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The lengths that people would go to avoid paying those marginal tax rates was legendary! https://www.latimes.com/business/la-fi-nocera-tax-avoidance-20190129-s

The lengths that people would go to avoid paying those marginal tax rates was legendary! https://www.latimes.com/business/la-fi-nocera-tax-avoidance-20190129-story.html https://www.latimes.com/business/la-fi-nocera-tax-avoidance-... There were also a lot of 'perks' paid for by companies, and a lot of spouses who didn't bother working. You can have a high marginal tax rate, but it tends to be economically counterproductive.

harimau777 2y ago
Companies paying for perks and spouses not having to work both sound like good things to me.
- CraigRo 2y ago
  I know of an airport, a bunch of hunting and fishing lodges, teams of housekeepers, etc. that basically allowed the executives of a fortune 500 company to live a pretty amazing life as if they owned an estate without actually paying for any of it. As soon as marginal tax rates came down, these things got eliminated -- it was far more efficient to just pay people. Likewise, smart people tend to marry other smart people. If one does well, the other got taxed at 90%. Guess what actually happened? She didn't work. Huge huge loss for the economy.
  - 39896880 2y ago
    >Huge loss for the economy That’s fine. It’s okay for humans to choose to live their one and only life in a way that doesn’t directly benefit “the economy.”
    - CraigRo 2y ago
      If your husband works and hits the 50+% bracket, and you are younger and make less... You either have to make 3x what your nanny does before you even keep a dollar- any less and you are paying to work. This is incredibly disheartening friends have complained about being involuntary housewives bc it would cost them too much to go to work
      - 39896880 2y ago
        The net might be less than the cost of a nanny at first, but kids do not need nannies, generally, when they go to school. If the spouse choosing to stay at home would prefer not to set their career back the 5-8 years (depending on how many kids) then that would still be worth it in the long run, salary wise.
- pixelfarmer 2y ago
  These offerings have a very obvious catch: They give you all these nice perks and take care of your family so you have more time for the company. They effectively buy you and your time.
  - CraigRo 2y ago
    This was summer camp and hunting camp for the executives. If you read the man in the gray flannel suit, you'll be surprised by how a lot of white collar execs didn't work that hard. Things moved a lot slower
rrrrrrrrrrrryan 2y ago
You could actually dial the top marginal tax rate pretty high if you create more brackets. The most extensive Laffer Curve study pegs the ideal top marginal tax rate at 73%.
- Decker87 2y ago
  Maximizing tax revenue isn't necessarily ideal.
  - titusjohnson 2y ago
    I would not infer that an optimal tax rate would be a maximal tax rate.
  - rrrrrrrrrrrryan 2y ago
    Raising tax rates beyond that point is guaranteed to be suboptimal, though. Most of the weird distortions being discussed in this thread are due to the postwar 92% tax rates. It's useful to know where the ceiling is. There are many people today that argue we should bring back Eisenhower level tax rates on the wealthy, and there are many others that argue we have to keep taxes on billionaires at the extremely low levels they're at today or they'll quit participating in our economy. Neither of these is true.

harimau777 2y ago

Companies paying for perks and spouses not having to work both sound like good things to me.

CraigRo 2y ago
I know of an airport, a bunch of hunting and fishing lodges, teams of housekeepers, etc. that basically allowed the executives of a fortune 500 company to live a pretty amazing life as if they owned an estate without actually paying for any of it. As soon as marginal tax rates came down, these things got eliminated -- it was far more efficient to just pay people. Likewise, smart people tend to marry other smart people. If one does well, the other got taxed at 90%. Guess what actually happened? She didn't work. Huge huge loss for the economy.
- 39896880 2y ago
  >Huge loss for the economy That’s fine. It’s okay for humans to choose to live their one and only life in a way that doesn’t directly benefit “the economy.”
  - CraigRo 2y ago
    If your husband works and hits the 50+% bracket, and you are younger and make less... You either have to make 3x what your nanny does before you even keep a dollar- any less and you are paying to work. This is incredibly disheartening friends have complained about being involuntary housewives bc it would cost them too much to go to work
    - 39896880 2y ago
      The net might be less than the cost of a nanny at first, but kids do not need nannies, generally, when they go to school. If the spouse choosing to stay at home would prefer not to set their career back the 5-8 years (depending on how many kids) then that would still be worth it in the long run, salary wise.
pixelfarmer 2y ago
These offerings have a very obvious catch: They give you all these nice perks and take care of your family so you have more time for the company. They effectively buy you and your time.
- CraigRo 2y ago
  This was summer camp and hunting camp for the executives. If you read the man in the gray flannel suit, you'll be surprised by how a lot of white collar execs didn't work that hard. Things moved a lot slower

rrrrrrrrrrrryan 2y ago

You could actually dial the top marginal tax rate pretty high if you create more brackets. The most extensive Laffer Curve study pegs the ideal top marginal tax rate at 73%.

Decker87 2y ago
Maximizing tax revenue isn't necessarily ideal.
- titusjohnson 2y ago
  I would not infer that an optimal tax rate would be a maximal tax rate.
- rrrrrrrrrrrryan 2y ago
  Raising tax rates beyond that point is guaranteed to be suboptimal, though. Most of the weird distortions being discussed in this thread are due to the postwar 92% tax rates. It's useful to know where the ceiling is. There are many people today that argue we should bring back Eisenhower level tax rates on the wealthy, and there are many others that argue we have to keep taxes on billionaires at the extremely low levels they're at today or they'll quit participating in our economy. Neither of these is true.