In the US of the founding era, the new nation did away with aristocrat titles as part of its founding. It also did away with the rule of inheritance. By primogeniture (the whole of a father's estate to go to the first-born son). The goal was a middling
economy that had a preponderance of middle class households, rather than let wealth accumulate and concentrate in the hands of a few.
We currently live in a land of income and wealth inequality that vastly greater than what existed in the middle of
the 20th century: "an equal starting point in the race of life," in Lyndon Johnson's famous image.
There is, moreover, a challenging paradox here. This country has intervened fundamentally in how inheritance is handled--as with the eradication of the
law of primogeniture.
While we ought to restore the inheritance tax, we should not tackle the problem of inheritance at the point where the ambition to pass something on is inspiring parents to do the most they can for their children's education.
Johnson did not grasp the obvious point that, at 70%, the top rate of income tax was still high, almost absurdly high. Of course cutting it (and other rates) to somewhere below 50% would have prompted more noninflationary production. Who focuses on
sharply profitable activity to the exclusion of tax shelters, or idle leisure time, when the rewards is 30 cents on the dollar? Surely very few of us.
Yet here was LBJ raising the top rate to an effective 77% via his 10% income tax surcharge.
It was met with the boos that greeted much of everything that the president did in 1968, the year of the Tet Offensive in Vietnam, Martin Luther King's assassination, and the "Yippie protests" at the Democratic National Convention in Chicago.
Leftists called the surcharge a war tax.
Johnson had quit the presidency in any event, announcing in March that he would not be running for reelection that year.
6% surcharge to restrain unbalanced economic expansion
We have now enjoyed 6 years of unprecedented & rewarding prosperity. Last year, in 1966:
Wages were the highest in history-and the unemployment rate, announced yesterday, reached the lowest point in 13 years;
Total after-tax income of American
families rose nearly 5%
Corporate profits after taxes rose a little more than 5%
Our gross national product advanced 5.5%, to about $740 billion;
Income per farm went up 6%.
Our greatest disappointment in the economy during 1966 was the
excessive rise in interest rates and the tightening of credit. They imposed very severe and very unfair burdens. Last year, I recommended fiscal and moderate tax measures to try to restrain the unbalanced pace of economic expansion. Legislatively and
administratively we took several billions out of the economy. I recommend a surcharge of 6% on both corporate and individual income taxes--to last for 2 years or for so long as the unusual expenditures associated with our efforts in Vietnam continue.