Alexandria Ocasio-Cortez (who's being referred to as AOC for short) is already all over the news, and among other things she wants to return to a top marginal income tax rate of 70%.



She thinks this will fund her programs.



Beyond that, supporters of the idea think high taxes on the rich mean economic prosperity. And people like Thom Hartmann also emphasize the other side of the coin: lowering taxes on the rich means poorer economic performance.



For a smash of that latter claim, I refer you all the way back to episode 331 of the Tom Woods Show:





Here's a standard summary of the "high taxes made us better off" argument:



“In the 1950s and 1960s when the top tax rate was 70-92%, we laid the interstate system, built the Internet, put a man on the moon, defeated Communism, our education system was the envy of the world, our middle class thriving, our economy unparalleled. You want that back? Raise taxes on the rich.”



Later this year I'll be releasing a free eBook on this and related issues, and you'll find all the corroborating links in there.



But for now, my partial reply:



(1) Via loopholes or outright tax evasion, these tax rates were not paid; these tactics would be much more difficult to duplicate today. And for various reasons, as even Thomas Piketty concedes, the 91% top marginal rate on the books became an effective rate of only 31% in the 1960s.



(2) Big spending programs are not evidence of prosperity; the U.S. government could duplicate any of these programs today.



(3) Left out is that when our education system was supposedly “the envy of the world,” it was spending far less per capita, adjusting for inflation, than it does today. From the early 1970s to 2003 alone, spending per capita doubled. So the Left has actually gotten its wish, though it pretends it hasn’t. Meanwhile, Japan, spending one-third as much per capita, and with much larger class sizes, vastly outperforms the U.S.



There is no connection between higher education spending and higher SAT scores. In fact, some of the highest scores are earned in states that spend the least on education. Washington, D.C., which spends the most, is dead last.



(4) The prosperity of the 1960s was fueled in good measure by the inflationary policies of the Federal Reserve. In John F. Kennedy’s three years as president, M2 growth averaged about 8 percent per year, far higher than in the 1950s. This produces resource misallocation that can look like prosperity. This false prosperity is self-reversing. By 1970 — at the very moment that Arthur Okun, influential White House economist throughout the 1960s, was boasting that the business cycle had been tamed forever — the recession began.



Americans paid for that false prosperity with a decade of inflation and stagnation. As economist Mark Thornton points out, “From the beginning of 1946 to the beginning of 1965 the consumer price index increased by 71.4%, but then increased 20% by the end of the decade. From 1965 — when the experiment began in earnest — to the end of 1980 the CPI increased by 176.6%. The experiment had tripled the rate of inflation experienced by consumers.”



For the full story of the 1970s disaster, see episode 568 of the Tom Woods Show:





(5) John F. Kennedy used the economy of the 1950s against Vice President Richard Nixon in the election of 1960. Economic growth averaged 2.4% per year under Dwight Eisenhower — not a bad record, to be sure, but hardly the earth-shattering, historically unique figure one might expect in light of the constant references to the 1950s.



(6) It was not unthinkable in the 1950s that a family might not have a telephone, a refrigerator (some still had iceboxes), or a television. (Bearing in mind that Ralph was a cheapskate, the Kramdens in The Honeymooners lacked all these things, and the program was not laughed out of court as silly or implausible.) Anyone wanting to live at that standard of living today can do so with precious little effort. Today, by contrast, 95% of Americans own cell phones, a technology that would have seemed out of science fiction in the 1950s.



A lot more can be said about this, but here's something to remember:



If there's some argument (like AOC's, above) you know has to be wrong, but you don't have the facts and figures at your fingertips to refute it, there's a quick and easy place to go:



The Tom Woods Show Elite.



Sure, you listen to the Tom Woods Show every day. But it's 2019 now. Time to take your rightful place among the Elite:

