ABSTRACT
The United State (U. S.) tax system—in particular, the federal personal income-tax code—has the effect of encouraging economic growth in capital-friendly countries, while discouraging U. S. production, work, and capital formation that collectively generate the wealth the United States shares. The U. S. tax system was fundamentally altered to an income-based tax system from a consumption-based tax system in the early part of the twentieth century. Andrew Mellon argued for an increase in corporate income tax rates on grounds that investment income should be taxed at a higher rate than earned income. The highly progressive personal income-tax system that the U. S. devised during World War I was a tax system that allowed U. S. wealth to be shared with other countries. Lewis H. Kimmel also pointed out that high marginal personal income-tax rates without a sizeable exclusion for income from savings translate into a lower national savings, investment, and production rate which is another effective benefit to other countries.
