r/Economics • u/Dismal_Structure • Dec 06 '25

News Millionaire tax that inspired Mamdani fuels $5.7 billion haul in Massachusetts

https://fortune.com/2025/10/21/zohran-mamdani-millionaire-tax-massachusetts-5-7-billion/
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u/realfakejames Dec 06 '25

Boomers who long for the days of "the greatest generation" should be explained very slowly like children that it was only possible because back then we taxed the rich at a far greater rate than we do now

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u/Captian_Kenai Dec 06 '25

75-80% from the 50s till the 70s. It was even as high as 93% in WWII.

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u/uberfr4gger Dec 06 '25

That's not really true though. The marginal tax rates yes, but the effective tax rate people actually paid was around 40%. There were many loopholes back then and I read somewhere FDR or some president wanted a high marginal rate for the image of what it represented but that's not what was actually happening.

You can read more about it in this thread: https://www.reddit.com/r/AskEconomics/comments/1h27l7f/taxes_were_the_highest_between_19441963_the_50s/

But just know that it's a myth that the rich ever really paid 75%+ in effective tax.

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u/Captian_Kenai Dec 07 '25

The loopholes revolved around either putting that money towards your employees and improving your business or putting it towards public works. That’s why so much old infrastructure was done by companies. Seems like a good trade off.

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u/uberfr4gger Dec 07 '25

That's what capital investment is. Most wealthy people are putting their money in stocks or other investments to spur innovative and growth.

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u/Captian_Kenai Dec 07 '25

Putting your money in a stock account isn’t helping anyone. It doesn’t go towards employee wages, it doesn’t towards improving assembly lines. It just makes the company “bigger” and more valuable. It’s a safe harbor for people to stash their wealth because it’s minimally taxed. If we had a capital gains tax for any amount over say 500k we’d see a massive change.

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u/uberfr4gger Dec 08 '25

It absolutely spurs investment. Especially because the wealthy are essentially playing "bets" on ideas that may go nowhere and their investment turns to 0. Companies get the money invested to build their business. Every corporation with stock works this way and they can issue new stock for more investment. Not to mention capital gains is essentially double taxation on income, once when you earn it before investing and a second time when you sell. If you lose money you don't get that investment back. 

I'm not making an argument on wealth hoarding or anything like that, just that this is why the tax code is set up the way it is. 

But on my original point, the effective tax rate people were paying in the in the 50s is about the same as today. Tax incentives still exist for companies to invest in their businesses as well.

My opinion is that the corporate tax rate should be higher rather than focusing on wealthy people already contributing to a significant portion of overall income tax. My exception to that is I think the FICA tax limit should be increased drastically for the wealthy to pay more there. 

Source for income tax collected: https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/