The point is that the source you cited to claim they didn't doesn't actually prove that, so what reason do us random HNers have to believe you over the initial claim that the higher tax rate in the past actually addressed this problem?
> From 1960 to 1985 the top marginal tax rate crashed from 90% to 30%
Nobody paid 90%. The tax rate reduction was countered with the closing of loopholes. (There are still a lot.)
Evidence for this is the nearly constant fraction of GDP collected in taxes. The other points are correct. Also, real incomes have both increased at the top end and shifted up for the population.
I find their conclusion that taxes "weren't that much higher" not supported by their graph. In 2010 the rate they show was 30% (it is a bit higher now) and in the between 1945 and 1970 it was roughly 45%. Thats 50% higher. That's a lot higher.
As fun as tribal arguing is, I wasn't taking a side. Did you read my post at all? I was saying that the methodology for claiming taxes were lower was so stupid as to defy even any attempt to ascribe good faith.
Let me quote my post for your convenience: "I don't know if taxes are higher now vs some point in history"
My point was not to refute that taxes went up, but rather that they didn't go up in a vacuum.
Wars were financed, population and productivity increased by huge amounts, and the entire economy shifted from an agrarian to an industrial one. The country's massive physical, social and and human infrastructure was built, one that the current high standard of living is still largely dependent on.
It is highly motivated reasoning to only highlight the tax rate increases without the sweeping societal changes that accompanied them.
You're knocking down a strawman. The position is that higher tax rates reduce economic growth. Your evidence does not contradict that assertion. Doesn't even touch it. Further, you're dealing with claims and a study that are ideologically driven... so more precision is required, not less.
""All that this graph reflects is that as taxes were decreased for the upper %1 over the past half century, they were increased on everybody else."
False."
I have to disagree. The Tax Reform Act of 1986 (as well as the cut of 64) disproportionately affected the lower income brackets. As a matter of record, tax rates are higher for the lower income brackets, and lower for higher income brackets than at any other point in US history.
"The top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15% - the only time in the history of the U.S. income tax (which dates back to the passage of the Revenue Act of 1862) that the top rate was reduced and the bottom rate increased concomitantly."
"The "rich", the top 1%, are the prime drivers of wealth creation. They are the reason GDP grows faster than population growth."
Anyone who has capital gains from the labor of others. It is misleading to say that they are responsible for this growth themselves. Their wealth is invested in those in other income brackets, and used to drive up GDP. There's nothing morally wrong with this system.
I agree that incentives for the upper %1 have a disproportionate effect on GDP. That said, from an economic perspective, I happen to believe that the Laffer curve has a very steep right side, and that we are to the left of the peak. This means that by raising rates, more revenue can be collected. For example, the 1981 tax cut did not improve revenue collection.
I believe that we should raise rates in order to pay for progressive social programs. The upper %1 have benefitted from not only their skill and ability to drive wealth creation, but also a good deal of luck.
Progressivism is a form of social insurance. It is an acknowledgment that perhaps, through no fault of my own, I might have been born poor, or with skills not suited to the modern economy. It is the understanding that in the richest nation on earth, no one should want for food, shelter, or healthcare, no matter what their ability to contribute.
This is not rhetoric. It is a judgement of values, and an assertion of a logical argument.
Think of it in terms of human capital. Those born into poverty today lack the access to crucial resources, such as education, to contribute to the economy to their full potential. It is a colossal waste of human resources to allow these conditions to continue. Imagine if Bill Gates had been born in Compton instead of Seattle.
> The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.
All of these studies consistently miss one thing.
Effective tax rates haven't really changed since before Reagan.
Prior to Reagan, the tax code was riddled with loopholes. Not like how it is now where corporations do this and that, but much worse. Rich individuals were just deducting everything they buy from their taxes.
The Reagan "tax cuts" did two things. One, they closed a lot of those loopholes. Two, they significantly lowered nominal rates. The two things basically canceled out. There was never any meaningful reduction in government revenue.
You're missing the point. Saying that once upon a time taxes were 90% and it was fine is wrong because there were ways round it. Therefore there is no historical evidence that this level of taxation would be a good idea.
It was obvious then and should be even more obvious now that it was bs, just like saying reducing taxes gives the govt more tax over time because the economy grows. This is used as an excuse but it's been shown yet again this is not what happens in reality.
No, GP is referencing the Greek financial collapse and accompanying austerity measures. They made no reference to the tax rate being high, and even if it was, tax evasion to get around that is unsupportable.
I also highly doubt it’s an easy hypothesis to test. It’s not like you can set up an experiment. Good luck linking correlation to causation given the highly unique conditions in every country.
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