80% tax rate Means prosperity

[jueco2005]

Quote from Zen Student:

Then you will indulge my mentioning that it is a logical fallacy to equate correlation with causation. Many productive countries have high tax rates, but this does not tell us whether they would be more or less productive with lower tax rates, whether the tax rate is the cause of the productivity, or how many individuals / businesses have avoided economic activity in these countries due to the tax system.

All your examples prove is that it is possible for a country to have a high rate of tax and still remain productive relative to some other countries. It does not tell us whether the tax rate is optimal or even desirable.

Well my opinion is that a high tax rate on the rich helps in the long term economic development of a country. It would have been imposible to win WWII whithout such rates. And if we had lost the war we would be having this conversation in Russian. There was an article in the economics magazine last week about how decreasing tax rate over the past 3 decades did not generate any extra real grow rate in GDP.

Few countries are growing under a low tax rate on the top rich. Chile is an example, yet the nation is divided in 2 Chiles, the poor and the rich. Eventually this leads to lots of unhappiness and social problems.



I haven't seen the methodology for this so cannot comment. I would suggest however that personal property rights including the right to keep the proceeds of your labour are perhaps amongst the most fundamental "economic freedoms" and governments who claim the right to a disproportionate amount of citizens personal income do not respect economic freedom. [/QUOTE]

The freedom of economic index is really interesting. Take a look.

Hong Kong comes first always, yet I heard they have some postures on social programs and taxes we would regard them in the US as communist/socialist.

 

[r-in]

Quote from jueco2005:

Yeah we live in a world of proof. When I was in college doing my BS in Economics we were told how virtually economics was already a cooked caked. We had figured almost everything there was to be figured about how the economy works. Well 2008 proved all that crap to be terrible wrong.

I simply say this because I am not in the business of proving or disproving anything. Tax rates were indeed between 70% and 90% between 1940 and 1980. I am at work right now and I do not have the time to provide you with the stats that you want me to give you. I encourage you to find this yourself, specially look about President Reagan tax rates deductions. That happened in 1980 and its not hard to find.

One more thing. The prosperity of the 1980s and early 90s is credited to his tax rate policies. I think they have to do more with the Fed change in the way they calculate inflation and the different type of inflation and bubbles it now creates. ASSET INFLATION. Just like the 90s stock market.

Again, as a politician you use words to try to avoid any semblance of fact. You claimed the AVERAGE TAX RATE was 90%. I enjoy how you drop the term average, and now want to imply the top rate was 90%. It was for a period of time, but the reality is it was no where near the average rate, for even the rich, as it is not today. I have no issue with the rich paying more, even on a percentage basis, not just a total payout that Repliconmen throw out. At the same time, my goal is to make as much money as I can, while contributing to charity to help those less fortunate. The government is not the less fortunate, and most of their programs are criminal enterprises, as can easily be proven.
Again I know I waste my time responding to your foolishness, but it irritates me to read this kind of crap. Oddly as it may seem to you I am also working while I respond to your garbage. With my wife we make enough to fall into higher brackets. We also give more than 10% of our income to causes we think spend money to help people who are less fortunate. I spend time researching these groups, and time and again I find governement sponsored agencies are infintetly less efficient and waste a tremendous amount of money paying staff that serves no known purpose.
I have no issue paying taxes, but I want proof that the agencies are doing something more than a private agency can do for less. I have yet to find one, and especially in my hometown the examples of fraud in public agencies are frightening.
Again, show your proof. I promise I work harder than most. I hold my kids to the same standard and am not popular with them as a result, but I hope down the road they understand the idea that words are meaningless and actions are truth.

 

[GTS]

Quote from trefoil:

It stabilizes the economy. You get some money drained out of the system in good times, and that money gets released in the form of deficit spending in bad times.

I'm not sure how you reached that conclusion. I'm pretty sure its been documented that the taxable income of the rich varies much more than the rest of the population because of the larger proportion of investment based income and incentive based income, both of which can decline in a bad economy.

(See "Volatile tax source" in this article as an example: http://www.sacbee.com/2011/12/27/4146710/plans-to-tax-the-rich-hold-risks.html )

If you rely on taxing the rich for a *greater* portion of govt revenue what happens is that you get even more revenue during a good economy, which the gov't immediately spends....during a bad economy when the tax revenue decreases faster then the underlying economy you end up running huge deficits because the gov't has already adapted to the higher level of spending from the good economy.

If the federal govt could learn to save extra revenue during good times in a rainy day fund like states do then maybe such a proposal would work, but with the current state of politics it is foolish to believe that the fed gov't would not just take any windfall as an opportunity to spend more.

 

[Rehoboth]

Quote from tomdavis:

1. The US did not prosper in the 1950s-1960s because of high taxes, but rather because of the aftermath of WWII. The period of 1945-1965 established the US as the leading manufacturing country in the world, not because of our manufacturing prowess, but rather because of our military might. At the end of WWII, the US had 5% of the world's population and almost 70% of the world's intact manufacturing and transportation infrastructure because most of Europe and Asia had been bombed to ashes during the war. For about 20 years, the US had the highest manufacturing price/wage structure in the world, from which the American middle class benefited greatly. By the mid-1960s, the rest of the world had rebuilt and the US had to actually compete against countries like Japan and Germany. Our market dominance began to erode in the 1970s, and the erosion increased in velocity during the 1980-90s as India and China entered the world markets. When hundreds of millions of people enter the global manufacturing workforce and are willing to work for fifty cents an hour, wages are going to fall, manufacturing is going migrate, and there's nothing anybody can do to stop it. It's inevitable that the economies of China and India will overtake the US because China's population is 4X the US and India is 3X. Simple math. The economic forces of gravity in action.

+1

The exact same thing happened after WWI, made the shift to peacetime production, and we got the roaring 20's. Fortunately the safeguards put in during the great depression preventing the recession of 1958-1961 from becoming another depression.

 

[jueco2005]

Quote from tomdavis:

1. The US did not prosper in the 1950s-1960s because of high taxes, but rather because of the aftermath of WWII. The period of 1945-1965 established the US as the leading manufacturing country in the world, not because of our manufacturing prowess, but rather because of our military might. At the end of WWII, the US had 5% of the world's population and almost 70% of the world's intact manufacturing and transportation infrastructure because most of Europe and Asia had been bombed to ashes during the war. For about 20 years, the US had the highest manufacturing price/wage structure in the world, from which the American middle class benefited greatly. By the mid-1960s, the rest of the world had rebuilt and the US had to actually compete against countries like Japan and Germany. Our market dominance began to erode in the 1970s, and the erosion increased in velocity during the 1980-90s as India and China entered the world markets. When hundreds of millions of people enter the global manufacturing workforce and are willing to work for fifty cents an hour, wages are going to fall, manufacturing is going migrate, and there's nothing anybody can do to stop it. It's inevitable that the economies of China and India will overtake the US because China's population is 4X the US and India is 3X. Simple math. The economic forces of gravity in action.

2. Though once there were "published" tax rates of 70-91%, very few ever paid taxes at those rates. Back then, there was something called "leveraged non-recourse tax shelters" that wealthy people used to eliminate as much as two-thirds of their tax burden. In addition, most very wealthy individuals kept a large percentage of their wealth offshore (e.g. Switzerland) where it was hidden from the IRS. A study by the IRS in 2003 showed that the richest people in the country paid about 32% of their income in federal taxes during those high tax rate periods (1950s-1960s). In the 1960s, Kennedy lowered tax rates; then Reagan further lowered the rates and also eliminated most tax shelters. In recent years, the tax benefits of offshore banking have been all but been eliminated. The richest 1% currently pay about 28% of their total income in federal taxes, a little less than the 1940/50/60s.

But it is impossible to win a war on low tax rate.

You are right that few paid this high amount, yet marginal tax rates were insanely higher than today is and the rich ended up paying much more than today. Back then there was little concentration of wealth as we know them today.

My post is limited to tax rates but if you take today’s lower tax rates with the endless loopholes to cheat taxes and with the many corporate laws allowing for wealth and market concentration in few companies you see how the rich in America grows astronomically richer while we struggle as America has been deindustrialized. Yes we still make lost of things here, but lost of jobs have been sold overseas. The cost of life is obviously higher, in 1950 a family of 4 could live with only one parent working, try that now even if you are a college graduate making 55,000 a year.

 

[9999]

Quote from trefoil:

I'm going to make one comment and one only, because the pitchforks and torches are already out I see.
.........
As for Italy, those folks are fleeing, to the extent it's happening, because of the euro crisis. Tax avoidance in Italy is a high art, so it ain't the taxes.

Oh, really? Lemme guess, Italians are thieves because it's in their dna, right? Do you happen to have a business in Italy?

 

[JerryAdler]

How Taxes Affect Economic Activity: Marginal Tax Rates and Tax Expenditures
Taxes have an effect on the economy in addition to the revenues collected because they cause people to alter their economic behavior, which generally results in a less efficient allocation of resources. Taxpayers can respond in three general ways to taxes: They can change the timing of their activities, for example by accelerating bonus payments or the sale of assets into this year if they think tax rates on earnings or capital gains will increase next year; they can adjust the form of their activities, for example by substituting tax-preferred fringe benefits for cash wages if the tax rate on wages increases; or they can change more fundamental aspects of their behavior, for example by working or saving less if tax rates on earnings or capital income increase.

The crucial point is that taxes raise the price of taxed activities and thereby lower the relative price of other things. In particular, the income tax reduces the returns from working (the after-tax wage), which lowers the price of other activities relative to working; it also reduces the returns from saving (the after-tax rate of return), which lowers the price of current spending relative to saving for spending in the future.

http://www.cbo.gov/doc.cfm?index=11976

Historically, more tax revenue is collected when tax rates are lower. And given globalization and the ease of moving money, an 80% tax rate would not only be self defeating, it would force equity to other venues depriving the economy of investment capital.

The government gets enough revenue. It's the shoddy business practices of government and left-wing ideologues who want to redistribute American wealth who are to blame for the mess. A country which has to increase tax rates to a confiscatory level just to pay its bills is on its way out.

 

[jueco2005]

Quote from r-in:

Again, as a politician you use words to try to avoid any semblance of fact. You claimed the AVERAGE TAX RATE was 90%. I enjoy how you drop the term average, and now want to imply the top rate was 90%. It was for a period of time, but the reality is it was no where near the average rate, for even the rich, as it is not today. I have no issue with the rich paying more, even on a percentage basis, not just a total payout that Repliconmen throw out. At the same time, my goal is to make as much money as I can, while contributing to charity to help those less fortunate. The government is not the less fortunate, and most of their programs are criminal enterprises, as can easily be proven.
Again I know I waste my time responding to your foolishness, but it irritates me to read this kind of crap. Oddly as it may seem to you I am also working while I respond to your garbage. With my wife we make enough to fall into higher brackets. We also give more than 10% of our income to causes we think spend money to help people who are less fortunate. I spend time researching these groups, and time and again I find governement sponsored agencies are infintetly less efficient and waste a tremendous amount of money paying staff that serves no known purpose.
I have no issue paying taxes, but I want proof that the agencies are doing something more than a private agency can do for less. I have yet to find one, and especially in my hometown the examples of fraud in public agencies are frightening.
Again, show your proof. I promise I work harder than most. I hold my kids to the same standard and am not popular with them as a result, but I hope down the road they understand the idea that words are meaningless and actions are truth.

Allow me to ask forgiveness for writing such foolishness. I thank you for taking your time to reply to me. However don’t do that anymore. I would like to advice you to travel the world, especially socialist Canada, Switzerland (amazingly the country with the highest percapita of millionaires) and Germany. Ever since I became a US citizen and traveled abroad I saw things much different. I come from a communist country and trust me I hate bad government and senseless propaganda. I used to think like a libertarian but not so much now after college degrees and traveling the world. Maybe you have already gotten your passport and traveled abroad and you still stick to your ideas; good for you. If you haven’t I encourage to travel and talk to people in this countries, specially the rich which you can find virtually everywhere.

 

[jueco2005]

Quote from JerryAdler:


Historically, more tax revenue is collected when tax rates are lower. And given globalization and the ease of moving money, an 80% tax rate would not only be self defeating, it would force equity to other venues depriving the economy of investment capital.

I wonder how Rich european countries do it then. They must have concentration camps for the rich to prevent them from leaving.

 

[r-in]

LOL, again you chose not to respond to your assertions, and throw out new assertions. I'll take living in the US everyday over those you cite. You are laughable at best and again refuse to offer any tangible proof to your claims.
I rate you a fool, and my time is done. I wish you could have offered something worthwhile as I would have been willing to listen. Sadly you just throw out one more assertion after another with no proof. I'll continue to live in the US, and you can move elswhere if you think it is better, and I will continue to research who I give money to and ocntribute to those that make a difference.