You're not wrong Zach

I believe Mexi Bugs came stock with 155's on a 5 1/2", and the tire fits just about flush with the rim. You at least want a tire that is about 20mm larger than the width of the rim- so 4.5" wheel = 114.3mm + 20mm = 134.3, or a 135 tire.
Where did you get that "formula"?
If you want a base line of where to start, look at what the car makers put on cars. VW installed 155s on 4" and 4½" wheels. Same wheels got 165s too. The rare stock 5½" VW wheels got 175s. If you research a 2CV, you will find it's wheels are probably 3" or 3½" wide to use 135s. According to the car makers, a 4" wheel is too wide for a 135 tire.
Mexican Beetles had 4½" wheels. Never a 5½.
Chris, send your wheels out and get them chopped down to 4½"! That solves everything.
Mexican Beetles indeed had 4,5 not 5,5 rims. That doesn't change the fact that 155s work much better on a 5,5 than on 4,5. Indeed VW did use very narrow rims, with the following results:
http://video.google.co.uk/googleplayer.swf?docId=640695539059738855 
I remember times when i played with little Fiats and a popular, tried combo was a 135/70-13 tire and a 5,5 inch wide rim. We wanted to have a good handling without using wide tires - the engine was week.
I'm talking about handling not the looks - the latter is subjective.
BTW - those Fiats had 135-12 tire and a 4x12 rim from factory, so I don't think car makers consider 4" wheel is too wide for a 135 tire.
