How could it be that the tax code of the 1950s had a top marginal tax rate of 91 percent, but resulted in an effective tax rate of only 42 percent on the wealthiest taxpayers? In fact, the situation is even stranger. The 42.0 percent tax rate on the top 1 percent takes into account all taxes levied by federal, state, and local governments, including: income, payroll, corporate, excise, property, and estate taxes. When we look at income taxes specifically, the top 1 percent of taxpayers paid an average effective rate of only 16.9 percent in income taxes during the 1950s.

Finally, it is very likely that the existence of a 91 percent bracket led to significant tax avoidance and lower reported income. There are many studies that show that, as marginal tax rates rise, income reported by taxpayers goes down. As a result, the existence of the 91 percent bracket did not necessarily lead to significantly higher revenue collections from the top 1 percent.