Posted on 01/19/2019 5:35:11 AM PST by reaganaut1
It wasn’t that long ago, in 1980, that America had a top income-tax rate of 70% for individuals, nearly double the current top rate of 37%.
And it wasn’t unusual. From 1940 through 1980 the top rate for the highest earners never dipped below 70%. During most of the 1950s, when the U.S. economy dominated the world, the top rate was 91%. It kicked in at $400,000 of taxable income, or roughly $3.7 million in today’s dollars.
This history is relevant given New York Rep. Alexandria Ocasio-Cortez’s recent call for higher tax rates on what she called the “tippy-tops” to raise more revenue. She suggested that a top rate of 70% could take effect at the $10 millionth dollar of income.
But make no mistake: Many top earners during the high-rate era, such as politicians Dwight Eisenhower and Ronald Reagan, entertainer Jack Benny and librettist Alan Jay Lerner, didn’t pay the top rates. In 1952, for example, when the top rate was 92%, the highest-earning 1% of taxpayers had an average rate of 32%, according to Elliot Brownlee, a tax historian and emeritus professor at the University of California, Santa Barbara.
“When top tax rates were high, there was always a large gap between the stated rates and what the highest earners actually paid as a percentage of their income,” says Joel Slemrod, an economics professor at the University of Michigan.
Of course, a filer’s average tax rate is lower than his top rate because the U.S. system is progressive, taxing higher income at higher rates. Still, the income tax due on $1 million of wages in 1952 would have been about $870,000, according to Jay Starkman, a certified public accountant in Atlanta who researches tax history.
(Excerpt) Read more at wsj.com ...
Interesting article. Thanks for posting.
AOC and her fellow travelers want it all.
By any means necessary.
...and, she’s not gonna let a few silly tax shelters stand in her way. Those would be history.
I worked with a military NCO who spent around six years in Montana. She’d bought a ranch property...put up a horse stable and cleared a good bit of 300 acre property. The property value escalated a significant amount by the time she got ready to sell, and she had a fair sized tax issue to account with. The local accountant just grinned, and pulled out this text written and passed by the House about a decade prior. As long as the property was noted as a horse-property and met several conditions....no taxes were owed on the profit. Oddly enough, the text was only written for Montana horse-ranch property.
I would speculate there are thousands of text exceptions written and people would be shocked that you could raise the taxation rate to 99-percent, and it wouldn’t matter....these exceptions to taxation exist and the majority of people would not be affected by AOC’s gimmick.
The government does not have the right to take our money and give it to people who vote for more money.
Millions of Americans will resist Socialism/Collectivism. By any means necessary.
Connecticut is currently experiencing a well-publicized budget problem due to ignorance of tax impacts. Basically, they tried to soak the rich to plug a gap and the rich - from hedge fund managers to corporations - moved out. Now the gap is bigger. Whoda thunk?
I sincerely hope that the millions will.
So how did Jack Benny pull it off (pay wall)
Did it have something to do with Rochester? ha ha
But... The purchasing power of a dollar was 20 fold or more through the better part of that time span. This greatly changes the perspective.
btt
” ...The local accountant just grinned, and pulled out this text written and passed by the House about a decade prior... “
We’re no fools here in Montana.
Currently our legislature is in session, for another 71 days, and then they ar done for two years.
Our reps and senators get paid about $100 per day of the session and a per diem that is not so good. When the session is over it’s the end of the paychecks. NO professional legislators in this state.
What we get in return is citizen centered laws that make sense...until our worthless Governor vetos them...
Our property tax is low, we have NO sales tax and our income tax is, at the highest rate, is just 6.9%.
All FReepres are welcome! Let me know if you are looking for property, my wife is an HONEST and hard working RE Broker/Owner.
Montana loves FReepers!
USA “dominated” the world economy in the 1950s because much of the industrial world’s infrastructure was still being rebuilt from smithereens due to World War II, it had nothing to do with tax rates. They didn’t actually say there was some sort of connection, but it’s an odd way to construct a sentence.
All the deductions and tax dodges are gone, they got that part right. So confiscatory tax rates would be an incredibly profound mistake on business and employment. The problem in this country is our “thought leaders” and “experts” and “economics nobel prize winners” have never held a job, ran a business, or have any idea how things work. Or, they are batting for the wrong team. Take yer pick.
The business of business is business. These morons just screw everything up.
Price that in ounces of gold, for at least a nominal figure. At today’s gold price it’s equal to $25,000,000 in greenbacks. Not $4,000,000
Interest rates were a whole nother world. Government guaranteed bonds paid 4 to 6 per cent. Prudent savers could live on the interest income alone, without risking their principal in the markets. It is true that risk taking is the way to generate profits, not everybody wants to do that.
So the government first confiscates your wealth through monetary inflation, stealing a huge portion of its purchasing power over time. The most important attribute of money is a store of value. Then whatever somebody manages to save over time above and beyond, gets taxed. A tax, on the illusory increase in wealth due to inflation. Pretty sick.
Confiscating the entire wealth of the wealthiest and then redistributing it to the poorest would only be a one time benefit of a few thousand dollars per person,which would then quickly be consumed and lost forever.Meanwhile the motive and means of producing even more wealth would be lost forever.
High tax rates on the rich guarantee an increase in value—for the services of experienced tax accountants.
Most wealthy people will find a thousand ways to legally avoid any tax—if it is worth their time and effort to do so.
Governments should never forget—pigs get fat and hogs get slaughtered.
“We’re no fools here in Montana.”
Then how do you explain Testor?
The real cost of such rates is the social rate of return on the funds. Taxes distort the allocation of resources, so private money is channeled into projects that are tax exempt/reduced rather than where they earn the most return. AOC uses Warren Buffet as an example who complains his taxes are too low. Really? He, and most of Hollywood, sing the same song. If that’s the case, then write the IRS a huge check, sit down, and STFU. The rest of us out here think the gov’t doesn’t know how to spend our money better than we do, and I’m sure as hell certain AOC doesn’t.
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