Opinion

Budget battle: Four points of advice from Ike

In confronting agonizing budget challenges and political fissures, America would benefit from advice from “Ike.” These words, from a Republican, challenged listeners then regardless of party, as they will challenge listeners today. Mount Holyoke College tax scholar John O. Fox gives us Dwight D. Eisenhower's four critical pieces of advice on taxes, debt, the role of government, and what it means to be a "good American."

2. On tax rates and tax thresholds

But “without adequate revenue, most of [these programs] would be abandoned or curtailed,” Ike said. And he insisted they be paid out of current taxes. For this reason, and because of the massive debt lingering from World War II, the top individual rate was to remain at 91 percent (vs. 35 percent today). Also, to the profound disappointment of most Republicans, he called for the top corporate rate to remain at 52 percent (vs. 35 percent today).

“The extension of this extra tax on corporations will provide enough money to pay the costs of the benefits this tax revision program will bring to individuals and businesses,” Ike explained. Both rates remained unchanged through the end of his presidency in 1960.

But before Democrats become too pleased with these policies: Ike also refused to lower the bottom individual rate below 20 percent (vs. 10 percent today), or to increase the personal exemption to protect one-third of all taxpayers from tax (vs. over 40 percent today). “The share of that one-third would have to be paid by the other two-thirds. I think this is wrong,” he declared.

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