My students have noted similarities between our current moment and the Gilded Age — the late-19th century period characterized by high tariffs, labor exploitation, political corruption, anti-immigrant policies, anti-Blackness, industry-linked environmental catastrophes, and extreme economic inequality. Sound familiar? History doesn’t repeat itself, but it does echo and rhyme.
In Gilded Age and Progressive Era Chicago, workers and Hull-House reformers exposed robber barons and organized for public services and government regulations to reign in economic inequality. The first federal corporate income tax was enacted in 1909 to regulate corporations and generate new revenue for public services. However, that 1% tax couldn’t remedy extreme inequality. Government needed to do more. And it did.
In 1935, President Franklin D. Roosevelt declared that “the people in the mass have inevitably helped to make large fortunes possible,” insisting that, “the duty rests upon the government to restrict such incomes by very high taxes.” During the New Deal era, higher corporate taxes funded a social safety net for Americans through Social Security, emergency loans, and cash assistance. These programs provided jobs for Chicagoans —expanding Lake Shore Drive, creating public art, and building new public schools and housing. Federal revenues also funded 1960s Great Society programs like Medicare, Medicaid, and food stamps. The welfare state’s social contract insisted that corporations pay taxes so the government could provide for, and protect, the public good.
Unfortunately, that social contract disintegrated over the last 50 years. Since the 1960s, the top corporate tax rate was cut from 52% to 21%. Simultaneously, the federal government provided large-scale subsidies to corporations. Bucking this trend, in 1973, Chicago passed the corporate head tax. Although it generated progressive revenue to support the city budget and public services, it ended under Mayor Rahm Emanuel in 2014. Emanuel, who called the tax “a job killer,” embraced prevailing, bipartisan, “cut-to-grow” policies that rejected progressive revenue and cut taxes for corporations, while privatizing and slashing public services.
The Roosevelt Institute documented how these policies resulted in “increased relative tax burdens on low- and middle-income households.” Our society asks low- and middle-income families to take on a greater tax burden and receive diminished public services, while those with the ability to pay more – the wealthy and corporations – receive unprecedented tax breaks and see their stocks and profits soar.