3 ms·

The top marginal rates were higher in the past. But there were huge deductions and loopholes. The percent of income captured by those taxes weren't really much

The top marginal rates were higher in the past. But there were huge deductions and loopholes. The percent of income captured by those taxes weren't really much higher. So raising from 39%->90% barely created any more tax revenue. Which is why I wonder if the math and economics works out. If you tax all income over 1 million at 90%, the partners at the firm I work for who make on average ~2 million will just incorporate and take equity instead. If you raise capital gains rates to 90%, nobody would invest another dime in America. I'm very skeptical that the top 10% of earners are going to sit still while you take 75% of the money they earn.

ska 9y ago
Sure, it's an interesting question, but it's hardly obvious to answer. You're just throwing numbers around to, we could do that all day and not really get anywhere. Again, I'm not arguing for or against - just for better quality arguments about it. There are at least plausible sounding reworkings of the tax code that could achieve this (far less than your 90% scenario). Far better to argue about those, than straw men. Both pro and con sides of this debate seem to be more fond of the straw men.
- rhino369 9y ago
  I am definitely throwing around numbers, but I specifically asked if the math and economics worked out. The people wanting a radical change to the system of income distribution need to prove their system works. I'm sure someone has done the math.
vostok 9y ago
Can you explain how you arrived at 75% effective tax rate for the top 10% and 90% marginal tax rate for income over $1 million? The math isn't working out for me.
- rhino369 9y ago
  I didn't come up with it. I'm asking if the math works out and the response was basically, as long as the marginal rate isn't over 100% it works. I don't think that is accurate. If someone modeled a realistic tax rate I'd love to see what they came up with.
  - ska 9y ago
    as long as the marginal rate isn't over 100% it works. That certainly wasn't my intended response. You can make the math work with realistic numbers, or at least it seems that way. Assume a 10-15% effective rate increase on highest income earners, even better if fewer loopholes are available, and you can fund such a program. That would put the US still lower but more in line with a number of other countries, so that's at least plausible. I'll try and dig up a worked example that isn't oversimplified. I buy your argument that there is a marginal rate at which this doesn't work, but haven't seen evidence that it is necessary.
  - vostok 9y ago
    What about the 18% increase for a $10,000 BI per household. The 90th percentile household makes ~$140k. Even at California's tax rates such a household currently pays ~30% in income taxes including payroll taxes if you assume no mortgage or retirement savings. If they don't live in California, save for retirement, or have a mortgage then they pay less. Under the 18%/10000 proposal, this household would pay an effective rate of 41-42%. This doesn't even account for the fact that BI would reduce welfare, social security, etc. After accounting for that, we're probably closer to 35% than to 40%, but you can make a rough estimate on your own.

ska 9y ago

Sure, it's an interesting question, but it's hardly obvious to answer. You're just throwing numbers around to, we could do that all day and not really get anywhere. Again, I'm not arguing for or against - just for better quality arguments about it. There are at least plausible sounding reworkings of the tax code that could achieve this (far less than your 90% scenario). Far better to argue about those, than straw men. Both pro and con sides of this debate seem to be more fond of the straw men.

rhino369 9y ago
I am definitely throwing around numbers, but I specifically asked if the math and economics worked out. The people wanting a radical change to the system of income distribution need to prove their system works. I'm sure someone has done the math.

vostok 9y ago

Can you explain how you arrived at 75% effective tax rate for the top 10% and 90% marginal tax rate for income over $1 million? The math isn't working out for me.

rhino369 9y ago
I didn't come up with it. I'm asking if the math works out and the response was basically, as long as the marginal rate isn't over 100% it works. I don't think that is accurate. If someone modeled a realistic tax rate I'd love to see what they came up with.
- ska 9y ago
  as long as the marginal rate isn't over 100% it works. That certainly wasn't my intended response. You can make the math work with realistic numbers, or at least it seems that way. Assume a 10-15% effective rate increase on highest income earners, even better if fewer loopholes are available, and you can fund such a program. That would put the US still lower but more in line with a number of other countries, so that's at least plausible. I'll try and dig up a worked example that isn't oversimplified. I buy your argument that there is a marginal rate at which this doesn't work, but haven't seen evidence that it is necessary.
- vostok 9y ago
  What about the 18% increase for a $10,000 BI per household. The 90th percentile household makes ~$140k. Even at California's tax rates such a household currently pays ~30% in income taxes including payroll taxes if you assume no mortgage or retirement savings. If they don't live in California, save for retirement, or have a mortgage then they pay less. Under the 18%/10000 proposal, this household would pay an effective rate of 41-42%. This doesn't even account for the fact that BI would reduce welfare, social security, etc. After accounting for that, we're probably closer to 35% than to 40%, but you can make a rough estimate on your own.