m . S o a k in g t h e W a t e r pr o o f e d R ic h ?
I consider the so-called principle (if it may be dignified by such a title)
of taxation in accordance with ability to pay ... utterly unsound....
The sound and justifiable method of taxing income is at a flat or
proportional rate.
But perhaps the high marginal tax rates were just so much
window dressing, A colossal illusion in the age of loopholes,
or a kind of spiritual consolation prize to the 20-percent-fellows.
After all, as early as the 1930s, the iconoclastic Henry Simons had
sensed a grand scheme of deception, whereby enormous surtaxes
are voted in exchange for promises that they will not be made
effective---- [Politicians may point with pride to the rates, while
quietly reminding their wealthy constituents of the loopholes.He
therefore urged Congress to quit this ludicrous business of dipping
deeply into great incomes with a sieve.
Later, cynics even charged that the only possible purpose of the gap between paper and real tax rates is to trick the American public into believing that the progressivity that it preferred had actually been achieved.
During the Eisenhower years, such complaints were common.
As a longtime economic critic of the tax system, Professor Harold
Groves, informed Congress:
the impression is widely shared that the Congress deliberately throws a high-rate scale to the public as a demagogic bone and then as deliberately allows escapes from taxes that make these rates specious.
Stanley Surrey, the leading academic tax lawyer of the post-World War II period and the architect of rate reductions as the chief tax policy analyst in the Kennedy administration, told the readers of Colliers that the federal income tax was a clear illustration of schizophrenia because Congress created high rates with one hand and escapes from them with the other.
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