In 1944 the top U.S. income tax rate reached 94% — the highest in American history. Despite peak patriotism and massive war-bond purchases, total tax revenue only hit 20.5% of GDP.
For the next eight decades, federal tax revenue has averaged just 17-18% of GDP, almost no matter what the tax rates were. When rates rise, people and businesses change their behavior.
Today the national debt has crossed $40 trillion and the government is running roughly $2 trillion annual deficits. Many argue that higher taxes on high earners or a wealth tax will solve the problem. The data shows otherwise.
In this video, we break down:
The historical ceiling on tax revenue
Why a 90% rate on high earners would raise far less than expected
The problems with wealth taxes
The actual low-hanging fruit Congress continues to ignore
Until serious spending reform happens, there are 40 trillion reasons to have a Plan B #short
