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I have given up with the long answers. The US had a marginal rate this high before: wrong, this doesn't reflect tax paid which, for the top 1%, is only down sli

I have given up with the long answers. The US had a marginal rate this high before: wrong, this doesn't reflect tax paid which, for the top 1%, is only down slightly since mid-1960s (and not worth anywhere close to what the US needs). Other countries do this successfully: wrong, other countries are far less progressive than the US with many more paying top rates. The lazy "we can be Sweden" thinking also indicates a fairly weak understanding of political theory. Assuming no reductions in revenue, the only solution is raising taxes substantially on the wealthy below 1%. Simple.

onion2k 8y ago
Let's assume you're right and the US really hasn't ever had a marginal tax rate of 70% in the past. Introducing it now would be the first time it's ever been done. What's wrong with trying new things?
- subjectHarold 8y ago
  That is fair, I didn't explain that. But it is fairly simple: progressive tax systems don't reduce inequality. The US already has one of the most progressive tax systems in the world? Is it working? The US is one of the most unequal countries in the world. Look at other similar systems, are they working? Also, no...they are also amongst the most unequal in the world. More broadly, this is totally out of step with what is happening everywhere else in the world. The US is still trying to catchup even after Trump's tax cut, the issue is that US has a tax system that is from the 1950s when capital movements between nations were essentially banned. That kind of works for the US as the dominant world power but it is becoming more unsustainable as time goes on. Great, try new things...but what is being proposed isn't a new idea. It is more of the same. The US system is already the most progressive, it already doesn't work, and the idea is to go even further. The new idea, which is being vigorously rejected, is to just do something that actually works. Crazy, right? You don't need to believe in crazy conspiracy theories, you don't need to re-invent taxation...just do the stuff that works.
  - dragonwriter 8y ago
    > But it is fairly simple: progressive tax systems don't reduce inequality. Ceteris paribus, they do (and certainly inequality has gotten worse in the US since Reagan's tax burden shift reduced tax progressivity), but particularly progressive tax systems are often pared with spending systems with less downward redistribution (or more upward redistribution) than those they are compared with, which counteracts the effect of greater tax progressivity; the US has less downward-redistributive spending than many other developed-world systems. [0] And obviously the tax system alone has less impact on inequality the smaller share of the economy taxation represents, and while the US tax system may be unuusally progressive, but it is also unusually light for the developed world (representing, at all levels of government, about 1/4 of GDP, compared to the OECD average of around 1/3.) [1] OTOH, the people pushing for more progressive taxes in the US today aren't pushing for that alone, they are pushing for more downwardly-redistributive spending funded by the taxes, as well, and mostly also for taxes representing a greater total share of the economy, as well. [0] https://www.economist.com/united-states/2017/11/23/american-taxes-are-unusually-progressive-government-spending-is-not https://www.economist.com/united-states/2017/11/23/american-... [1] https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe...
    - subjectHarold 8y ago
      I agree. As I have said elsewhere, US spending is also unusually bad. But I have seen nothing to suggest that the tax-hike crew have any good ideas about spending either. Their idea seems to be "let's just be Denmark", this is exceptionally dumb ("you can't be like Denmark" is the first lesson in most comparative policy analysis courses). And the issue with progressive systems is that all other things aren't equal. Great, something works in theory...no-one cares. If you are analysing policy, it isn't economics, no-one cares about theory...all that matters are results. Progressive tax systems don't work. The idea of upward and downward redistribution also sounds like something beloved of theoreticians. Something is only upward or downward re distributive after the fact. The US needs to find its own path (as an example: the idea of a "single payer" health system is just preposterous).
avoutthere 8y ago
No amount of tax increase alone is going to address a $22 trillion debt. Reducing the size of the state will be required.
- mikeash 8y ago
  We were on track to pay off the debt 20 years ago. The debt is substantially higher now but nothing has fundamentally changed.
  - Matticus_Rex 8y ago
    The difference between what it takes to pay down a moderate debt and what it takes to pay down a truly massive debt is a fundamental difference.
    - mikeash 8y ago
      The debt is about 3x higher in real dollars, and about 2x higher relative to GDP. That doesn’t seem like the sort of change that would take you from “moderate” to “truly massive.”
- GoodJokes 8y ago
  Debt isn’t a problem in reality. Especially as the world’s reserve currency. If that ever becomes not the case, we’ll the whole monetary system will be touched. I would google modern monetary theory. I think that is the future more or less.
- wombatpm 8y ago
  According to https://www.ssa.gov/policy/docs/ssb/v75n1/v75n1p1.html https://www.ssa.gov/policy/docs/ssb/v75n1/v75n1p1.html we reached peak social security surplus back around 2008, and cross the line into deficit real soon now. So instead of having extra revenue that can be spent, the budget now has to take into account redemptions of special social security bonds to fund current operations. From the Social Security Administrations perspective they have years of funding because of the trust fund. From a congressional perspective its a double hit to the budget No Surplus + have to pay back redemptions now. So this was a wonderful time to give a trillion dollar tax cut to corporations. I do not know how you reduce the size of the state with the baby boom bubble entering retirement. The paranoid part of me thinks the secret solution will be a 1918 Influenza resurgence that disproportionately takes out people over 70. Solves Social Security and Medicare expenditure at the federal level and the pension problem at the state and local level.
mikeash 8y ago
I think you need a longer answer than this, because the marginal rate was indisputably higher than this before.
- tryptophan 8y ago
  I think he means effective marginal rate. 70% is nice and all, but when you are able to deduct 40% of that, is it really higher than 30%?
  - mikeash 8y ago
    “Effective marginal rate” is a nonsense phrase. We can discuss marginal rates or effective rates but you can’t combine the two. I assume the other commenter is doing the standard, “that rate doesn’t really count because nobody really paid it.” Which is a perfectly good point, but it’s not accurately expressed by pretending that marginal rates weren’t that high.
    - dragonwriter 8y ago
      You can absolutely compare effective marginal rates; if you have effective rate data by income level, you can calculate from that effective marginal rates, which are simply the effective rate on the difference between the nth and (n+1)th dollar. OTOH, because one of the big ways this is manipulated is by income that isn't “counted” as income, getting good data from which to estimate effective marginal rates is tricky and you end having to make assumptions that are hard to validate.
- subjectHarold 8y ago
  http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf - my reply was sufficient, you are just having trouble because it doesn't match with whatever you conclusion you jumped to without data.
  - mikeash 8y ago
    Your own link states that there used to be a 70% marginal rate.

onion2k 8y ago

Let's assume you're right and the US really hasn't ever had a marginal tax rate of 70% in the past. Introducing it now would be the first time it's ever been done. What's wrong with trying new things?

subjectHarold 8y ago
That is fair, I didn't explain that. But it is fairly simple: progressive tax systems don't reduce inequality. The US already has one of the most progressive tax systems in the world? Is it working? The US is one of the most unequal countries in the world. Look at other similar systems, are they working? Also, no...they are also amongst the most unequal in the world. More broadly, this is totally out of step with what is happening everywhere else in the world. The US is still trying to catchup even after Trump's tax cut, the issue is that US has a tax system that is from the 1950s when capital movements between nations were essentially banned. That kind of works for the US as the dominant world power but it is becoming more unsustainable as time goes on. Great, try new things...but what is being proposed isn't a new idea. It is more of the same. The US system is already the most progressive, it already doesn't work, and the idea is to go even further. The new idea, which is being vigorously rejected, is to just do something that actually works. Crazy, right? You don't need to believe in crazy conspiracy theories, you don't need to re-invent taxation...just do the stuff that works.
- dragonwriter 8y ago
  > But it is fairly simple: progressive tax systems don't reduce inequality. Ceteris paribus, they do (and certainly inequality has gotten worse in the US since Reagan's tax burden shift reduced tax progressivity), but particularly progressive tax systems are often pared with spending systems with less downward redistribution (or more upward redistribution) than those they are compared with, which counteracts the effect of greater tax progressivity; the US has less downward-redistributive spending than many other developed-world systems. [0] And obviously the tax system alone has less impact on inequality the smaller share of the economy taxation represents, and while the US tax system may be unuusally progressive, but it is also unusually light for the developed world (representing, at all levels of government, about 1/4 of GDP, compared to the OECD average of around 1/3.) [1] OTOH, the people pushing for more progressive taxes in the US today aren't pushing for that alone, they are pushing for more downwardly-redistributive spending funded by the taxes, as well, and mostly also for taxes representing a greater total share of the economy, as well. [0] https://www.economist.com/united-states/2017/11/23/american-taxes-are-unusually-progressive-government-spending-is-not https://www.economist.com/united-states/2017/11/23/american-... [1] https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe...
  - subjectHarold 8y ago
    I agree. As I have said elsewhere, US spending is also unusually bad. But I have seen nothing to suggest that the tax-hike crew have any good ideas about spending either. Their idea seems to be "let's just be Denmark", this is exceptionally dumb ("you can't be like Denmark" is the first lesson in most comparative policy analysis courses). And the issue with progressive systems is that all other things aren't equal. Great, something works in theory...no-one cares. If you are analysing policy, it isn't economics, no-one cares about theory...all that matters are results. Progressive tax systems don't work. The idea of upward and downward redistribution also sounds like something beloved of theoreticians. Something is only upward or downward re distributive after the fact. The US needs to find its own path (as an example: the idea of a "single payer" health system is just preposterous).

avoutthere 8y ago

No amount of tax increase alone is going to address a $22 trillion debt. Reducing the size of the state will be required.

mikeash 8y ago
We were on track to pay off the debt 20 years ago. The debt is substantially higher now but nothing has fundamentally changed.
- Matticus_Rex 8y ago
  The difference between what it takes to pay down a moderate debt and what it takes to pay down a truly massive debt is a fundamental difference.
  - mikeash 8y ago
    The debt is about 3x higher in real dollars, and about 2x higher relative to GDP. That doesn’t seem like the sort of change that would take you from “moderate” to “truly massive.”
GoodJokes 8y ago
Debt isn’t a problem in reality. Especially as the world’s reserve currency. If that ever becomes not the case, we’ll the whole monetary system will be touched. I would google modern monetary theory. I think that is the future more or less.
wombatpm 8y ago
According to https://www.ssa.gov/policy/docs/ssb/v75n1/v75n1p1.html https://www.ssa.gov/policy/docs/ssb/v75n1/v75n1p1.html we reached peak social security surplus back around 2008, and cross the line into deficit real soon now. So instead of having extra revenue that can be spent, the budget now has to take into account redemptions of special social security bonds to fund current operations. From the Social Security Administrations perspective they have years of funding because of the trust fund. From a congressional perspective its a double hit to the budget No Surplus + have to pay back redemptions now. So this was a wonderful time to give a trillion dollar tax cut to corporations. I do not know how you reduce the size of the state with the baby boom bubble entering retirement. The paranoid part of me thinks the secret solution will be a 1918 Influenza resurgence that disproportionately takes out people over 70. Solves Social Security and Medicare expenditure at the federal level and the pension problem at the state and local level.

mikeash 8y ago

I think you need a longer answer than this, because the marginal rate was indisputably higher than this before.

tryptophan 8y ago
I think he means effective marginal rate. 70% is nice and all, but when you are able to deduct 40% of that, is it really higher than 30%?
- mikeash 8y ago
  “Effective marginal rate” is a nonsense phrase. We can discuss marginal rates or effective rates but you can’t combine the two. I assume the other commenter is doing the standard, “that rate doesn’t really count because nobody really paid it.” Which is a perfectly good point, but it’s not accurately expressed by pretending that marginal rates weren’t that high.
  - dragonwriter 8y ago
    You can absolutely compare effective marginal rates; if you have effective rate data by income level, you can calculate from that effective marginal rates, which are simply the effective rate on the difference between the nth and (n+1)th dollar. OTOH, because one of the big ways this is manipulated is by income that isn't “counted” as income, getting good data from which to estimate effective marginal rates is tricky and you end having to make assumptions that are hard to validate.
subjectHarold 8y ago
http://gabriel-zucman.eu/files/PSZ2017.pdf http://gabriel-zucman.eu/files/PSZ2017.pdf - my reply was sufficient, you are just having trouble because it doesn't match with whatever you conclusion you jumped to without data.
- mikeash 8y ago
  Your own link states that there used to be a 70% marginal rate.