Ray Madoff

Because in the time when we had all of this lavish wealth and lots of poor people, the tax system that we had was terrible.

People who had businesses, they got to benefit when there were tariffs.

It allowed domestic providers to raise their prices too.

Professor Ray Madoff again.

So it was like a very happy system for the industrialists and not so great for consumers and everyone else.

So everything got expensive.

So you had these super rich people and you had a lot of people who weren't doing well at all.

And a lot of people began to be concerned that the people that weren't doing well would not be so happy with this system of capitalism.

And at the time, there were actual alternatives.

This is back when there were options out of capitalism.

Socialism was really quite big and was sweeping parts of Europe.

I think it's so ironic today that capitalism suffers from a lack of competition.

Because of the threat of socialism, people that wanted to keep capitalism felt they needed to show that capitalism could serve the public well.

Even the conservative Wall Street Journal advocated for heavy taxes, particularly on people with inherited wealth.

And Andrew Carnegie, in his famous Gospel of Wealth, wrote, we have to have heavy taxes on inheritance because all of these rich people running around living on their inherited wealth is a problem.

And in fact, only applied to the richest 5% of Americans.

Nobody else paid any taxes at all.

Over time, the income tax, as we all know, became applicable to pretty much all Americans.

We had a progressive income tax that had higher rates for those who had higher income.

And this was all meant specifically to rein in the rich people.