COMMENTARY: The destructive effects of outrageous taxation

Taxes have become the biggest bill for the typical American, a recent report confirmed. They cost more than housing, food and other necessities. This has been apparent for decades, affecting the lifestyles of millions of Americans and others in advanced welfare state societies.

In the 1940s and 1950s, progressive tax rates in the United States reached 91 percent. Highly successful people stopped working once they reached the 91 percent rate in a tax year. No matter how much you love your work, does it make sense to keep working if you are only allowed to keep nine cents out of a dollar?

For many people, the answer was no. Comedian Jack Benny got a lower rate by incorporating. By claiming all his income was corporate, and after years of battling in tax court, Benny achieved a lower rate in a famous 1955 court decision. Relief was coming for the rest of us.

In the early 1960s, President John F. Kennedy believed that cutting taxes was unjust and favored the rich. Kennedy took office during a recession. After researching taxes, Kennedy changed. He realized high taxes hurt the economy. Hence, they hurt everyone.

In a famous address in New York, Kennedy called for a tax cut because it would help everyone. He said, “A rising tide lifts all boats.”

A strong economy followed the cuts until later that decade, when the Vietnam War short-circuited the growth. To pay for the huge war and welfare spending of the 1960s and 1970s — not only was the Vietnam War more expensive than anticipated but the startup costs for Medicare were much higher than anticipated, just as they were with George W. Bush’s drug prescription plan four decades later.

President Reagan, in pushing for his tax cuts in the 1980s, cited Kennedy. Those arguments angered class-warfare critics. They insisted low taxes were a strategy of helping the rich at the expense of the rest of us. While it may make some people feel good knowing that rich people pay through the nose, the majority of Americans still paid higher taxes in the 1970s, directly and indirectly, owing to inflation, the ultimate tax.

There were more examples of the we-must-seek-shelter-for-our-wealth-or-we’ll-lose-it philosophy in the 1960s and 1970s. Financial professionals were trying to sell well-heeled investors all manner of seemingly bad investments, often in the form of limited partnerships. They were everything from low-income housing to Broadway shows. (One show business expert said that putting money in the Great White Way was “a great way to lose money” since a supermajority of shows ran in the red.)

They had something going for them no matter how egregious their losses: They were great tax write-offs. Taxes, despite several so-called “low-tax” administrations, remain a problem.

Excessive government spending and regulation, which inevitably leads to more taxation under all governments, has been going on for a long time in almost every democracy with a Congress or a Parliament and some career pols.

Indeed, Americans now pay more in taxes than they spend on food, clothing and housing combined, arguing the growing tax burden shows government has become “so big and bloated,” writes economist Stephen Moore. He cited a chart from the Committee to Unleash Prosperity estimating Americans paid $8.19 trillion in taxes in 2025, compared with $7.39 trillion spent on food, clothing and housing combined.

“Government has become so big and bloated that taxes cost more than life’s basic necessities. Americans pay more in taxes than they spend on food, clothing and shelter combined,” Moore added. He says Americans should be outraged, but maybe they’re not. Many vote for incumbents and are trapped by high taxes.

Few can pull a Jack Benny.

Gregory Bresiger writes about financial and economic issues for InsideSources.com.