Looking at the 91% tax rate

Did the 91% tax rate on the rich bring in the revenue we feel we need?


During the 1950s and 1960s, the top marginal tax rate was 91%.  We have all listened to this fact that quickly gets followed with, "therefore we can raise taxes on the richest and it will not be a problem for them".  We can tax them as much as we wish because we used to do it before.  I myself have wondered how this could be.  Research will lead one to find that back then extreme loop holes existed that allowed for much lower actual rates being paid.  Again, I found this interesting, though I could not name any single loop hole used.  Business lunches and expenses always come to the front and there are other exemptions I am sure.  But still, the difference is so extreme, so large that I always wondered what the actual rates being paid were.  I still do not have my answer but I have found that a different way to examine this question sheds light on the future potential of taxes.

On a personal note, I am certain that if my boss's taxes rise those that enjoy the trickle down effects of his success will see less for their labor, myself included.

Taxes as a percentage of GDP.  Revenue vs. GDP

When one examines the revenue to the Federal Government during this period, as a percentage of GDP, it remained between 14.5 and 19%.  Regardless of the tax rate, the taxes received always remain within a trend line vs. GDP. Even when both President Kennedy and Reagan lowered them, revenue continued at historic norms.  This, to me, has made all the difference in understanding the grand scheme of tax rates.  The country has come to accept this amount of Government support and has come to provide this amount of Government revenue.  Any more will not be found.

This tells me that you can only acquire a certain percentage of property from the citizen.  I would of course remind one that Constitutionally, the citizen is only responsible for a certain amount; limited.

This tells me that raising taxes does not automatically generate revenue. There is historic precedent that details the opposite to provide further evidence that the citizen will only support a given percentage of their property and labor to the Government.

This tells me that the Liberal myth of 91% did not actually generate the windfall of money for their favorite charity; Uncle Sam.  And further, it will not generate the necessary 1+ Trillion dollars for their wealth exchange programs being tauted and packaged by President Obama.

This tells me that it is not taxes, or lack there of, that sit at the root of the problem but spending by the Government instead.

Spending vs. GDP: Spending vs. GDP

How can we, as honest citizens, believe that the Government can constantly and with rising slope continue to spend more or our property?  Where is the limit on the Government's power of taxation?  Does one exist?

There are 17 enumerated powers yet these fall be the side of the road, in the ditch called the American Dream, to the one guiding Liberal principle: for the General Welfare, all things are possible, Liberty be damned.