Over at Capital Gains and Games, Bruce Barlett offers some thoughts on raising the top income tax rates in which he notes that,"[i]t wasn't until World War II that the federal income tax affected a large percentage of the population. By 1943, 29.4% of Americans were filing tax returns, about the same as today." It seems to me that part of our trouble in the policy debates of today stems from the fact that people think the world they grew up in and live in now, represents the way things have been historically. Bartlett's tidbit reminds us that this is simply not the case.
Many of the things that we think of as essential characteristics of our world are really only about 70 years old. The post World War II era saw the rise of employer-sponsored health insurance and defined benefit retirement plans. Two government programs that were created on either side of WW II, Social Security and Medicare, account for an enormous portion of the federal budget. Massive defense spending in response to the Cold War is another. Political discussions today are filled with mourning for the loss of bipartisanship. At least some political scientists suggest that we are really just seeing a return to the normal level after a long period of unusually low partisanship.
Maybe some of the focus on these issues is simple demographics. This is the era in which the baby-boomers grew up and there are a lot of them. But for those of us not in that cohort, do we just wait around until the boomers work this out? Generational forbearance doesn't seem like a very good strategy. In any case, I really do think it would be helpful if we recognized the fact that just because we have done some things a certain way since 1945 or so, doesn't mean we can't do them some other way now.
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