SSRN Review & Roundup: Eyal Reviews Bank's High Rates and Low Taxes • TaxProf Blog

This week, Mirit Eyal (Alabama; Google Scholar) reviews Steven A. Bank (UCLA; SSRN), Introduction, High Rates and Low Taxes: Tax Dodging in Mid-Century America (Cambridge University Press 2026).

A word of full disclosure before we begin. Steven Bank was my doctoral advisor and mentor, and it is entirely possible, indeed more than likely, that I collected some of the primary sources that appear in this book. The reader should take my admiration for the work with whatever grain of salt that warrants. I suspect the book’s merits will speak for themselves regardless.

Steven Bank’s High Rates and Low Taxes: Tax Dodging in Mid-Century America arrives at a moment when calls to return to mid-century tax rates have become a familiar refrain in American policy debates. Economists like Emmanuel Saez and Gabriel Zucman have pointed to the era’s top marginal rates, which reached 91 percent between 1951 and 1963, as evidence that steeply progressive taxation is both feasible and desirable, while critics dismiss such nostalgia as ignoring the rampant avoidance that hollowed those rates from within. Bank’s central contribution is to move beyond this familiar tug-of-war and offer something richer, namely a cultural and institutional history of how tax dodging became not merely a tool of the ultra-wealthy but a mass-market phenomenon that reshaped American attitudes toward taxation itself.

The book’s introduction, which forms the basis of this review, frames the project clearly. Bank begins by situating the effective-rate debate and the contested question of how much the wealthy actually paid under those high statutory rates. Saez and Zucman contend that effective rates for the very affluent exceeded 50 percent and that “tax dodging was kept in check,” a claim Bank treats with respectful skepticism. Other studies have placed effective rates considerably lower, in the range of 20 to 30 percent by the end of the 1950s, though Bank is careful to note that methodological differences, particularly whether one includes all taxes or only federal income taxes and whether capital gains are counted, account for much of the discrepancy. As Bank quotes Boris Bittker, “there are many different ways to compute effective tax rates, generating as many computations as there are commentators.” Bank’s insight is that this debate over effective rates, while important, is “fundamentally not about tax dodging” as a social and cultural phenomenon. Most studies focus narrowly on the top one percent, overlooking the way that avoidance behaviors became entrenched across income groups well before the much-discussed tax shelter boom of the 1970s and 1980s.

The introduction’s pre-history of tax dodging is genuinely fun to read. Bank sweeps from the Roman Empire, where wealthy citizens buried gold coins and stopped keeping accounts to evade the tax collector, through Heian-period Japan, interwar Switzerland, and the property tax evasion that plagued nineteenth-century America. We learn, for instance, that in Roman Egypt it was so common to evade taxes by fleeing one’s village that there was an established procedure for announcing and recording the fugitives. In San Francisco, although the total value of taxable securities on the exchange was estimated at over $110 million, only $5,000 worth were reported on tax returns. And in Massachusetts, when assessors cracked down, a quarter of the state’s intangible wealth simply vanished from Boston and reappeared in neighboring towns with friendlier assessors. These vignettes do more than set the scene. They establish that the impulse to minimize tax burdens is a near-universal feature of human societies, which in turn raises the question that animates the rest of the book. What was distinctive about the American experience at mid-century?

Bank’s answer centers on two structural developments and one cultural transformation. The structural changes are familiar enough, the dramatic rise in top marginal rates and the broadening of the tax base from a “class tax” to a “mass tax.” Bank marshals striking data to illustrate how these forces combined. In 1936, only 61 tax returns reported income subject to the 77 percent marginal rate, which applied above $1 million. By 1954, over 77,000 individuals were subject to a comparable rate of 72 percent, because the threshold had plummeted to $44,000. Meanwhile, the number of tax returns filed exploded from 7.5 million in 1940 to 60 million by 1960, a 757 percent increase against a population that had grown only 36 percent. Even the lowest bracket felt the squeeze. By the early 1950s, the bottom rate had climbed to over 20 percent on income above $4,000, a far cry from the 4 percent rate on income over the same threshold that prevailed in the late 1930s. As William J. Casey and J.K. Lasser observed in their 1952 report on tax-sheltered investments, “a dollar of corporate income can shrivel down to less than a penny by the time it has passed through the wringer of the corporate income tax, the individual tax on dividends and the estate tax payable on passing savings on to one’s family.” These twin pressures created both the incentive and the market for tax dodging on a mass scale.

The cultural transformation is the book’s more original claim. Bank traces the evolution of public attitudes through the lens of the term “tax dodging” itself. In the nineteenth and early twentieth centuries a tax dodger was “contemptible and unpatriotic.” The Chicago Daily Tribune in 1883 called tax dodging “one of the most discouraging of many signs of the laxity of our social ties,” while the Atlanta Constitution in 1921 described the tax dodger as “a thief who steals from his honest fellow-citizens the benefits that accrue from American citizenship and the protection of the American flag.” This moral opprobrium intensified during the Depression, when the Pecora hearings revealed that J.P. Morgan and his partners had paid no income tax in 1931 and 1932 (along with Otto Kahn of Kuhn, Loeb, who paid nothing between 1930 and 1932) and President Roosevelt denounced avoidance schemes as “unethical” and “evil” in his 1937 tax message to Congress. It made little difference, as Bank notes, that Morgan and Kahn had paid no tax because their stock market losses had wiped out any income. Bank claims that “that point seemed lost on many reporters and lawmakers, not to mention the general public.” By the 1950s and 1960s, however, a “subtle shift” had occurred. The term “tax dodging” retained some stigma but was increasingly used with moral ambivalence, becoming a catch-all that reflected neither pure condemnation nor full approval. Curiosity had replaced shock, and envy had replaced outrage.

Bank’s account of the legal profession’s efforts to draw bright lines between “avoidance” and “evasion” is one of the introduction’s strongest sections. He traces the arc from John Sears’s 1921 Virginia Law Review article, insisting on a sharp distinction between “lawful” avoidance and “forbidden evasion,” through Judge Learned Hand’s famous dictum in Gregory v. Helvering that “there is not even a patriotic duty to increase one’s taxes,” to Roosevelt’s sardonic rejoinder that “tax evasion becomes tax avoidance when a wealthy man hires a $250,000 lawyer to change the word evasion to the word avoidance.” Bank demonstrates that Hand’s opinion itself contained what Dan Shaviro called here a “curious dual quality,” a pro-taxpayer statement embedded in a pro-government ruling. Hand recognized that the transaction in Gregory literally complied with the statute, yet still rejected it as violating the spirit of the law, concluding that “to dodge the shareholders’ taxes is not one of the transactions contemplated as corporate ‘reorganizations.’” As Bank shows, the legalistic line-drawing never succeeded in shaping popular attitudes. Raymond Moley, one of the architects of the New Deal, captured the futility well. “The public cares little about the legal distinction between ‘evasion’ and ‘avoidance’,” he wrote. “To the country as a whole, a tax dodger is a tax dodger.” By 1940, tax lawyer Harry Rudick could offer the cynical but practically accurate definition that “avoidance is merely successful evasion and evasion is unsuccessful avoidance.” Randolph Paul had offered a similarly pragmatic formulation a few years earlier, that “avoidance being what works, and evasion being what fails.”

The democratization narrative, how tax dodging migrated from the smoky confines of white-shoe law firms to department store tax preparation offices and newspaper advice columns, is the thread that should give the full book its distinctive energy. Bank previews a compelling cast of characters. Hollywood celebrities who pioneered shelter transactions and made them glamorous, corporate executives whose compensation structures spread deferred pay and fringe benefits down the corporate ladder, and offshore havens like Switzerland, Liechtenstein, the Bahamas, and the Netherlands Antilles that advertised not their ski slopes and beaches but their tax laws. These groups, the introduction tells us, were “uniquely positioned to influence public perception of and engagement with tax dodging.” Celebrities were income-rich rather than asset-rich, had non-tax reasons to want to own rather than rent their talents, and, crucially, had the kind of public profiles that meant their tax maneuvers could not stay quiet for long. Executives, though less famous, may have been “even more influential over the long run,” because the compensation structures they devised for themselves (deferred pay, stock-based compensation, generous fringe benefits) cascaded down the corporate hierarchy to middle-level employees and traveling salesmen. The introduction makes clear that these were not isolated phenomena but mutually reinforcing forces that “publicize[d], normalize[d], and legitimize[d]” tax dodging as a cultural institution. Bank also notes the rise of an entirely new retail tax preparation industry, with advisers setting up shop in department stores and shopping centers, writing do-it-yourself guides that promised to bring “the rich guy’s tax dodging secrets to the little guys.” Access to tax advice had never been greater, and with it came access to the tools for avoiding the taxes that advice revealed.

Bank’s thesis about the cause of this cultural shift is nuanced. He argues that it was not high rates alone that produced mass tax dodging, but the “backtracking” from those rates. The loopholes, special exemptions, and selective enforcement that Congress adopted as implicit tax cuts when it lacked the political will to reduce rates directly all played a part. This backsliding “both emboldened those who benefitted from it and disheartened those who were left out, leaving them to identify their own forms of tax dodging.” Bank points to the telling example of withholding on savings account interest. When Congress proposed extending wage withholding to interest income, a modest measure that would have affected ordinary taxpayers, the public resisted bitterly, precisely because they had watched the wealthy enjoy far more generous forms of tax relief. The implication, which carries obvious resonance for contemporary debates, is that the danger lies not in high rates per se but in the gap between stated rates and actual enforcement, a gap that breeds cynicism and invites escalation.

There are aspects of the introduction that leave this reviewer wanting more, though that may be the nature of an introduction. Bank acknowledges the methodological disputes over effective rates but does not fully adjudicate them, noting Bittker’s observation. The book will presumably engage these questions in greater depth, and one hopes Bank will offer his own assessment of where the effective rate most plausibly fell, rather than treating the question as ultimately indeterminate. Additionally, the introduction’s treatment of the international dimension, the rise of tax havens and their advertising campaigns, is tantalizing but necessarily compressed. The reader is left eager for the fuller account promised in later chapters.

One might also push back gently on the framing of tax dodging as primarily a mid-century phenomenon that “set the stage” for later developments. The introduction’s own pre-history suggests that tax minimization is a constant of human civilization, and one might argue that what changed at mid-century was not the impulse but merely its scale and visibility. Bank seems aware of this tension but does not fully resolve it in the introduction, which focuses more on establishing the novelty of the mid-century experience than on accounting for what is genuinely continuous across eras.

These observations, however, are invitations for the fuller treatment that the book itself presumably provides. On the evidence of this introduction, this book promises to be a work of considerable historical depth and narrative flair. Bank brings a legal historian’s rigor to questions that are too often debated with more heat than light, and his insistence on understanding tax dodging as a cultural phenomenon, not merely a technical or economic one, is overdue. For anyone engaged in the current debates over progressive taxation, inequality, and enforcement, this book should be essential reading. And for those of us who may have spent time in the archives tracking down some of the sources cited herein, it is deeply satisfying to see them put to such excellent use.

Here is the rest of this week’s SSRN Tax Roundup:

Damilola Adebayo (Unaffiliated), Carbon Pricing as a Driver of Development in Africa: Lessons from South Africa (Apr. 2026)

Edmund Poku Adu (Arkansas St. U.) & Clancy Owoo (U. N. Texas), Government Warnings and the Limits of Deterrence: TikTok Tax Misinformation and Search Behavior (Apr. 2026)

Frank Agostino (Agostino & Assoc.), Form 872-P and the Outer Limits of TEFRA Consents: Why Boilerplate Does Not Extend the Statute for Penalties, Additions to Tax, and Interest (Apr. 2026)

Frank Agostino (Agostino & Assoc.), Work Authorization, Social Security Number Validity, and Refundable Credits (Apr. 2026)

Nelson Alino (Unaffiliated), Taxation and Technology: How Artificial Intelligence Reconfigures Professional Judgment, Expertise, and Institutional Legitimacy (Apr. 2026)

Wira Andika (Unaffiliated), Dispute over the Interpretation of PMK 71/2022: How Logistics Companies Prevail in Arguments Against Tax Correction (Apr. 2026)

Dr. Akhil Bhardwaj (India Gov.) & Vikrant Kumar Sharma (U. of Kota), IPC to Bhartiya Nyaya Sanhita: Implications and Future Prospects (Apr. 2026)

Kimberly A. Clausing (UCLA), Lessons from Three Global Collective Action Problems, Va. Tax Rev. (forthcoming 2026)

Stephen L. Curtis (Cross Border Analytics, Inc.) & Reuven S. Avi-Yonah (Michigan), Frankenstein’s Drugs: Did Gilead Sciences’ Bahamas Tax Caper Create a Multibillion-Dollar Periodic Adjustment? (Apr. 2026)

Ripon Chandra Das (Unaffiliated), Income Tax Practisioner Exam Guide 2026 (Apr. 2026)

Samuel E. Dangond (Unaffiliated), Citizen Fiscal Objection (OCF): A Scalable Individual Tax Traceability Architecture Without Distributed Consensus at 1/190th the Cost (Apr. 2026)