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>...That's why a house costs on average 24 times more today than in 1960, There might be isolated cases of that happening, but in general, nothing close to tha

by opo 9y ago

>...That's why a house costs on average 24 times more today than in 1960, There might be isolated cases of that happening, but in general, nothing close to that. >...In fact, if you look at a fifty-year period after World War II, home prices were absolutely steady. In 1947 the Case-Shiller index stood at 110, and in 1997, adjusted for inflation, it stood at 110 again. http://www.motherjones.com/kevin-drum/2010/08/chart-day-housing-prices-wwii/ http://www.motherjones.com/kevin-drum/2010/08/chart-day-hous... There is a chart at the bottom of the article. In terms of wages, it is more realistic to focus on total compensation: >...Economists long have noted that focusing on AHE rather than total compensation yields an inaccurate picture of labor compensation due to the omission from AHE of employer-provided benefits. https://files.stlouisfed.org/files/htdocs/publications/es/07/ES0707.pdf https://files.stlouisfed.org/files/htdocs/publications/es/07... The page has 2 charts showing the differences when you compare wages to total compensation. The tax burden has basically gone opposite of what you imply. For example, the top 10% paid 49% of taxes in 1980 and paid 70% in 2014. (http://www.ntu.org/foundation/page/who-pays-income-taxes http://www.ntu.org/foundation/page/who-pays-income-taxes) The "top marginal rate" means very little by itself. What matters is the effective rate which takes into account the credits/deductions that are allowed, the other lower tax rates, etc. >...The top end tax bracket needs to go well above 50% to make it riskier to invest what's left in those markets, rather than taking a risk on starting or growing a business, the expenses of which are 100% tax deductible. If the effective federal tax rate would be > 50% and there would likely be state taxes also, why would anyone invest in a small business? The vast majority of new businesses fail in the first 5 years. With such high tax rates, why take a risk when the vast majority of the time almost all the money will be lost and if you are able to make a successful business, taxes will take almost all the profit? Much more rational to invest in government bonds.

cmurf 9y ago
>There might be isolated cases of that happening, but in general, nothing close to that. Where people want to live and work are cities. If you look at urban housing vs wages, housing has grown 3x compared to wages. Considering urban areas isolate cases is somewhere in between funny and absurd. >The tax burden has basically gone opposite of what you imply. I have neither stated nor implied anything about tax burden. I've only stated incentives and their consequences. > For example, the top 10% paid 49% of taxes in 1980 and paid 70% in 2014. (http://www.ntu.org/foundation/page/who-pays-income-taxes http://www.ntu.org/foundation/page/who-pays-income-taxes) The "top marginal rate" means very little by itself. The top marginal rate is a threat, with a real consequence. Of course the vast majority will try to avoid it, it's how they avoid it that matters. > What matters is the effective rate which takes into account the credits/deductions that are allowed, the other lower tax rates, etc. No, that's not what matters. I'm not trying to make sure the effective rate is either fair or equal among people who make the same income. What I want to do is incentivize a greater velocity of money, rather than rich people who don't need to save another dime, causing inflated housing and stock prices by stashing money there. I want the risk of saving money at the top end to be at least equal to that of starting or growing a business. And right now top end tax rates are so damn cheap it is way less risky to pay that cheap ass tax, and stuff the rest in real estate or stocks, than it is to take a 100% tax deduction and start or grow a business. That's bad. And you increase the risk of being a hoarder with the real threat of taking most of that income away, above a certain amount. It doesn't matter that in 1928 probably only 5 people in the whole country paid 90+% income tax on their last $100,000 earned. The very fact that insane rate existed was the incentive for most everyone else to do something with their money rather than nothing. And it's the something else that is the benefit to society. Not how much revenue the government raised from it.
- opo 9y ago
  >...Considering urban areas isolate cases is somewhere in between funny and absurd. What you said was "That's why a house costs on average 24 times more today than in 1960," You didn't say you were only taking about urban areas, and you have given no evidence that a house costs on average 24 times more today than 1960 when adjusted for inflation. You also haven't given any evidence that the increases in the house prices are due to the tax rates especially when there are more obvious factors. >...I have neither stated nor implied anything about tax burden. What you said was "It's a neo-feudal give away." >...What I want to do is incentivize a greater velocity of money, Increasing aggregate demand isn't some magic solution to every economic problem. Long term what makes a country wealthy is increased productivity. >...The very fact that insane rate existed was the incentive for most everyone else to do something with their money rather than nothing. The WW II rates of 90+ percent don't mean "...incentive for most everyone else to do something with their money rather than nothing". It actually means the opposite of what you mean. If the government will take any gains you make, you invest the money in bonds that won't be taxed. If, for example, you want to incentive people to invest in new businesses, you would look at lowering the tax rates for that investment - not increase them. As a rule, most economists are opposed to very high marginal tax rates due to the inefficiencies they introduce - compensation being moved to non-salary, money wasted on CPAs, lawyers and lobbying congress for special deductions, dead weight losses for economic activity that isn't done, etc.

by opo 9y ago

cmurf 9y ago

>There might be isolated cases of that happening, but in general, nothing close to that. Where people want to live and work are cities. If you look at urban housing vs wages, housing has grown 3x compared to wages. Considering urban areas isolate cases is somewhere in between funny and absurd. >The tax burden has basically gone opposite of what you imply. I have neither stated nor implied anything about tax burden. I've only stated incentives and their consequences. > For example, the top 10% paid 49% of taxes in 1980 and paid 70% in 2014. (http://www.ntu.org/foundation/page/who-pays-income-taxes http://www.ntu.org/foundation/page/who-pays-income-taxes) The "top marginal rate" means very little by itself. The top marginal rate is a threat, with a real consequence. Of course the vast majority will try to avoid it, it's how they avoid it that matters. > What matters is the effective rate which takes into account the credits/deductions that are allowed, the other lower tax rates, etc. No, that's not what matters. I'm not trying to make sure the effective rate is either fair or equal among people who make the same income. What I want to do is incentivize a greater velocity of money, rather than rich people who don't need to save another dime, causing inflated housing and stock prices by stashing money there. I want the risk of saving money at the top end to be at least equal to that of starting or growing a business. And right now top end tax rates are so damn cheap it is way less risky to pay that cheap ass tax, and stuff the rest in real estate or stocks, than it is to take a 100% tax deduction and start or grow a business. That's bad. And you increase the risk of being a hoarder with the real threat of taking most of that income away, above a certain amount. It doesn't matter that in 1928 probably only 5 people in the whole country paid 90+% income tax on their last $100,000 earned. The very fact that insane rate existed was the incentive for most everyone else to do something with their money rather than nothing. And it's the something else that is the benefit to society. Not how much revenue the government raised from it.

opo 9y ago
>...Considering urban areas isolate cases is somewhere in between funny and absurd. What you said was "That's why a house costs on average 24 times more today than in 1960," You didn't say you were only taking about urban areas, and you have given no evidence that a house costs on average 24 times more today than 1960 when adjusted for inflation. You also haven't given any evidence that the increases in the house prices are due to the tax rates especially when there are more obvious factors. >...I have neither stated nor implied anything about tax burden. What you said was "It's a neo-feudal give away." >...What I want to do is incentivize a greater velocity of money, Increasing aggregate demand isn't some magic solution to every economic problem. Long term what makes a country wealthy is increased productivity. >...The very fact that insane rate existed was the incentive for most everyone else to do something with their money rather than nothing. The WW II rates of 90+ percent don't mean "...incentive for most everyone else to do something with their money rather than nothing". It actually means the opposite of what you mean. If the government will take any gains you make, you invest the money in bonds that won't be taxed. If, for example, you want to incentive people to invest in new businesses, you would look at lowering the tax rates for that investment - not increase them. As a rule, most economists are opposed to very high marginal tax rates due to the inefficiencies they introduce - compensation being moved to non-salary, money wasted on CPAs, lawyers and lobbying congress for special deductions, dead weight losses for economic activity that isn't done, etc.