Taxes After World War 2:
- Tax rates were 90% at the time.
- The only people paying 90% were those making three million or more.
- There were only two tax brackets instead of seven.
- The United States had an enormous amount of debt.
- The taxes continued to get higher as the debt went down, but the economy continued to grow.
- Federal Government remained a large part on the United States GDP.
- Republicans went along with that higher taxes was taking something away from the wealthy.
- The International Revenue Service reckoned that the effective rate of tax in 1954 was 35%
Reagan's Tax Cuts
- Economic Recovery Tax Act-The board agreed that Reagan's plan may work, which stated that there was a 25% decrease in tax rates.
- Tax Reform Act- Reagan knew closing loopholes and lowering tax rates. The legislation passed reducing tax brackets by two. 15 percent for the middle class and 20 percent for the wealthy.
Tax Reform Act
- A law passed by the United States Congress to simplify the income tax code.
- he Tax Reform Act of 1986, commonly referred to as the second of two Reagan tax cuts, lowered the top tax rate from 50% to 28% and raised the bottom tax rate from 11% to 15%.
- It required people claiming children as dependents to provide Social Security numbers for each child on their tax returns, it expanded the Alternative Minimum Tax and increased the Home Mortgage Interest Deduction to incentivize homeownership.