Speaker of the House Nancy Pelosi hasn’t even warmed up her gavel, but already the newest, and youngest member of her party’s Congressional caucus, Alexandria Ocasio-Cortez, has suggested a 70% tax rate on earnings over $10 million.
That’s probably not the issue Pelosi thought she would have to explain right away to voters. John Harwood reports in CNBC:
The top tax rate stood above 90 percent throughout the 1950s. But through deductions and tax avoidance, “taxes on the rich were not that much higher” then, the conservative Tax Foundation noted in a 2017 article.
The top rate remained 70 percent as late as 1981, the first year of Ronald Reagan’s presidency. The most affluent 1 percent paid a far lower average rate of 30.5 percent, however, according to a Tax Policy Center analysis. By 1989, when Reagan left office, the top rate had been slashed to 28 percent but their average rate dropped only slightly to 27.9 percent.
After three decades with top rates below 40 percent, a big hike from today’s 37 percent poses risks politically and perhaps economically. Self-described socialist Sen. Bernie Sanders stopped at a 54.2 percent for incomes above $10 million in his 2016 presidential campaign proposal; Democratic nominee Hillary Clinton proposed 43.6 percent for those earning above $5 million.
Raising taxes on the wealthy has been tried. It has never worked out very well. In fact, revenues rose after President Trump’s tax cuts.