MARSHALL, Minn. — In 1913, the 16th Amendment to the Constitution legalized the federal income tax. Marginal tax rates in the United States have varied widely, but since 1988 we have been in a prolonged period of low taxation.

For most of the 96 years we have been taxing income, the highest marginal rate remained above 70 percent; for only 35 of those years has it been below 50 percent. In only 14 years has the top marginal rate dipped below the current 35 percent, and six of those years directly preceded the last New Deal. This data reveals that the United States sustained massive economic growth in a period of very high marginal taxation while sustaining exceptional levels of public investment in infrastructure, education, and military spending.

Indeed, the very infrastructure built in this period of high public investment is now crumbling. The I-35W bridge collapse is only the most dramatic example. As streets, sewers, sidewalks, curbs, electrical grids, schools, etc., age, they need to be replaced. Homeowners across the state, from the metro area to greater Minnesota, are facing local tax assessments for sewers and roads that cost between $10,000 and $30,000, payable immediately in many cases.

1945-80: High taxes, high public investment
The United States built a world-class infrastructure between 1945 and 1980, and we did it with high taxes and high public investment. Between 1945 and 1970, a period of economic expansion unprecedented in world history, the top marginal tax rate did not dip below 70 percent, and for many years was above 90 percent. (Today, the top rate is less than half that much.) During that time, the nation built hundreds of state universities, thousands of miles of roads and highways, laid thousands of miles of sewers, constructed water treatment plants, built schools, sent a generation of veterans to college and men to the moon, and created conditions in which the United States became the engine of the world's economic growth. It was not cheap, but the generations that preceded us sacrificed so that we might thrive.

Now it is our turn to decide what kind of nation we want to be and what kind of nation we want to leave our children. Simple-minded cries that taxes destroy the incentive of "job creators" were not true in the 1950s, and are not true now. In the last few months we have seen what "job creators" do with the extra wealth they collect in a low tax environment. They place bets on complex financial derivatives and credit default swaps whose real values we may never be able to decipher.

Expect wealthy to seek the highest return
The wealthy, as a whole, cannot be expected to invest in job creation, but instead should be expected to follow the highest return they can get — whether it creates a job or, as has been the case, is part of a Ponzi scheme or a simple bet on the value of a valueless insurance instrument peddled by AIG. Many hundreds of billions of dollars were bet on such schemes, and none of it created any real wealth or permanent jobs.

We now know that when tax rates are low the rich place their bets on Bernard Madoff and "complex financial securities." We also know that when taxes were higher the nation invested in its people by promoting the general welfare, providing for the common defense, and securing the blessing of liberty for ourselves and our posterity.

We tried the low tax way and it did not work. It is time for a change, and for some fairness in the tax code. 

Jeff Kolnick is an associate professor of history at Southwest Minnesota State University.