Why 39.6%?

[Steve from Lambeth]

The top rate of federal income tax was set at 39.6% many years ago; I can't remember when exactly, but definitely by the time of Bush's 2001 tax cuts. It's been there ever since, except under the TCJA regime where it's been at 37%. There have been calls from various Democrats to pre-emptively restore the old rate and Joe Biden stated it again in his latest budget.

Why is a 39.6% top rate of tax such a totemic figure for Democrats, above - and notwithstanding - their support for TCJA expiry? What is achieved at 39.6% taxation that 39%, 39.5%, 40%, or even 39.9% would not achieve? Why was it even set there in the first place?

[Arizona Iced Tea]

Having such a specific number makes it look like politicians actually did tons of research and inquiry whereas a clean 40 foesnt.

[GP270watch]

The top rate of federal income tax was set at 39.6% many years ago; I can't remember when exactly, but definitely by the time of Bush's 2001 tax cuts. It's been there ever since, except under the TCJA regime where it's been at 37%. There have been calls from various Democrats to pre-emptively restore the old rate and Joe Biden stated it again in his latest budget.

Why is a 39.6% top rate of tax such a totemic figure for Democrats, above - and notwithstanding - their support for TCJA expiry? What is achieved at 39.6% taxation that 39%, 39.5%, 40%, or even 39.9% would not achieve? Why was it even set there in the first place?

It was a newly created bracket in 1993 under Clinton along with 36%. But there were much higher top tax brackets, Reagan cut the top tax bracket from 70% at the start of his presidency to 28%. Whenever the United States fought wars or had an economic shock one of the first things Congress and the President would do was raise the top tax rate.

[Del Tachi]

39.6% is the rally point because it was the top marginal rate before TCJA, and Democrats are singularly united around rejecting Trump.

[brucejoel99]

I'd guess because after taxing over ~$400K of income that things like capital gains start becoming more practically relevant than income for raising potential revenue, at least to the extent that the truly high-earners mostly aren't wage-earners, but already-wealthy deduction-takers: income >$500K/yr. is in the 99th percentile of less than 1.5M households.

[ultraviolet]

Probably just because that’s what it was before so it’s easier to get support for.

[Pres Mike]

It’s harder to attack democrats for raising taxes when they just want to restore it to previous rates

[politicallefty]

39.6% is the rally point because it was the top marginal rate before TCJA, and Democrats are singularly united around rejecting Trump.

It isn't about Trump. It was the same issue with the Bush tax cuts. Republicans cut the top marginal rate and Democrats wanted to revert back to the 39.6% rate. That's just one of the classic debates over tax policy. (I think the compromise at the time of sunset was restoring the old top rate, but adjusting the income level higher for the top rate.)

I have no idea where the original idea for 39.6% came from back in 1993. At that time, the highest marginal rate was 31%.

[Linus Van Pelt]

The previous top rate in 1993 had been 36%, so presumably the number came from a 10% increase to the rate (36+3.6=39.6).

[🐒Gods of Prosperity🔱🐲💸]

Lincoln's 1860 share of the national popular vote?

[Fmr. Gov. NickG]

The previous top rate in 1993 had been 36%, so presumably the number came from a 10% increase to the rate (36+3.6=39.6).

Yeah, this was always my assumption as well.