There was a time when the top income tax rate in the United States was over 90%. The rich paid it. The country thrived. And no, the market didn’t collapse. In fact, it flourished.

That time was the postwar era — and it remains one of the most economically successful periods in American history.

The postwar consensus

From the late 1940s through the early 1970s, much of the Western world embraced what is now derisively called “socialism” by American conservatives. Governments invested heavily in infrastructure, guaranteed jobs, regulated industries, and built out massive welfare programs.

In the United Kingdom, the postwar Labour government created the National Health Service and nationalized major industries including coal, rail, and steel. France pursued dirigisme — a policy of state-directed capitalism that saw heavy state involvement in industrial development. West Germany adopted the social market economy, blending free-market capitalism with strong social protections and worker representation.

In the U.S., the top marginal tax rate never dipped below 70% during this period, peaking at 91%. Even after deductions and loopholes, the effective tax rate on the wealthiest Americans hovered around 40% or higher.

Yet this was not a time of economic stagnation. It was a time of record growth.

The golden numbers

GDP soared. Between 1945 and 1973, U.S. GDP grew at an average rate of nearly 4% per year. Unemployment remained low, and median household income rose steadily.

The government poured tax revenue into transformative programs. The GI Bill helped millions of veterans buy homes and attend college, while the construction of the Interstate Highway System created jobs and connected the country like never before. Public universities were heavily subsidized, and owning a home became attainable for much of the working and middle class.

This was a time when the middle class expanded, not shrank—and it was built on government spending made possible by high taxes on those who could most afford to pay them. Unemployment was low. Wages grew. Home ownership expanded. Public universities were affordable. Infrastructure boomed. The middle class was invented.

Far from choking investment, high taxes on the wealthy helped fund massive public programs that fueled economic expansion. It wasn’t trickle-down. It was built-up — a model that created demand from the bottom and middle.

This was the so-called Golden Age of Capitalism, and it didn’t come from deregulation or tax cuts. It came from public investment and a sense that the rich owed something back.

The myth of collapse

Today’s right-wing politicians warn that taxing the rich or regulating business will destroy the economy. But history tells a different story.

The U.S. economy was more equal, more stable, and more productive during the era of high taxes and high government spending than in any period since. The idea that these policies lead inevitably to collapse is ahistorical nonsense.

What changed?

In the 1980s, Reaganomics flipped the model. Taxes on the rich were slashed. Deregulation exploded. Wages stagnated. Inequality soared. Productivity continued to rise, but the rewards stopped flowing to workers.

This shift wasn’t just economic—it was ideological. Conservative think tanks like the Heritage Foundation and business lobbies such as the Chamber of Commerce launched coordinated campaigns to frame taxation and regulation as threats to freedom. The term “welfare queen” was deployed to demonize social programs. Media echoed the message: government was the problem, not the solution.

The result? A historic transfer of wealth upward — and a sustained assault on the very consensus that had built the modern middle class. Taxes on the rich were slashed. Deregulation exploded. Wages stagnated. Inequality soared. Productivity continued to rise, but the rewards stopped flowing to workers.

The result? A historic transfer of wealth upward — and a sustained assault on the very consensus that had built the modern middle class.

The lesson

The Golden Age of Capitalism worked not in spite of taxing the rich and investing in society — but because of it. That history has been buried under decades of propaganda, but it’s still there.

We don’t have to imagine what a fairer system might look like.

We just have to remember.