Few people paid the 90% rate because the income bracket was so high that few people actually made enough money to fall into that bracket. The tax code had fewer deductions in the 1950s then it does now. All compensation was taxed back then, not just direct compensation. And it was much harder to convert wages into capital gains because they defined compensation much more strictly than they do now.
Capital gains rates were not lower than ordinary income rates, however, they used an "exclusion" system (similar to a deduction) that lowered the effective rates to what would be today's ordinary income rates.
Actually capital gains rates were actually lower for top income individuals.
More precisely, you could exclude half your capital gains income, or opt to have all of your capital gains taxed at an alternative rate of 25%. Most people would choose the former, but top earners could benefit from choosing the latter instead.
All compensation was taxed back then, not just direct compensation. And it was much harder to convert wages into capital gains because they defined compensation much more strictly than they do now.
This just isn't right. It was a significant change when, for example, the company car became a taxable benefit. Now employers can't pay for your schooling without paying taxes on it.
Almost everything (except for health insurance) gets taxed today.
Few people paid the 90% rate because the income bracket was so high that few people actually made enough money to fall into that bracket. The tax code had fewer deductions in the 1950s then it does now. All compensation was taxed back then, not just direct compensation. And it was much harder to convert wages into capital gains because they defined compensation much more strictly than they do now.
Capital gains rates were not lower than ordinary income rates, however, they used an "exclusion" system (similar to a deduction) that lowered the effective rates to what would be today's ordinary income rates.