Changes

The [[New Deal]] was able to expropriate the upper income brackets even before [[World War II]]. In 1929, total aggregate Personal Income was estimated at 80.6 billion dollars and the tax brackets making above $50,000 in taxable income retained 5.2 billion, after income and surtax; in 1936, when total Personal Income was estimated at 64.2 billion dollars, not quite 1.2 billion was retained by "the Rich". Taxable income above $100,000 was wholly absorbed by the government if account is taken of estate taxes. Economist and former Austrian Finance Minister [[Joseph Schumpeter]] described it in these terms:  

The [[New Deal]] was able to expropriate the upper income brackets even before [[World War II]]. In 1929, total aggregate Personal Income was estimated at 80.6 billion dollars and the tax brackets making above $50,000 in taxable income retained 5.2 billion, after income and surtax; in 1936, when total Personal Income was estimated at 64.2 billion dollars, not quite 1.2 billion was retained by "the Rich". Taxable income above $100,000 was wholly absorbed by the government if account is taken of estate taxes. Economist and former Austrian Finance Minister [[Joseph Schumpeter]] described it in these terms:  

:"''a tremendous transfer of wealth has actually been effected, a transfer that quantitatively is comparable with that effected by [[Lenin]]. The present distribution of disposable incomes compares well with the one actually prevailing in Russia.''<ref>Schumperter continues: "the Russian act of April 4, 1940, concerning the income tax, reveals that incomes as low as 1.812 rubles per year were subject to it. It also reveals the existence of incomes of over 300,000 rubles which were then taxed at the rate of 50 per cent. Now, let us neglect the tax on the lowest incomes entirely and put the modal income in the 1,812–2,400 ruble group at 2,000 rubles; further, let us put the modal retained income in the highest group at no higher than 150,000 rubles (though those 300,000 rubles before tax were a lower limit). Then we discover that the higher of these modes was 75 times the lower one. Even if we put, for 1940, the American equivalent (not of course in purchasing power, but in the sense of equivalent position in the income scale) of the lower mode at as low as $1,000, we shall evidently not find much in the United States income distribution of retained incomes (even apart from the reductions specifically motivated by the requirements of war finance) to support, in the light of the Russian paradigma, the current phrases about atrocious inequalities, “concentration of power” as measured by concentration of income, and the like. The evidence presented in the well-known book by Bienstock, Schwarz and Yugov on ''Industrial Management'' in [[Russia]] tends to support this view. Many other details point in the same direction, for instance, the fact that those ranges of the professions who could formerly but cannot now afford domestic servants in the United States, do enjoy this privilege—worth a ton of electrical household gadgets—in Russia. All this still fails to take account of advantages that do not pass through income accounts. The power and social position—which is one of the main reasons for valuing a high income—of the industrial manager, especially if leader of the local unit of the [[Bolshevik]] party, is far and away above that of an American industrialist. Interesting phenomenon—this Lag of Ideas! Many well-meaning people in this country now profess horror or indignation at social inequalities which did exist fifty years ago, but no longer do. Things change, slogans remain."</ref>

:"''a tremendous transfer of wealth has actually been effected, a transfer that quantitatively is comparable with that effected by [[Lenin]]. The present distribution of disposable incomes compares well with the one actually prevailing in Russia.''<ref>Schumperter continues: "the Russian act of April 4, 1940, concerning the income tax, reveals that incomes as low as 1.812 rubles per year were subject to it. It also reveals the existence of incomes of over 300,000 rubles which were then taxed at the rate of 50 per cent. Now, let us neglect the tax on the lowest incomes entirely and put the modal income in the 1,812–2,400 ruble group at 2,000 rubles; further, let us put the modal retained income in the highest group at no higher than 150,000 rubles (though those 300,000 rubles before tax were a lower limit). Then we discover that the higher of these modes was 75 times the lower one. Even if we put, for 1940, the American equivalent (not of course in purchasing power, but in the sense of equivalent position in the income scale) of the lower mode at as low as $1,000, we shall evidently not find much in the United States income distribution of retained incomes (even apart from the reductions specifically motivated by the requirements of war finance) to support, in the light of the Russian paradigma, the current phrases about atrocious inequalities, “concentration of power” as measured by concentration of income, and the like. The evidence presented in the well-known book by Bienstock, Schwarz and Yugov on ''Industrial Management'' in [[Russia]] tends to support this view. Many other details point in the same direction, for instance, the fact that those ranges of the professions who could formerly but cannot now afford domestic servants in the United States, do enjoy this privilege—worth a ton of electrical household gadgets—in Russia. All this still fails to take account of advantages that do not pass through income accounts. The power and social position—which is one of the main reasons for valuing a high income—of the industrial manager, especially if leader of the local unit of the [[Bolshevik]] party, is far and away above that of an American industrialist. Interesting phenomenon—this Lag of Ideas! Many well-meaning people in this country now profess horror or indignation at social inequalities which did exist fifty years ago, but no longer do. Things change, slogans remain."</ref>

==Crash of 1937==

==Crash of 1937==

When FDR was inaugurated for his second term in March 1937 [[national income]], [[payroll]]s, and industrial production<ref>League of Nations Monthly Bulletin of Statistics, June, 1936. Percentage change 1929 to March 1936, United States -21.8%, rank number 13.</ref> were still 20 per cent below the 1929 figure and construction was still only about one third what it had been in 1929 when the nation had a booming economy due to massive speculation that would ultimately lead to the stock market crash. By June, 1937 the [[U.S. Treasury]] reported relief payments were less than in the same period the preceding 12 months, however this was not so. The Treasury merely shifted relief payments to other accounts. Relief payments were, in fact, larger than the year before. The Treasury made a practice of "cooking the books" to produce phony numbers. Stock prices declined and by September the dire reality could be no longer hidden. By the end of October 1937 the market crashed. The U.S budget was running a [[deficit]] at the time of $300,000,000 a month.

When FDR was inaugurated for his second term in March 1937 [[national income]], [[payroll]]s, and industrial production<ref>League of Nations Monthly Bulletin of Statistics, June, 1936. Percentage change 1929 to March 1936, United States -21.8%, rank number 13.</ref> were still 20 per cent below the 1929 figure and construction was still only about one third what it had been in 1929 when the nation had a booming economy due to massive speculation that would ultimately lead to the stock market crash. By June, 1937 the [[U.S. Treasury]] reported relief payments were less than in the same period the preceding 12 months, however this was not so. The Treasury merely shifted relief payments to other accounts. Relief payments were, in fact, larger than the year before. The Treasury made a practice of "cooking the books" to produce phony numbers. Stock prices declined and by September the dire reality could be no longer hidden. By the end of October 1937 the market crashed. The U.S budget was running a [[deficit]] at the time of $300,000,000 a month.

===Unemployment worse than in 1933===

===Unemployment worse than in 1933===