US Income Inequality: Top !% Take Home 24% of US Income

[thereisnospoon]

Yay! Weez a Third World Nation!! Better calls the UN fo some of our cash back!! Looks like weez gonna need it now that the NY Slimes says weez Third World. I wants my money back UN!!

Our present economic circumstances classify us as a third world nation. The reason we don't know it is because we've been living on a credit card for so long that we think we're rich. But if all of our creditors, including China, closed down our accounts and demanded immediate payment in full you would soon see that the United States of America is in fact a third world nation.

Is your house paid for? Is your car paid for? Are your credit cards paid off? If so, you are one in many thousands. Are you aware that, thanks to government excess, your share of the National Debt is somewhere around $45,000. Can you pay that off?

I don't know if you have any grandchildren but if you do you should know they are in debt, too.

That's how bad it is.

Yes our cars are paid off, we pay the full balance on our credit cards immediately when the bills come in. Our only contractual debt is a modest mortgage on our house and we have the cash to pay that off if we had to, but it would deplete our 'rainy day fund' too much to make that attractive right now. We have a modest income that I'm sure qualifies us to be counted among the 'poor' and eligible for all kinds of assistance but we eat well, live as we choose, and do just fine without any of that assistance. That is the case I believe with millions of the nation's 'poor'.

But we do cook most meals at home, don't eat out much, don't take expensive vacations, don't buy the latest gadgets and electronics, and find ways to economize as much as possible without reducing our quality of life in any significant way. And if we can't afford it, we don't buy it.

We would appreciate it if our elected leaders were as respectful of our money.

Same here. We do ok income wise. However we choose to live beneath our means. Rarely go out to eat and when we do, it's moderately priced. We don't make any purchases with credit that we can pay cash for.
I look around and I see so many people living high off the hog. Large homes, cars, boats, RV's.....All on credit. I used to be in a business where I was in people's homes every day. I would get into a large home.. 3 or 4k square feet. Two people living there. At least one room with NO furniture in it...House poor. Many of these people are one step from foreclosure. Why?...Remember the cars, rv's ,etc.?...Those are priorities.

 

[MikeK]

Interesting exchange between O'Reilly and Juan Williams last night as they discussed who the President is--is he a socialist????--and what socialism actually is.

In a nutshell, socialism is government owning or controlling the means of production, and in Marxist socialism is also the 'redistribution of wealth' philosophy. In Marx's '1875 Critique of the Gotha Program', he coined the phrase: "From each according to his ability, to each according to his needs".

The socialist minded among us believe the rich should be taxed more and forced to provide more because they don't 'need all that wealth' and the little guys 'needs' it. And they see the government as the vehicle to take from the rich and provide to the 'poor'.

What they leave out of that equation, however, is Marx's philosophy that everybody would contribute as much as they were able. Somehow that part always gets swallowed up in a socialist system though just as soon as folks figure out they don't have to put in much effort in order to have as much as those who do. And then the system begins breaking down so everybody has less except those in power who can take whatever they want.

I prefer the American system.

The extreme example of socialism is communism and the extreme example of capitalism is fascism. Neither extreme is desirable.

The American system, which is a capitalist economy regulated by expedient socialist policies, such as Social Security, Medicare, Medicaid, public education, public maintenance of infrastructure, publicly provided police and fire protection, etc. The time in our history when the American system operated at peak efficiency in terms of productivity, economic stability and social harmony was the period indicated in the following figure:

The income tax rate of $200,000 annual income, or more:

1950 - 91%

1980 - 70%

1985 - 50%

1987 - 38%

2004 - 35%

http://www.taxfoundation.org/files/f...y-june2010.pdf

The decline in all three positive aspects of American society occurred in close proportion with the gradual reduction in the tax rate. Today we are at a level of economic decline not seen since 1929, just before the bottom dropped out and we entered the Great Depression -- the reasons for which were not unlike our present situation. The existing tax rate for the top economic level is just 15%. What can we expect to come of that?

I, too, favor the American system. But in order for it to work we need to impose a realistic rate of taxation on the most affluent level of society. It is the only way to elevate us above the third world status we are falling into.

 

[MikeK]

How can our current level of concentrated wealth be good?
The last time we reached this level of wealth concentration was in the late '20's just before the Great Depression.
And yes, the accumulation of this level of concentrated wealth has resulted in a zero-sum game.That's an opinion ...Not based in fact.

Actually it is based on well documented facts.

Well now...Since you opened the door. What is your solution?...Really...You libs are great at pontificating about what you consider"obscene wealth", but you are incapable or unwillling to say what it is really on your minds as to how to reduce this so-called "wealth gap"...W Why don't you simply admit that you want government to "take it from them". From each according to his abilities to each according to his needs, correct?
Quite frankly, this wealth thing is all about getting votes for democrats anyway.
No one talked about wealth gaps or any of that nonsense when the democrats controlled both houses of Congress.
This is much ado about nothing. The ones screaming about this issue are simply looking for a handout.

If it were up to me I would impose a limit of twenty million dollars in accumulated personal assets and authorize the IRS to confiscate every penny above that level. And I would restore the progressive income tax to the 91% upper level.

Yes. I want government to "take it from them," and I want to hear some someone tell me they just can't make it on a measly twenty million.

 

[MikeK]

Which kind of system requires someone living in poverty to contribute the same in taxes as someone who is mega wealthy?

Oh I don't know. Maybe the one the Founders envisioned in which the people would not be subject to a king or dictator or fuedal lord or any other authority that would decide what property the people could have and what their rights would be?

Maybe the one in which all people have an equal vote and an equal responsibility for the integrity and accountability of those they elect to administer the people's shared affairs?

Maybe the one in which government has no power to buy or bribe votes or enslave people with entitlements and thereby increase its own power, prestige, influence, and personal wealth and thus does not corrupt itself or those it bribes or enslaves?

Maybe the one the Founders saw in which for the first time in the history of the world, the people would secure unalienable rights for all and then govern themselves. The system that made us the greatest nation on Earth? The system that we are slowly but inevitably losing through creeping socialism unless the people have the will to turn that around?

How about some specific examples of what you call "creeping socialism."

 

[MikeK]

Typical HuffPuff crap.

'All men are CREATED equal". Key word: Created. Why is it inequality for some people to get more than others? Want more, get up off your ass and work harder.

How hard does one have to work to "earn" two billion dollars?

Do you have any real awareness of just how much money that is? Do you understand the devious machinations that made accumulation of that kind of profit possible?

I dunno. How many hours do you think Bill Gates put in before he could let Microsoft run pretty much on its own energy? He wasn't born into money and he ran his first fledging business on a shoestring working out of a garage right here in Albuquerque. But he hit on a concept hundreds of millions were willing to pay for and so he prospered.

Ross Perot wasn't born in to money. He worked as a salesman for IBM until he saved up enough money to start Data Systems and the rest is history.

Warren Buffett was born with a few more advantages than most billionaires, but it was his inate skills as a mathematician and businessman that helped him turn modest wealth into great wealth.

Sam Walton was a depression baby born to struggling farmer parents who were barely ekeing out a living. But he was a visionary and able to turn small amounts of money into larger amounts until he built a retail empire and earned the distinction of being the world's richest man.

T Boone Pickens started out with a paper route as a youth and taught himself acquisitions and mergers, worked his way through college, and built an oil empire. Not sure he ever made it into the $2 billion class but he got close.

All these men started from humble beginnings and built financial empires with their own two hands, their brains, inspiration, work ethic, and innovation. And all have contributed enormously to hospitals, museums, foundations, and have helped thousands upon thousands of other people earn a living with some of those becoming wealthy too.

The lesson is that ANYBODY can do it if they have the ability, the work ethic, the ambition, and the initiative.

I wonder if it has ever occurred to you that not everyone is motivated to accumulate billions of dollars. In my opinion, anyone who is so motivated is pathologically greedy.

As previously mentioned, I believe there should be a twenty million dollar limit on accumulation of personal assets. This means I am not opposed to wealth but rather excessive wealth, which equates to a form of nobility and represents a serious threat to the integrity of our political system, our economic system and, ultimately, to democracy itself.

With twenty million dollars one can afford every luxury that a reasonable, rational individual could wish for. So what other than greed could motivate people like those you've listed? There are millions of Americans whose ability, work ethic, ambition and initiative are unquestionable but they do not devote those attributes to accumulating vast amounts of money.

 

[Foxfyre]

How hard does one have to work to "earn" two billion dollars?

Do you have any real awareness of just how much money that is? Do you understand the devious machinations that made accumulation of that kind of profit possible?

I dunno. How many hours do you think Bill Gates put in before he could let Microsoft run pretty much on its own energy? He wasn't born into money and he ran his first fledging business on a shoestring working out of a garage right here in Albuquerque. But he hit on a concept hundreds of millions were willing to pay for and so he prospered.

Ross Perot wasn't born in to money. He worked as a salesman for IBM until he saved up enough money to start Data Systems and the rest is history.

Warren Buffett was born with a few more advantages than most billionaires, but it was his inate skills as a mathematician and businessman that helped him turn modest wealth into great wealth.

Sam Walton was a depression baby born to struggling farmer parents who were barely ekeing out a living. But he was a visionary and able to turn small amounts of money into larger amounts until he built a retail empire and earned the distinction of being the world's richest man.

T Boone Pickens started out with a paper route as a youth and taught himself acquisitions and mergers, worked his way through college, and built an oil empire. Not sure he ever made it into the $2 billion class but he got close.

All these men started from humble beginnings and built financial empires with their own two hands, their brains, inspiration, work ethic, and innovation. And all have contributed enormously to hospitals, museums, foundations, and have helped thousands upon thousands of other people earn a living with some of those becoming wealthy too.

The lesson is that ANYBODY can do it if they have the ability, the work ethic, the ambition, and the initiative.

I wonder if it has ever occurred to you that not everyone is motivated to accumulate billions of dollars. In my opinion, anyone who is so motivated is pathologically greedy.

As previously mentioned, I believe there should be a twenty million dollar limit on accumulation of personal assets. This means I am not opposed to wealth but rather excessive wealth, which equates to a form of nobility and represents a serious threat to the integrity of our political system, our economic system and, ultimately, to democracy itself.

With twenty million dollars one can afford every luxury that a reasonable, rational individual could wish for. So what other than greed could motivate people like those you've listed? There are millions of Americans whose ability, work ethic, ambition and initiative are unquestionable but they do not devote those attributes to accumulating vast amounts of money.

Then I hope you find a happy home in some country in which the government decides what is enough for the citizen rather than the citizen deciding that for himself or herself. How did you arrive at a $20 million cap? Is that some magic number among liberalland i.e. the political class? I guess you missed the part where these rich people not only enriched themselves, but they have helped fund hospital wings, great universities, museums, foundations, and scholarship funds as well as providing venture capital for countless others and providing means of a good living for tens of thousands of other people.

Do you really think people acquire such fortunes just because they want the fortunes? Because they are greedy?

I don't know you or anything about you. But it would terrify me to think that a great many Americans think as you do.

 

[editec]

What do you propose to remedy this? Should we put all the wealth in the hands of the government the way Venezuela is doing, making everyone poor, or should we simply start handing out checks to equalize everyone's income?

We can start by revoking unwarranted tax breaks that did nothing to help the country except add $2trillion to our debt

Could you define "unwarranted tax breaks" in a way that doesn't make me think you're a Stalinist?

A hardworking Doctor ends up paying 36% of his income for FEDeral taxs,

But if you make 4 Billion a year (the averge income of the Top 10 derivative trading companies CEOs) trading derivatives you pay FEDERAL TAxes at a rate of 15%.

Who is getting screwed by FEDERAL taxation??

The hardest working, most productive people in the USA, that's who.

Not the superwealthy, not the poor, not the blue collar workers, either.

The UPPER MIDDLE and LOWER-UPPER CLASSES are the people paying the lions share of the taxes.

The top two tiers MINUS the SUPERWEALTHY are being screwed most badly, folks.

 

[The Rabbi]

We can start by revoking unwarranted tax breaks that did nothing to help the country except add $2trillion to our debt

Could you define "unwarranted tax breaks" in a way that doesn't make me think you're a Stalinist?

A hardworking Doctor ends up paying 36% of his income for FEDeral taxs,

But if you make 4 Billion a year (the averge income of the Top 10 derivative trading companies CEOs) trading derivatives you pay FEDERAL TAxes at a rate of 15%.

Who is getting screwed by FEDERAL taxation??

The hardest working, most productive people in the USA, that's who.

Not the superwealthy, not the poor, not the blue collar workers, either.

The UPPER MIDDLE and LOWER-UPPER CLASSES are the people paying the lions share of the taxes.

The top two tiers MINUS the SUPERWEALTHY are being screwed most badly, folks.

That's the stupidest example you could come up with.
No one makes $4B trading for his own account. CEOs get paid on a combination of salary and bonus. Those are taxed at the typical rates for salary and bonus.
The top 5% pay 80% of taxes. They also create the most wealth. Why would you want to kill the goose that lays the golden egg? You are right: Top income earners are getting screwed.
Flat tax now!

 

[Foxfyre]

Could you define "unwarranted tax breaks" in a way that doesn't make me think you're a Stalinist?

A hardworking Doctor ends up paying 36% of his income for FEDeral taxs,

But if you make 4 Billion a year (the averge income of the Top 10 derivative trading companies CEOs) trading derivatives you pay FEDERAL TAxes at a rate of 15%.

Who is getting screwed by FEDERAL taxation??

The hardest working, most productive people in the USA, that's who.

Not the superwealthy, not the poor, not the blue collar workers, either.

The UPPER MIDDLE and LOWER-UPPER CLASSES are the people paying the lions share of the taxes.

The top two tiers MINUS the SUPERWEALTHY are being screwed most badly, folks.

That's the stupidest example you could come up with.
No one makes $4B trading for his own account. CEOs get paid on a combination of salary and bonus. Those are taxed at the typical rates for salary and bonus.
The top 5% pay 80% of taxes. They also create the most wealth. Why would you want to kill the goose that lays the golden egg? You are right: Top income earners are getting screwed.
Flat tax now!

And the one thing the hardcore Left seems not to understand here is that our tax policy affects behavior. Raise the capital gains tax and it becomes less profitable or unprofitable to move capital and it is much more likely to be hoarded and made unavailable to those who would otherwise benefit from it. There is more than $2 trillion in available American capital being held offshore right now and it is estimated about the same amount is being held back here until our current tax policy is decided and settled. Right now in the climate of uncertainty, the owners are unwilling to risk it. Give them certainty of a settled and reasonably permanent favorable tax structure and they will put those resources back into circulation and we should soon see the economy taking off again.

Put the tax rates on the top earners at 70 to 90% where it once was and most of that money is sheltered, often off shore, That has been the historical case. That 70 to 90% looks great on paper, but little of that money was going into the U.S. Treasury. Once it was made more profitable to utilize it in the USA, it was put into service. 10 to 20% going into the treasury is far better than 50 to 90% that is sheltered and made unavailable to anybody.

Raise taxes on corporations and continue to burden them with excessive regulation and mandates and you force more and more of them to move operations overseas where the business climate is more favorable. That may make you feel noble and that justice is being done, but it is costing us hundreds of thousands of American jobs every year.

The more you try to punish the rich, the more you will hurt the poor.

 

[boedicca]

The extreme example of socialism is communism and the extreme example of capitalism is fascism. Neither extreme is desirable.

The American system, which is a capitalist economy regulated by expedient socialist policies, such as Social Security, Medicare, Medicaid, public education, public maintenance of infrastructure, publicly provided police and fire protection, etc. The time in our history when the American system operated at peak efficiency in terms of productivity, economic stability and social harmony was the period indicated in the following figure:

The income tax rate of $200,000 annual income, or more:

1950 - 91% - $1,812,771 in 2010 dollars

1980 - 70% - $530,191 in 2010 dollars

1985 - 50% - $406,020 in 2010 dollars

1987 - 38% - $384,575 - in 2010 dollars

2004 - 35% - $231,275 - in 2010 dollars

http://www.taxfoundation.org/files/f...y-june2010.pdf

The decline in all three positive aspects of American society occurred in close proportion with the gradual reduction in the tax rate. Today we are at a level of economic decline not seen since 1929, just before the bottom dropped out and we entered the Great Depression -- the reasons for which were not unlike our present situation. The existing tax rate for the top economic level is just 15%. What can we expect to come of that?

I, too, favor the American system. But in order for it to work we need to impose a realistic rate of taxation on the most affluent level of society. It is the only way to elevate us above the third world status we are falling into.

The decline represents the con game that inflationary monetary policies enable in setting tax policies.

I added the 2010 constant dollars to your tax rates above.

In 1950, $200,000 in today's dollars would be over $1.8M in income - which is significantly higher than the $231K in 2004.

And that, boys and girls, reflects the true agenda of Taxing The Rich. Taxes on The Rich are the camel's nose into our individual financial tents. The Rich don't make enough income (how many people in 1950 made over $1.8M per year - damned few) to fuel Big Government Progressive Programs. So, with the help of the Fed to drive inflation, The Rich is defined down so that now The Rich make $250K per year.

In a decade or two, that level of The Rich will be the equivalent of families making $100K per year today.

 

[Foxfyre]

The extreme example of socialism is communism and the extreme example of capitalism is fascism. Neither extreme is desirable.

The American system, which is a capitalist economy regulated by expedient socialist policies, such as Social Security, Medicare, Medicaid, public education, public maintenance of infrastructure, publicly provided police and fire protection, etc. The time in our history when the American system operated at peak efficiency in terms of productivity, economic stability and social harmony was the period indicated in the following figure:

The income tax rate of $200,000 annual income, or more:

1950 - 91% - $1,812,771 in 2010 dollars

1980 - 70% - $530,191 in 2010 dollars

1985 - 50% - $406,020 in 2010 dollars

1987 - 38% - $384,575 - in 2010 dollars

2004 - 35% - $231,275 - in 2010 dollars

http://www.taxfoundation.org/files/f...y-june2010.pdf

The decline in all three positive aspects of American society occurred in close proportion with the gradual reduction in the tax rate. Today we are at a level of economic decline not seen since 1929, just before the bottom dropped out and we entered the Great Depression -- the reasons for which were not unlike our present situation. The existing tax rate for the top economic level is just 15%. What can we expect to come of that?

I, too, favor the American system. But in order for it to work we need to impose a realistic rate of taxation on the most affluent level of society. It is the only way to elevate us above the third world status we are falling into.

The decline represents the con game that inflationary monetary policies enable in setting tax policies.

I added the 2010 constant dollars to your tax rates above.

In 1950, $200,000 in today's dollars would be over $1.8M in income - which is significantly higher than the $231K in 2004.

And that, boys and girls, reflects the true agenda of Taxing The Rich. Taxes on The Rich are the camel's nose into our individual financial tents. The Rich don't make enough income (how many people in 1950 made over $1.8M per year - damned few) to fuel Big Government Progressive Programs. So, with the help of the Fed to drive inflation, The Rich is defined down so that now The Rich make $250K per year.

In a decade or two, that level of The Rich will be the equivalent of families making $100K per year today.

Damn and I have to spread rep before I can give it to Boedicca again.

I dunno girlfriend. This is pretty complicated. Will they understand it? Will they want to?

 

[boedicca]

Inflation is a very simple concept. It's important to compare dollar values in constant terms, or the comparisons are meaningless. We've all heard older relatives talk about candy bars costing a dime and the movies costing 50 cents.

Well, we now pay $8-$10 for movies. Why? Inflation.

I suggest booking this link for future reference.

Inflation Calculator | Find US Dollar's Value from 1913-2010


It also helps to understand that the overwhelming majority of national income is earned by lower, middle, and upper class folks. The Rich is a Red Herring to con the Middle Class into being taxed much more in the future. Just look at the original tax rates for U.S. income taxes:

http://www.ntu.org/tax-basics/history-of-federal-individual-1.html


In 1913-1915 highest rate of 7% affected those making over $11 Million Dollars per year in 2010 dollars.

Now, our current government wants to tax incomes over $350K +/- to nearly 50% (when Income taxes, SS, Medicare, and the ObamaCare surcharge are added up - and this is before state income taxes are overlaid).

It's important to understand The Trend here.

 

[MikeK]

Then I hope you find a happy home in some country in which the government decides what is enough for the citizen rather than the citizen deciding that for himself or herself.

I along with most others were quite content living in America during its most productive and economically stable period -- in which the progressive tax rate capped at ninety-one percent.

How did you arrive at a $20 million cap? Is that some magic number among liberalland i.e. the political class?

That was the average personal fortune held by millionaires during the period when the tax rate was 91%, which was America's most stable and productive period, and which is the period in our economic history that brainwashed and/or ignorant tea-baggers don't care to talk about. So the figure is my own hypothesis and is subject to increase or reduction pending review.

I guess you missed the part where these rich people not only enriched themselves, but they have helped fund hospital wings, great universities, museums, foundations, and scholarship funds as well as providing venture capital for countless others and providing means of a good living for tens of thousands of other people.

And did you miss the part where these generous gestures occur as tax write-offs?

Do you really think people acquire such fortunes just because they want the fortunes? Because they are greedy?

Do you really think it happens by accident? What else but the Gordon Gecko mentality motivates someone to willfully, often obsessively, accumulate more money than any rational person can spend?

I don't know you or anything about you. But it would terrify me to think that a great many Americans think as you do.

My economic situation is closely similar to yours. I'm retired. I draw a generous pension and Social Security. I have no mortgage, no car payments, my credit cards are a convenience only and I have a nice stack of EE and I Bonds. So I am essentially content and comfortable.

The difference between us is I see what the neo-Conservative movement has already done to an increasing number of Americans and I know that unless their agenda is reversed they will soon get around to me.

And you!

 

[Foxfyre]

Then I hope you find a happy home in some country in which the government decides what is enough for the citizen rather than the citizen deciding that for himself or herself.

I along with most others were quite content living in America during its most productive and economically stable period -- in which the progressive tax rate capped at ninety-one percent.

How did you arrive at a $20 million cap? Is that some magic number among liberalland i.e. the political class?

That was the average personal fortune held by millionaires during the period when the tax rate was 91%, which was America's most stable and productive period, and which is the period in our economic history that brainwashed and/or ignorant tea-baggers don't care to talk about. So the figure is my own hypothesis and is subject to increase or reduction pending review.


And did you miss the part where these generous gestures occur as tax write-offs?

Do you really think people acquire such fortunes just because they want the fortunes? Because they are greedy?

Do you really think it happens by accident? What else but the Gordon Gecko mentality motivates someone to willfully, often obsessively, accumulate more money than any rational person can spend?

I don't know you or anything about you. But it would terrify me to think that a great many Americans think as you do.

My economic situation is closely similar to yours. I'm retired. I draw a generous pension and Social Security. I have no mortgage, no car payments, my credit cards are a convenience only and I have a nice stack of EE and I Bonds. So I am essentially content and comfortable.

The difference between us is I see what the neo-Conservative movement has already done to an increasing number of Americans and I know that unless their agenda is reversed they will soon get around to me.

And you!

The difference between you and me is that you want the government to define freedom, prosperity, and social justice.

To me, freedom means that short of infringing on somebody else's unalienable, civil, legal, or constitutional rights, I do what I please, think what I wish, say what I wish, define success for myself, and utiliize my personal property as I choose. The minute I lose the ability to do that I am powerless and subject to a central authority from which our Founders and Constitution set us free. It is a freedom for which much blood and treasure has been expended to win for us and defend for us. It produced the most free, most successful, most prosperous nation the world has ever known. I am not willing to give it up for some kind of liberal socialist do-gooder philosophy that has never worked in any country in which it has been tried.

 

[kiwiman127]

It must really suck being wrong all the time like you are. Here you had Greg Mankiw all wrapped up. And now I got and post his exact words contradicting what you thought he wrote.

FWIW, revenue from the decreased cap gains and div tax rate increased dramatically after they were enacted. Lower rates brought more revenue as the incentive to hold appreciated investments decreased relative to opportunity cost. Thus was it always so.

Wrong all the time?
Here's a quote from Mankiw's Bog:
"My other work has remained consistent with this view. In a paper on dynamic scoring, written while I was working at the White House, Matthew Weinzierl and I estimated that a broad-based income tax cut (applying to both capital and labor income) would recoup only about a quarter of the lost revenue through supply-side growth effects. For a cut in capital income taxes, the feedback is larger--about 50 percent--but still well under 100 percent. A chapter on dynamic scoring in the 2004 Economic Report of the President says about the the same thing.

I don't have a problem with a person changing his mind over time based on new evidence and new thinking. So even if I had changed my mind on this issue and somehow decided that broad-based tax cuts were self-financing, I would not feel bad about it. But the truth is, I haven't changed my mind."
Greg Mankiw's Blog: On Charlatans and Cranks

 

[Foxfyre]

A rebuttal to Mankiw:

There will be no gain in long-term tax revenue from increasing tax rates on those making more than $200,000 per year, despite claims by President Obama's Office of Management and Budget, and the Congressional Joint Committee on Taxation, which studied the administration's tax proposals. The current debate over the expiring Bush tax cuts is a replay of the debate about the Reagan tax-rate reductions of three decades ago. We know the outcome of that debate. Lower tax rates, particularly on labor and capital, lead to higher levels of employment and economic growth.

Those of us who argued in the late 1970s and early 1980s for lower tax rates were often characterized as "radical supply-siders" and criticized for claiming that all tax-rate reductions lead to higher tax revenues. This was untrue; none of the principal advocates of Reagan's 1981 tax cuts made this claim.

The Reagan tax cuts reduced rates for all income classes, even though it was well understood that cutting the lower rates would result in substantial revenue losses. Low tax rates (below 20%) do not cause much of a disincentive for working, saving or investing, and hence there is little supply-side effect. We did argue, however, that reducing the high marginal rates (up to 70% on high-income earners) would cause little, if any, revenue loss, because of the large, positive supply-side effects. Were we right?

The official government tax revenue and economic forecast models are still largely Keynesian static models, rather than dynamic...

Since most of the Reagan tax cuts applied to lower- and middle-income earners, there was close to a dollar lost in tax revenue for each "dollar" of tax cut for these groups. Still, CBO figures show that total tax revenue only fell from 19.2% of gross domestic product (GDP) in 1982, before most of Reagan's tax-rate reductions were put in place, to 18.4% of GDP in 1989, the year he left office. This happened because the U.S. economy grew by more than one-third in real terms (34.3%), much faster than the 24.3% rate expected even by economists within the Reagan administration. Thus, by the time President Reagan left office, the economy was generating more tax revenue at a maximum 28% rate than many on the left forecast it to generate at a maximum 70% rate.

The Reagan tax-rate reductions did, in fact, pay for themselves — but it took about seven years. . . .
Tax Cuts and Revenue: What We Learned in the 1980s | Richard W. Rahn | Cato Institute: Commentary

 

[MikeK]

And the one thing the hardcore Left seems not to understand here is that our tax policy affects behavior. Raise the capital gains tax and it becomes less profitable or unprofitable to move capital and it is much more likely to be hoarded and made unavailable to those who would otherwise benefit from it. There is more than $2 trillion in available American capital being held offshore right now and it is estimated about the same amount is being held back here until our current tax policy is decided and settled. Right now in the climate of uncertainty, the owners are unwilling to risk it. Give them certainty of a settled and reasonably permanent favorable tax structure and they will put those resources back into circulation and we should soon see the economy taking off again.

Put the tax rates on the top earners at 70 to 90% where it once was and most of that money is sheltered, often off shore, That has been the historical case. That 70 to 90% looks great on paper, but little of that money was going into the U.S. Treasury. Once it was made more profitable to utilize it in the USA, it was put into service. 10 to 20% going into the treasury is far better than 50 to 90% that is sheltered and made unavailable to anybody.

Raise taxes on corporations and continue to burden them with excessive regulation and mandates and you force more and more of them to move operations overseas where the business climate is more favorable. That may make you feel noble and that justice is being done, but it is costing us hundreds of thousands of American jobs every year.

The more you try to punish the rich, the more you will hurt the poor.

But regardless of how you twist and wiggle the fact remains that when the progressive tax rate capped at 91% (pre-Reagan) the U.S. enjoyed its greatest period of prosperity. How do you explain that? If what you're trying to convince yourself of were in fact true, what accounts for such phenomenal economic growth and stability with a 91% tax rate?

One thing you should understand is the tax shelters you are holding up as your shield against logic did not exist back then but were put in place by Reagan, Bush-1, Clinton and Bush-2. But regardless of when they existed, tax shelters are not carved in stone. A stroke of the right pen and they are gone. So your point is moot.

Now, at the bottom line of this discussion, the reason for taking from the rich and giving to the poor (in the language of your side of the issue) is precisely the reason for the prosperity we enjoyed during the pre-Reagan years. And the way that works is very simple: while the rich don't need the excess wealth and hoard it, the poor go right out and spend it, which is what makes the economy grow! It's called circulating revenue and is not rocket science.

 

[Foxfyre]

And the one thing the hardcore Left seems not to understand here is that our tax policy affects behavior. Raise the capital gains tax and it becomes less profitable or unprofitable to move capital and it is much more likely to be hoarded and made unavailable to those who would otherwise benefit from it. There is more than $2 trillion in available American capital being held offshore right now and it is estimated about the same amount is being held back here until our current tax policy is decided and settled. Right now in the climate of uncertainty, the owners are unwilling to risk it. Give them certainty of a settled and reasonably permanent favorable tax structure and they will put those resources back into circulation and we should soon see the economy taking off again.

Put the tax rates on the top earners at 70 to 90% where it once was and most of that money is sheltered, often off shore, That has been the historical case. That 70 to 90% looks great on paper, but little of that money was going into the U.S. Treasury. Once it was made more profitable to utilize it in the USA, it was put into service. 10 to 20% going into the treasury is far better than 50 to 90% that is sheltered and made unavailable to anybody.

Raise taxes on corporations and continue to burden them with excessive regulation and mandates and you force more and more of them to move operations overseas where the business climate is more favorable. That may make you feel noble and that justice is being done, but it is costing us hundreds of thousands of American jobs every year.

The more you try to punish the rich, the more you will hurt the poor.

But regardless of how you twist and wiggle the fact remains that when the progressive tax rate capped at 91% (pre-Reagan) the U.S. enjoyed its greatest period of prosperity. How do you explain that? If what you're trying to convince yourself of were in fact true, what accounts for such phenomenal economic growth and stability with a 91% tax rate?

One thing you should understand is the tax shelters you are holding up as your shield against logic did not exist back then but were put in place by Reagan, Bush-1, Clinton and Bush-2. But regardless of when they existed, tax shelters are not carved in stone. A stroke of the right pen and they are gone. So your point is moot.

Now, at the bottom line of this discussion, the reason for taking from the rich and giving to the poor (in the language of your side of the issue) is precisely the reason for the prosperity we enjoyed during the pre-Reagan years. And the way that works is very simple: while the rich don't need the excess wealth and hoard it, the poor go right out and spend it, which is what makes the economy grow! It's called circulating revenue and is not rocket science.

And I say baloney. We have already shown that the 91% tax rate produced no more revenues and most likely far less revenues than lower rates would have produced. I refer you to the information I just posted. The U.S. treasury saw very little in the way of revenues during the time of those rates because there were hundreds of ways to shelter income and the rich took advantage of every single one of them as well they should.

If we enjoyed great prosperity during the period of 91% tax rates, how much more prosperity would we have enjoyed under the Reagan tax reform or the Bush tax reform had those been implemented during the same period of rapid growth?

It would require the most deficient appreciation for history and severe tunnel vision to believe that the prosperity was accomplished via 91% tax rates.

And it is also of note that the same philosophy of transfer of wealth during that period produced the broad expansion of entitlements, created dependency of tens of millions of people on government subsidies, and has produced the unsustainable system we now have that is breaking the bank.

Try for the big picture. It works a lot better than nitpicking a single fact out of the whole.

 

[thereisnospoon]

And the one thing the hardcore Left seems not to understand here is that our tax policy affects behavior. Raise the capital gains tax and it becomes less profitable or unprofitable to move capital and it is much more likely to be hoarded and made unavailable to those who would otherwise benefit from it. There is more than $2 trillion in available American capital being held offshore right now and it is estimated about the same amount is being held back here until our current tax policy is decided and settled. Right now in the climate of uncertainty, the owners are unwilling to risk it. Give them certainty of a settled and reasonably permanent favorable tax structure and they will put those resources back into circulation and we should soon see the economy taking off again.

Put the tax rates on the top earners at 70 to 90% where it once was and most of that money is sheltered, often off shore, That has been the historical case. That 70 to 90% looks great on paper, but little of that money was going into the U.S. Treasury. Once it was made more profitable to utilize it in the USA, it was put into service. 10 to 20% going into the treasury is far better than 50 to 90% that is sheltered and made unavailable to anybody.

Raise taxes on corporations and continue to burden them with excessive regulation and mandates and you force more and more of them to move operations overseas where the business climate is more favorable. That may make you feel noble and that justice is being done, but it is costing us hundreds of thousands of American jobs every year.

The more you try to punish the rich, the more you will hurt the poor.

But regardless of how you twist and wiggle the fact remains that when the progressive tax rate capped at 91% (pre-Reagan) the U.S. enjoyed its greatest period of prosperity. How do you explain that? If what you're trying to convince yourself of were in fact true, what accounts for such phenomenal economic growth and stability with a 91% tax rate?

One thing you should understand is the tax shelters you are holding up as your shield against logic did not exist back then but were put in place by Reagan, Bush-1, Clinton and Bush-2. But regardless of when they existed, tax shelters are not carved in stone. A stroke of the right pen and they are gone. So your point is moot.

Now, at the bottom line of this discussion, the reason for taking from the rich and giving to the poor (in the language of your side of the issue) is precisely the reason for the prosperity we enjoyed during the pre-Reagan years. And the way that works is very simple: while the rich don't need the excess wealth and hoard it, the poor go right out and spend it, which is what makes the economy grow! It's called circulating revenue and is not rocket science.

Reason is simple. Wartime economies always are boom times.
Also, government operated far more efficiently then as well.
What is it about the confiscation of wealth by government that gives you lefties such a hard on?
Why is it you lefties are so vehemently opposed to fiscal responsibility?
Why is it you lefties are so focused on the confiscation of other people's money.

 

[asterism]

A national sales tax of 23% to replace all corporate and income taxes would have raised more money in 2004 than the current system.

"Based on static calculations, a 23 percent FairTax raises a similar amount of revenues ($106 billion more based on our calculations) as the current income taxes it is designed to replace. As such, it is appropriate to deem this proposal a revenue-neutral proposition based on the static methodology. Given the dynamic growth effects from implementing this proposal, the static estimate is, of course, a lower bound of the potential revenues the proposal will generate and the upper bound of the revenue-neutral rate."

A Macroeconomic Analysis of the FairTax Proposal

Arduin, Laffer & Moore Econometrics

http://www.fairtax.org/PDF/MacroeconomicAnalysisofFairTax.pdf