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It was built when the top marginal tax rate in the United States was above 70 percent, a level which would make a lot of people go into fits of apoplectic rage if you were to suggest it now.



If we want better roads, another space shuttle, the next wave beyond the integrated circuit, etc... most prudent course of action would be to reinstate the internal revenue act of 1954.


You could try spending less on shiny war machines and more on your people, also.


> It was built when the top marginal tax rate in the United States was above 70 percent, a level which would make a lot of people go into fits of apoplectic rage if you were to suggest it now.

...a rate which almost nobody actually paid, given the copious methods for reducing tax liability available at the time (most of which have since been eliminated).


Wait, what?


Some interesting statistics of tax rates: https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...

- During WWI it peaked at 77% - During WWII it peaked at 94%!!


It didn't really, though. That's the marginal income rate, not capital gains -- it's a tax rate for an empty bracket. It was super effective wartime grandstanding which is still fooling everyone decades later.

Capital gains -- the rate the upper class actually pays -- has never risen above 35% at the federal level. And that's within a few points of 2018 marginal rates when we factor in state level taxes for places like California. The tax moved from federal to state (or to earmarked federal, like NIIT)

Capital gains:

1945: 35% federal + 6% state = 41%

2018: 25% federal + 3.8% NIIT + 13.1% state = 41.9%

Prior to losing SALT, wealthy Californians paid slightly lower marginal rates than in 1945. Trump's changes cause the current marginal tax rate for wealthy Californians to be higher than in 1945 -- the year you're calling out as a peak.

No one really paid 94%.


It did affect certain people, though, like movie actors like Ronald Reagan. His stated rationale for supply-side economics was that back during WW2, him and his peers would do 2 movies/year and then be done working, because doing a 3rd would put them in the top tax bracket and the government would get all the money.

https://toomuchonline.org/the-tax-that-turned-ronald-reagan-...


Yeah. I should say "virtually no one." The tax did apply to a very tiny proportion of high end income.


Highest federal tax rate by year, 1918 - 2017: https://bradfordtaxinstitute.com/LibRepository/235f37bd-612d...

The bulk of the interstate highway system was built between 1960 and 1980.


And tax deductions were much higher then than now. Nobody actually paid those rates.

The percentage of GDP collected as income taxes is about the same then as it is now. In fact, the top 1% paid less of the total taxes during the New Deal than now.[1]

[1]http://www.slate.com/blogs/moneybox/2017/08/07/the_history_o...




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