NYT
While there was a 91% top marginal personal income tax rate between WWII and the JFK Presidency, virtually no dollars were ever exposed to that tax rate, because the income threshold for that rate was so extremely high, plus deductions, and the existence of trust funds. In fact, there were many tax FIT tax brackets, compared to the two that existed from about 1985 to 1990, three from 1990 to 1993 and five from 1993 to the present. The reason nobody cared is because almost all income earners were in lower brackets. But, since the bracket thresholds weren’t automagically indexed to inflation, (doing that only started in 1985), as post-1964 inflation kicked in, household incomes kept experiencing bracket creep, and taxed at rates that almost nobody’s income was taxed at in the 1950s.
I think the best solution going forward is a single rate FIT with the only deductions being personal, spousal and dependent, with a relatively manageable rate, and extending FICA rates to all income. Tax-free trust funds and most non-profit organizations…gone. There should also be a 50% rule, in that no person should be made to pay more than half his income in total taxes to all levels of government, which means that if someone’s total tax remittances, FIT + FICA + State (if applicable) + Local (if applicable) + documented sales taxes paid + The personal property and real estate taxes on at most one residence and at most two automobiles (we don’t need to subsidize Jay Leno’s car collection) is more than half of his or her income, the Feds will send them a rebate for the delta amount that is over 50%.
I’m not for a VAT. If we’re going to have Federal sales taxes, they should be on the retail end only, because a 10% VAT means exactly the same end-user retail cost increase as would a 10% retail end-user sales tax, only a VAT is a bureaucratic nightmare and more of a lead anchor on the economy than a regular sales tax.
UPDATE 11/27
Proof of my contention that that 91% bracket was only window dressing.
UPDATE 12/9
