Sarah Palin's War on Taxes - and History
By Jon Perr Thursday Dec 10, 2009 11:00amAmong the qualities that uniquely define Sarah Palin is that she doesn't know what she doesn't know. But as her confusion about climate change, the First Amendment and even Alaska's energy production showed, Palin's ignorance of a subject is no barrier to her speaking out with great conviction about it. So it is once again with talk of potential tax increases to fund the escalating war in Afghanistan. War time taxes are never necessary, Sarah Palin seemed to suggest this week, because during World War II "many Americans gave what little money they had to buy the war bonds that funded it all."
As Andrew Sullivan noted here and here, the Quittah from Wasilla used this week's anniversary of the Japanese attack on Pearl Harbor to invent a new myth about how the United States mobilized and paid for the war which followed it. Palin wrote this December 7:
The attack on Pearl Harbor launched America into the Second World War, and our Greatest Generation did not hesitate when asked to sacrifice for their country. American men enlisted in droves, American women went to work in the factories that became our "Arsenal of Democracy," and many Americans gave what little money they had to buy the war bonds that funded it all.
Of course, in reality Americans funded the war through massive debt and massive tax increases (above).
As NPR recalled in August, Americans starting in 1942 began paying dramatically higher taxes, with the richest paying the most of all:
During World War II, tax rates for the wealthy soared as high as 94 percent. But poor and middle-class families also paid taxes at rates substantially higher than today's. Despite those high taxes, the vast majority of Americans surveyed by Gallup back then said the taxes they paid were fair.
Just two weeks ago, former Reagan Treasury Department economist Bruce Bartlett quantified those war time taxes and how that vast new burden was shared across the Greatest Generation:
During World War II, federal revenues roughly tripled as a share of the gross domestic product (GDP) and the number of people paying income taxes expanded tenfold, from 3% of the population in 1939 to 30% by 1943. In 1940, a family of four needed close to $80,000 of income in today's dollars before it paid any federal income taxes at all. By the war's end, it saw its effective tax rate rise from 1.5% to 15.1%. (Today such a family only pays a federal income tax rate of about 6%.) But taxes weren't the only way the war was paid for. Spending on nondefense programs was cut almost in half, from 8.1% of GDP in 1940 to 4.4% in 1945.





