Category: Taxes and Policy, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945”

  1. Seaton says:

    (Sorry for the cut-&-paste, but thought the below was salient message, charts are great–)
    “Concluding Remarks
    The top income tax rates have changed considerably since the end of World War II. Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income distribution are currently at their lowest levels since the end of the second World War. The results of the analysis suggest that changes over the past 65 years in the top marginal tax rateand the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.”

  2. patslatt says:

    Effective tax rates for business might have been way lower than very high headline rates in the past. Writeoffs for tax shelters in real estate and oil exploration were generous.

    In the 1960s UK, where the Beatles were paying 95 to 99% marginal rates, managers of businesses were compensated with company cars,generous expense accounts and extravagant office suites to boost egos. Management culture of that old fashioned generation treasured leisure time pursuits for favourite hobbies like cricket and gardening.. At times, it seemed as if business was unimportant to managers as described in the book “The Stagnant Society”.

    All that changed as the Thatcher revolution and a very severe recession paved the way for a new generation of ambitious, businesslike managers.

  3. Herman Frank says:

    If we compare “income from taxes with GDP and national debt” the picture calls for action. If we compare “distribution of income across the population” the picture calls for action.

    I don’t expect any action, as a culture of bravado calls the shots. You’ve all heard it, the words socialism, communism, capitalism, big government, small government, unemployed, undeserving, strong, weak are all sprinkled on the turd to make it more appealing.
    That no one forget, “The Marlboro cowboy died of cancer, caused by smoking!” There went that image of a cultural hero!

    The new immigrants will tip the scale towards resolution of the first 2 points mentioned. Because they have not been brainwashed by the propaganda machine of fake heroes.
    There is no justice and equality where cultural heroes of economic might (Microsoft, Pfizer, Caterpillar but to name a few) morally abuse the system to reduce their corporate taxes.
    There is no justice and equality where cultural heroes of finance (any hedge-fund manager?) can lodge his/her earnings in a different income category so as to pay the lowest rate possible.

    A decent society lives with and for all. It is self-sustainable.
    The present is not.
    Action is necessary, for the preservation of American society at large.