For release: 05/19/26
A lesson in economics for AOC
By Cal Thomas
Tribune Content Agency
I am not an economist, but I do have some personal experience with the principles of economics and the rules that allow especially Americans to prosper while becoming more self-reliant and less dependent on government.
Rep. Alexandria Ocasio-Cortez (D-NY), aka AOC, the youngest woman ever elected to Congress, graduated from Boston University cum laude, and then returned to the Bronx and worked as a bartender and waitress to help her mother fight foreclosure of their home. Nothing wrong with that, but her life experience apparently has taught her little. In some recent comments she claimed that the very wealthy became that way, not from salaried work, but from investments. A version of this economic envy has been told and re-told ever since the days of President Franklin D. Roosevelt.
The central flaw in this “reasoning” is that there is only a fixed amount of money to go around and if someone makes more than you, it isn’t fair. The opposite is true. The money supply is unlimited. People are only limited in the amount they can earn by their talents, persistence and a willingness to take reasonable risks.
AOC and her socialist fellow travelers think there is something wrong with earnings from investments and other non-salaried income. Investments in the stock market produce capital for corporations who hire people and pay them salaries. They are then able to make investments that help sustain them and their families.
History has shown that lower taxes not only bring more money into the treasury, but leaves more money in our pockets to spend, save and invest, thus building wealth for ourselves.
Just one example. The Revenue Act of 1926 promoted by President Calvin Coolidge benefited all classes, not just the wealthy. Before Coolidge entered office, the federal income tax rate was 73 percent. The Revenue Act lowered it to 25 percent.
In his first message to Congress in 1923, Coolidge said: “High taxes reach everywhere and burden everybody. They diminish industry and commerce. They make agriculture unprofitable. They increase the rates on transportation. They are a charge on every necessity of life.” Instead of reducing federal revenue, the Revenue Act caused more money to flow into the Treasury. The government ran surpluses every year Coolidge was president.
These are not difficult lessons to learn. Unfortunately, AOC, Senator Bernie Sanders (I-VT) and New York City Democrat-Socialist Mayor Zohran Mamdani have allowed their radical ideology to obscure the economic and political lessons from even the recent past. High state and city taxes are a major cause of the economic migration to lower tax states, though no one can escape the long arm of Washington.
AOC and company claim not everyone can afford to invest in the stock market and other sources. Yes, they can. They can put away a dollar or two (or more) a week and buy conservative stocks that outperform a savings account at the local bank. Socialists don’t want people to become financially independent because that means they won’t be addicted to government and the politicians who poorly manage it to the tune of a $39 trillion debt.
The late David Horowitz said: “Socialism is a plan of morally sanctioned theft. It is about dividing up what others have created. Consequently, socialist economies don’t work; they create poverty instead of wealth…”
Here’s another quote from the late economist and social philosopher Ludwig von Mises: “The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent.”
That should be the end of the debate, but it won’t be because too many of us are ignorant of economic history.
Readers may email Cal Thomas at tcaeditors@tribpub.com. Look for Cal Thomas’ latest book “A Watchman in the Night: What I’ve Seen Over 50 Years Reporting on America” (HumanixBooks).
(C) 2026 TRIBUNE CONTENT AGENCY, LLC.
Mr. Thomas,
I read your recent column on Rep. Alexandria Ocasio Cortez with interest, but also with a growing sense that your argument relies more on nostalgia than on economic reality. You invoke the Revenue Act of 1926 as if it were a timeless model for prosperity, when in fact it was a policy crafted for a country that no longer exists. The America of 1926 bears almost no resemblance to the America of 2026, and treating them as interchangeable does a disservice to your readers and to the debate you claim to be advancing.
When Calvin Coolidge cut the top marginal tax rate from 73 percent to 25 percent, he was unwinding a temporary wartime spike. The federal government was tiny, consuming a fraction of the GDP it does today. There was no Social Security, no Medicare, no Medicaid, no modern safety net of any kind. The population was younger, the economy was industrial, and productivity gains translated directly into rising wages. The surpluses you celebrate were the product of demobilization and a booming manufacturing base, not a magical economic principle that can be lifted out of its historical context and dropped into the present day.
Today’s economy is defined by something entirely different: extreme wealth concentration and a financial system that rewards capital far more than labor. The top 0.1 percent now holds more wealth than the bottom 80 percent combined. That is not a talking point; it is a measurable fact. And it is precisely the point AOC is making when she notes that the wealthy derive their income primarily from investments rather than wages. You dismiss this as a misunderstanding of economics, but it is simply an acknowledgment of how the modern economy functions. The rules have changed. Pretending they haven’t does not make it so.
You also repeat the familiar claim that investment by the wealthy inevitably creates jobs. That may have been truer in the 1920s, when capital flowed into factories, railroads, and mass production industries. But in today’s financialized economy, investment often takes the form of stock buybacks, private equity extraction, and speculative instruments that enrich shareholders without expanding employment. Corporate profits are at record highs, yet real wages have barely moved. If investment automatically produced broad prosperity, workers would be thriving. They are not.
Your argument depends on the comforting idea that what worked a century ago will work today. But the Revenue Act of 1926 was designed for a country with a young population, a manufacturing driven economy, and minimal federal obligations. We live in a country with an aging population, a service and technology driven economy, and a social contract that Americans overwhelmingly support. The challenges are different, and so must be the solutions.
AOC’s point is not that wealth is immoral or that investment is harmful. It is that our tax system has failed to keep pace with the way wealth is actually generated in the modern economy. When capital gains and passive income are taxed more lightly than labor, the result is not innovation—it is entrenchment. It is a system that rewards ownership over work and accelerates inequality year after year.
You frame your column as a lesson in economics. But the real lesson is that economic policy cannot be frozen in amber. The Revenue Act of 1926 belongs to a different era, a different economy, and a different America. If we are going to have a serious conversation about wealth, taxes, and opportunity, we must start by acknowledging the world as it is, not the world as it once was.
Sincerely
Paul McKinney
Thanks for reading my column Mr. McKinney. You make some good points, but the principles that worked in 1926 still work today and can be updated. Recall the Clinton-Gingrich Welfare reform deal. Clinton and Gingrich managed two balanced budgets. Lower taxes and especially less spending (unsustainable debt being the real problem — see DOGE and Citizens Against Government Waste and their just published Pig Book (CAGW.org). We are spending as if there is no tomorrow and if we don’t stop there won’t be. Thanks again for writing. See my two latest books “America’s Expiration Daye” and “A Watchman in the Night: What I’ve seen in 50 years of reporting on America.”Enjoy and celebrate and remember during this Memorial Day Weekend.