By Matthew Dunn
The
popular and critically acclaimed television series “Mad Men” on AMC, brought
viewers into the world of the advertising industry in the 1960s. The protagonist of the series, Don Draper, is
a successful executive who is well known for his brilliant advertising
messages. Although Draper is often
presented as discontent with his personal life, he does have all the genuine
markers of wealth that classify someone in the 1% of wealthiest Americans. When the show begins in 1960, he is living
with his beautiful wife and two children in the wealthy suburb of Ossining
which is Westchester, New York. Don
lives in a very large house, has two cars, sends his children to excellent
schools, has a full time nanny (even though his wife does not work), and even
pays for his wife’s equestrian hobby. In
Don’ business life he frequently goes to the finest restaurants and travels the
nation. He manages to do all of this
while having an alcohol dependency and several mistresses.
The
fictional Don Draper lived through what is called by some as “The Golden Age of
Capitalism”. That is that business
thrived, unemployment was low, people had money to spend, and economic crises
seemed a thing of the past. With all the
new wealth that was created during this time, the United States government
decided that it was best that those with the most would pay a very large share
of their earnings in income taxes. Between
1960 and 1970 the marginal tax rate for the highest incomes was between 70% and
90%.[i] So even with 90% of his earnings going to
taxes, Don Draper still had the ability to live quite the lifestyle.
However,
in the 21st century, income tax rates have gone down
significantly. During the 1980’s
marginal tax rates declined significantly for the wealthiest Americans. Between 1980-1988, the marginal tax rate
declined from 70% to 28%. Since then the
highest marginal tax rate that wealthy Americans have paid has been 40%.[ii] This has been part of a major income redistribution. That redistribution has favored the
wealthiest members of our society. In
fact for many of these wealthy Americans they earn their fortunes through
capital gains and they pay a mere 15% on much of their wealth. Warren Buffett, one of the wealthiest men in
the world, once commented that “his tax rate was lower than his
secretary’s”.
Republicans
would like us to believe that business will be decimated by high taxes. This is completely false. In fact American business reigned supreme during
the post-war years. During the 1950s and
1960s General Motors was the largest company in the world. GM’s President, Alfred Sloan, was so wealthy
he was able to start a huge foundation bearing his name, and generously donate
much of his fortune to causes such as treating cancer and education (Memorial
Sloan-Kettering Cancer Center bears the name of him and his head of research at
GM, Charles Kettering). Today, GM is
mostly known for its 2009 bankruptcy.
There are many reasons for this of course, such as increased
competition, and bad business practices by GM, however, it cannot be argued
that GM performed better under lower government taxes.
So,
wealthy Americans need not worry about high taxes. Perhaps it is time that the wealthy only have
two homes instead of five. One boat
instead of three. A Mercedes instead of
a Ferrari. The tax policies which have
been instituted since 1980, have only helped the wealthiest Americans, while
everyone else has been struggling to stay afloat. High taxes allowed governments to build
tremendous infrastructure. It allowed
Americans to go to public colleges for free.
It even allowed people to buy a tremendous amount of consumer goods,
without having to use credit cards. It
is time for the wealthy to pay their fair share.
