Media darling Rand Paul is doing his best to end progressive taxation in America. Randolph Paul, over a half-century ago, helped make progressive taxation a prime building block for America’s middle class golden age. To stop politicos like Rand, we need to remember insightful advocates like Randolph.
April 15 is fast approaching, and Americans are naturally thinking about taxes. But most of us won’t be thinking about taxes the same way Americans once did. Over the past half-century, we’ve had a profound transformation in our attitudes toward income taxation.
How profound? Consider the tax perspective of Randolph Paul, the corporate tax attorney who helped shape federal tax policy during and after World War II.
Randolph Paul probably thought about taxes — and their role in our society — as deeply as any American of his time. Paul lived and died taxes, literally. In 1956, he slumped over and passed away while testifying about tax policy before a U.S. Senate committee.
Paul’s tax career had started decades earlier. In 1918, just a few years after the federal income tax went into effect, Paul began specializing in tax law. By the 1930s, he had become one of Wall Street’s top tax experts. His clients ranged from General Motors to Standard Oil of California, and probably no one in America knew the tax code — loopholes and all — any better.
That knowledge made Randolph Paul invaluable to Franklin Roosevelt’s New Deal. In 1940, Paul helped New Dealers write an excess profits bill. In 1941, right after Pearl Harbor, he joined the Treasury Department and worked to make sure that all Americans, the wealthy included, contributed financially to the war effort.
Paul succeeded. By 1944, the federal income tax had become a major presence in American life. Most Americans, for the first time ever, were paying income tax — and rich Americans were paying the most taxes of all. During the war, the tax rate on income over $200,000, about $2.6 million today, jumped to 94 percent.
Two years after the war, back in private practice, Paul published his masterwork, the ultimate distillation of his thinking about tax policy. His new book, Taxation for Prosperity, presented a carefully argued case for continuing high wartime tax rates on peacetime high incomes. (more…)