Fact check: Viral post exaggerates corporate tax rates under President Dwight Eisenhower

Fact check: Viral post exaggerates corporate tax rates under President Dwight Eisenhower

USA News

play

The claim: The corporate tax rate under Eisenhower was 90%

A recent Facebook post claims the corporate tax rate was 90% under President Dwight D. Eisenhower, who held office from 1953 to 1961. 

“Why?” says the April 28 post, below a photo of Eisenhower. “Because high corporate tax rates create incentives for big businesses to spend on things like new locations, new hires, new equipment, and product research and development which are deducted from taxable earnings…It’s not socialism. It’s responsible economics.” 

The post, from popular left-wing Facebook group The Other 98%, accumulated more than 12,000 shares and 25,000 interactions. Another account posted the same information with a different graphic. USA TODAY has reached out to both posters. 

Follow us on Facebook! Like our page to get updates throughout the day on our latest debunks

But the numbers are off here. While the individual income tax rate for some earnings rose over 90% during Eisenhower’s time in office, the corporate tax rate was closer to half that level. 

Corporate taxes topped out at 52% under Eisenhower

During Eisenhower’s presidency, the corporate tax rate ranged from 30 to 52%, according to the Tax Foundation’s historical data on U.S. federal corporate income taxes.

Like the current federal income tax, corporate taxes during Eisenhower’s time followed a graduated model where tax rates increased as income did. From 1952 to 1963, a span that encompasses Eisenhower’s entire presidency, IRS historical data confirms the tax rate was 30% for the first $25,000 in profits that a company made, and 52% for anything over that amount. 

Fact check: Post misleads on Putin’s role in nationalizing Russian bank, creating currency

Tax codes have changed several times since Eisenhower’s presidency. From 1993 to 2017, the U.S. used a graduated corporate tax code much more complex than the two-tier one from the 1950s and early 1960s, utilizing eight different brackets, according to the Tax Foundation. However, the Tax Cuts and Jobs Act, passed in 2017 during the tenure of President Donald Trump, abolished the graduated system, establishing a 21% flat corporate income tax according to the text of the bill.

Eisenhower’s presidency did see some tax rates above 90%, but that figure only applied to the individual income taxes of top earners. For married people filing jointly in 1953, for example, any income above $200,000 was taxed at 90%, above $300,000 at 91%, and above $400,000 at 92%.

Nowadays, individual income tax rates are much lower, and the highest tax rates have dropped to nearly a third of their mid-1900s highs. For tax year 2022, individual single taxpayers with income over $539,900 are taxed at 37%, according to the IRS. For married couples filing jointly, the same rate applies to any income over $647,850. 

Our rating: False

Based on our research, we rate FALSE the claim that the corporate tax rate under Eisenhower was 90%. The corporate rate ranged from 30% to 52% between 1952 and 1963. One part of the tax code did reach over 90%, but that rate only applied to the top earners’ individual income taxes – not corporate income taxes. 

Our fact-check sources: 

Thank you for supporting our journalism. You can subscribe to our print edition, ad-free app or electronic newspaper replica here.

Our fact-check work is supported in part by a grant from Facebook.

Read More