Rep. Alexandria Ocasio-Cortez, the democratic socialist from New York, has triggered widespread conservative backlash by informally proposing a 70 percent marginal tax rate on America’s richest in her recent “60 Minutes” interview — a backlash that’s led to countless tweets and even cable news segments pushing misinformation about the proposal.
But Ocasio-Cortez’s idea — which Republicans are dismissing as radical or socialist, like they tend to with everything she does — is supported by a majority of Americans, according to a new poll, and it’s not unlike tax laws that were in place in the 1950s. Her proposal suggests that people who make more than $10 million will see a 70 percent tax rate on the amount above $10 million.
“Once you get to the tippy-tops, on your 10-millionth dollar, sometimes you see tax rates as high as 60 percent or 70 percent,” the newly minted congresswoman told Anderson Cooper in the Jan. 6 interview.
What she’s saying is that people who make the most should be contributing far more to tax revenue, not that all $10 million should be taxed.
“These are tax rates that are supposed to apply to very, very high incomes only,” economist and Columbia University professor Wojtek Kopczuk told VICE News. “Most people wouldn’t be affected at all.”
In reality, the proposal isn’t so radical compared to historic income tax rates in the United States.
What’s the history of top tax rates in the U.S.?
Before Republican President Ronald Reagan reformed American tax codes in 1981, a 70 top tax rate on America’s wealthiest people was tax law. The current top tax rate is is 37 percent for individuals making beyond $500,000. Big tax cuts chopped that rate to 50 percent in 1981, then chopped it further to 38 percent in 1986. But if you look back even further at tax history in the U.S., top tax rates were much higher than 70 percent: 91 under President Dwight Eisenhower for individuals making $200,000 annually.
Since Reagan, Republicans have repeatedly sought to cut taxes for wealthy Americans. As recently as late 2017, the GOP passed a tax bill that Trump signed into law that slashed overseas profit taxes and cut inheritances taxes, among other benefits for the wealthy. Ocasio-Cortez’s policy, though a long way from any actual implementation, would be the biggest blow to Republican tax policy in decades.
“Republicans are against it because they are against higher taxes,” John Devereux, an economic history professor at the City University of New York told VICE News, saying that many top earners would still find ways to avoid such high tax rates.
“Plus, it really suits them to paint the Democrats as the high-tax party,” he added.
What are Republicans saying?
Many Republicans have continued to either mistakenly or willfully imply that Ocasio-Cortez’s tax idea would take $7 of every $10 a person makes.
House Minority Whip Steve Scalise, for example, tweeted that Democrats want to take “70% of your income and give to fantasy leftist programs.”
On Fox News this week, Ainsley Earhardt incorrectly told a New York Post columnist that Ocasio-Cortez wants 70 percent of his paycheck. This prodded the columnist Michael Goodwin to lament that young people “don’t understand the history of our country,” which, as noted above, is not true if you look at the history of U.S. tax laws.
As recently as Tuesday, former Wisconsin Gov. Scott Walker tweeted that even 5th graders don’t want 70 percent of their allowances taken away: “Imagine if you did chores for your grandma and she gave you $10. When you got home, your parents took $7 from you.”
Ocasio-Cortez has repeatedly noted that these are mischaracterized interpretations of what she suggested on “60 Minutes.”
In her favor, American voters seem to have a better understanding of the concept, and the congresswoman said she’s not surprised that 59 percent of the Hill-HarrisX poll respondents said they supported the idea.
Cover: Alexandria Ocasio-Cortez, then a candidate for the 14th Congressional district of New York, speaks during a rally against Judge Brett Kavanaugh at City Hall, Monday, Oct. 1, 2018, in Boston. (AP Photo/Mary Schwalm)