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If the tax cut for the wealthiest Americans does expire, those households making over $250,000 would see their income tax rise from 33 percent to 36 percent. Those making upwards of about $375,000 would go from a 35 percent tax rate to 39.6 percent. But what about the wealthiest of the wealthy? Why should someone making many millions of dollars a year pay the same percentage in taxes as someone making in the mid-six figures? We're going to talk about the history of upper-income taxes with Joseph Thorndike. He directs the Tax History Project at the nonprofit group Tax Analysts, and he's the author of the forthcoming book "Their Fair Share: Why Americans Tax the Rich."

Mr. Thorndike, welcome to the program.

JOSEPH THORNDIKE: Thanks very much.

BLOCK: I want to play for you a little bit of tape of President Ronald Reagan in 1986, just before he signed the Tax Reform Act, which reduced the number of tax brackets but also significantly lowered tax rates overall.

(SOUNDBITE OF ARCHIVED AUDIO)

RONALD REAGAN: When our Founding Fathers designed this government of, by and for the people, they never imagined what we've come to know as the progressive income tax. When the income tax was first levied in 1913, the top rate was only 7 percent on people with incomes over $500,000 - now, that's the equivalent of multimillionaires today.

BLOCK: So 7 percent in 1913, but the top rate starts skyrocketing very soon after that. How high up did it go?

THORNDIKE: The rate during World War I got up to 77 percent in very short order. There was a lot of pressure on the federal government to raise money quickly, and the income tax was quite a tempting target for them.

BLOCK: And then by the time of FDR?

THORNDIKE: By the time of FDR in the middle of the next war, the rate topped out at 94 percent, which is almost inconceivable today, but was consistent both with FDR's political philosophy and with the revenue needs of the government at the time.

BLOCK: How did he explain the need for a 94 percent top tax rate?

THORNDIKE: In large part, he talked in terms of sacrifice. He believed that if America's young boys were sacrificing on the battlefield, then the least we at home could do was sacrifice from our pocketbooks.

BLOCK: And that top tax bracket was for people who were making then about $200,000 a year - that would be about $2 million in income now. Were those people actually paying that tax rate, or were there ways around it - just as there are now?

THORNDIKE: There are always ways around tax rates. People will avoid taxes even in those moments of national sacrifice.

BLOCK: What about the argument that, you know, if the government is going to take, in this case, say, 90 percent of my income, why should I work hard? Why should I try to make a good salary if it's all going to go to taxes?

THORNDIKE: Well, there's definitely a point at which it does start to affect incentives that way, and that's why economists, even as early as the late 1930s, were worrying that the Roosevelt tax rates were too high. The war is a little bit of a special case. People understand that. The real surprising thing is that they retained the wartime rates for more than a decade - 15 years after the end of the war.

BLOCK: Well, let's jump ahead now to the present day, and try to figure out why we shouldn't have, say, a billionaire tax? Why should Oprah Winfrey or Lady Gaga be paying the same percentage of their income in taxes as a common dentist, a fairly successful dentist somewhere?

THORNDIKE: I think that's a good question. I think there is a reasonable case to be made on either side. And I think there's a pretty strong moral case to be made now that there should be distinctions there. It's not really simplifying the tax system to reduce the number of brackets, and mostly it's just a question of looking at the tax tables to determine how much you owe.

There are reasons to not tax the super rich at super high rates, and that is, just as we said, the super rich will find a way around them. To some extent, high rates on the rich are self-defeating because they promote a lot of tax avoidance. Tax avoidance, in turn, actually irritates regular taxpayers. That undermines support for the tax system in general, which can actually end up having a perverse effect. So you can end up discrediting the income tax itself. It's an irony of progressive taxation.

BLOCK: But is that argument the same as saying, look, they're just going to find a way around the law, so we don't need a law? I mean, wouldn't it be better to fix the law so they couldn't get around it?

THORNDIKE: Well, that's hard to do, but there's a better way to raise the rates on the rich - the effective rates on the rich. The way to do that is to close loopholes to eliminate tax preferences. The only problem with that is that we all have our own loopholes and our own tax preferences, and it's very hard to muster the political will to take things away from people.

So, you know, some of the most expensive preferences are, for instance, the tax-free treatment of employer-provided health care or the mortgage interest deduction. We'd love to take away the loopholes from the rich guys. We don't want to give up our own.

BLOCK: If you look at the history of how people have explained the rationale for high taxes on the top, top earners, how much of that hinges on a redistribution-of-wealth argument - in other words, that the very, very wealthy should pay for programs that help lift up the bottom?

THORNDIKE: It's important to be specific, when we talk about redistribution, about what it is we're actually trying to redistribute. And historically, there have been people who have defended progressive taxes as a means to redistribute wealth. I think, though, if you look at what actually moves lawmakers to make decisions, it's not about redistributing wealth. It's about redistributing the tax burden. We talk a lot about their fair share, and I named my book "Their Fair Share." But the reason it's actually a useful phrase to think about is the share of what? Is it the share of wealth, or is it the share of the tax burden? Historically, the share of the tax burden has really been what's driving the debate.

BLOCK: Joseph Thorndike, thanks for coming in.

THORNDIKE: Thanks very much.

BLOCK: Joseph Thorndike's upcoming book is titled "Their Fair Share: Why Americans Tax the Rich." You can check out a timeline of the highs and lows of marginal tax rates at our website, npr.org.

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