of our economy, pay plenty in federal, state, and local taxes, and in many cases pay a higher rate than the super-wealthy.”
Biden’s emphasis on public investment in individuals illustrates his view of the U.S. economy. He has been pushing for federal procurement to nurture American business, requiring that “made in America” for federal procurement will mean 60% of component parts are made in the U.S.; that number will rise to 65% in 2024 and 75% in 2029. When he took office, products qualified as “made in America” if 55% of their components were made in the U.S.
Today, the White House issued guidance requiring that after May 14, all of the iron, steel, manufactured products, and construction materials used for any project funded by the $1.2 trillion bipartisan infrastructure bill must be made in the U.S. That rule can be waived if it hurts the public interest, if the supplies are not available in the U.S., or if it will increase costs more than 25%. The administration hopes to create jobs, ease shortages, and limit our reliance on countries whose national interests are not in line with ours, like China. Since manufacturing is above the historical average at 78.7% capacity, the rule will probably require more factories.
The Biden administration has also used money as leverage over Russia, of course, and the sanctions there are biting. On April 13, Maersk, the world’s largest shipping company, left the country. Losing Maersk, along with a number of other shippers, will strangle the movement of goods. Russia’s president Vladimir Putin insists that the sanctions have failed, but today the head of Russia’s central bank said that consumer prices are up 16.7% from last year and that since “practically every product” in Russia depends on imported parts, when factories run through their inventories, prices will skyrocket. Meanwhile, Russian workers are losing jobs as foreign businesses leave the country.
For his part, Putin insists that the global alliance against Russia’s invasion of Ukraine will collapse. But tonight CNN reports that the U.S. State Department is considering naming Russia a state sponsor of terrorism, a designation that would place Russia with North Korea, Iran, Syria, and Cuba and further choke Russian trade.
MSNBC commentator and national security expert Malcolm Nance has thrown his lot in with those fighting against Russia. Tonight, speaking in uniform from Ukraine, he told MSNBC’s Joy Reid: “The more I saw of the war going on, the more I thought I’m done talking… It’s time to take action here. So about a month ago I joined the international legion here in Ukraine….”
