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Your model is wrong or incomplete, then. Corporate taxes were at 40+% during the 1950s, which was one of the most prosperous periods in American history. [0] Du

Your model is wrong or incomplete, then. Corporate taxes were at 40+% during the 1950s, which was one of the most prosperous periods in American history. [0] During that same period, the top marginal bracket for individuals exceeded 80%. [1] Nobody says “oh, I’m just not going to bother making a lot of money” just because they face a high tax rate. —— [0]: https://en.wikipedia.org/wiki/Corporate_tax_in_the_United_States https://en.wikipedia.org/wiki/Corporate_tax_in_the_United_St... [1]: https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates https://www.taxpolicycenter.org/statistics/historical-highes...

barry-cotter 5y ago
Incomplete. It’s not that difficult to be prosperous when you’re the only developed country that didn’t get bombed. As far as income taxes go you’re not completely wrong but if your firm can expense your car, lunch, dinner, rent for executive’s homes and children’s school fees you can have a great deal higher consumption inequality than inequality of earnings. Tax treatment has changed enormously since the 1950s in the US[1]. Also, really, nobody? I’m not claiming everyone responds in the same way, just that if you make things less attractive fewer people will do them. Think on the margin. Does increasing taxes on a thing mean no one will do sit? No. But fewer will. [1] See https://news.ycombinator.com/item?id=2979882 https://news.ycombinator.com/item?id=2979882 > Back in the 1950s, the rich were really good at tax avoidance. All they had to do was to donate more than their total income to charity. (The so-called flying nun tax exemption.) This was doable because when you donated items that appreciated in value, you didn't get taxed on the increase in value, but got to claim the whole value. So if your parents had bought a lot of art, you could donate the art. Better yet you could donate a million dollars to a charitable foundation you had, have them use it to buy a piece of art from you, and then donate 4 other pieces of art which are now valued at $1 million each. The result was a huge run-up in the value of things like art, and a simultaneous increase in public art for display. When you visit the Metropolitan Museum, you're basically seeing the benefits of a tax dodge.

barry-cotter 5y ago

Incomplete. It’s not that difficult to be prosperous when you’re the only developed country that didn’t get bombed. As far as income taxes go you’re not completely wrong but if your firm can expense your car, lunch, dinner, rent for executive’s homes and children’s school fees you can have a great deal higher consumption inequality than inequality of earnings. Tax treatment has changed enormously since the 1950s in the US[1]. Also, really, nobody? I’m not claiming everyone responds in the same way, just that if you make things less attractive fewer people will do them. Think on the margin. Does increasing taxes on a thing mean no one will do sit? No. But fewer will. [1] See https://news.ycombinator.com/item?id=2979882 https://news.ycombinator.com/item?id=2979882 > Back in the 1950s, the rich were really good at tax avoidance. All they had to do was to donate more than their total income to charity. (The so-called flying nun tax exemption.) This was doable because when you donated items that appreciated in value, you didn't get taxed on the increase in value, but got to claim the whole value. So if your parents had bought a lot of art, you could donate the art. Better yet you could donate a million dollars to a charitable foundation you had, have them use it to buy a piece of art from you, and then donate 4 other pieces of art which are now valued at $1 million each. The result was a huge run-up in the value of things like art, and a simultaneous increase in public art for display. When you visit the Metropolitan Museum, you're basically seeing the benefits of a tax dodge.