A quick history lesson. From 1940-1980:
•Wealthiest paid 70-94% marginal tax
•0 of them went broke from taxation
•0 of them left USA
•All remained exceedingly wealthy
•Manufacturing boomed
•The middle class was 62% of US economy (It's now 40% post 'trickle down scamenomics)
•We had the strongest middle class growth in US History
Let's do that again. Stop protecting billionaires. Start taxing them.
#TaxBillionaires
🇳🇱
@QasimRashid I mean, It was abusive and unfair, which is enough reason for me to give it a hard no... **no one** should be taked out of 94% of their income, regardless if they can survive it.
That said, I can pretty much garuntee the whole "0 of them left" and "0 of them went broke" is pure nonsense, you have a source for that?
@freemo that’s not how progressive tax systems (including the now-watered-down one in the US) works. No one paid 94% of their entire income in tax, pre-Reagan - that would have been a flat tax system (which the US has never had to my knowledge), and as you so rightly point out is grotesquely unfair (especially to lower income workers) @QasimRashid
Yes I am well aware how income tax works. But yes as you get father above the 200K bracket the closeryoull get to 94%. So yes you have tax rates abusively high for the rich that can approach 94%, if your rich enough you are effecitvely paying 94%.
Please feel free to explain specifically where you think i went wrong. I deal with these sorts of taxes daily as the EVP of a company.
@freemo sure. Building on the example from Khan Academy, if I make $10,001 in income, I don’t pay 20% of the total ($2,000.20) in taxes. Rather, I pay 20% of the income that’s in the 20% bracket as tax i.e. 20% of $1, or $0.20. This is equivalent to 0.002% of my total income, not 20%.
The same pattern applies as my income goes up and the higher portions of it “land” in higher tax brackets. I’m only paying that higher tax rate on the marginal income that falls in that bracket. The net effect is that my overall effective income tax rate is *always* lower than the top tax rate I’m paying - that’s simply how the math works.
@pmonks @freemo
In addition, the discussion of onerous income taxes on high earners is a smoke screen, an attempt to make people forget that wealth does not come from their income, but from investments, much of which are taxed differently or not at all. And if anyone wants to plead poverty of liquidity, they will find no sympathy here. Wealth snowballs in a way that someone living month to month can’t fathom.
Preach Lucy B, Preach! 🙋
@pmonks yes.. that doesnt disagree with what i said.
If you want to talk in math terms.. as your income approaches infinity what does your effective tax rate approach? It approaches the 20%, or in the real world case 94, like I said.
@freemo and as we approach infinity, the remaining 6% also approaches infinity. Maths is fun that way.
But let’s also not forget that:
1. The 94% top tax bracket you’re quoting only existed for 1 year (1944/45)
2. To hit that bracket, one had to earn more than ~$3.5 million in today’s dollars
Even today anyone earning that much in any single year is clearly incredibly wealthy, and incurring a high absolute tax rate on the marginal income above $3.5 million doesn’t change that.
1. It was hovering in thr 90s fkr about 10 years
2. Actually closer to 2 mil or 2.5 mil and yes im aware, so. Its an abusive tax rate in my eyes regardless of how rich someone being taxed it might be.
As i said no one, including the incredibly wealthy, should ever be taxed at such an abusive rate.
@freemo the top marginal tax rate hovered around 90% from 1944 until 1963, and stayed above 70% until Reagan gutted the tax system in 1980.
Respectfully, you’re incorrect regarding the amount. The 1944/45 94% tax bracket was on incomes above $200,000, which in today’s dollars is close to (but slightly less than) $3.5 million.
Finally, I consider unrestricted wealth antithetical to healthy democracy (and also immoral, though that’s neither here nor there), and taxation is one of the few effective mechanisms we have to counter it. To one of the points one of the other commenters here made regarding the wealthy dodging income tax anyway, this is also why I’m in favour of wealth taxes (despite some of their flaws).
Yea its 3.3m your right there.
Wealth is not a pie, some having more doesnt mesn others have less. So its hard for me to see someone who generates wealth unethical. That say the system does have inequality issues to be addressed.
As for rich people avoiding taxes, i usually find its kore so the other way around, usually the poor and middle class seem to lie, avoid, and cover up taxes when they can far more often than the rich. Id like so find some good numbers on that though, just from what Ive seen.
@freemo I agree that wealth isn’t a fixed-size pie, and that isn’t a point I’m making (or think is especially important). The tendency for wealth to concentrate in the hands of a few if left unchecked, *is* the point I’m making, along with the demonstrated fact that taxes are one of our best mechanisms to counter this.
I’m also not sure what tax evasion (by anyone) has to do with the original discussion. But let me be clear that I absolutely believe the IRS should be comprehensively funded so that they can go after all tax evaders, whoever they are.
What your missing is these people where wealth concentrates are also the people resonsible for creating much of that same wealth.
So i have no issue with someone having way more wealth than everyone else when that wealth only exists because of thrm in thr first place. It isnt a pie they are stealing more from, they literally are baking the pies.
@freemo trickle down economics (which you appear to be describing) does not work. The impact of cutting (or indeed increasing) tax rates over the last century or so has not been shown to have much, if any, correlation with relevant economic indicators (GDP, job creation, income growth, wage growth, etc.).
I try to avoid memes when engaging in serious discussions, but this one nicely summarises what we’re discussing:
@pmonks Nope no one said anything about trickle down.
@freemo you didn’t use that term, but what you’re describing is indeed trickle down economics.
@pmonks No not even remotely related. At no point did i suggest rich people having money or keeping their money was needed to ensure the poorer and middle class people would benefit.
I
@freemo you did, here: https://qoto.org/@freemo/110269174381291162
First paragraph reads:
“What your missing is these people where wealth concentrates are also the people resonsible for creating much of that same wealth.”
And not to go off on a tangent, but this isn’t even true. ~50% of the jobs in the US are in small businesses, and 2/3 of job growth over the last 25 years has been created by small businesses. They’re the engine of the economy, not the wealthy.
@pmonks No i didnt... nothing in the quote i made implies trickle down, nothing.
I also never said the wealthy were the engine or the only ones generating wealth, nor did i even say they generate the majority of wealth.
My god man read what i said not what you want to hear.
@freemo are you disputing that you wrote that toot, or are you disputing that your statement in that toot (“these people where wealth concentrates are also the people resonsible for creating much of that same wealth.”) describes trickle down economics?
I wrote the toot, nothing in what you quoted implies there is any trickle down effect or even, as you imply, that they are the only ones generating wealth
@freemo the argument that the wealthy predominantly create wealth is literally describing trickle down economics.
You don’t have to take my word for it - for example here’s the top non-ad result I just got on Google for the search “definition of trickle down economics”: https://www.investopedia.com/terms/t/trickledowntheory.asp
The first paragraph reads:
“Trickle-down economics and its policies employ the theory that tax breaks and benefits for corporations and the wealthy will trickle down and eventually benefit everyone.”
@freemo @pmonks Wealth is not interchangeable with profit, it is an accumulation of profit. The profit in any given retrospective timeframe is absolutely a pie. There was only so much to be made, and if we share in that profit and you got more, I absolutely got less.
There is no such thing as a “wealth generator”, only a “profit generator” (and that sounds a good deal less lofty). Whether my profit becomes my wealth is beyond their control.
Taxes (usually) limit profit, not wealth.
No one said anything about wealth being equivelant to profit... what are you talking
When i turn a pile of sand i to a piece of glass ive created wealth, i own that wealth, and this is true regardless of if i ever sell that piece of glass or not. It has nothing to do with profit except that selling the glass and converti g the wealth i made into cash .eans i can buy more sand, make more glass, and generate more wealth.
@freemo @pmonks You’re talking about it. You are discussing the idea of taxes being used to redistribute wealth. But they’re (generally) not, they redistribute profit.
Normally, no-one is coming to raid the wealth of the wealthy, just to limit the growth of inequality. However, fail to limit that growth for long enough and people can become dangerously unequally wealthy. So now, people are actually starting to talk about a “wealth tax”. This is a warning sign.
No insaid nothing about taxes redistributing wealth. I only pointed out that the rich people, who got rich by being good wealth generators, shoukd not be taxed an abusive rate in the 90s.
Whether what is abusively taken from them is used to redistribute money is secondary to my concerns at best.
@freemo @pmonks Ok, point taken. Your position still confuses me, though. When you say “good wealth generators” It sounds like you believe that’s a service they’re offering society as a whole. But when I see that phrase all I see is “efficient profit maximisers”. Few individuals are involved in activity that increases the size of the economy and even those that are focussed on increasing their own wealth. So I don’t understand why that should defend them against any given level of taxation.
So no profit maximizers and wealth generators are very different things, though a person may be both.
The reason you dont see them as expanding the economy is because wealth can be destroyed too. You have wealth generators and wealth destroyers and these forces cancel eachother. So overall you may not see the economy grow even kf an individual is generating a lot of wealth
@freemo correction: I did. I mentioned wealth taxes several replies ago. @utterfiction
Yea thats nonsense. They arent cheating on their taxes as employees. They are usually working under the table or not reporting side income and stuff like that. Everytime you see someome on the street selling food or washing your car or any of the many hard working services people do to make money independently, its almost never reported to taxes.
@freemo @pmonks
If an employee is being paid under the table, that means either the employer is exploiting an undocumented worker or they are paying someone less than minimum wage.
I can guarantee the employer is saving more in taxes than the employee, benefitting once again, the wealthy.
Middle class workers NEED that documentation because it is required to get credit.
Yea thats just plain wrong.
No thats just completely disconnected from reality. My mom worked under the table her whole life.. She was documented and asked her employer to pay her under the tabke so she could make more...
And yes there is a motivation to show income for loans, but most people working under the table cant get loans anyway.
@freemo @pmonks So your mom was exploited by her employer and saved them a bunch of payroll taxes. Not to mention she missed out on some very important employee protections like unemployment insurance, any type of employer provided health insurance or pension, and workman's compensation. That employer took advantage of your mom and pocketed the difference.
No she was offered a normal job at normal pay. **She** asked her employer to pay her under table so she could keep her tax money as extra. The employer helped her out. The employer gained nothing so they didnt exploit anything.
That said you are pretending like everyone in the middle class is an a w2 worker and not a 1099 worker. 1099 workers can just skip paying taxes and has little to do with who is paying them.
She asked to miss out on protections, and since the employer doesnt need to provide any sort of health insurance the employer wasnt saving anything.
@freemo @pmonks Employers have to file 1099 forms too. So all the taxes are on the worker and again, the federal government knows what you make if you're a 1099 employee and they will get their taxes.
And again, this is a wealthy breaking the law problem, not a worker problem. The employer holds all the cards in this situation and could choose not to pay her under the table.
@freemo @pmonks @QasimRashid First of all, the top US tax bracket is 7x higher than the Dutch one, and 12.5% less. The "OUTRAGEOUS" Biden proposal to raise the top income tax bracket would still have Americans earning ~€489k paying rates like Dutch earning €35k.
Second, even when top US rates were +80%, almost nobody was paying them. Why? Because the whole point was to redirect income into capital investments.
The Dutch taxes on the highest tax bracket is also highly abusive. So not sure thats a great comparison.
@freemo repeatedly calling something “abusive” doesn’t make it so, and I hope this conversation is encouraging you to reconsider that dogma with an open mind. @opendna @QasimRashid
Saying it isnt abusive also doesnt make it so. Clearly this is my interpritstikn.
@freemo @pmonks @QasimRashid The uber-wealthy of that era built universities and libraries, and even whole cities.
California had a 90% corporate asset tax on cash over a few million dollars (today's values). Was is an era when the rich were oppressed? No. It was a Golden Age of Capitalism which changed the world. They built railroads and industries instead of gambling on fictional capital markets and parking cash in 0.01% government bonds.
A person making 489 euros in the netherlands will pay about 233 euros in taxes, or the very abusive tax rate of about 48%
On 45k euros income the dutch will pay about 13k or 29%
Similarly in the usa 489 equivelant in euros of income would cost you 35.5% effective rate and 41.5% marginal rate.
So no this is incorrect, at 489K while the taxes are a nice chink less in the US it is also quite a bit higher than the 45K levdl as you suggest also.
@freemo @pmonks @QasimRashid HSBC says the Dutch second band is 37.25%. The top US bracket is 37%.
You're invoking effective rate, which are effectively meaningless if you exclude VAT/sales tax, health insurance, education, etc. Cutting the top US backet (& cap gains) was paid for by shifting the burden of society, the economy, and the state, to those least able to pay.
@freemo that is incorrect. The Dutch also have a progressive income tax system and the first bracket (9.28% tax rate) is from €0 to €35,742. So your example person would pay €45.38 in taxes (in 2023). @opendna @QasimRashid
I literally used the official govt tax burden calculator in both cases... no the nunbers are accurate.
@freemo it seems you mixed up the numbers in your post - did you mean €469 (your first number) or €469,000 (your second number)? I used your first number, fwiw.
The second number is clearly for someone wealthy, so a high tax rate is not going to be material for them - they have plenty of income. @opendna
@freemo @pmonks @QasimRashid
Now Dr. Explain to us how tax credits and tax write offs work to lessen the tax burden for the wealthy. Not to even mention the tax deferrals offered in 401ks and IRAs. So the real question is not what is the tax bracket you're in but what is the effective tax rate you actually pay. That's why Buffet says his secretary pays more in tax than he does.
@freemo again, that’s not how progressive tax systems work. Khan Academy has a good explainer that might help explain where you’re going wrong: https://www.khanacademy.org/economics-finance-domain/core-finance/taxes-topic/taxes/v/tax-brackets-and-progressive-taxation @QasimRashid