In 1960, the top marginal tax rate was 91%, applying to income over $200,000 for single filers — equivalent to roughly $1.5 million in today’s dollars.
Nobody paid the 91% tax rate. Anyone who found themselves over the top tier chose to spend their excess money. If they were $10,000 into the top tier, they could elect to pay $9100 in taxes, or spend $10,000 on payroll and other deductible expenses. They could keep $900, or $10,000 worth of products and services purchased from the open market.
Nobody paid the 91% tax rate. Anyone who found themselves over the top tier chose to spend their excess money. If they were $10,000 into the top tier, they could elect to pay $9100 in taxes, or spend $10,000 on payroll and other deductible expenses. They could keep $900, or $10,000 worth of products and services purchased from the open market.
Nobody chose to keep the $900.