[quote=AN]So, while we all can agree 90% is too high, he said a 50-60% tax rate would help and higher top tax rates encourage businesses to spend money. That got me thinking about 1963 tax brackets. I find out that the minimum tax rate was 20%. If we had good economic growth in the early 60s because of higher top marginal tax rate, then one can say we had good economic growth in the early 60s because of higher minimum tax rate as well. BTW, the standard deduction back then was 10% of your AGI, not a fixed number, so EVERYONE pay taxes.[/quote]
First, the argument was not that higher top tax rates cause economic growth, but rather there is little evidence that it inhibits growth.
The correlation on the bottom rates would be just the opposite. People who don’t make very much money, tend to spend everything they make. As income (and rates) rise, more is saved. Spending (or in the case of businesses, investing and growing) is stimulative (or more specifically, increases in spending are stimulative) , whether the source is public or private. Higher rates on business with excess cash flow encourages spending/hiring because the higher the rate, the smaller the after tax cost. Lower rates lead to higher savings.
You’re right about the standard deduction being a % of AGI back then. But like now, there were personal exemptions. I think it was $600 per person. So the first $600 (per exemption) plus 10% of AGI was deducted from AGI before calculating the tax.
