If you’re a multimillionaire and you’ve heard the chatter about a new top tax rate of 70%, don’t worry—it’ll never happen.
The new Democratic Congresswoman Alexandria Ocasio-Cortez has triggered conservative aneurysms with a suggestion to hike the top tax rate to as high as 70%, in order to fund new environmentally friendly technology. AOC, as she’s known, points out correctly that tax rates have been that high before. In the 1970s, the top rate was 70%. Even in Ronald Reagan’s 1980s, the top rate was 50%. Today, it’s 37%.
But we’re not going back where we came from, for two reasons. First, trust in government has plunged. In 1958, 73% of Americans said they trusted the federal government to do the right thing most of the time. By 2017, that had fallen to 18%. That’s a gigantic change reflecting disgust with the Vietnam War, Watergate, political dysfunction, worsening income inequality and other types of perceived deterioration in American life. Confidence in the executive branch has dipped under President Trump, but growing distrust of government is a long-term trend that predates him.
If you don’t trust the government, you’re going to be more reluctant to hand over tax dollars than if you thought your money would be well-spent. Surveys show that a majority of Americans don’t trust Washington with their tax dollars, and voters think the government wastes about half of all the money it collects. Barring a national emergency that requires new funding, the voter and political pressure to substantially raise taxes isn’t there, even if it’s somebody else’s taxes.