Historical look at top marginal tax rates

Timothy Taylor (h/t @tylercowen) has an interesting post on the revenue raised by different the U.S. tax code from 1958-2009 (total revenue and the distribution). This point in his review of this Tax Policy Center piece caught my eye:

2) Raising tax rates on those with the highest incomes would raise significant funds, but nowhere near enough to solve America’s fiscal woes. Baneman and Nunns offer this rough illustrative estimate: “If taxable income in the top bracket in 2007 had been taxed at an average rate of 49 percent, income tax liabilities (before credits) would have been $78 billion (6.7 percent of total pre-credit liabilities) higher, taking into account likely taxpayer behavioral responses to the rate increase.”

We need a fairly comprehensive tax reform that makes clear about how much revenue we need to raise (which is of course linked to the spending we want), and which not only focuses on marginal tax rates but the tax expenditures that are allowed to remain. We are entering a higher spending period by default given the baby boomers moving into Medicare and Social Security, with a lower-than-average tax code in terms of revenue collected. It seems likely that the effective tax rate will rise for most everyone.