I’ve long liked Ben Stein as a comic actor and game show host but held a somewhat lower opinion of his politics. He was a speechwriter for Nixon and Ford and still strongly defends Nixon, going so far as to dismiss Nixon’s sins as merely lying to “protect his subordinates” and to stay in office and “keep his agenda of peace going.” In fact, Nixon did a lot of commendable things, but he was also a bigot and a crook.
Stein is also notorious for narrating an alleged documentary that was a very dishonest — not merely uninformed — piece of Creationist propaganda. (Roger Ebert had a nice rant about it.)
But he also on occasion says some at least halfway sensible things.
In a recent appearance on Fox and Friends, Stein said, “I hate to say this on Fox — I hope I’ll be allowed to leave here alive — but I don’t think there is any way we can cut spending enough to make a meaningful difference. We’re going to have to raise taxes on very, very rich people. People with incomes of, say, two, three, four million a year and up. And then slowly, slowly, slowly move it down. Two fifty a year, that’s not a rich person.” (Actually, someone making $250,000 a year would be a fairly rich person to most of us, but never mind; he’s on a roll.)
Stein, who has law degree and some background in economics (not least because his father was a noted economist), told his hosts, “The evidence is that there is no clear connection between the level of taxation and the level of economic activity. The biggest growth and prosperity we’ve ever had in this country was from roughly 1941 to 1973. That was the best years we’ve ever had and those were years of much higher taxes than we have now.”
Steve Doucy responded, “Taxes were at 70, 80 percent then,” and Stein pointed out, “The highest rate was in the 90s during parts of the 50s, and yet we were very prosperous.” (Indeed, except for the year 1950 when it was only slightly lower, the top rate remained over 90 percent throughout the 1950s and into the Kennedy administration.)
I should note that Doucy and Stein were speaking of the top marginal tax rate, which applied only to the portion of income over a very high limit. Even the ultra-rich paid lower rates on all but that top portion.
We came out of the Great Depression and World War II with a huge national debt, bigger than the annual gross domestic product, and relatively high tax rates at the top helped hold that debt in check. By the time Jimmy Carter left office in 1980 (when the top rate was still 70 percent), the debt was only about a third of GDP.
Under Ronald Reagan income tax rates were cut, greatly worsening the deficit, but the top rate remained at least 50% for the first six years of his administration. Then when taxes were deeply slashed in keeping with a fantasy that this would stimulate the economy enough to keep tax receipts the same or higher, the national debt skyrocketed. George H.W. Bush reluctantly agreed to a modest tax increase but that didn’t solve the problem, and the deficit and poor economy became major issues in the 1992 election.
Bill Clinton won that election and pushed through a tax increase (though top rates were still substantially lower than at any time from 1932 through the middle of Reagan’s second term). Republicans predicted economic disaster, but we instead saw the longest period of economic growth in U.S. history and the first budget surpluses since Lyndon Johnson. The national debt went down not just in relation to the economy but in absolute dollar terms. A national debt clock set up by a private political group near the mall in Washington had to be turned off, because it could not be made to run backwards. Estimates were that the entire debt (at least outside of the trust funds) would be paid off entirely in another decade or so.
That hope was erased under George W. Bush by a combination of spending increases, two rounds of tax cuts mainly benefiting the wealthy, and the financial crisis at the end of his presidency. The economy had not been in that grave a state since the crash of 1928, and by some measures it was worse. But the response was better, combining massive expansion of the money supply by the Federal Reserve, large tax cuts, and sustained government spending (more at the federal level to offset deep state and local cuts). The economy and private employment started growing again, probably preventing a collapse into a second Great Depression. (Update 2016 June 9: By the last year of the Obama administration the economy was in much better shape while still not fully recovered, and the annual budget deficit had been greatly reduced.)
Getting back to Stein, I think he was advocating additional increments in marginal tax rates for incomes over half a million dollars a year, and I agree with him. We don’t have to go all the way back to the levels of the 1950s.
(Updated 2015 June 9 to correct some minor mistakes, replace a dead link, and clarify some sentences.)