[quote=AK][quote=permabear]Our country was most balanced, most productive, and most secure when we had top tax rates at the modern equivalent of $10M+ at 90%[/quote]
… and back then we had an enormous tax shelter industry that resulted in quite a bit of misallocation of capital. The collapse of the tax shelter industry after the Tax Reform Act of 1986 is often cited as a trigger event of the savings and loan crisis.
I’d be surprised if anyone actually paid that 90% marginal tax rate.[/quote]
Exactly….NO ONE paid that rate.
The ultimate goal of the government for taxation policies should be revenue for whatever they want to overspend on….after they take their “maintenance fee”. However, that is often not that case. Taxation policies normally revolve around class warfare in order to gain votes based on entitlement. I would love to see how much $100 of revenue is actually distributed back to the people after overhead. $20? maybe. So $80 goes to a middleman that produces nothing but bureaucracy.
If the government truly wanted Revenue they would drop the tax rate across the board. It has been proven time and time again that a decreased tax rate generates more revenue…which should be the ultimate goal.
A little excerpt from an article I read
“Internal Revenue Service data show that there were 206 people who reported annual incomes of one million dollars or more in 1916. But, as the tax rate on high incomes skyrocketed under the Woodrow Wilson administration, that number plummeted to just 21 people reporting a million dollars a year in income five years later.
Not to worry. Right after Congress enacted the cuts in tax rates there were suddenly 207 people reporting taxable incomes of a million dollars or more in 1925. As Casey Stengel used to say, “You could look it up.” It is on page 21 of an Internal Revenue publication titled “Statistics of Income from Returns of Net Income for 1925.”
The government, which collected less than $50 million in taxes on capital gains in 1924, suddenly collected well over $100 million in capital gains taxes in 1925. At lower tax rates, it no longer made sense to keep so much invested in tax-exempt securities, when more money could be made by investing in the economy.
As for “the rich”– who really were rich in those days, when $100,000 was worth more than a million dollars is worth today– those in the highest income brackets paid 30 percent of all taxes in 1920 and 65 percent of all taxes by 1929, after “tax cuts for the rich.”
