Representative Alexandria Ocasio-Cortez (D-NY) knows how to make headlines, from saying that facts don’t matter if the argument is morally sound to arguing that the unemployment rate is low because everyone works two jobs. She knows how to infuriate the right and knows how to be a media darling on the left.
In one of her latest interviews, she proposed a marginal tax rate of 70 percent on the “tippy tops.” She justified her proposal by citing the 1950s and 1960s when the marginal rate was as high as 91 percent.
“You know, you look at our tax rates back in the ’60s, and when you have a progressive tax rate system, your tax rate, you know, let’s say, from zero to $75,000 may be 10% or 15%, et cetera. But once you get to, like, the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60 or 70%. That doesn’t mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder, you should be contributing more.”
The only problem for the democratic socialist it-girl is that nobody paid this rate.
From Liberty Nation:
In the ‘50s and ‘60s, the tax code was around 10,000 pages long. The first couple of pages stated that all earnings were taxable and listed the 26 brackets, from 20% on low income to 91% on high income. The remaining pages outlined all the exceptions, exemptions, and statutes.
However, examples of tax avoidance were legion. As the old joke from that era goes, if you’re a millionaire, you don’t contest the IRS — you lobby the government to garner an exemption.
Brian Domitrovic, assistant professor of history at Sam Houston State University and author of Econoclasts: The Rebels Who Sparked the Supply-Side Revolution, provided a funny story in a Learn Liberty video about this topic. When Hollywood mogul Louis B. Mayer retired from Metro-Goldwyn-Mayer studios (MGM), he was given a lump sum payment of $2.7 million ($20 million today), but it was not subjected to the 91% rate. Instead, Mayer coughed up only 25% because he hired a lobbyist to whisper in the ear of a congressman to write a pet statute that exempted his income from taxation.
Simply put: Almost nobody paid the top rate. It is estimated that only 0.002% of households at the so-called tippy top forked over that much to the tax man. (Their accountants or lobbyists must have been horrible.)
It was so useless that President Kennedy slashed the top marginal levy rate by one-third, along with a myriad of other across-the-board cuts.
Even if it were enacted today, it would only generate an estimated $291 billion over a decade.
But AOC has garnered public support, says a new poll.
According to a study by The Hill and HarrisX, 59 percent of registered voters support the idea. Among the party lines: 45 percent of Republicans support it, 71 percent of Democrats endorse the idea, and 60 percent Independents would approve of it.
The study also examined other issues of the day, finding that less than half the country endorses President Donald Trump’s wall (42 percent), Trump himself (41 percent), Judge Brett Kavanaugh (41 percent), tax cuts (40 percent), Nancy Pelosi (38 percent), and Congress (18 percent).
This is a reminder of H.L. Mencken’s quote, “Democracy is a pathetic belief in the collective wisdom of individual ignorance.”
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