One Direction

In 1960, the tax rate for the top bracket — that is, income earned beyond the first four million or so in today's dollars — was ninety-one percent. Today, that top rate is thirty-seven. The drop didn't happen all at once — and it didn't happen under one party.

Kennedy started the cuts, bringing the top rate to seventy. Reagan took it down to twenty-eight. Then it went up — twice. The first President Bush broke his "read my lips" pledge and raised it, because he believed the deficit mattered more. Clinton raised it again, to thirty-nine point six, to shrink the deficit further. Critics predicted a recession. Instead, the nineties delivered the longest economic expansion in a century — and by the end of the decade, the budget was balanced.

Since then, it's been mostly one direction: Bush Two cut rates, then Trump — twice. Each cut was sold as temporary. Nearly all became permanent.

Sixty years later, the wealthiest Americans pay less than half the top rate they did in 1960.

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The top bracket in 1960. The 91% rate applied to taxable income over $400,000 for married couples — roughly $4.3 million in today's dollars. Only about 0.002% of households had any income taxed at that rate. Everything below the threshold was taxed at lower bracket rates, exactly as it works today. (Tax Policy Center; Tax Foundation)

The important caveat: almost nobody paid 91%. Deductions, shelters, and preferential treatment of capital gains meant effective rates were far below statutory rates. During the 1950s, the top 1% paid an average effective federal income tax rate of about 17% (roughly 42% including all state, local, and payroll taxes). By 1966, 155 taxpayers with incomes above $200,000 paid zero federal income tax — a revelation that led to the creation of the Alternative Minimum Tax. Still, economists Saez and Zucman calculate that the effective total tax rate on the 400 wealthiest Americans has fallen from about 56% in 1960 to about 23% today. (LegalClarity; Manhattan Institute / Piketty-Saez)

The timeline of the top rate:

• 1960: 91% (over $400K married)
• 1964-65: Revenue Act of 1964 — proposed by Kennedy, signed by Johnson — cuts to 70%
• 1981-86: Reagan cuts to 50% (ERTA), then 28% (Tax Reform Act of 1986) — the lowest since 1916
• 1990: George H.W. Bush signs OBRA 1990, raising the rate to 31%, breaking his "read my lips: no new taxes" convention pledge. The deficit-driven decision fractured his party and contributed to his 1992 loss, though the recession and Perot's candidacy also played major roles.
• 1993: Clinton signs OBRA 1993, raising the top rate to 39.6% for deficit reduction — without a single Republican vote. Critics predicted recession; the 1990s instead produced the longest economic expansion recorded to that point (120 months, 1991-2001) and four consecutive budget surpluses (FY1998-2001) — the only balanced budgets since 1969.
• 2001-03: George W. Bush cuts the top rate to 35% (EGTRRA/JGTRRA), with sunset provisions requiring expiration in 2010.
• 2010-12: Obama extends all Bush cuts for two years (December 2010 deal — the event that prompted the founding of the Patriotic Millionaires), then signs ATRA 2012, making the Bush cuts permanent for incomes below $400,000 and restoring 39.6% above that threshold.
• 2017: Trump signs TCJA, cutting the top rate to 37%, expiring 2025.
• 2025: The One Big Beautiful Bill Act makes the TCJA rates permanent.

(Tax Project Institute; Wolters Kluwer; NTU historical brackets)

"Sold as temporary, nearly all became permanent." The Bush cuts were enacted with 2010 sunsets to comply with budget rules; ATRA 2012 made them permanent for 98%+ of taxpayers. The TCJA's individual provisions were scheduled to expire at the end of 2025; the OBBBA made them permanent. The only major provisions ever allowed to expire were the top-bracket Bush cuts (2013).

The nineties expansion caveat. The 1990s boom had many causes: the dot-com surge, the peace dividend, spending restraint deals, and favorable demographics — not just tax policy. The script makes the narrow claim: the tax increases did not cause the recession critics predicted. It does not claim the increases caused the boom. Similarly, the balanced budgets of 1998-2001 resulted from both increased revenue (economic growth + higher rates) and spending discipline. (Concord Coalition)

Related Civic Minute segments: Who Can Afford to Run? (CM-53). Related PM scripts: Who Actually Pays, Two Tax Codes, The 50-Year Experiment. Upcoming: The Laffer Curve (the steelman for rate cuts — where the argument works and where it breaks).