JUST BECAUSE HIGH MARGINAL INCOME TAX RATES EXISTED SIXTY YEARS AGO DOESN’T MEAN THEY ARE A GOOD IDEA TODAY
A discussion at the Cato blog of the effect of higher marginal income tax rates, now being proposed by some in Congress, highlights an aspect of that discussion that has occurred to me before. The proponents of dramatically higher tax rates cite the fact that such rates existed in the past, without any apparent harm to the economy. That assumes, however, that the national, and indeed the world, economy, are essentially no different than they were in the 1930s, or even the 1950s.
In reality, of course, the national and world economies are dramatically different today than they were even in the 1970s, let alone the ‘50s or ‘30s, as the author of that Cato blog post points out.
And why do the proponents of higher income tax rates always seem to overlook the demonstrated fact that lowering the top marginal rate has historically resulted in higher, not lower, tax revenue?
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