By Sam Loose | USA
Just as any other political nerd would do, I naturally found myself tuning in to watch the politicon debate between Ben Shapiro and Cenk Uygur. I enjoyed the debate but could not help noticing that Cenk continuously made the point that the economy during the 1950’s and 1960’s the American Economy experienced tremendous growth while its taxes on large business and the highest earners was around ninety percent and therefore the economic growth was a result of the high taxes.
This is not the first time I have heard this argument and it is simply not correct; in the name of logical honesty, I believe it is time to put this myth to rest. There are several aspects of this claim that need to be addressed in order to addressed in order to properly debunk it; including how the tax system works, how the taxes were actually paid, the state of the American economy at the time, and finally the state of the rest of the world’s economy.
While taxes are one of the most the hot button issues in politics, few people from both the sides of raising and lowering the taxes actually realize how taxes work. Yes, most assume that income taxes are just a percentage of total income. For example, if the highest tax group begins at $200,000 and the rate is twenty percent one would assume one making $250,000 would have to pay $50,000 in taxes. While there is some truth to this belief it still is not accurate. This is because taxes exist on a bracket, meaning that a person’s income is taxed on each benchmark it passes. So, if we are still addressing our high earner and the low tax bracket exists from zero to $50,000 and is 10%, the medium ranges from $50,001 to $199,999 and is 15%, and the highest bracket exists from $200,000 and up and is still at 20%, he would be paying $37,500. Knowing this is crucial to understanding how everyone’s “fair share” works out and how taxing the rich doesn’t result in an extremely high revenue.
Furthermore, we must address who and how the taxes were paid. First and foremost the tax rate was nowhere near as high for corporations as they were for high earning individuals. In fact, it was nowhere near it, less than half even, this left businesses with more money and more room to expand. Second of all the 1950’s tax system was incredibly complex with twenty-four brackets and thousands of rules and stipulations. Naturally so many rules lead to countless loopholes causing many to cheat their way out of paying.
Finally, we must look at both the American Economy and the World Economy in order to understand why it boomed. The second world war destroyed the industry of almost every nation involved, leaving them dependent on the United States to help repair them. But the United States also experienced economic turmoil following the close of the war, with most of its industry focused on supplying both the U.S. and its allies, the end of the war brought a shortage of production which soon turned was filled by consumer products, and just as it did in the early 1920’s caused the economy to soar.