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The Myth of High Tax Rates

The Democrats are hellbent on slapping the wealthy with outrageous tax rates–90 percent in some instances. The thought process is that a higher tax code will enrich government coffers, enabling it to deal with more pressing issues.

Not true! Just another myth, says economic historian Phillip Magness. While tax rates for the wealthy reached an unfathomable 90 percent during World War II and the Eisenhower Administration and remained as high as 70 percent before the Reagan Revolution, the plan just didn’t work.

“No one ever paid close to those rates,” says Magness, who’s researched tax codes for more than a decade. “A millionaire on average would pay 41 percent. There’s always deductions and exemptions and carve-outs that are baked into the tax code.” Magness and John Stossel debate the issue on this edition of Stossel on Reason.TV.