Taxes, a recent report confirmed, have become the biggest bill for the average American, says the Committee to Unleash Prosperity. This was illustrated by a recent online chart.
Indeed, economist Stephen Moore writes that Americans now pay more in taxes than they spend on food, clothing, and housing combined. He adds government has become “so big and bloated.” He cited a chart from the Committee estimating Americans paid about $8.19 trillion in taxes in 2025, compared with roughly $7.39 trillion spent on food, clothing and housing combined. Moore added that, “Government has become so big and bloated that taxes cost more than life’s basic necessities.”
Yet this has been true for decades, affecting the lifestyles of millions of Americans as well millions of others living in other advanced welfare state societies. In the 1940s and 1950s, tax rates in the United States would reach 91 percent, according to The Decline (And Fall) of the Income Tax, by Michael J. Graetz. Taxes affect lifestyle. No matter how much you love your work, does it make sense to keep working if you are only allowed to keep nine cents out of a dollar? For many hard-working people the answer was no. Over the years, some taxpayers tried various tax avoidance strategies.
At the end of World War I, with the United States in the midst of a little-known Depression, the rates of many well-heeled taxpayer rates were high. They started putting their money in tax shelters and not stocks, looking to escape excessive rates of taxation. The Treasury secretaries of both the outgoing Wilson administration and incoming Harding administrations complained high taxes were wrecking the economy; that it was starved for capital because the rich preferred to keep their money in tax shelters. Treasury Secretary Andrew Mellon detailed this in his book, Taxation. He called for lower taxation and reduced spending as strategies to persuade the rich to stop locking up their money in Munis, money that wasn’t invested in stocks because taxes were high.
One disgruntled taxpayer took action. Comedian Jack Benny got a lower rate by incorporating. By claiming all his income was corporate, and, after waging a battle in tax court over years, Benny achieved a lower rate in a famous 1955 court decision. The Jack Benny Case refers to Benny v. Commissioner of Internal Revenue (Docket No. 39123), a 1955 US Tax Court decision in which Jack Benny challenged whether part of a stock sale payment was taxable as ordinary income for his services.
By the early 1960s, some relief was coming for the rest of us. President John Kennedy initially believed that cutting taxes was unjust and favored the rich. But Democrat Kennedy found the nation in a recession. After researching taxes, Kennedy changed. In his last months of his life, President Kennedy realized high taxes hurt the economy. In a famous address in New York, a few months before his death, Kennedy called for a tax cut. Kennedy’s volte face was documented in the book, JFK and the Reagan Revolution by Lawrence Kudlow.
A strong economy followed the cuts until later that decade when the Vietnam War short-circuited the growth, which is something Americans should consider as the Iran war drags on. To pay for the huge war and welfare spending of the 1960s and 1970s—not only did the Vietnam War go on longer and was more expensive than anticipated, the startup costs for Medicare were much higher than quoted just as they were with George W. Bush’s drug prescription plan four decades later—tax rates rose in the 1970s.
President Reagan, in pushing for his tax cuts in the 1980s, cited Kennedy. Those arguments angered class warfare critics. They insisted low taxes were a strategy of helping the rich. But while it may make some people feel good knowing that rich people pay through the nose, the majority of Americans still paid higher taxes in the 1970s, directly and indirectly, owing to inflation, which is the ultimate tax.
But excessive government spending and regulation, which inevitably leads to more taxation under all governments, has been going on for a long time in almost every democracy with a Congress or a Parliament and some career pols.
Excessive taxes have driven many successful people into becoming tax exiles. But not all. James Herriot, the wonderful British author of All Creatures Great and Small books, never got rich from his bestselling books and popular television shows. Herriot, unlike some other British high earners, would not leave his beloved home. He paid an 83 percent tax rate.
When interviewed by journalist Ray Bennett, Herriot, at age 62, was still a full-time working veterinarian although he was counseled to leave town:
There’s not many of me left in this country. Most bestselling authors are away in Ireland, where they pay no tax at all; in Jersey, where they pay 10 percent; or on the Isle of Mann, where it’s much the same. But I stay here and pay my 83 percent. I like it here.
There were more episodes of this kind where we must seek shelter for our wealth or we’ll lose it philosophy in the 1960s and 1970s. As a young reporter working for Financial Planning Magazine, I got a taste of this. I remember financial professionals trying to sell well-heeled investors all manner of seemingly bad investments, often in the form of limited partnerships. They were everything from low-income housing to Broadway shows—of the latter, one show business expert once told me that putting money into shows was “a great way to lose money” since a supermajority of shows run in the red. But, no matter how egregious their losses, they were great tax write-offs. Today, taxes—despite several so-called “low tax” administrations—remain a problem.
Americans, despite several GOP administrations saying they favor lower taxes, should be “outraged,” Moore says. But maybe they’re not. Many vote for incumbents. Unfortunately, few can pull a Jack Benny.
