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
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@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%.
@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
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 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.”
@pmonks i never said the wealthy "predominately" generate wealth. Yes they are wealth generators, everyone else can be too.
You really are trying hard to ram that square peg in a round hole so you can use your talking points... but again i said nothing of the sort.
Yea that definition you just provide has absolutely no relationshop to what i said. Never said it trickles down, never claimed it benefits everyone to give them cuts or breaks either.
@freemo again, you did say that, here: https://qoto.org/@freemo/110269174381291162
First paragraph:
“What your missing is these people where wealth concentrates are also the people resonsible for creating much of that same wealth.”
And as I said a few minutes ago, this isn’t even true - small businesses contribute more to the economy (i.e. the creation of wealth) than the wealthy do.
@pmonks you keep.quoting that, literally no.where in the quote of mine you keep using did i say or imply what you keep.insisting i said.
Yes they generate much of the same wealth that they wind up walking away with. That is not remotely the same as saying giving them money or tax breaks benefits everyone. I didnt even imply they were the majority of wealth generators, only that thr monry they have in the end they largely generate. Just as the wealth others aquire is largely generated as well.
@freemo as others have said elsewhere in this thread, the wealthy largely obtain that wealth by skimming the difference between the value of what their employees produce, and what they pay those employees. That’s not “generating wealth”, it’s exploitation.
Yea thats not really true.
@freemo that’s not a very convincing argument you have there.
@pmonks Now was yours, i just rejected your assertion with no basis. The burden is on you to make the argument not me.
@freemo others in this thread already replied to you with those details. I can go back and dig out their bases if you wish but I (perhaps mistakenly) assumed you wouldn’t be that pedantic.
@pmonks ive already addressed the others or may have them blocked if thry are offiensive.. so no clue if i even saw what your referi g to but if i did inlikely already addresses it.
@freemo I followed all of those side threads and nowhere did you provide any compelling counter-arguments.
@pmonks Considering what an abysmal job your doing at even understanding my position when we are having a direct conversation i dont have much faith that yiu successfully followed those side threads at all to be honest.
That said i do remain some hope that you are discussing in good faith... some
@freemo then let me paraphrase what I think your position is, you can correct it, and we can continue from there.
My understanding of *your* position is:
“The wealthy generate much of the wealth in society in a just fashion, should be allowed to retain most or all of that wealth for themselves, and there are no substantial negative societal ramifications of them doing so.”
No...
Sonfor stsrters most wealth is not genersted justly, not by the rich, the middle class or the poor. People trying to generate wealth at every class bracket are riddled with illegal and immoral activity to get there. So no the wealth generated by the wealthy has tons of unjustice attached to it, but so is the wealth generated by every other class.
They also shouldnt be allowed to "retain most or all" for themselves. While 90%+is quite abusive i hav no problem with more reasonable tax percentage, but no i do t think tax should be at or near 0% for the wealthy.
@freemo ok good clarifications and I’d like to understand more. For starters, what, in your opinion, would be a reasonable tax system, not only for the wealthy but for the entire socioeconomic spectrum?
@pmonks that would create a lot more mess in the conversation than it might be worth.
I personally woukd prefer a progressive spending tax rwther than income. Luxury items have very high tax rates, essentials like food has a low or 0 tax rate. Tax spending not earning, have high tax rates on luxury , creates a more fair and still progressive system.
That said i doubt we could ever get such a system approved and woukd require a complete rework of the tax system and addressing tons of edge cases, so probably best we leave that out of the scope of this discussion.
@freemo how do you avoid hoarding by the wealthy? Recall that almost all of their income is disposable, so disincentivizing spending (as a spending tax would do) reduces their spending (and consumer spending, at least in the US, is a major driver of the economy).
A lot to unpack there, but ill try.
So hoarding. There are a few factors that mitigate it, and depending on what is hoarded it may not be a big deal. The simplest case of keeping cash in a bank account isnt as big a deal as people think since that cash is made availible as loans to others, If everyone is hoarding cash that means the cost of loans goes down and enables easier access to loans (more cash in the bank not moving means it can be lended). So the first aspect is "hoarding isnt as bad as you think"
Second hoarding is less of an issue here because while true it would mean reduced spending on luxury items, there is no sales tax on investments. So it would encourage (particularly due to the lower interest rates) more spending on investments and less on luxury items, rather than money not moving at all... So changing economy so fewer people are buying million dollar cars and that money is spent starting more million dollar business is a good thing.
Third is that there are pressures that encourage spending regardless.. Usually inflation rate means if you sit on money it looses value, this is intentional... So this is another pressure for people to spend their money. thanks to sales tax being high it means they should be encouraged to spend the money but again towards investments, so yea lots of pressures that push towards money flow.
