Jason OMahony - Irish political blogger, Irish politics, EU politics

Here’s a jaw dropper: Which country used to have an income tax rate of 91%?

Posted by Jason O on Apr 19, 2012 in US Politics |

Ike the dirty Commie.

Ike the dirty Commie.

In a shocking indictment of my social life, I recently came across this little nugget. Which dirty socialist country run by some filthy commie taxed its citizens at 91% of their income? The answer, if you just happened to be wondering, was the United States, under that filthy red liberal commie bastard Eisenhower. In fact, and it raises interesting questions about the whole idea that high taxes are a bad idea, the upper rate in the US did not drop below 70% until President Reagan was elected in 1981. Now, conservatives will of course whoop and holler at this, but given that the income tax rate was never below 63% from 1932 (reaching 94% during WW2) until 1981, you have to ask, was it really as detrimental as we are told? I mean, how did the US perform from 1932-1981? Well, it defeated two military superpowers, armed the free world, contained the Soviet Union, put a man on the Moon, rebuilt Europe, created Social Security, Medicare and Medicaid, and created a land of prosperity for its people to a level unparallelled by any people in history. Hmm.

Now, don’t worry, I’m not going all red. I have serious issues about the morality of confiscating wealth in those proportions. The other fact was that unlike any European country attempting to impose taxes at that rate, the US does not have a culture of people leaving the US to work elsewhere to pay less tax. The truth is, if you imposed taxes like that in any single EU country all you would do is clear out the business class. However, if there was an EU income tax, especially with the (in some cases) 23 different bands that existed in the US, you might have a different effect. Ironically, the sort of people in Ireland (the left) most in favour of taxing the wealthy at high rates are also the people most opposed to creating a federal Europe that could actually do it, a point that the Eurosceptic right know full well. Funnily enough, the French Socialists and the German SPD are beginning to twig it too. Imagine, for example, if you didn’t levy it at all on people creating labour intensive or export-led companies or in R&D?   

Check out The Tax Foundation website here.  


Martin Holterman
Apr 19, 2012 at 8:17 am

As Robert Reid explained on Jon Stewart yesterday evening, after deductions, etc., this amounted to an effective tax rate of about 55%.

Apr 19, 2012 at 6:05 pm

It should be noted that the rate was high but that does not mean that it was paid. Deductions and tax evasion where widespread. A more accurate measure of tax is the tax take as a percentage of the economy, which hovers around 25% (federal) no matter what the tax rate was for the last 60 years. Talking wealth away from wealth producers and government spend it on its own projects is always damaging to the economy, who knows how much better the US would have performed without those taxes.



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