Quotation of the Day…

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… is from page 3 of Thomas Sowell’s 2012 monograph, “Trickle Down” Theory and “Tax Cuts for the Rich” (original emphasis):

What actually followed the cuts in tax rates in the 1920s were rising output, rising employment to produce that output, rising incomes as a result and rising tax revenues for the government because of the rising incomes, even though the tax rates had been lowered. Another consequence was that people in higher income brackets not only paid a larger total amount of taxes, but a higher percentage of all taxes, after what have been called “tax cuts for the rich.” There were somewhat similar results in later years after high tax rates were cut during the John F. Kennedy, Ronald Reagan and George W. Bush administrations. After the 1920s tax cuts, it was not simply that investors’ incomes rose but that this was now taxable income, since the lower tax rates made it profitable for investors to get higher returns by investing outside of tax shelters.

The facts are unmistakably plain, for those who bother to check the facts. The federal income tax rate on the highest incomes in 1920 was 73 percent. By 1928, the highest income tax rate had been reduced to 25 percent. Between those two years, the total amount of income tax revenue collected increased, and the proportion of all income taxes collected from people earning a million dollars or more per year also increased, from less than 5 percent in 1920 to 15.9 percent in 1928.