Freshman Democratic Rep. Alexandria Ocasio-Cortez threw out what some are calling a radical suggestion in an interview on "60 Minutes."
"You look at our tax rates back in the '60s, and when you have a progressive tax rate system, your tax rate, let's say from zero to $75,000, may be 10 percent or 15 percent, etc. But once you get to the tippy-tops — on your 10 millionth dollar — sometimes you see tax rates as high as 60 or 70 percent," Ocasio-Cortez said.
A 70 percent tax rate may sound high, but the U.S. has done it before. And it's been even higher.
From 1943-1963, the top tax rate in the U.S. ranged from 88 percent to a high of 94 percent. Then for the next two decades, the high rate ranged from 70-77 percent.
But if you were subject to the highest rate, the government wasn't taking 70 or 80 percent of your income. The U.S. uses what's called a marginal tax rate, so the rate you pay adjusts as you make more money.
Let's use the current tax rates to explain: The U.S. has seven rates, ranging from 10 percent to 37 percent. The lowest rate applies to income an individual makes up to $9,700. Then the money that person makes from $9,701 to $39,475 is taxed at the next rate, which is 12 percent. Then it continues from there to the top rate of 37 percent, which is applied to any income over $510,300.
So going back to Ocasio-Cortez and her 70 percent tax rate idea — that rate would only apply to money someone makes over $10 million.
Based on the latest wage information from the Social Security Administration, that rate would apply to less than 3,800 Americans. Still, one expert told Politifact it could bring in an additional $72 billion per year — but of course that's before applying any deductions or exemptions.
This story is reported in partnership with PolitiFact and is part of an in-depth analysis show called “What The Fact” that airs Sunday mornings on Newsy.
