A Fight About Taxing The Wealthy, A Century Before President Obama

President Obama’s proposal to hike certain taxes on the wealthiest Americans while offering new tax breaks targeted at the middle class has reignited a long-running debate about how much of the government’s money should come from the rich. It’s a conversation that goes back more than 100 years, as M. Susan Murnane describes in a 2004 paper for Law & Social Inquiry.

The income tax as we know it today began in 1913 and rose to “confiscatory levels” as military spending ballooned during World War I, Murnane writes. In 1918, the marginal tax rate for the highest earners hit 77 percent. In the post-war years, some conservatives hoped to virtually eliminate the tax, while progressives argued that keeping the high levels for the wealthiest would “curb the power of monopolists” and let the country repay war debt with money “derived from war profiteering.”

The ultimately successful compromise was known as the Mellon tax reforms after Treasury Department Secretary Andrew W. Mellon. Murnane argues that it was the result of a public relations campaign that helped sell the public not just on how to tax capitalists but on industrial capitalism itself.