From the 1960s to Reagan it was 70%.
Please note this is the TOP RATE, what less then 1 % of the population pays.
On top of that the this is the TOP RATE on a GRADUATED INCOME TAX. In an Graduated Income Tax, different rates kick in as your income increase, but the increase is NOT on total Income but what ever is the rate set for that higher income bracket. Thus, this 75% may be for income over $100,000 (I do NOT know how France breaks up its Rate, I am using $100,000 as an example). Thus if your income is less then $100,000, you are taxed at the lower rate (For this example I using two rates 25% and 75%, again I do NOT know the exact tax rates in France, I am trying to explain what a graduated Income tax works).
Given my example, anyone making less then $100,000 has to pay $25,000 in income taxes. If someone makes $200,000, that person pays 25% on the FIRST $100,000 (i.e. $25,000) and then 75% tax on the second $100,000 of the $200,000 earned (Or $75,000, which when added to the $25,000 taxes due on the First $100,000 comes to $100,000).
Thus for a person making $200,000 a year, a 75% top rate is an effective tax rate of just 50% ($25,000 plus $75,000 is $100,000, which is 50% of $200,000).
Now, before you cry about people making more then $200,000, lets understand most people making that much money per year, the income is NOT from wages but from investments (Capital Gains). Prior to Reagan, when the US Tax rate was 70%, Capital Gains were classified as "Long Term" an investment made more then Five year before, or "Short Term" for income from investments made less then five years before. Short term Capital Gains were treated as if it was ordinary income, Long Term Capital Gain were subject to a 50% disregard, i.e If from investments you made 1 Million Dollars, but it due to an investment made more then five years before, when you cashed in the investment, you only had to pay taxes on 50% of the Million or $500,000. Given the numbers I used above, the first $100,000 is liable for $25,000 in taxes, and the remaining $400,000 is liable to the 75% tax or $300,000, for a total tax of $325,000 on a One Million Dollar gain.
I Suspect this is what the French had adopted, a top rate of 75% subject to a Capital Gain set off (probably 50% but I do NOT know). The advantage of such a system is it punish stock brokers and speculators, since they do NOT hold investments for Five years or longer, they gains, if they exceed the top tax rate, are taxable at the 75% rate. On the other hand, long term investors, if they income exceeds the top tax rate, pays 75% on only 50% of their income (Or 37.5%).
Just note, the US BOOMED when it had a 90% top tax rate, subject to the 50% disregard. Such a tax systems takes most of its money from speculators, while providing long term investors a solid gain after taxes.
When I was in what I call "Accounting U" or Robert Morris Collage (now Robert Morris University, but its name in 1900 was the Pittsburgh School of Accounting and when I was in still graduated more then 90% accounting majors) we talked about Reagan's change and Reagan's decision to drop Long Term Capital Gain. To be honest we failed to see how that drop would encourage speculators to manipulate the Market (THe Congress of the 1930s did UNDERSTAND that problem and came up with this excellent solution to end most short term speculation, let the Government get most of the money from Speculation, while making sure investors get most of their gain from their investments).
Since Reagan Long Term Capital Gain has come back, but to reduce the already low level of taxation on investors including speculators. I see this move to a 75% top tax rate as a return to the system that worked from WWII till Reagan, it basically confiscated gains do to speculation, while rewarding investment. It is a system we need to return to, and I see France is leading the way.
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