OK... I'm calling shenanigans on this graph...
Who is paying 66% of their income in taxes? The highest tax bracket in America pays just 35%, and even that is marginal, so it isn't even 35%.
Historically, that highest tax bracket has been far higher... from FDR through to Reagan, the highest tax bracket paid at least 70% of their income in taxes. Let's see... what happened when Reagan slashed that tax rate for the wealthiest Americans? Oh yeah, our debt rose. By a lot.
The tax rate was ridiculously high. It was an act of tyranny. I cannot find any moral justification for theft of that degree. More than half? No fuck that, that is bonafide evil.
And it is extremely counterproductive. Tax revenue was down, really down, even though the tax rate was at 95%. Why? Because no one cared to get rich. That is a ridiculously stupidly high tax rate. Who would want to work that hard to have 95% of the fruit of their labor stolen? I know I wouldn't. So no one tried to make much money. So productivity was down. So the GDP was down. So tax revenue was down.
JFK said, "what am I to do?" Well John Maynard Keynes had the answer:
"…to create wealth will increase the national income and that a large proportion of any increase in the national income will accrue to an Exchequer, amongst whose largest outgoings is the payment of incomes to those who are unemployed and whose receipts are a proportion of the incomes of those who are occupied…
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more—and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss."
So JFK lowered the top marginal tax rate from 91% to 77% and 89% to 76%. As a result, tax revenue rose (I don't know the exact number off hand but I can find it for you if you wish).
Well this got future economist Art Laffer thinking. Inspired by the Keynes and the JFK phenomena as well as Muqaddimah, he developed the Laffer Curve. Reagan hopped on the idea and slashed the top marginal tax rates from 70% to 30%, thereby performing one of the greatest acts in favor of personal liberty in the history of America. And tax revenue rose substantially
And I do have the exact numbers for this one. With the 70% tax rate, the total revenue for the top margin was 37 billion dollars 1980. With deductions, the government collected 19 billion. After the tax cuts, the total revenue of the top margin was 353 billion dollars. The government took all 30% of that and got 100 billion in 1988. By slashing taxes from 70% to 30%, the government collected 5 times more revenue.
With all the extra money, the rich began investing. And so the economy took off like a skyrocket. I don't know why everyone hates Reagan so much. During his presidency, everyone did fantastically. The economy was booming. He won 49 out of 50 states in his reelection, the biggest landslide in American history. My guess is that the left needs an icon to raze as much the right needs an icon to idolize. Both sides ignore the facts of the matter, but I think the left is more egregious in this sense. Oh Reagan is so evil. Yeah, well you would be doing phenomenally better if you lived during his presidency than under Obama's right now.
Now, because historically the government never gets more than 18.5% of the GDP in taxes no matter what the rate is, I say we should have a 18% flat or fair rate. I believe this will generate the highest revenue. Get rid of the capital gains tax (please God get rid of that one even if you raise the income tax to 50%, it is the most astoundingly stupid tax ever devised) and the estate tax. Get rid of double/triple/quadruple taxation.