In 1963, the top tax bracket was 91%, down from 94% in 1946. Today, the top tax bracket is 39%. Imagine if you won the lottery in 1963, you would keep only a very, very small portion of it.
After years of recession, the economy started to move again. President Kennedy decided that he would push a bold domestic program, including tax cuts. He declared that the absence of recession was testimony of economic growth and proposed significant tax cuts. But Kennedy did not agree that corresponding spending cuts were needed, and the battle over the tax cuts continued unabated through 1963. They were not passed until sometime after his assassination under Lyndon B. Johnson.
In 1963, Kennedy addressed congress with these words:
"Now, when the inflationary pressures of the war and the post-war years no longer threaten, and the dollar commands new respect-now, when no military crisis strains our resources--now is the time to act. We cannot afford to be timid or slow. For this is the most urgent task confronting the Congress in 1963.
In an early message, I shall propose a permanent reduction in tax rates which will lower liabilities by $13.5 billion. Of this, $11 billion results from reducing individual tax rates, which now range between 20 and 91 percent, to a more sensible range of 14 to 65 percent, with a split in the present first bracket. Two and one-half billion dollars results from reducing corporate tax rates, from 52 percent--which gives the Government today a majority interest in profits-to the permanent pre-Korean level of 47 percent. This is in addition to the more than $2 billion cut in corporate tax liabilities resulting from last year's investment credit and depreciation reform.
To achieve this reduction within the limits of a manageable budgetary deficit, I urge: first, that these cuts be phased over 3 calendar years, beginning in 1963 with a cut of some $6 billion at annual rates; second, that these reductions be coupled with selected structural changes, beginning in 1964, which will broaden the tax base, end unfair or unnecessary preferences, remove or lighten certain hardships, and in the net offset some $3.5 billion of the revenue loss; and third, that budgetary receipts at the outset be increased by $1.5 billion a year, without any change in tax liabilities, by gradually shifting the tax payments of large corporations to a . more current time schedule. This combined program, by increasing the amount of our national income, will in time result in still higher Federal revenues. It is a fiscally responsible program--the surest and the soundest way of achieving in time a balanced budget in a balanced full employment economy."
One year later, congress was still debating the tax cuts. Lyndon Johnson came back at them hard:
"That tax bill has been thoroughly discussed for a year. Now we need action. The new budget clearly allows it. Our taxpayers surely deserve it. Our economy strongly demands it. And every month of delay dilutes its benefits in 1964 for consumption, for investment, and for employment.
For until the bill is signed, its investment incentives cannot be deemed certain, and the withholding rate cannot be reduced-and the most damaging and devastating thing you can do to any businessman in America is to keep him in doubt and to keep him guessing on what our tax policy is."
Interesting words, coming from a Democrat. Especially, ones ranked so highly by liberals.
http://www.presidency.ucsb.edu/ws/index.php?pid=9138
http://www.loc.gov/exhibits/herblock-gallery/herblock-looks-at-1962-part2.html
http://www.jfklibrary.org/JFK/JFK-in-History/JFK-on-the-Economy-and-Taxes.aspx
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