SCOTT KINSHIP ON “HILLARY AND BERNIE, TAX FANTASISTS”: Soak-the-rich proposals ignore history and wouldn’t raise nearly enough money to fund big spending plans.
Progressives have often reminded us that the U.S. had such rates in the past. From 1936 to 1980, the highest federal income-tax rate was never below 70%, and the top rate exceeded 90% from 1951 to 1963. Under Ronald Reagan, the top federal rate declined to 28% by 1988 and has never reached 40% since.
The discussion of these rates can easily create the impression that the federal government collected far more money from “the rich” before the Reagan administration. And it can also leave another impression: There would be no downside to raising rates to 1950s levels, given that decade’s prosperity.
Neither impression would be correct. The effective tax rates actually paid by the highest income earners during the 1950s and early ’60s were far lower than the highest marginal rates. Few taxpayers reached the top brackets, the code was rife with loopholes, and capital gains were taxed at much lower rates.
There’s no fantasy involved here — just cold, hard politics.
Raising the top marginal rate isn’t about income equality or raising revenue. It’s about making a mess of the tax code, then sneaking in loopholes and shelters for cronies.