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In our society today, the source of income that has boosted the US into an age of affluence from the ´50s all the way to today is taxing, as taxes support the US the most out of all incomes. The total tax collections from individuals, both big and small incomes came out to over 3.5 trillion dollars in 2015. These numbers were not always the case, as the post-WWII taxes were so high in the '50s, that the top marginal individual tax rates stayed near or above 90%, and the effective tax rate at 70% for the highest incomes. These levels helped shoot up the US government's economy as in the 1950s and early 1960s, the top marginal tax rate was over 91%: This caused a golden age for America and a golden age of tax. An example of this is that the federal government took 91 cents of every dollar. These high tax levels would influence a major problem from then until now, Tax evasion. Outraged Americans would try and find ways to weasel out o these immense costs, causing decades of tax avoidance. Tax costs helped boost America into affluence in the ´50s, but that same way of income paved a path for high taxes and a great source of income for the economy up until today, even though some of that was clouded by the introduction of heavy tax evasion.

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In the 1950s,  the economy was high under Eisenhower. Eisenhower had mostly focused on balancing the federal budget.  Many Americans had been exhilarated with joy, considering how it was raised by 4-5 percent. The Americans felt great considering, that at the end of the decade they were able to have 30% more purchase power than at the beginning. The "boom" during the 50s had also helped many small, American businesses whilst the larger ones had also gotten support as well. The business meant more jobs and openings had appeared and the jobs for returning war veterans were broader and easier to acquire. Overall the Economy had been greatly improved and Americans' happiness had started to increase and the cost and market had drastically improved, The 1950s was a great time for the economy, and the people living in it had enjoyed it as well. For prices were great and income was sustainable and jobs were easy to obtain.

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The Taxes Post WWII had people SHOCKED

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During the 1950's world trade was on the uprise. With the end of WWII many nations were in dire need of supplies and goods from developed countries. It was thought that if the US were to reduce the tariffs it would increase the world trade. In a letter from the secretary of state to the president, the Secretary of State believed that lowering the tariffs were not only necessary to increase world trade but necessary to increase relationships with other countries (History.state.gov). This lower in tariffs and Europe in shambles allowed for the US to step up and begin to produce around 50% of the worlds goods (section 41.3). This greatly increased the volume of the US economy by over doubling the gross national product. The US went from producing about 200 million in goods a year to around 500 million a year between 1945 and 1960 (History.com). The 1950 post world war II period was a key role in increasing the US world trade and relations which helped boost the US into an age of affluence.

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Packed ports over the west coast due to an increase in world trade.

From portoflosangeles.org

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The GI bill had given the military veterans access to college education, and it was affordable

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Consumer spending was at a high, the 30's had created an age of unstable jobs and high unemployment. In fact the 50's had fixed all those problems and helped employ people

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The 1950s had a major impact on towns and families. There was a significant decrease in poverty among the American population 10 percent of the American population moved from rural and busy areas to the suburbs. The population as a whole grew by 19 percent in the 50s while the suburban population grew by 47 percent(Gilder Lehrman). This helped boost many sectors of the economy such as the housing industry, automobile industry, and highway construction. The 50s is when many Americans became middle-class citizens. Also, many people started speaking against inequality and injustice. Racial prejudice started to become mainstream for many Americans in the 50s(History).

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Someone in 1955 who made $1 million a year paid over $800,000 in taxes

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The tax income in 2015 was over 3.5 trillion dollars.

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With the age of affluence came great spending and lots of wealth. However, did this spending and wealth lead the US on a trend to spend to much? While the US was bringing in hundreds of millions of dollars in the 1950's other European countries were still left in shambles from WWII. This caused a mass gap in wages from the US compared to Europe. In change now it is thought that the American society spends more on average than European society. In an article from Bloomberg it was stated that, "Americans have to learn to live like Europeans." Due to Covid-19 many Americans have lost their jobs which has resulted in the American government to lend out 4.6 trillion and inflate the US dollar about 8% (World Economic Forum) just to satisfy the American spending needs. Sources like Bloomberg believe that the US could use a break in spending to make the market more healthy and possible prevent another detrimental crash.

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After Rep. Alexandria Ocasio-Cortez (D-N.Y.) raised the idea of a marginal tax rate of 70% on income over $10 million, the progressive wing of the Twittersphere began pointing out that in the 1950s and early 1960s, the top marginal tax rate was over 90%.

The progressives' point was that, despite this seemingly onerous level of taxation, the 1950s were a golden age for the U.S. economy, and the rich did just fine, thank you very much. According to records compiled by the Tax Foundation, a single person making $16,000 in 1955 - that's $150,000 in today's dollars - had a marginal tax rate of 50%; compensation of $50,000 ($470,000 today) moved you into the 75% tax bracket; and an income of $200,000 ($1.9 million today) put you in the 91% tax bracket. (Married couples filing jointly hit the 91% mark at $400,000.)

That meant that the federal government took 91 cents of every dollar over $200,000. When you added it all up, someone in 1955 who made $1 million a year paid over $800,000 in taxes.

At least they did in theory. Myself, I had a hard time believing that wealthy people in the 1950s had a different attitude toward the taxman than wealthy people do today. And guess what? I was right. The rich and their well-paid accountants worked just as hard to lower their tax bills as the rich do today - harder, in fact, because failing to do so was incredibly costly. They bridled just as much at what they viewed as confiscatory taxes. And they found - or created - enough loopholes that, according to the Congressional Research Service, the top 0.01% in the 1950s paid not 90% but closer to 45% of their income in taxes.

Back then, the wealthiest people in the U.S. were not corporate executives or baseball players. (The latter group made so little, they usually had to work during the off-season.) Rather, they were entertainers. In 1958, for instance, the chief executive of U.S. Steel, Roger Blough, made around $300,000. Frank Sinatra made closer to $4 million. (That's $35 million in today's dollars.) Sinatra, Bob Hope, Bing Crosby, Sammy Davis Jr., Joan Crawford, Henry Fonda, Humphrey Bogart - these were the people who were most concerned with sheltering their income.

Prior to the Tax Reform Act of 1986, the tax code was full of loopholes that individuals could take advantage of. One favorite was buying rental properties. In 1954, Congress passed a law allowing for accelerated depreciation on any income-producing real estate - meaning wealthy taxpayers could deduct from their income tax a percentage of the value of the property each year. What made it even better was that, more often than not, the property appreciated in value, even as the government provided its generous depreciation schedule. The tax break was used not only by actors making millions but also by lawyers and doctors making $50,000 or $60,000 a year.

Another common practice was to push income generated in Year 1 into Years 2, 3, 4 and beyond. In 1957, for instance, William Holden was signed by Columbia Pictures to act in "The Bridge on the River Kwai." The company agreed to give the 39-year-old actor 10% of the gross profits. To keep his taxes down, Holden insisted that Columbia pay him no more than $50,000 a year. The movie, of course, was a huge hit, with domestic box-office receipts exceeding $27 million ($241 million in 2019 dollars).

It might seem that Columbia got the better end of the deal, because Holden would be long dead by the time the money was finally paid out (also, inflation would erode the value of his take). But if Holden had taken his $2.7 million in one lump sum, he would have wound up putting less than $300,000 in his pocket, thanks to the 91% marginal tax rate. By taking $50,000 a year, Holden greatly increased his chances of being able to take home significantly more.

There were two other tax loopholes favored by actors and other entertainers - loopholes that were largely out of reach for the merely well-to-do. The first was the oil depletion allowance. The second was the collapsible corporation.

The oil depletion allowance was created by Congress in 1926. Meant to give incentives to drill for oil, it reduced the taxable income generated by an oil well by 27.5%. It was, writes Yuxun Willie Tan in the Iowa Historical Review, "the biggest tax loophole in U.S. history."

Among the first Hollywood stars to understand the tax benefits of the oil depletion allowance were Crosby and Hope. Writes Tan: "They each paid $40,000 to Monty Moncrief (a successful Texas oilman as well as their golfing partner) for a 25% share in a West Texas venture." Tan continues:

"For this particular venture, both stars earned $5,000,000 each on their initial $40,000 investment. When the depletion allowance was taken into account, $1,375,000 of the $5,000,000 was tax-free. Other Hollywood stars who experienced similar successes in the oil business included Jimmy Stewart, Gene Autry, Don Ameche and Frank Sinatra, who fittingly titled his first oil well 'Crooner No. 1.' "

And if your well turned up dry? That wasn't so terrible; you could deduct the loss from your taxes. As one oil expert put it at the time, "If you are in the 90% tax bracket, you are risking only 10 cents on the dollar spent on unsuccessful ventures." In effect, Hollywood was providing the capital that oilmen needed to drill wells. "When you see a group of movie people talking on a set, you don't know whether they're discussing an oil well or a movie," one oilman said in 1949.

The collapsible corporation was the other tax loophole Hollywood stars relied on. Whenever they made a movie, they would set up a corporation and have the movie producer pay their compensation to the corporation, out of which they would take a small salary and pay all their expenses. Why? Because the corporate tax rate was around 50% rather than 90%. After the star's fee had been paid out, the corporation would go out of business.

Once again, Crosby was a trailblazer, setting up his first collapsible corporation in 1937. Soon enough, every star in Hollywood was following suit. Sinatra gave his corporations British-sounding names, like Essex, Bristol, Kent and Canterbury. Some stars would sell stock in their corporation to the movie company, so they could take their fee in the form of capital gains, which had a maximum tax rate of only 25%. At one point, the IRS sued Groucho Marx and his producing partner, arguing that the $1 million they received from NBC, which aired their show, "You Bet Your Life," should be categorized as income, not capital gains. Luckily for Groucho, the courts disagreed.

In the mid-1950s, Congress did pass a law aimed at putting a stop to the use of collapsible corporations. But the law itself had a loophole: If 25% of the corporation's income came from a different industry, then it was legit. You can guess what the stars did. They merged their oil business and their movie business into one corporation.

It is true that the U.S. economy did extremely well during the two decades when the marginal tax rate was 90% or above. But it's not right to say the high tax rates didn't have an effect on economic behavior. They certainly did. When I asked Gary Giddins, Bing Crosby's great biographer, whether the high marginal tax rate affected Crosby, he wrote back in an email:

"In about 1942, Crosby received a mandate to live on a mere $25,000." That's half a million in today's money. "He was earning close to a million, yet always had to hustle to pay his taxes. This fact encouraged him to perform hundreds of troop shows, here and abroad, and to turn down all paid concert appearances, as the money would only go to the government anyway. His accountant told him he was relieved that he decided not to divorce his wife, because it would have put him in a financial bind."

I'm not saying we couldn't do with more taxes on the rich. But let's be careful. When Bing Crosby won't give a concert, it's safe to say the marginal tax rate is too high.
Nocera writes a column for Bloomberg.

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How a 91% rate sparked the golden age of tax avoidance in 1950s Hollywood

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After Rep. Alexandria Ocasio-Cortez (D-N.Y.) raised the idea of a marginal tax rate of 70% on income over $10 million, the progressive wing of the Twittersphere began pointing out that in the 1950s and early 1960s, the top marginal tax rate was over 90%.

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Most of the revenue the government collects comes from contributions from individual taxpayers, small businesses, and corporations through taxes that get collected on a yearly or quarterly basis. The remaining sources of federal revenue consist of excise, estate, and other taxes and fees.

What makes up individual income taxes? How much federal revenue is contributed by Social Security and Medicare taxes? What's included in the 9% of revenue that doesn't come from taxpayers or corporations? Explore the visualization to find out.

You may recognize these taxes on your paycheck. Unlike personal income taxes, these taxes are used to help fund specific social service programs. Funds are collected from your paycheck, and in most cases, matched by your employer, and then divided into the various trust fund accounts.

Social Security has two trust fund accounts: the Old Age and Survivors Insurance Trust Fund (OASI) and the Disability Trust Fund (DI). The funds in these accounts are responsible for providing workers and their families with retirement, disability, and survivor's insurance benefits.

Medicare also has two accounts: the Hospital Insurance Trust Fund (HI), also known as Medicare Part A, and the Supplementary Medicare Insurance Trust Fund (SMI). These funds pay for hospital, home health, skilled nursing, and hospice care for the elderly and disabled.

The Federal Reserve Act of 1913 established the Federal Reserve System (the Fed) as the central bank for the United States. The Fed works closely with the Department of the Treasury, which manages the finances of the federal government. The Fed issues Treasury securities and conducts auctions of these securities to raise funds for the federal government. In addition, the Fed also processes monetary transactions on behalf of Treasury, including issuing payments and other government receivables.

The role of the Fed is to support the economy, not to make a profit. Once the Fed pays its expenses, any remaining profits are sent to Treasury to be used by the federal government.

Government revenue also comes from payments to federal agencies like the U.S. Department of the Interior. Have you visited a national park recently? Did you know your national park entry fee also applies towards government revenue? Other agencies generate revenue from leases, the sale of natural resources, and various usage and licensing fees.

When you're done here, explore the trends in federal revenue over the past five years.

Continue

The visualization was created using the Monthly Treasury Statement (MTS) as the data source for federal government revenue of the United States. Some categories from the MTS have been renamed in order to be more easily understood.

When payments of Individual Income and Social Security and Medicare taxes are made, the taxpayer makes a single, combined payment and does not report the amounts attributable to each tax. Thus, the MTS reports Social Security and Medicare taxes as estimated amounts and reports Individual Income taxes as the residual of the combined payments minus the Social Security and Medicare estimated amounts. When the actual amounts of Social Security and Medicare taxes are determined, the MTS reflects the difference between the initial estimates and the actual amounts as an adjustment for prior years' taxes with an offsetting adjustment to individual income taxes. In Fiscal Year 2020, estimates of Social Security and Medicare taxes were made prior to the onset of the coronavirus disease 2019 (COVID-19).

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Sources of Federal Government Revenue | U.S. Treasury Data Lab

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Most of the revenue the government collects comes from contributions from individual taxpayers, small businesses, and corporations through taxes that get collected on a yearly or quarterly basis. The remaining sources of federal revenue consist of excise, estate, and other taxes and fees. What makes up individual income taxes?

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The 1950s economy had helped us shape the current economy. What is arguably one of the best times for our economy? It was nick-named "Baby boom" which it had boosted the economy. Our current economy strives off of this great piece of American history, as it all started with the prices lowering and the currency was losing value and the recession was at hand. This was the beginning and it ended great helping out the economy. The nation had started enjoying these and started the beginning of a stable economy.

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Editors, . com. "The 1950s." HISTORY, 17 Apr. 2020, www.history.com/topics/cold-war/1950s.

"History | About | Port of Los Angeles." 6 May. 2022, www.portoflosangeles.org/about/history.

"Inflation continues to climb in US after hitting 40-year high." World Economic Forum, 6 May. 2022, www.weforum.org/agenda/2022/03/inflation-pandemic-covid-united-states.

"Foreign Relations of the United States, 1950, National Security Affairs; Foreign Economic Policy, Volume I - Office of the Historian." 19 Jan. 2022, history.state.gov/historicaldocuments/frus1950v01/d272.

Lee, Joseph. "Demand and Supply in White Collar Unionism." Minnesota Academy of Science. Morris UNM, digitalcommons.morris.umn.edu/cgi/ viewcontent.cgi?article=2562&context=jmas. Accessed 6 May 2022. Originally published in Journal of the Minnesota Academy of Science, vol. 37, no. 2, 1971.