Today's Poll: Do you support making the top marginal tax rate for high-income earners 70 percent?
It`s a completely ridiculous idea! Why would you punish the most successful?
Jim, jealousy and greed. Money brings out the worse in the human animal. I see this every day when I gamble at the local casino. Women are the worse.
It's not really a horrible idea if you consider a couple of things.
If you believe in "Make America Great Again," well, our greatest period of economic growth came in the 1960s when the top marginal rate was as high as 90 percent.
Clearly, a high marginal rate doesn't de-incentivize wealth or wealth creation.
One of the reasons (among many) is the sense that some in the middle class feel about falling behind. Well, wealth inequality is higher now than any time since the Gilded Age (when the political response was populism and socialism and turned the Republican Party to progressivism (Teddy Roosevelt, Hiram Johnson, etc.) There was a lot of political turmoil coming out of the Gilded Age and we seem to be in that place now.
A marginal rate just means you get a higher tax rate on the amount you earn over what you earn in a lower tier. For example, you might be taxed at 15 percent on your first $250,000, then 30 percent on your next $250,000, then 50 percent on your next $250,000, and 70 percent on every over $750,000. (for example).
It actually wouldn't raise that much money. It wouldn't pay for universal health care, for example, or free college education, or any of the progressive/socialist dreams of some of the new wave Democrats.
The link below talks about the need to increase the capital gains tax. I don't have a position on that but it's an interest read with good background on taxes (it was actually the Democrats during the Reagan presidency that pushed hardest to get away from a 70 percent top marginal rate).
Our tax rates were very similar from the 30s to the 80s. Punish? The most successful entrepreneurs often fail numerous times before belting one out of the park. They are often able to swing and miss because they known that our society will keep them fed and otherwise nourished, which gives them the confidence to keep investing in their hopes and dreams. Paying for that assurance/insurance is the least they could do.
How about pegging capital gains and dividends taxes to income tax rates? You make $2,000,000 per year in capital gains and really have no earned income--someone like Warren Buffet?? You should be paying 35% on the gains, not 15% or 20%--that puts you in a lower tax bracket than someone who earns about $38,000-$82,000 per year (joint). This is how Warren Buffet pays has a lower marginal tax rate than his secretary. Could just treat dividends and capital gains as income flat out.
Better yet--what about a flat tax? Everyone pays the same percentage of whatever they earn/create past a universal basic amount?
Our tax system now completely skewed to favor the wealthy and too many rules/policies intended for social engineering. Horrible system, but too many folks feeding from the "system" trough to ever change it! LOL
I used to support flat tax until I studied economics a bit and started to appreciate the value of a progressive tax.
Income inequality is a two-edged sword. It's good because in a free market system you want to give people an incentive to do the things that create wealth. Then all of the society benefits. But too much inequality can be destabilizing to society. A progressive tax helps keep a balance between too much and too little inequality. That's one reason I lean toward a 70 percent top marginal rate.
Capital gains should perhaps be progressive, too -- nothing on your first $500K in a year (leaving plenty of room for incentive to invest), 15 percent up to $1 million, and 30 percent on everything over that -- as a marginal rate, as well?
The rich can still get richer but not at such a faster pace that it creates too much inquality.
Daniel, I think that's about the wisest thing you've ever said in a comment. It's very Adam Smithean.
I agree totally.
There is a reason they were called the greatest generation. Parents of baby boomers wanted good roads, good schools, and a strong military. The fact the top tax rate coincided with this time period is no coincidence. America was great then, much greater than it is now. Trump worries about a wall; I worry about the pervasive greed that has enveloped our society. The me first generation, screw everyone else.
In place of a higher tax that may be divisive, one interesting idea might be to say that if your company makes less than $1million, you must pay your workers at least $X wage and page for at least X% of their insurance. If your company makes between $1million and another set amount, your company must pay a minimum wage of at least $X and must pay for an even higher percentage of all benefits, and must offer ALL benefits. If your company makes more than $1billion a year, you must pay for all benefits and offer all benefits.
This wouldn't resolve the issue of generating money for the government to spend, and it would probably be opposed as regulating business too much. If the goal of this high tax cap is, for example, to fund a single-payer system, then forcing all companies making ridiculous amounts of excess money to pay for the entirety of their employees' benefits would save employees money and get rid of having to find health insurance for everyone through government. Just an idea that might be slightly more favorable than increasing taxes on rich people.
For some reason my comment is not posting in its entirety. It's only posting 1 full sentence and the beginning of another.
One interesting idea might be to say that if your company makes
The high tax rates of the 40's, 50's and early 60's had much to do with WW II. After the war, they just stayed there. And there was no worry of moving money and business anywhere else, we were almost the only country that had an economy undamaged. There was no other place to go. But that started to change in the 60's. President John Kennedy saw that and pushed the first major rate drop. And the economy took off.
" it would probably be opposed as regulating business too much .."
As well as it should be.
Without business owners and investors, there is no economy. Pretty illogical to keep piling regulatory burdens on them.
Our national debt is quickly approaching the highest ratio to Gross domestic product ever. Which was reached in 1946. The cause obviously, as you point out John Roach, was WW2.
A simple google of "graph of national debt" renders the facts:
Right now the Gross Federal Debt is $21,982,423,036,475.23. At the end of FY 2018 the debt was $21.46 trillion, or 107.1% GDP. The highest federal debt in US history was 119.0% GDP in 1946 just after World War II. At the end of FY 2018 the federal deficit was $779 billion, or 3.9% GDP.
Our debt predicament is easily traced to our continuous moronic war mongering which is bankrupting us while murdering millions, maiming many millions more, and displacing and disenfranchising untold millions more. Trump claims to be pulling out of Syria... we'll see. In the meantime we're following the same bully blueprint with Venezuela. INSANE! Your maker will be interested to know just what your roll was.
“The only thing necessary for the triumph of evil is for good men to do nothing.”
This quote was used by JFK, he credited Edmund Burke, it's origins seem to be ambiguous.
Howard, cotrary to your "compliment" I've said many wiser things in comments. You just didn't agree with them. LOL