After The New York Timesrevealed last week that Donald Trump could have avoided paying taxes for almost two decades, Trump and his surrogates doubled-down on their assertion that his fiscal maneuvering made him a "genius." But, despite their antipathy towards having to pay taxes, Americans have never taken kindly to the rich shirking their burden. Steven R. Weisman, author of the book The Great Tax Wars and Vice President for Publications and Communications at the Peterson Institute for International Economics, discusses how the American public's views on paying taxes have shifted over time and whether, at this moment, paying them is seen as patriotic or just plain stupid.
"I Paid My Income Tax Today" by Irving Berlin
BROOKE GLADSTONE: From WNYC in New York, this is On the Media. I’m Brooke Gladstone.
BOB GARFIELD: And I'm Bob Garfield.
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Last Saturday, The New York Times released a bombshell report offering the first look into the mythical tax returns of Donald Trump.
FEMALE CORRESPONDENT: Someone mailed The New York Times several pages of Trump’s 1995 tax records.
FEMALE CORRESPONDENT: Documents show Trump declaring a loss of nearly a billion dollars.
FEMALE CORRESPONDENT: And Trump’s billion-dollar loss in 1995 could have exempted him from paying federal income tax for two decades.
BOB GARFIELD: Could it be, after all these months, after all the outbursts and hate speech and scandals and lies, that the thing to discredit Donald Trump would be - tax loss carry forward? With criticism rushing at him full force, Trump and his proxies tried the usual jujitsu to flip the narrative in his favor.
DONALD TRUMP: I have brilliantly used those laws to pay as little tax as legally possible.
FORMER NYC MAYOR RUDY GIULIANI: The man’s a genius. He knows how to operate the tax code for the benefit of the people he’s serving.
GOV. CHRIS CHRISTIE: And I think the worst part, Chris, is this is the tax code that people in America suffer under every day.
BOB GARFIELD: This is also known as trying to make a silk purse, a golden-clasped silk purse beaded with diamonds and pearls, out of a sow's ear, because nobody likes to pay taxes, right? Props to Donald for outsmarting Uncle Sam – yeah - no, wrong!
According to Steven R. Weisman, author of The Great Tax Wars, even if we think government is bloated and inefficient, Americans, historically, are more than willing to pony up. Steven, welcome.
STEVEN WEISMAN: Thanks, Bob.
BOB GARFIELD: So many conflicting ideas at play here. We think tax rates are too high. We hate paying taxes. But we fill our legislatures and our Congress with politicians dedicated to cutting taxes for the wealthy, so paradoxical or somethin’.
STEVEN WEISMAN: Look, Americans have had mixed feelings about paying taxes since the dawn of the income tax, which was actually enacted during the Civil War by Abraham Lincoln, when the only source of revenue for the Union was tariffs. And tariffs are very regressive. They’re like a sales tax. So when the war occurred and sacrifice was demanded, the public wanted not only income taxes but they wanted the rich to pay what they thought was their fair share. They thought that was a patriotic duty.
During World War I, the rate for top income earners went up to 70% of your income taken and more than 90% during World War II. That rate continued to exist well into the 1950s.
BOB GARFIELD: And the current highest marginal tax rate for even the wealthiest Americans is?
STEVEN WEISMAN: Thirty-nine point six percent (39.6%).
BOB GARFIELD: Not the confiscatory 90% rate that we had towards the end of World War II, but when Donald Trump talks about us being the, you know, highest tax country in the Western world, which is wildly untrue, it resonates. What part of us wants to believe that the government is picking our pockets?
STEVEN WEISMAN: [LAUGHS] I think all of us want to believe that on April 15th. Paying taxes is painful for most of us. But if you really ask Americans whether their own tax level was fair, most of them say it is. They recognize that they have to pay taxes. But it really is objectionable to most Americans that the wealthiest can find loopholes to avoid paying taxes altogether or at a much lower rate than the rest of us. Governor Mitt Romney found that out in 2012, when he revealed his income tax returns, that he paid a much lower rate than the average middle-class American. And that precedent is, obviously, what made Donald Trump reluctant to reveal his tax returns this year.
BOB GARFIELD: If we harbor this overriding sense of fairness, why do we continue to pull the levers in state legislative and gubernatorial and congressional races for those who argue against that native fairness?
STEVEN WEISMAN: Well, the tax-cut era in federal tax rates really accelerated, of course, with the advent of Ronald Reagan. But what's worth recalling is that in the period when taxes were cut on the wealthy, there were also tax cuts made to the middle class and there was something called the earned income tax credit, which meant that money was put in the pocket of the very poorest. And I think that accounts for why tax cuts got passed repeatedly in the 1980s and through the administration of George W. Bush.
BOB GARFIELD: Talking about Reagan, the great tax cutter, even he was obliged to talk about tax inequity. Here's what he said.
PRESIDENT RONALD REAGAN: We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary, and that’s crazy.
BOB GARFIELD: And then he cut taxes for everyone. How did he square that circle?
STEVEN WEISMAN: Well, I like to think of Reagan as sort of the poet laureate of capitalism. He fashioned and really pioneered the idea of taxes as a punishment for what I call virtuous behavior - hard work, self-discipline, saving, investing, creativity, employing people. So his belief that taxes were a disincentive to hard work and economic growth was at the root of his ability to persuade America that there was nothing wrong with our economy that couldn't be fixed by tax cuts.
BOB GARFIELD: We do seem, when times are tough, to be willing to pony up more for the sake of, if nothing else, patriotism, no?
STEVEN WEISMAN: That's absolutely right, and I think that's the problem Trump is running into now. You know, during World War II one of my favorite stories from that period was that the great Irving Berlin, one of the great composers of popular music in the 1940s and ‘50s, wrote a song called “I Paid My Income Taxes Today.”
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You those bombers in the sky? Rockefeller helped to build 'em, so did I. I paid my income tax today.
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STEVEN WEISMAN: It was the idea that, like the rich, I’m willing to step up and carry the fight for my country. So I do think that, especially in times of emergency and war and peril, which certainly the Republican side is saying we are in now, people are more willing to have a progressive tax system that is fair but that demands more of the wealthy.
BOB GARFIELD: Steve, thank you.
STEVEN WEISMAN: Yeah, thank you for having me.
BOB GARFIELD: Steven Weisman is author of The Great Tax Wars: Lincoln to Wilson - The Fierce Battles over Money and Power That Transformed the Nation. He’s also the vice president for publications and communications at the Peterson Institute for International Economics.