by Gary Alexander
April 14, 2026
“Taxation is the art of plucking the goose so as to obtain the largest amount of feathers with the least amount of hissing.”
— Jean-Baptiste Colbert, Finance Minister to King Louis XIV of France.
As if any American needs a reminder, let me state the obvious: Even if you file for an extension (as I do each year), your annual tax bill is due tomorrow, April 15 – the date of the sinking of the Titanic in 1912 and the death of Lincoln in 1865 – so forget Julius Caesar’s Ides of March and beware the Ides of April!
We’ve seen top marginal tax rates of 94% in the U.S. and over 100% in some European nations, but that sort of highway robbery always leads to fewer tax collections, as the best and brightest seek safe havens.
Economist Art Laffer invented the “curve” bearing his name in 1974, bearing out this correlation. There is a magic number – experience points to 25%-30% top tax rates – as the sweet spot for generating revenue.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
High Tax Rates Caused a 1960s “Brain Drain” in Britain,
Then Pushed Swedish Artists and Athletes into Exile in the 1970s
I’ve just seen a film, “What Sweden Got Right,” the third in a series I’ve reviewed for the Anthem Film Festival. The previous cases in point were Vietnam and Poland, two rapidly growing capitalist economies. (I’ve reviewed all of these films here, adding another low-tax convert, Ireland, last month in these pages.
The “Soak the Rich” crowd often cite Sweden as a model of a high-tax, high-benefit economy in Europe. Senators Bernie Sanders and Elizabeth Warren raise toasts to Sweden, but Sweden’s brief flirtation with socialism only took effect in the 1970s and 1980s, and it was a failure. Sweden actually gives us a real-life study of what happens under low or high tax rates. Sweden was a very poor nation before the 1860s, when capitalism became their national mantra. Then, from 1870 to 1913, Sweden’s per capita GDP rose 50% faster than the rest of Western Europe. By 1950, taxes were just 21% of Sweden’s GDP, lower than in the U.S. then, and about 10 percentage points below taxes in like Britain, France, and West Germany.
In the 1960s, marginal tax rates exceeded 100% in Great Britain, causing the famous “brain drain” of leading British scientists and artists, leading to our first major artistic protest: The Beatles’ Tax Man:
Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman
Should five per cent appear too small?
Be thankful I don’t take it all
‘Cause I’m the taxman
If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet
‘Cause I’m the Taxman
Don’t ask me what I want it for
If you don’t want to pay some more
‘Cause I’m the taxman
My advice for those who die:
Declare the pennies on your eyes
‘Cause I’m the taxman!
George Harrison was the primary composer of “Taxman” (with help from John Lennon). It was released on August 6, 1966, as the opening cut on their “Revolver” album. Taxman was based on a severe tax problem facing the Beatles then: In April 1966, a report from the London accountancy firm of Bryce, Hammer, Isherwood & Co. advised them, despite the group’s immense success, “Two of you are close to being bankrupt, and the other two could soon be.” The Beatles were required to pay the 95% “super tax” devised by PM Harold Wilson’s Labour government,” hence the opening line, “one for me, 19 for you.”
Meanwhile, Sweden had become the fourth-richest country in the world, and the fifth-freest economy at that time, according to Robert Lawson and Ryan Murphy of the O’Neil Center for Global Markets and Freedom.
Then came Sweden’s failed experimentation with higher taxes, thus creating their own Brain Drain of tax avoiders. Tennis champion Bjorn Borg moved to Monaco in the 1970s. The famed film director Ingmar Bergman was slower to learn the lesson from the Beatles’ 1966 hit song. On January 30, 1976, soon after making his gorgeous film of Mozart’s opera, “The Magic Flute,” while rehearsing a play in Stockholm, he was arrested and charged with income tax evasion. These charges cut deeply, and he suffered a nervous breakdown as a result of public humiliation. He was soon hospitalized in a state of deep depression.
In short order, on March 23, 1976, prosecutors dropped all charges, but the damage was done. Bergman left the country, denying the tax man any lucrative taxes on the income they scared away. He vowed never to work in Sweden again. He closed down his studio there, suspended two announced film projects, and went into self-imposed exile in Germany. He lived 30-more years but only made two-more films.
Sweden learned from painful experience and began lowering top tax rates. In 2004, they abolished gift and inheritance taxes. This brought some former tax refugees back home. In 2013, Ingvar Kamprad, founder of IKEA, returned to Sweden (from Switzerland) 40-years after leaving to escape its high taxes.
And now Sweden now has more billionaires per capita than the United States, due to lowering tax rates.
The 90% Tax Attack on Leading American Artists, 1943-1963
I can’t close this section without repeating Col. Tom Parker’s famous quote that it was his “patriotic duty to keep Elvis in the 90% tax bracket,” which was in force from 1943 to 1963. In fact, by 1973, Elvis was officially the highest individual taxpayer in America, paying the IRS $2.96-million in 1973 income taxes.
On the other side of Parker’s patriotic plan, many great musicians worked for the love of music and were cheated by accountants out of their taxes. Many big names ended in poverty, depression or early death.
- Singer Nat “King” Cole suffered from threats and penalties by the IRS (and FBI) due to unpaid taxes, contributing to his early death at age 45 in 1965.
- Comic Ernie Kovacs was so deep in debt to the IRS that it may have led to his early death, but his widow Edie Adams paid the IRS every last blood-red cent of his outrageous tax bill.
- Band-leader Woody Herman was thrown out of his home, which the IRS sold for back taxes, and had to keep his band on the road in old age to pay back taxes (I saw one of his last performances).
- Singer/songwriter Willie Nelson racked up a $30-million unpaid tax bill by 1990.
- Clarinetist Artie Shaw writes in his “Self-Portrait” (5-CD set) about his post-war tax blues:
“In 1949, I had a problem with the Internal Revenue Service, who claimed I owed them a lot of money that I didn’t feel I did. Of course I couldn’t get into a legal hassle with them, so I put together another band,” but the Big Band Era was dead, so he lost more money and fell deeper into IRS debt, so he retired for five-years, then “I had another IRS problem, and once again had to make enough money to get them off my back,” but that plan also failed.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
I could add many more stories of high marginal tax rates, scaring away high earners in a number of fields, but we face the same problem within several U.S. states now, and we’re seeing the same trend: an exodus by millions of taxpayers from high-tax states to lower-taxed states. I did this in 2004, moving from high-tax Virginia and Maryland to Washington state, the only blue state with no state income tax. In fact, our state Constitution forbids income taxes, although our greedy politicians keep trying to create them. (I must add Washington state charges high sales and property taxes, high excise taxes and business taxes).
The Laffer Curve in Action…Now, and a Century Ago
As Art Laffer says at the start of his book, “Taxes Have Consequences,” high-income earners can switch courses four ways, rapidly: “The extent of their wherewithal gives them options. High earners can readily change the location of where they earn their income, the timing as to when they receive their income, and the form in which they receive their income – not to mention how much income they choose to earn.”
Last year, the “One Big Beautiful Bill” lowered top tax rates, and some will claim big refunds this week, likely to fuel consumer spending – although the federal government refuses to cut their spending spree.
The first time a President cut taxes and spending, we saw a big boom in the Roaring 1920s. The market began its biggest rise 100 years ago, in 1926, and we could see a repeat of those Roaring 20s soon….
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
This mastermind for this prosperity was Treasury Secretary Andrew Mellon, but the winning formula was repeated by Democrats in the 1960s, when President Kennedy said, in 1962, that he was about to send a comprehensive tax cut package to Congress. Speaking before the Economic Club of New York, he said,
“An economy hampered by restrictive tax rates will never produce enough revenue to balance our budget, just as it will never produce enough profits. Surely the lesson of the last decade is that budget deficits are not caused by wild-eyed spenders but by slow economic growth and periodic recessions.”
Sure enough, the 1950s were a time of frequent recessions, but there were no recessions from 1961 to 1970 after JFK and LBJ cut the top tax rate from a punitive 91% down to 70%. This act then tripled the “take home pay” of the rich (30% vs. 9%), fueling greater spending and higher tax receipts – resulting in a balanced budget in 1969. This same pattern returned in the Reagan-era tax cuts of the 1980s, which cut the top tax rate from 70% to 28%, fueling yet another boom, resulting in a doubling of tax revenues.
This Master Plan for Growth worked in the 1920s, 1960s, 1980s and in 2017 – and it can work again.
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
The Long-Term Outlook for Energy Prices
Income Mail by Bryan Perry
Buckle Up on the Road to a “Normal Nation State” in Iran
Growth Mail by Gary Alexander
On Taxes: The Laffer Curve in Action…and in the Arts
Global Mail by Ivan Martchev
This Ceasefire is Starting to Look Like a Failing Truce
Sector Spotlight by Jason Bodner
“Big Money” Buying Suddenly Revived Last Week
View Full Archive
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About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20-years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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