Franklin D. Roosevelt's 100 tax proposal.edited (1) (3).edited

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1 Franklin D. Roosevelt's 100% tax proposal Name Institution Course Professor Date

2 Franklin D. Roosevelt's 100% tax proposal In 1935, President Franklin D. Roosevelt, who presided over the United States from 1933 to 1945, enacted legislation referred to as The Revenue Act. As stated by the Bank (2012), the Act was colloquially referred to as the "soak the rich tax." For the sake of equity, this Act was primarily enacted with regard to enormous profit-making corporations. The tax system was modified in response to the economic performance and the imperative to generate increased revenues following the Pearl Harbor attack. This paper offers a condensed explanation of the impact that President Roosevelt's intention to raise taxes to 100% of income had on the people of the United States. The implementation of progressive taxation has commenced. Progressive taxes were distinguished by imposing a disproportionately high tax burden on individuals with higher incomes. This rationale, and thus this line of reasoning, is valid due to its adherence to the principle of equity. A progressive tax is a system in which the proceeds collected from affluent segments of society are reallocated to support economic development in less affluent areas. Funded by taxes levied by the affluent, prosperity-generating infrastructures will increase government support and guarantee the employment of a large number of individuals. When speaking to Congress in April 1942, Roosevelt claimed that everyone was entitled to equal pay, and during the fiscal year, there was a maximum tax of up to $25,000. However, such taxing was waived for small-scale businesses that were cash-strapped and would be required to pay taxes under law provisions (Roosevelt et al., 1968). The implementation of a flat tax resulted in minimal distinctions between significant and minor entities. However, this particular form of tax imposed certain drawbacks for sizable corporations. These sizable organizations are distinct entities from the personnel they maintain. It was difficult to determine

3 if the tax affected the individuals in this instance. The stakeholders who would be impacted included shareholders, executives, and other staff members. Nevertheless, there was intense opposition to the 100% Tax Plan. Critics, which included prominent business figures such as Andrew Mellon, argued that exorbitantly high tax rates would serve as a deterrent to labor force productivity, innovation, and entrepreneurship. Mellon issued a warning regarding the historical recurrence of capital withdrawal from productive enterprises as a consequence of excessive taxes, anticipating possible adverse effects on the economy. Senator Huey Long lauded the proposal, declaring, “The income tax has made more liars out of the American people than golf has” (Zinn, 2005). Critics contended that an exceptionally high tax rate might deter individuals from pursuing higher incomes, thereby potentially impairing innovation and productivity. The proposal incited fervent discussions concerning its potential ramifications. Advocates lauded it as a courageous stride toward social justice and anticipated that the redistribution of wealth would stimulate the economy. Economist John Maynard Keynes supported the idea of taxing higher incomes, stating, "The avoidance of taxes is the only intellectual pursuit that carries any reward" (Leuchtenburg, 2015). However, critics cautioned against potential negative ramifications for both economic expansion and individual motivations. The 100% Tax Plan ultimately failed to be enacted into law. Nevertheless, its proposition symbolized a momentous turning point in the annals of American economic history, underscoring the perpetual challenge of reconciling economic prosperity with the equitable distribution of wealth (Roosevelt et al., 1968). The discussion pertaining to this proposition demonstrated the persistent conflict between policies that promote economic equality and those that encourage entrepreneurial pursuits.

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4 In summary, the 100% Tax Plan, proposed by Franklin D. Roosevelt, surfaced amidst a period of economic turmoil, sparking fervent debates regarding its potential ramifications. Although some viewed it as a strategy to address inequalities in wealth, critics expressed apprehensions regarding its adverse effects on innovation and economic expansion. Notwithstanding its failure to materialize, the enduring impact of the proposal highlights the perpetual difficulty of harmonizing economic equilibrium with the motivation of expansion and productivity.

5 References Brands, H. W. (2009). Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt. Doubleday. Fusfeld, D. R. (1954). The economic thought of Franklin D. Roosevelt and the origins of the New Deal. Columbia University Press. Leuchtenburg, W. E. (2015). Franklin D. Roosevelt and the New Deal: 1932-1940. Harper Perennial. Roosevelt, F. D., Ramspeck, R., Mead, J., & Randolph, J. (1968). Franklin D. Roosevelt. Union. World Bank. Information, Communication Technologies, & infoDev (Program). (2012). Information and communications for development 2012: Maximizing mobile. World Bank Publications. Zinn, H. (2005). A People's History of the United States. Harper Perennial Modern Classics.

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