In the heated political debate that Americans are having about federal spending and revenue, advocates of higher taxes often cite the 1950s as a Golden Age. Then, it is claimed, the wealthy paid higher federal taxes and the system was fairer. A closer look at the facts, however, does not support this assertion.
- In the 1950s, very few people paid the very high income-tax rates aimed at the wealthiest.
- Claims that wealthy people paid more taxes rest instead on the assumption that the rich, as stock owners, bore the entire burden of higher corporate taxes of that era. There are good reasons to doubt this assumption about corporate taxes.
- Even if we leave these assumptions unchallenged, the economy of the 1950s was so different from our own that its tax structure cannot be reproduced today.
- The most plausible viable paths to higher taxes in today's economy would render the tax system less fair, not more so.