Apparently unsatisfied with the suggestion of fellow Democrat Alexandria Ocasio-Cortez that wealthy Americans should be forced into a 60-70% tax rate, likely 2020 presidential candidate Julian Castro, who served as the Obama Administration’s Housing and Urban Development secretary, seemed to speculate on Sunday about the possibility of raising Ocasio-Cortez’s bid to 90%.
Appearing on ABC News’ “This Week,” Castro remarked that he could support Ocasio-Cortez’s suggestion, adding, “Oh, I can support folks at the top paying their fair share … There was a time in this country where the top marginal tax rate was over 90%, even during Reagan’s era in the 1980s, it was around 50%.”
Castro, the former mayor of San Antonio, Texas, urged “that we get more serious about making sure the corporations pay their fair share. He continued, “During this campaign, if I run, I’m going to be very up front with the American people on how we would do that because I think that they are owed that, but it is worth it. It is worth it in this country for us to do that,” he said, vowing not to be “a single issue candidate.”
In 2015, Democratic presidential candidate Bernie Sanders, never averse to raising taxes, also brought up the Eisenhower tax rates during the Iowa presidential debate. Sanders was asked about tax rates, “Well, let’s get specific, how high would you go? You’ve said before you’d go above 50 percent. How high?” He responded, “We haven’t come up with an exact number yet, but it will not be as high as the number under Dwight D. Eisenhower, which was 90%.”
But as the Tax Foundation explained in 2017, it is true that the top federal income tax rate was 91% for most of the the 1950s, but the top 1% of taxpayers in the 1950s only paid about 42% of their income in taxes. The Tax Foundation explains that the 91% bracket of 1950 only applied to households with income over $200,000, the equivalent of roughly $2 million today. Additionally, the high tax rate only applied to income above $200,000, not to every single dollar earned.
An article in Forbes from 2015 estimated that $200,000 in the 1950s would be equivalent to $1.7 million now, then added, “But general living standards have risen considerably over the past 60 years. Well more than doubled in fact more like four times … To be similarly high up the totem pole of relative incomes, assuming no change in inequality, you’d actually need that $8.9 million to live as large. And this is about right: living standards have risen some eight times since around 1900. That’s for everyone, not just the super rich. … So, while $8.9 million might be equal to the general rise in incomes over the period, given the way that the very tippy top incomes have soared away, this only puts you in the relative income position of that $4.4 million to equate to the $200k. That is, $8.9 million isn’t as close to the top as $200k was then.”