[quote=AN][quote=SK in CV]But I could make a pretty strong argument that increasing the top tax rate, particuarly on businesses, would be good for the economy, but not to 90%. Somewhere between 50 and 60% would help. Higher top tax rates encourage businesses to spend money when the government pays for half of it.[/quote]
Alright, lets take a look at what the tax brackets were the last time we saw >60% top rate.
As you can see, people making $250k in today's dollar didn't pay 91% back then as well.
What's also interesting in 1963, when you say was good period of growth, the lowest tax rate was 20% from the very first dollar you make. It also ramp up very fast where by the time you get to $112k, the tax rate was 50%.[/quote]
AN,
Based on your chart, it's easy to see that higher-income earners were paying significantly higher rates back then than they do now. So why all the whining from those who are currently paying ~15$%, some of whom are paying 15% or less on incomes that are much higher than $250K, or even $1MM.
Also, remember that the wealth/income disparity was much smaller then than it is now. It's important to remember that wealth and purchasing power/income is relative (to those around you who are competing for the same resources/goods/services at a particular moment in time). It looks like "the rich," as defined by those in the top 1%, were paying SIGNIFICANTLY higher rates then than they do now, AND wealth was more equally distributed. Therefore, the purchasing power of most American workers was much closer to the purchasing power of the top, both because of the distribution of wealth/income and because of the more progressive tax rates. This almost always leads to healthier growth than when wealth is disproportionately skewed toward the top of the economic pyramid.
Ultimately, it is purchasing power that matters most of all, and growth is greatest, and most sustainable, when the greatest number of people have decent purchasing power (with no debt offset!). When wealth/income is more equally distributed, purchasing power can come from income/savings for more people. When wealth is skewed toward the top, the purchasing power of the less fortunate is, all too often, reliant upon credit/debt. When people go into debt to bring purchases forward, it always leads to less growth in the future as servicing that debt begins to overwhelm the less fortunate. When the top ~5-10% have all the purchasing power, it will lead to bubbles, cost inflation, accelerating wealth/income disparities, and (ultimately) revolution. This is where we find ourselves right now.
The last time we saw such high debt levels was right before the Great Depression (the real cause of the GD, IMO). It also happened to coincide with a period of very, very low tax rates for the wealthiest individuals. Coincidence? I think not.
Again, there is NO evidence that shows higher top maginal rates affect growth in a negative way. NONE. There is also no evidence to show that raising top marginal rates on top earners would eliminate jobs. New jobs are created when demand is growing...natural, sustainable demand cannot grow when wealth is so heavily concentrated.
Like SK already said, there is good reason to believe that higher top tax rates on businesses would *stimulate* job growth.
....... “Several years ago, Senators Max Baucus and Charles Grassley asked the Congressional Budget Office to whip up an analysis of income inequality in America. It took awhile to piece together, but the report’s now out, and the picture’s quite stark. The incomes of the wealthiest 1 percent have nearly tripled since 1979. Everyone else? Not so much.
The chart on the right sets the scene. The after-tax incomes of the middle class (the 21st to 80th percentiles) have grown at about 1 percent per year since 1979, adjusting for inflation. The incomes of the wealthies 1 percent, meanwhile, have zoomed upward at a consderably faster pace.”
These days, “the rich” are paying LESS, as a percentage of income, than many middle-class American workers. There is something very, very wrong with that.
