Defining “Enough”

When we say “I’ve had enough of this behavior,” we understand intuitively that there’s a limit—a point beyond which more becomes excessive or harmful. The same concept can apply to income. While nobody enjoys struggling to make ends meet, there might be a ceiling where additional earnings bring diminishing returns to personal happiness while creating broader societal concerns.

Historical Perspectives on Income Limits

America’s own tax history reveals fascinating insights into how we’ve answered this question over time. The federal income tax, established in 1913, began modestly with a top rate of just 7% on incomes exceeding $500,000 (equivalent to about $15.9 million today). This suggests an early tolerance for high earners.

However, as the nation faced the challenges of World War I, the Great Depression, and World War II, perspectives shifted dramatically. By 1944, the top tax rate had skyrocketed to 94% on incomes of $200,000 or more (about $3.5 million in today’s dollars).

Throughout the 1950s and early 1960s—a period often remembered for economic prosperity and growth—top marginal tax rates remained between 82% and 91%. This wasn’t viewed as radical; it reflected a social consensus that extremely high incomes should contribute proportionally more to public needs.

The Shifting Consensus

The economic philosophy of the nation changed significantly in the 1980s under President Reagan. The Tax Reform Act of 1986 dropped the top rate to 28%, reflecting a new belief that lower taxes on high earners would stimulate economic growth that would benefit everyone.

Since then, top rates have fluctuated between 35% and 39.6%, never returning to the high levels of the mid-20th century. Today, our tax system includes seven brackets ranging from 10% to 37%, with higher rates applying only to income above certain thresholds.

Modern Approaches to Income Limits

Some cities have recently begun experimenting with policies that specifically target extreme income inequality within companies:

• San Francisco instituted a 0.1% surcharge on a company’s local tax bill if its top executive makes 100 times what median workers earn, increasing to 0.2% if the ratio reaches 200 times.
• Portland, Oregon implemented a similar approach in 2016, applying a 10% tax surcharge on publicly traded companies whose CEOs earn 100 to 250 times more than their median workers.

These modest policies have successfully generated additional revenue for public services while highlighting extreme pay disparities.

The Mathematics of Wealth

Sometimes the simplest way to understand “too much” is through clear comparisons:

Imagine earning $1 per second from birth until age 100—an astronomical rate that would yield about $3.1 billion over a lifetime. Yet some individuals accumulate wealth that dwarfs even this impossible scenario.

Consider another perspective: If we decided no one should earn more than 100 times what the lowest-paid worker makes, and if that worker earned a livable wage of $21.46 per hour (about $44,636 annually), the maximum allowable income would be approximately $4.4 million per year.

Using the current federal minimum wage of $7.25 per hour as the baseline would cap top earners at $1.5 million annually.