this post was submitted on 27 Mar 2025
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How’d we get there at the time? Was it public political will? The need to fund the world wars? Did we always have high rates and only in the last few decades back off from that being the norm?
We had high tax rates which is entirely unrelated to the prosperity of the 1950s which was based on the USA comprising 50% of the world economy.
We cut the rates in 1983 and took in more revenue overall which indicates that a top marginal rate can be set high enough to encourage tax fraud, tax evasion, and tax avoidance. This is what Laffer suggested at a cocktail party and is now known as “The Laffer Curve”