The irony is that just as markets started delivering more unequal outcomes, tax policy asked less of the top. The top marginal tax rate was lowered from 70 percent under Carter to 28 percent under Reagan; it went up to 39.6 percent under Clinton and down finally to 35 percent under George W. Bush.54 This reduction was supposed to lead to more work and savings, but it didn't.55
The economic landscape over the years has seen a significant shift in tax policy, particularly affecting the wealthiest individuals. Under Presidents Carter and Reagan, the top marginal tax rate was drastically reduced from 70 percent to 28 percent. Subsequent presidents, such as Clinton and George W. Bush, made additional adjustments, resulting in the rate fluctuating between 35 to 39.6 percent. These tax cuts were intended to incentivize work and savings among the top earners, but the anticipated positive effects did not materialize as expected.
This irony highlights a growing inequality in the market outcomes just as the tax burdens on the affluent were diminishing. Stiglitz points out that the reliance on these tax policies to foster economic growth hasn't produced the intended benefits, ultimately leaving a society more divided. Instead of promoting equitable prosperity, these changes have contributed to widening income disparities, showing that reducing taxes on the wealthy hasn't translated into greater societal benefits.
