Top Federal Tax Rates

From the always great

When Alexandria Ocasio-Cortez had the temerity to suggest that to the top marginal tax rate on very high incomes should be 70%, the right-wing media immediately began making false claims that she wanted to impose a flat 70% tax on everyone’s income. That is certainly not what she said. She suggested that rate would only apply to income above, for example, $10 million. Interestingly enough, most Americans agree with her. A poll from The Hill/HarrisX, showed that 59% of registered votes are fine with 70% as the top marginal rate. Among women, 62% support the idea; among men it is 55%. Even among Republicans there is some support for it, with 45% approving.

A 70% marginal rate wouldn’t be the highest in American history by any means. When the federal income tax was instituted by the Sixteenth Amendment in 1913, the top marginal rate was 68%. During World War II, it was 94% for a couple of years. More recently, during the administration of the conservative Republican Dwight Eisenhower, the top marginal rate varied from 90% to 92% for couple with a joint income of $3.4 million in 2019 dollars. Despite that, the country flourished during Eisenhower’s administration, demonstrating that a high marginal rate doesn’t wreck the economy. In fact, it took Democrat John Kennedy to lower it to 70%—the same rate Ocasio-Cortez wants. The economy did fine during the Kennedy/Johnson administration, again showing that tax rates and the economy aren’t correlated at all. Here is a graph showing the top rate over time: