Wow! I came across the chart above on Jim Sinclair's site. It's hard to believe that we went from a 25% marginal tax rate in 1930 to 79% in 1940. That was all done smack in the face of the Great Depression. It sure looks like we could be looking at a repeat of history and from where I sit that would not be a good thing. Given the poor state of the American household balance sheet, a tax increase like the one above would decimate what is left of our consumer economy. It's a conundrum our leaders wish they could avoid if at all possible. Kick the can down the road, that is the politicians way.
Take a look at the tax rate for the war years 1941-45 --- a jump up to 94%. Can you imagine a 94% tax rate? That is the definition of shared sacrifice. While I am not a fan of higher tax rates, I believe that if we as a country decide that war is necessary we should also be prepared to pay for it. 90% + tax rates might put a damper on some of the banging war drums.
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