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While many people are still debating whether President Obama’s tax plan should be passed, there is one thing that is certain: it will cause a significant increase in the personal income tax rate. The current top rate for high earners is 35%. If the new bill passes, this would jump up to 39.6%. This rate would be the highest in history with only a handful of exceptions. For example, it was 39% for those who filed taxes on their capital gains and dividends over $250,00 from 1931 to 1933 as well as 1942-1943. In 1944-1945 this went up to 50% before dropping back down to 25%. The top marginal rate has not been above 40% since 1968 but could return if Obama’s plan is passed. The following graph shows what happened when President Reagan reduced the tax rates: In 1983, income tax rates were lowered across all levels of earnings and there was an increase in federal revenue generated by personal income taxes despite lower total revenues because people earned more money due to higher economic growth. If


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