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"I’m scared. ... the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes, such as the 80 percent tax

"I’m scared. ... the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes, such as the 80 percent tax rate on income over $500,000" I stopped reading here. Try again. Current top income tax rates are insanely slow by historical standards. They were 90% in the 40s and 50s and 70% in the 70s [0] [0] http://taxfoundation.org/sites/default/files/docs/fed_individual_rate_history_nominal.pdf http://taxfoundation.org/sites/default/files/docs/fed_indivi...

wmeredith 11y ago
I had s similar reaction to this example of an "oppressive tax". This is just the sort of taxes that were in place when America was taking over the world. It's not oppressive. It's a good idea. It hurts the oligarchs, it helps the 99 percent, which is who drives the economy.
- liquidise 11y ago
  I have never understood the notion that taxes at or above 50% are at all ethical, and yet some argue openly for 80%+. The idea that the government is entitled to more of someone's earnings than they are is shocking. To then suggest the government is entitled to 4 out of every 5 dollars a person earns is, quite frankly, beneath consideration in my eyes. What right do you, i or anyone else have to call this anything but theft?
  - lfowles 11y ago
    Tax brackets. The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Looking at GP's PDF for 1945: Income Take home $10,000 $7,060 $20,000 $12,140 $50,000 $21,680 $100,000 $29,680 $200,000 $37,180 $500,000 $55,180 Of course, this is for income, the people being taxed the highest rates will also have capital gains. Inspired by michaelchisari below, here's the same table in 2015 $$ Income Take home $132,576.67 $93,599.13 $265,153.33 $160,948.07 $662,883.33 $287,426.21 $1,325,766.67 $393,487.55 $2,651,533.33 $492,920.05 $6,628,833.33 $731,558.05 Whew, big numbers.
    - michaelchisari 11y ago
      Fr the record, $55,180 in 1945 is the equivalent of $727,917.20 now.
      - lfowles 11y ago
        Thanks! Added another table with modern day $$$. Big numbers!
    - liquidise 11y ago
      > The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Astounding double standards. Some numbers: if Ted makes $100,000/yr and Jim earns $1,000,000/yr and both are taxed at 30%, Jim is already paying $270,000 _more_ in taxes every year. Even at the same tax rate. Crank Jim's rate to 90% and we are looking at an $870,000/yr difference! Through what greed can we morally justify such insatiable lust for the money other's have earned? Furthermore, the capital gains argument is rife with unintended consequences. It, quite literally, disincentives the wealthiest folks from innovating and earning money through economically productive means. Instead, we send the message "if you insist on earning money by working like the rest of us, we are going to take 80% of it. But, if you want to rest on the laurels of your investments and be otherwise unproductive, by all means. The choice is yours." It terrifies me that this mindset is the majority opinion these days.
      - lfowles 11y ago
        As the other reply says " Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you. "
        liquidise 11y ago
        I am aware how they work. I get that all earning up to a point are taxed under bracket x, and then after that are taxed at bracket y, and so forth. Unless you mean something else in which case i welcome you to explain where i have erred here. If that is in fact what you mean, it still changing absolutely nothing. The effective tax rate on folks in these upper brackets would still be enormous. But i guess piggybacking baseless comments is an easy way to avoid justifying these stances. I still have not seen someone say how they are justified in taking that much money from people while feeling ethical.
  - 1971genocide 11y ago
    Do you know what is theft ? When kids born today are unable to afford to go to college, while the same people who are against +80% tax were born in an era when tax was way higher at +90% that helped pay for their education and create the infrastructure that allowed them to earn their wealth. "Surplus Wealth is a scared trust which its possessor is bound to administer in his lifetime for the good of the community " - Andrew Caregie. Guess what if you think the government is treating you unfairly then be prepared when society bifurcates and returns a stack error in the form of "bolsheviks".
    - onewaystreet 11y ago
      Some of the wealthiest people in the US were born just a few decades ago. Not all US billionaires are not crotchety 80-year-olds.
    - yummyfajitas 11y ago
      More kids than ever before can afford to go to college. http://www.bls.gov/opub/ted/images/2010/ted_20100428.png http://www.bls.gov/opub/ted/images/2010/ted_20100428.png
      - rosser 11y ago
        Having little choice but to sign yourself up for a mortgage-sized debt that can't be discharged isn't the most obvious definition of "affordable" I've ever encountered.
        yummyfajitas 11y ago
        I'm defining "afford to go to college" as "have enough money to actually attend if they choose to". The number of people who actually attend is a lower bound on this number. A quick google search yields an average cost of $9k for a state school, $22k for out of state, and $31k for private. Maybe the expensive side of college is "mortgage-sized" debt, provided you are comparing to the cheapest mortgages.
        thetopher 11y ago
  - eli_gottlieb 11y ago
    Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you.
  - unprepare 11y ago
    > dollars a person earns When an individual who grows up without ever taking advantage of a single piece of society, they will have an argument for taxes being unfair. Lets not forget the debts that all citizens owe to the country: Roads Internet Telephones Water Food regulation Environmental regulation Scientific advancements Protection from outside forces (military) Flight regulations etc. Once youve paid for all of those you can begin to complain about how taxes are unfair.
    - liquidise 11y ago
      I am not arguing for no taxes. I am saying that an effective tax rate above 50% is theft. Taxing more successful people at multiplicatively higher %'s is lunacy. They already are paying way more than lower income folks at the same rate. If your argument is that more successful people consume more resources and thus owe the government a greater debt, then i would argue we should be taxing consumption more. Not income.
      - unprepare 11y ago
        > i would argue we should be taxing consumption more Consumption tax disproportionately affects the poorest citizens. It is a non-workable solution. Consumption is what drives the economy, disincentives to consumption would hurt the economy as a whole (causing the wealthy to lose money via investments). Further, a citizen has no hope to pay off the debt that it owes the government for the things i listed previously. There is no tax rate at which you would effectively pay back the government for its investments in society. The yearly budget of the US Department of Transportation alone, is 77 billion - that's just to keep federal roads drivable. If you think theres some tax level at which you have paid for the initial investment and upkeep of the federal highway system, by all means share it here, i would love to know what number you think is 'fair' since its 'your money' even though they aren't 'your roads' You have an extremely entitled view of what "fair" is.
  - njharman 11y ago
    Don't earn such a disproportionate amount of money and it won't get "stolen". In other words if you don't steal so much from others, go meet won't steal it back.
- fezz 11y ago
  It also created a larger market for hugely expensive cars and other luxury items. The 1970's had a 70% tax for the richest. In 1982, that dropped to 50% and coincidently was when the boom in excess really got started.
  - cpursley 11y ago
    Good point! Another reason to drop personal and corporate income tax, short-term capital gains tax and replace it with a progressive consumption tax.
- mc32 11y ago
  I don't think it's that simple. Oligarchs will go live in another jurisdiction which taxes less. Rich people have alternatives, so unless you have a global tax agreement of some sort, I don't think this is viable. Potentially, one could end up collecting fewer tax dollars because they are "living" in the Bahamas or Cayman Is.
  - bro-stick 11y ago
    Truly rich people tend to invest their balance sheet mostly illiquidly in trusts and pay themselves a low-as-possible allowance from low interest, short-term loans against assets. Personally, they don't tend to own much directly to avoid the taxman's reach and for liability too.
ikeboy 11y ago
There's an argument that the effective rates then were only around 50%. See https://www.aei.org/publication/why-we-cant-go-back-to-sky-high-1950s-tax-rates/ https://www.aei.org/publication/why-we-cant-go-back-to-sky-h..., http://www.bloombergview.com/articles/2013-01-02/1950s-tax-fantasy-is-a-republican-nightmare http://www.bloombergview.com/articles/2013-01-02/1950s-tax-f..., and http://www.wsj.com/articles/SB10001424127887324705104578151601554982808 http://www.wsj.com/articles/SB100014241278873247051045781516....
Rangi42 11y ago
The highest one I see is a 94% tax on income over $200,000 in 1945. First of all, that was towards the end of a World War during which we developed an entirely new kind of bomb. Nothing our government is currently doing requires that level of commitment from its citizens. Second, that income bracket in 1945 would be at $2.676 million today [1]. Even the top 0.1% of US incomes today start at just $1.6 million [2]; a tax bracket like the 1945 one would have barely any people in it. [1]: https://www.wolframalpha.com/input/?i=US%24200000+%281945+US+dollars%29 https://www.wolframalpha.com/input/?i=US%24200000+%281945+US... [2]: https://en.wikipedia.org/wiki/Affluence_in_the_United_States#Top_percentiles https://en.wikipedia.org/wiki/Affluence_in_the_United_States...
refurb 11y ago
Nobody paid those rates. There were a ton of deductions available to reduce taxable income. Also the top rate would apply to income over $5M in today's dollars (can't remember the exact number, but it was high). How much money do you think you can raise from folks making over $5M per year? The answer is not much, there aren't that many of them relatively speaking. Also, if you include the earned income tax credit, low income folks are paying way less in taxes than they were back then.
- cottonseed 11y ago
  > There are a ton of deductions available to reduce taxable income. FTFY. They wouldn't today, either.
  - refurb 11y ago
    I think your comment is a bit cynical, but I can't disagree. There are many ways to make money and if the gov't decides to tax one more highly, the money just shifts to the low tax routes. The gov't eventually clamps down and the process starts all over again. Hell, the reason the US has employer sponsored healthcare is because there were wage caps during WW2. So what did companies do? Compensate with something other than wages.
    - cottonseed 11y ago
      I'm just looking at the data. In 2010, the top tax rate was 35%. The nominal tax rate for 1% earners (over $1.4M) was 20% [0]. [0] https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Effective_income_tax_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
marcoperaza 11y ago
That's misleading. Marginal tax rates on the highest tax brackets were nominally high, BUT there were way more deductions and loopholes. There was no Alternative Minimum Tax like there is today. A big part of Reagan's tax reforms was eliminating these deductions while bringing the rates down. Also, America was the only game in town during those years. All of the competition was still recovering from WW2 and/or being suffocated by communist rule. And it was a single market the size of the rest of the Western world combined. If you had money, America was the place to invest it. Major technological breakthroughs, even when originating overseas, generally took off in the US. On a moral note, I think that an 80% tax rate is oppressive. That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people.
- cottonseed 11y ago
  > That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people. What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance (DARPA-funded university project spinouts, SBA, government contracting.) Consumption is spending money. They government spends it, or give it to people who do (that seems to cover consumption and charity.) What is more civil than banding together to take some of the variance out of life?
  - marcoperaza 11y ago
    > What is more civil than banding together to take some of the variance out of life? Letting people decide how to spend their own money. Private charity is "banding together to take some of the variance out of life". Like all of the government's authority, taxation flows from the end of a gun. You can be imprisoned and fined if you don't pay what you owe. > What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance Government investment in certain sectors can be good, such as for fundamental sciences. But in general, private investment does better with the same amount of money. Even when government programs are well designed at their birth, the world around them changes faster than politics and bureaucracy can keep up with.

wmeredith 11y ago

I had s similar reaction to this example of an "oppressive tax". This is just the sort of taxes that were in place when America was taking over the world. It's not oppressive. It's a good idea. It hurts the oligarchs, it helps the 99 percent, which is who drives the economy.

liquidise 11y ago
I have never understood the notion that taxes at or above 50% are at all ethical, and yet some argue openly for 80%+. The idea that the government is entitled to more of someone's earnings than they are is shocking. To then suggest the government is entitled to 4 out of every 5 dollars a person earns is, quite frankly, beneath consideration in my eyes. What right do you, i or anyone else have to call this anything but theft?
- lfowles 11y ago
  Tax brackets. The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Looking at GP's PDF for 1945: Income Take home $10,000 $7,060 $20,000 $12,140 $50,000 $21,680 $100,000 $29,680 $200,000 $37,180 $500,000 $55,180 Of course, this is for income, the people being taxed the highest rates will also have capital gains. Inspired by michaelchisari below, here's the same table in 2015 $$ Income Take home $132,576.67 $93,599.13 $265,153.33 $160,948.07 $662,883.33 $287,426.21 $1,325,766.67 $393,487.55 $2,651,533.33 $492,920.05 $6,628,833.33 $731,558.05 Whew, big numbers.
  - michaelchisari 11y ago
    Fr the record, $55,180 in 1945 is the equivalent of $727,917.20 now.
    - lfowles 11y ago
      Thanks! Added another table with modern day $$$. Big numbers!
  - liquidise 11y ago
    > The government isn't entitled to 80% of what _any_ person earns, just a portion of what the _richest_ earn. Astounding double standards. Some numbers: if Ted makes $100,000/yr and Jim earns $1,000,000/yr and both are taxed at 30%, Jim is already paying $270,000 _more_ in taxes every year. Even at the same tax rate. Crank Jim's rate to 90% and we are looking at an $870,000/yr difference! Through what greed can we morally justify such insatiable lust for the money other's have earned? Furthermore, the capital gains argument is rife with unintended consequences. It, quite literally, disincentives the wealthiest folks from innovating and earning money through economically productive means. Instead, we send the message "if you insist on earning money by working like the rest of us, we are going to take 80% of it. But, if you want to rest on the laurels of your investments and be otherwise unproductive, by all means. The choice is yours." It terrifies me that this mindset is the majority opinion these days.
    - lfowles 11y ago
      As the other reply says " Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you. "
      - liquidise 11y ago
        I am aware how they work. I get that all earning up to a point are taxed under bracket x, and then after that are taxed at bracket y, and so forth. Unless you mean something else in which case i welcome you to explain where i have erred here. If that is in fact what you mean, it still changing absolutely nothing. The effective tax rate on folks in these upper brackets would still be enormous. But i guess piggybacking baseless comments is an easy way to avoid justifying these stances. I still have not seen someone say how they are justified in taking that much money from people while feeling ethical.
- 1971genocide 11y ago
  Do you know what is theft ? When kids born today are unable to afford to go to college, while the same people who are against +80% tax were born in an era when tax was way higher at +90% that helped pay for their education and create the infrastructure that allowed them to earn their wealth. "Surplus Wealth is a scared trust which its possessor is bound to administer in his lifetime for the good of the community " - Andrew Caregie. Guess what if you think the government is treating you unfairly then be prepared when society bifurcates and returns a stack error in the form of "bolsheviks".
  - onewaystreet 11y ago
    Some of the wealthiest people in the US were born just a few decades ago. Not all US billionaires are not crotchety 80-year-olds.
  - yummyfajitas 11y ago
    More kids than ever before can afford to go to college. http://www.bls.gov/opub/ted/images/2010/ted_20100428.png http://www.bls.gov/opub/ted/images/2010/ted_20100428.png
    - rosser 11y ago
      Having little choice but to sign yourself up for a mortgage-sized debt that can't be discharged isn't the most obvious definition of "affordable" I've ever encountered.
      - yummyfajitas 11y ago
        I'm defining "afford to go to college" as "have enough money to actually attend if they choose to". The number of people who actually attend is a lower bound on this number. A quick google search yields an average cost of $9k for a state school, $22k for out of state, and $31k for private. Maybe the expensive side of college is "mortgage-sized" debt, provided you are comparing to the cheapest mortgages.
      - thetopher 11y ago
- eli_gottlieb 11y ago
  Please learn how marginal tax brackets and rates work before talking about the issue where people can hear you.
- unprepare 11y ago
  > dollars a person earns When an individual who grows up without ever taking advantage of a single piece of society, they will have an argument for taxes being unfair. Lets not forget the debts that all citizens owe to the country: Roads Internet Telephones Water Food regulation Environmental regulation Scientific advancements Protection from outside forces (military) Flight regulations etc. Once youve paid for all of those you can begin to complain about how taxes are unfair.
  - liquidise 11y ago
    I am not arguing for no taxes. I am saying that an effective tax rate above 50% is theft. Taxing more successful people at multiplicatively higher %'s is lunacy. They already are paying way more than lower income folks at the same rate. If your argument is that more successful people consume more resources and thus owe the government a greater debt, then i would argue we should be taxing consumption more. Not income.
    - unprepare 11y ago
      > i would argue we should be taxing consumption more Consumption tax disproportionately affects the poorest citizens. It is a non-workable solution. Consumption is what drives the economy, disincentives to consumption would hurt the economy as a whole (causing the wealthy to lose money via investments). Further, a citizen has no hope to pay off the debt that it owes the government for the things i listed previously. There is no tax rate at which you would effectively pay back the government for its investments in society. The yearly budget of the US Department of Transportation alone, is 77 billion - that's just to keep federal roads drivable. If you think theres some tax level at which you have paid for the initial investment and upkeep of the federal highway system, by all means share it here, i would love to know what number you think is 'fair' since its 'your money' even though they aren't 'your roads' You have an extremely entitled view of what "fair" is.
- njharman 11y ago
  Don't earn such a disproportionate amount of money and it won't get "stolen". In other words if you don't steal so much from others, go meet won't steal it back.
fezz 11y ago
It also created a larger market for hugely expensive cars and other luxury items. The 1970's had a 70% tax for the richest. In 1982, that dropped to 50% and coincidently was when the boom in excess really got started.
- cpursley 11y ago
  Good point! Another reason to drop personal and corporate income tax, short-term capital gains tax and replace it with a progressive consumption tax.
mc32 11y ago
I don't think it's that simple. Oligarchs will go live in another jurisdiction which taxes less. Rich people have alternatives, so unless you have a global tax agreement of some sort, I don't think this is viable. Potentially, one could end up collecting fewer tax dollars because they are "living" in the Bahamas or Cayman Is.
- bro-stick 11y ago
  Truly rich people tend to invest their balance sheet mostly illiquidly in trusts and pay themselves a low-as-possible allowance from low interest, short-term loans against assets. Personally, they don't tend to own much directly to avoid the taxman's reach and for liability too.

ikeboy 11y ago

There's an argument that the effective rates then were only around 50%. See https://www.aei.org/publication/why-we-cant-go-back-to-sky-high-1950s-tax-rates/ https://www.aei.org/publication/why-we-cant-go-back-to-sky-h..., http://www.bloombergview.com/articles/2013-01-02/1950s-tax-fantasy-is-a-republican-nightmare http://www.bloombergview.com/articles/2013-01-02/1950s-tax-f..., and http://www.wsj.com/articles/SB10001424127887324705104578151601554982808 http://www.wsj.com/articles/SB100014241278873247051045781516....

Rangi42 11y ago

The highest one I see is a 94% tax on income over $200,000 in 1945. First of all, that was towards the end of a World War during which we developed an entirely new kind of bomb. Nothing our government is currently doing requires that level of commitment from its citizens. Second, that income bracket in 1945 would be at $2.676 million today [1]. Even the top 0.1% of US incomes today start at just $1.6 million [2]; a tax bracket like the 1945 one would have barely any people in it. [1]: https://www.wolframalpha.com/input/?i=US%24200000+%281945+US+dollars%29 https://www.wolframalpha.com/input/?i=US%24200000+%281945+US... [2]: https://en.wikipedia.org/wiki/Affluence_in_the_United_States#Top_percentiles https://en.wikipedia.org/wiki/Affluence_in_the_United_States...

refurb 11y ago

Nobody paid those rates. There were a ton of deductions available to reduce taxable income. Also the top rate would apply to income over $5M in today's dollars (can't remember the exact number, but it was high). How much money do you think you can raise from folks making over $5M per year? The answer is not much, there aren't that many of them relatively speaking. Also, if you include the earned income tax credit, low income folks are paying way less in taxes than they were back then.

cottonseed 11y ago
> There are a ton of deductions available to reduce taxable income. FTFY. They wouldn't today, either.
- refurb 11y ago
  I think your comment is a bit cynical, but I can't disagree. There are many ways to make money and if the gov't decides to tax one more highly, the money just shifts to the low tax routes. The gov't eventually clamps down and the process starts all over again. Hell, the reason the US has employer sponsored healthcare is because there were wage caps during WW2. So what did companies do? Compensate with something other than wages.
  - cottonseed 11y ago
    I'm just looking at the data. In 2010, the top tax rate was 35%. The nominal tax rate for 1% earners (over $1.4M) was 20% [0]. [0] https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Effective_income_tax_rates https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...

marcoperaza 11y ago

That's misleading. Marginal tax rates on the highest tax brackets were nominally high, BUT there were way more deductions and loopholes. There was no Alternative Minimum Tax like there is today. A big part of Reagan's tax reforms was eliminating these deductions while bringing the rates down. Also, America was the only game in town during those years. All of the competition was still recovering from WW2 and/or being suffocated by communist rule. And it was a single market the size of the rest of the Western world combined. If you had money, America was the place to invest it. Major technological breakthroughs, even when originating overseas, generally took off in the US. On a moral note, I think that an 80% tax rate is oppressive. That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people.

cottonseed 11y ago
> That money would otherwise be flowing into business investments & consumption, charity, and civil society, the natural institutions of free people. What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance (DARPA-funded university project spinouts, SBA, government contracting.) Consumption is spending money. They government spends it, or give it to people who do (that seems to cover consumption and charity.) What is more civil than banding together to take some of the variance out of life?
- marcoperaza 11y ago
  > What is more civil than banding together to take some of the variance out of life? Letting people decide how to spend their own money. Private charity is "banding together to take some of the variance out of life". Like all of the government's authority, taxation flows from the end of a gun. You can be imprisoned and fined if you don't pay what you owe. > What do you think the gov't does with it, burn it? 5 of the 6 startups I worked for wouldn't have happened without government assistance Government investment in certain sectors can be good, such as for fundamental sciences. But in general, private investment does better with the same amount of money. Even when government programs are well designed at their birth, the world around them changes faster than politics and bureaucracy can keep up with.