Literally no one paid that rate in the US. During that period the government captured ~17-18% of GDP in taxes which is the post war average. There were a ton of tax breaks then, by today’s standards.
There’s a giant sucking sound as all the money in the economy accumulates out of towns and cities and into the endless digital coffers of the investment class.
[1] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
If .2% of earners REPORT INCOME greater than $x, they paid tax on that!
We get the percentiles straight from the IRS data.
There's this idea that people report they made $100 MM to the IRS, but are like, "Well, I only want to pay tax on $300k of that." And the IRS is like, "Sure."
You wouldn't be in the top .2% if you only reported incomes of $300k to the IRS. You'd barely be in the top 2%.
Taxable income is highly elastic as taxes and income increase. See Emmanuel Saez’s paper here [1]. (Conclusion on page 60) it’s a good overview of the inefficiency of high marginal rates.
It’s nice to believe we could just scoop up the wealth of the wealthiest in society and make good use of the money, but it becomes very hard to collect in a hurry in the real world. Most OECD nations with generous social benefits fund them with VAT and taxes on middle income earners. They’ve all abandoned things like wealth taxes and soaring marginal rates for practical reasons.
[1] https://www.nber.org/system/files/working_papers/w15012/w150...
Its a time and a half the top marginal nominal rate, which is significantly above the real rate collected on the top 0.01%.
So, yeah, its much higher.
You have zero evidence for this.
Again, like I did 4(?) posts above this one, I'm going to ask for evidence, because I've heard this assertion a lot but never seen any specifics. Surely if they had plenty of tax avoidance strategies, you would be able to point to their version of the Double-Irish. Maybe even be able to estimate the magnitude of dollars avoided in taxes?
Literally they did.
In 1944, the top rate peaked at 94 percent on taxable income over $200,000 ($2.5 million in today’s dollars3). That’s a high tax rate.
Over the next three decades, the top federal income tax rate remained high, never dipping below 70 percent.
https://bradfordtaxinstitute.com/Free_Resources/Federal-Inco...
Note the parent said "marginal" tax rate.
> During that period the government captured ~17-18% of GDP in taxes which is the post war average.
Even if the 17~18% of GDP is true (not saying it isn't, just dont have time to verify), it's very likely the highest tax bracket had way fewer people than it does today, so it would be equivalent of taxing earners of $100M/year in today's world. Weighing against GDP total negates increases in spending by the government to provide services that spur economies / provide benefits / etc. Point is - this figure is irrelevant and doesn't normalize the discussion.
[1] https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
Yes they literally did. Your article says exactly what I said:
The 91 percent bracket of 1950 only applied to households with income over $200,000 (or about $2 million in today’s dollars). Only a small number of taxpayers would have had enough income to fall into the top bracket – fewer than 10,000 households, according to an article in The Wall Street Journal. Many households in the top 1 percent in the 1950s probably did not fall into the 91 percent bracket to begin with.
You need to understand the difference between marginal tax and effective tax. What you're referring to is effective tax. The parent very explicitly said marginal tax.
[0] - https://www.cbpp.org/research/federal-tax/marginal-and-avera...
The data from Piketty, Saez, and Zucman is not divided among federal, state, and local taxes, so it is difficult to tell exactly how much the rich were paying in federal income taxes specifically during this period.
Some of the distributional assumptions in the Piketty, Saez, and Zucman paper are questionable. In particular, the authors assume that the full burden of the corporate income tax falls on owners of capital, which may not be correct. However, the authors note that they “have tested a number of alternative tax incidence assumptions, and found only second-order effects.”
> The Saez paper points out that even among the 0.01% people were avoiding that top rate.
Of course there were - tax avoidance is inevitable, but to say literally none of them were pay the stated rate with no evidence is disingenuous.
Bringing this back the overall point of the discussion - with a marginal tax rate that high (even with avoidance) it raised the effective tax rate nearly ~600 basis points higher. That's significant.