Runaway Greed Is Destroying America: Should There Be a Lid on How Much Someone Can Make?

Social decency, most Americans today would agree, demands a minimum wage, a floor that keeps working people out of dire privation. Does social decency also demand a “maximum wage,” an income ceiling that discourages wealth from dangerously concentrating?

Philosopher Felix Adler certainly thought so. We remember Adler today as the tireless reformer who led the national effort to end child labor in the early 1900s. Adler also founded the Ethical Culture movement and introduced the kindergarten concept into American education. Much less well known: Adler advanced America’s first serious maximum wage proposal.

The exploitation of workers young and old, Adler believed, generated grand private fortunes that exerted a “corrupting influence” on American politics. To curb that corruption, he proposed a steeply graduated income tax — with a 100 percent top rate at the point “when a certain high and abundant sum has been reached, amply sufficient for all the comforts and true refinements of life.”

This 100 percent top rate, Adler told a packed 1880 lecture hall in New York City, would leave with the wealthy individual “all that he can truly use for the humane purposes of life” and  tax away “only that which is to him merely a means of pomp and pride and power.” 

The New York Times would give Felix Adler’s call for an income maximum widespread circulation, but the notion of a maximum wage wouldn’t take a specific legislative form until World War I, when progressives demanded a 100 percent tax on all income over $100,000 to help finance the war effort.

The group backing this $100,000 income limit, the American Committee on War Finance. would assemble a network of 2,000 volunteers and publish clip-out ads in daily newspapers across the country that readers could sign to “pledge” their support.

Americans who signed the Committee pledge were committing themselves “to further the prompt enactment into law” of the boldest tax-the-rich proposal any American political grouping had ever promoted. They were demanding a fixed limit on income, what the Committee would call “a conscription of wealth.”

“If the government has a right to confiscate one man's life for public purposes,” Committee on War Finance chairman Amos Pinchot, a progressive New York attorney, declared, “it certainly ought to have the right to confiscate another man's wealth for the same purposes.”

The richest 2 percent of Americans, Pinchot would testify to Congress, owned an incredible 65 percent of America’s wealth.

“Neither the United States nor any other country can carry on a war which will make the world safe for democracy and the plutocracy at the same time,” Pinchot would note to lawmakers. “If the war is to serve God, it cannot serve Mammon.”

Amos Pinchot and his fellow progressives would not, in the end, win the 100 percent top tax rate they were seeking. But by war’s end their campaign had totally changed the tenor of America’s political discourse on taxes. The nation’s top tax rate on income over $1 million, just 7 percent in 1914, would hurdle to 77 percent in 1918.

The “Red Scare” that followed World War I in the United States would quickly dash progressive hopes for a more egalitarian America — and usher in a right-wing political reaction that once again made America safe for plutocracy. Incomes and wealth would concentrate at a ferocious pace, and top Democrats and Republicans alike would push throughout the 1920s for lower taxes on America’s richest. By 1925, no dollar of income over $100,000 would face more than a 25 percent tax rate.