How we lost the system that built the middle class
They just passed another big, beautiful bill. 🤮 More tax breaks for the wealthy, a higher estate tax exemption, expanded loopholes for corporations and private equity. And for the rest of us? Absolutely nothing, except the same tired line: “We can’t afford it.”
Funny. Because there was a time in this country when we could afford it all — and we did.
When folks hear “94% tax rate,” they picture the government swooping in and snatching almost everything you make. That’s not how it worked. But it is how billionaires want you to think it worked.
Here’s the truth: back in the 1940s, we taxed the ultra-rich — and we taxed them hard. Not only did the economy survive, it absolutely took off. Those high tax rates paid for war, recovery, public infrastructure, and the birth of the American middle class. And about 70% of the country supported taxing businesses to benefit workers, families, and communities.
Compare that to today. A recent study from UC Berkeley found that the 400 wealthiest Americans — names like Musk and Bezos — paid an average effective tax rate of just 24% between 2018 and 2020. That’s less than the 30% rate paid by the average U.S. taxpayer.
Why? Because the ultra-rich don’t earn money the way most people do. Their wealth comes from stocks, businesses, and assets — which are taxed less, or not at all, unless they’re sold. And thanks to newer tax cuts, they’re paying even less than before.
So why don’t we talk about how things used to work? Because the people benefitting from today’s rigged system don’t want you to know it used to be different — and better.
A BRIEF (BUT CRUCIAL) HISTORY
In 1944, under President Franklin D. Roosevelt, the top federal income tax rate hit 94%. That number sounds wild today, but it was a marginal rate — it only applied to income above $200,000 (about $3.5 million today). Everything below that was taxed at normal rates. The 94% rate only kicked in on the ultra-high end.
This wasn’t money sitting in a vault. It got used — to build things. Big things.
Those taxes helped fund World War II and the postwar recovery. They paid for the GI Bill, which sent 8 million veterans to college. Between 1933 and 1973, they financed the construction of over 1 million units of low-rent public housing.
They laid the groundwork for the Interstate Highway System. And while Social Security was funded primarily by payroll taxes, it was supported by general tax revenue too.
Back then, a single income could buy a house, support a family, and even cover a vacation. All while the wealthiest Americans paid between 82% and 94% on their top earnings. And guess what? The economy boomed.
THEN CAME THE CUTS
In the 1980s, President Reagan slashed the top tax rate from 70% to just 28%. From that point on, everything started to shift.
Wages flatlined. The middle class shrank. CEO pay exploded. Billionaires hoarded record-breaking wealth, and the cost of living soared.
Was it all because of tax cuts? No — but they played a major role. Lowering the rates on the ultra-rich shifted incentives, widened inequality, and tilted the economy away from workers and toward capital.
LET’S BUST SOME MYTHS
- “It’s not fair to tax the rich.” What’s actually unfair is billionaires using public roads, courts, and labor — then dodging taxes with offshore accounts and legal loopholes. They didn’t build their empires alone. We paid for the system they profit from.
- “They’ll leave the country.” Nope. The U.S. taxes worldwide income. And when France passed a wealth tax, fewer than 1% of the rich actually left. They’re not giving up their Manhattan penthouses or private jets over a modest tax increase.
- “It’ll hurt jobs.” The biggest job booms in American history — from the 1940s through the 1970s — happened while the rich were taxed the most. Why? Because back then, it made more sense to invest in workers than to hoard profits. Today, the argument that taxing the wealthy limits job creation is refuted by generations of data.
- “It won’t raise enough money.” Also wrong. A 2% wealth tax on individuals worth more than $50 million could raise around $3 trillion over a decade. And if we taxed capital gains like ordinary income, closed estate tax loopholes, and lifted the cap on Social Security taxes, we’d be looking at more than $10 trillion — all without touching the middle class.
WHAT COULD THAT MONEY DO?
We could fund universal childcare. Make public college tuition-free. Cancel student debt. Guarantee paid family leave. Expand affordable housing. Upgrade our public transit (yes, even SEPTA). Fully fund Social Security and Medicare. And finally, invest in real climate infrastructure and reparations programs.
All of it is possible — just by asking the ultra-wealthy to pay like they used to. And even then, they’d still have more money than they could ever spend.
THIS ISN’T RADICAL. IT’S AMERICAN HISTORY.
Taxing the rich used to be normal. It built our roads, our schools, our homes, and our future. But when we stopped, the system cracked. Wages froze. Prices soared. The rich kept everything. And now they look you in the eye and say, “There’s just not enough to go around.”
Nah. There’s plenty. We just stopped asking them to pay their share.
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