The following is an excellent excerpt from the book “THE RICH DON’T ALWAYS WIN: The Forgotten Triumph Over Plutocracy That Created The American Middle Class, 1900-1970” by Sam Pizzigati from Chapter Six on page 166 and I quote: “In the Senate, meanwhile, insurgent Republican George Norris of Nebraska was demanding a stiff progressive tax on large estates, and a variety of other senators, progressive Democrats and insurgent Republicans alike, had floated their own plans to hike tax levies on the wealthy and their corporations. In late April 1935, Robert La Follette from Wisconsin gave this legislative advocacy for taxing the rich much wider public visibility.
“The administration of President Roosevelt has thus far failed to meet the issue of taxation,” La Follette charged in a national radio address. “Progressives in Congress will make the best fight of which they are capable to meet the emergency by drastic increases in taxes levied upon wealth and income.”
Many of FDR’s top officials saw higher taxes on the rich as every bit as necessary as La Follette did. The Utah banker Marriner Eccles, now the chairman of the Federal Reserve, had told Congress in March that “our problem now is one of distribution of income.” The ordinary Americans whose consumption could be sparking an economic recovery didn’t have enough income to consume. The nation’s dollars were stagnating instead in the overstuffed pockets of the rich. “The most effective way of achieving a better balance,” Eccles told Congress, “is through income taxes.”
New Dealers in the Treasury Department felt the same way. In February 1935, they passed to the White House a plan for a significant tax overhaul. FDR refused to push it. But the growing support for “Share Our Wealth” soon had Roosevelt reconsidering. FDR would tell his aide Raymond Moley that something had to be done “to steal Long’s thunder.” Roosevelt would tell a William Randolph Hearst representative in May that he just might have to “throw to the wolves the forty-six men who are reported to have incomes in excess of one million dollars a year.”
On June 16, the same day his Social Security bill passed the Senate, Roosevelt threw them. The president delivered his first “Message to Congress on Tax Revision.” The address would be historic. No sitting president had ever so plainly made the case for taxing the wealthy and their works. FDR began by openly admitting the inadequacies of the nation’s current tax code.
“Our revenue laws have operated in many ways to the unfair advantage of the few,” the FDR message acknowledged, “and they have done little to prevent an unjust concentration of wealth and economic power.”
That concentrated wealth and power, the president’s message continued, endangered the democratic essence of America.
“The transmission from generation to generation of vast fortunes by will, inheritance, or gift is not consistent with the ideals and sentiments of the American people,” the president contended. “Such inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government.”
FDR would go on to attack the case against taxing the rich. All the nation’s people, through their government, had created a society that enabled some to prosper. The most prosperous, the president argued, needed to recognize that contribution.
“People know that vast personal incomes come not only through the effort or ability or luck of those who receive them, but also because of the opportunities for advantage which Government itself contributes,” the president explained. “Therefore, the duty rests upon the government to restrict such incomes by very high taxes.”
Conservative Republicans quickly charged that Roosevelt was playing politics. His message, GOP members on the House Ways and Means Committee claimed in a statement, aimed at “undermining the increasing political strength of the two chief exponents of the ‘share-the-wealth’ and ‘soak-the-rich’ philosophy by making a bid for the support of their large army of followers.” The GOP conservatives would be absolutely right. FDR’s tax message had precious few specifics and came accompanied by no draft legislation. The White House seemed in no hurry to actually accomplish anything on tax reform. FDR seemed to be content with headlines that trumpeted his willingness to tax and soak the rich.
But progressives in the Senate moved to keep FDR’s feet to the tax fire. Nearly two dozen senators demanded action before the end of the 1935 session. If he wanted to maintain his tax-the-rich political momentum, FDR had little choice. He would have to seriously engage in the legislative process, and he did. But Roosevelt’s hasty interventions would help move to passage a bill more symbol than substance. Under the new tax eventually enacted in 1935, only relative handfuls of America’s wealthy would pay appreciably more in taxes. The top federal income tax rate, then 63 percent on income over $1 million, would rise to 79 percent, but only on income over $5 million. The top tax rate on estates would rise, too, from 60 to 70- percent, but only on bequest value over $50 million.
Progressives did not hide their disappointment. The radical New York Republican Vito Marcantonio deemed the final legislation “a creampuff, milk-and-toast, innocuous, and meaningless gesture.” The New Republic magazine lamented that FDR had taken “only a tiny step toward redistributing wealth.”
But business leaders went berserk. Their well-publicized fury at Roosevelt’s tax-the-rich rhetoric would make the 1935 tax legislation FDR signed into law seem far tougher on the rich and powerful than the facts on the ground warranted. The FDR-backed tax bill, complained House Ways and Means Republicans in their minority report, only made sense for a nation about “to adopt the communistic system.” One conservative Southern paper, the Charleston News and Courier, called the tax bill a “soak-the-brains program” that targeted “energy, thrift, and the will to deny self and to achieve.” The tax provisions of the new Revenue Act, harrumphed upstate New York GOP congressman Bertrand Hollis Snell, had been “designed not to produce revenue but to confiscate property for the use of a vast federal bureaucracy.”
If the plutocrats hated FDR’s tax bill, many Americans understandably concluded, the tax bill must indeed effectively share the wealth. The one man who might have set America straight on that score, Huey P. Long, would not be around to argue the point. On September 8, 1935, barely a week after the FDR tax bill became law, Long was shot at the Louisiana capitol in Baton Rouge. He died two days later.
The 1935 tax bill would not be FDR’s last word on taxing the rich and sharing the wealth. Roosevelt was just getting started. He campaigned for reelectoin in 1936 as he had not campaigned the first time around in 1932. This time, FDR did no fence-straddling. He would throw no bones to keep corporate leaders content. He campaigned, as he pledged in early 1936, against “the forces of privilege and greed.” We must, he told Congress in his annual January message, “wage unceasing warfare,” against “our resplendent economic autocracy.”
Members of Congress would wage only a little of this warfare in their 1936 session. The president asked lawmakers for a new tax on undistributed corporate profits, the piles of cash that many corporations chose to park in income-generating financial assets instead of investments in new production. Taxing these stashes, reformers held, would discourage tax avoidance by wealthy shareholders. Lawmakers delivered a “watered-down version” of what Roosevelt sought as they rushed to end the congressional session and get back home and start campaigning for what promised to be an enormously pivotal election.
FDR would have two rivals in his 1936 reelection campaign, the Republican governor of Kansas Alf Landon and a Populist-spirited congressman from the Northern plains, William Lemke of North Dakota. Lemke ran as a candidate of the Union Party, a marriage of political convenience between Father Coughlin, Francis Townsend, and Huey Long’s rather mean-spirited successor, Rev. Gerald L. K. Smith, a shady Midwest minister who had hooked up with Long in Louisiana and grabbed the reins of the Share Our Wealth movement after Long’s death.
The Union Party never mounted a serious campaign. The nation’s progressive movements would quickly shun it. Roosevelt would give them no other political choice. In the 1936 campaign FDR made himself the presidential candidate progressives had been dreaming about their entire lives. He came out swinging against the plutocrats, the “economic royalists” as the president dubbed them, and never let up. “We shall continue to use the powers of government to end the activities of the malefactors of great wealth who defraud and exploit the people,” declared the very first plank of Roosevelt’s 1936 Democratic party platform.
At Franklin Field in Philadelphia, before an audience of one hundred thousand, Roosevelt welcomed his party’s nomination and eloquently outlined a magnificently egalitarian narrative of American history. In 1776, Roosevelt began, Americans had sought and won freedom “from the tyranny of a political autocracy—from the eighteenth-century royalists who held special privileges from the crown.” But the onset of the industrial age had brought forth a new civilization and “a new problem for those who sought to remain free.”
“Economic royalists,” FDR explained, had “carved new dynasties” and built new kingdoms upon their “concentration of control over material things.” The “privileged princes of these new economic dynasties” had “created a new despotism,” a new ”industrial dictatorship.” Private enterprise had become “privileged enterprise.” “In the face of economic inequality,” the president continued, the “political equality we once had won” had become “meaningless.”
“To some generations much is given,” FDR would conclude. “Of other generations much is expected. This generation of Americans has a rendezvous with destiny.”
FDR’s rhetorical fusillade against plutocracy would continue straight through the entire campaign. The “forces of selfishness and of lust for power,” Roosevelt would tell his final campaign rally in New York’s Madison Square Garden, had never before “been so united against one candidate as they stand today.” Added Roosevelt: “They are unanimous in their hate for me—and I welcome their hatred.”
The president didn’t just offer fiery rhetoric to progressives in his 1936 campaign. He offered leadership. He campaigned less as the nominee of the Democratic Party and more as the leader of a national progressive coalition that would stretch from veteran crusaders against grand fortune like Fiorello LaGuardia, now the mayor of New York City, and the La Follettes of Wisconsin to the millions of Americans who thrilled to the biblical share-the-wealth cadences of Huey P. Long.
The Republican progressives in Congress would ride with Roosevelt and desert their party’s nominee. In Minnesota, the Farmer-Labor Party endorsed Roosevelt, and the Democrats in the state ran no opposition to the Farmer-Labor candidate for governor. In Nebraska, Roosevelt endorsed veteran Senate progressive George Norris, not his Democratic Party challenger. In New York, a new American Labor Party ballot line let lifelong socialists vote for Roosevelt without having to pull down the Democratic Party lever.
In 1936, FDR no longer needed the institutional base of the old Democratic Party. A new institutional partner had arrived on the scene, the newly organized mass industrial unions, the CIO of John Lewis and Sidney Hillman. With labor’s help, Roosevelt was ushering onto the American scene a new political lineup, notes historian Jean Edwards Smith, “a unique alliance of big-city bosses, the white South, farmers and workers, Jews and Irish Catholics, ethnic minorities, and African Americans that would dominate American politics for the next generation.””
(AFTER PRESIDENT ROOSEVELT HEARD ABOUT THE SURVEY INVOLVING HIM, SENATOR HUEY LONG AND FATHER COUGHLIN, HE KNEW THEY WERE RESONATING WITH THE VOTERS AND HE KNEW THERE HAD TO BE A WAY OF REDISTRIBUTING THE WEALTH. HE CAME TO THE CONCLUSION THAT THE ONLY FAIR WAY WAS TO DO IT THROUGH THE INCOME TAXES. EVEN THOUGH THIS WAS THE PROPER WAY, THE ELITISTS OR PLUTOCRATS WOULD HATE HIM FOR DOING SO, INCLUIDNG THE INVESTMENT BANKERS. THESE BATTLES DIDN’T GET REAL SERIOUS UNTIL WORLD WAR II STARTED. IN SOME WAY, THEY HAD TO MAKE A PUBLIC RELATIONS STORY WELL ENOUGH TO GET the SOLDIERS WHO WERE DYING FOR OUR OCUNTRY AT A SALARY OF $60 A MONTH, TO SHAME THE WEALTHY INTO PAYING MORE INCOME TAX, TO MAKE SURE WE WOULD WIN THE WAR AND THAT THEIR FACTORIES WERE PROTECTED FROM THE GERMANS, IN CASE THE GERMANS WOULD WIN. TODAY, WE DON’T REALLY SEEM TO HAVE MANY ENEMIES, OTHER THAN BILLIONAIRES TRYING TO EXPLOIT ONE ANOTHER AND SEEING WHO CAN EXPLOIT MORE TAX BREAKS THROUGH TAX LOOPHOLES, SUCH AS A BIG CORPORATION LIKE GENERAL ELECTRIC, WHO DOESN’T PAY ANY INCOME TAX AND EVEN GETS MONEY BACK FROM THE GOVERNMENT. NOW, FINALLY, YOU HAVE, HERE COMES THE IRS TO THE RESCUE BY DECIDING WHO CAN HAVE TAX-EXEMPT STATUS THROUGH THEIR 501 © 4 GROUP. THE RIGHT-WING GROUPS SAY THE IRS IS FAVORING THE LIBERALS. THE LIBERALS SAYING THE IRS IS FAVORING THE RIGHT-WING, SUCH AS APPLE WHO IS HIDING HUGE AMOUNTS OF MONEY IN IRELAND. I HOPE THEY REALY INVESTIGATE THIS BECAUSE IT HAS BEEN GOING ON NOW FOR A LOT OF YEARS AND US MIDDLE CLASS ARE GOING BANKRUPT BECAUSE OF THE GREEDY CORPORATIONS, INVESTMENT BANKERS AND BILLIONAIRES WHO CONTROL LEGISLATORS, THROUGH LARGE CAMPAIGN CONTRIBUTIONS.
LaVern Isely, Overtaxed Independent Middle Class Taxpayer & Public Citizen & AARP Members