http://www.americanthinker.com/blog/2011/06/the_real_tax_rates_on_top_earners.html
The top rate for the federal Individual Income Tax was 91 percent in 1963. In 1965 Congress lowered the top rate to 70 percent, in memory of JFK who had floated the idea. Then Ronaldus Magnus charmed Congress into lowering the top rate to 50 percent in 1982. Reagan again scored in 1988, when the top rate went to 28 percent.
. ..
Regardless of where the highest marginal tax rate is set, the rich will always manage to reduce what they owe. During the 1950s, when it was 91 percent, they exploited loopholes and deductions that as a practical matter reduced the effective top rate 50 to 60 percent. Yet that's still substantial by today's standards. The lesson is government should aim high, expecting that well-paid accountants will reduce whatever the rich owe.
. . .
Exemptions also account for the complexity of the tax code. Simplification of the code would entail the stripping out of exemptions. But if it is not to whack the taxpayer with a tax hike, simplification must be paired with rate reductions, which take the statutory rate closer to the effective rate. For example, the 1986 tax bill cut exemptions from the code in exchange for lower statutory rates, which resulted in a top statutory rate that was only 3.8 percent higher than the top effective rate for the 1979-2001 period. Reagan was zeroing in on the real rate. Nevertheless, exemptions soon snuck back into the code, and along with them, complexity.
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(The entire article is available at the link.
I found it fascinating reading. Zim.)
Mad Poet Strikes Again.
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