The income tax was established in the horrible year of 1913, the same year the US got its central bank.  (This also happens to have been the last year of peace, free trade and the international gold standard before war, depression, fascism and communism destroyed the best of western civilization.)

The tax got its foot in the door with a top marginal rate of 7%, but as soon as the US was conned into WWI, the rate shot up to over 75%. It came down after the war and was 25% through the 1920s, but FDR raised it in the Depression and WWII to over 90%, where it remained until 1963. Few people remember that the top rate remained over 70% until the Reagan administration got it down to 50% and then 28%.

Source: http://www.truthandpolitics.org/top-rates.php

The reason these rates are collectively forgotten is that they were felt by very few. In nominal dollars, the top bracket started at $500,000 in 1913 and went to $2,000,000 in WWI and $5,000,000 during WWII. Multiply these figures by about 20 and 15, respectively, for the equivalents in 2008 dollars. Even the top bracket of $200k in 1980 was big money–it would buy a nice beach house or Park Avenue apartment.

The top bracket was lowered to under $30k by 1988, and while it has since been raised to over $300k, thanks to inflation this is merely an upper middle class income.  It’s worth noting that in the 1920s only the top 20% paid any direct federal tax at all, whereas now the average American works for half the year to cover the sum of various taxes.

The lesson here is to not be surprised if federal rates are hiked to well over 50% in the coming years as the budget deficit shoots past the $1 Trillion mark. And I wouldn’t count on the top bracket going back to $60 million either, now that middle class earners are used to the government calling them rich.