7 ms·

Well, it seems to me that the current situation of ever increasing wealth inequality is unsustainable. Can you suggest some sort of middle ground?

by Teever 2y ago

WalterBright 2y ago
There's no limit to people's ability to create wealth. Creating wealth made the US the richest country in the world. Why would you want to stop that?
- Teever 2y ago
  Would you support a return to the top marginal tax rate of 91% on the ultra-wealthy, like it was during the 1950s and 60s, when the U.S. economy was booming, infrastructure was being built, and income inequality was much lower?
  - alvah 2y ago
    Correlation != causation. The US economy in the 1950s and 1960s was a very different beast - Europe (the main industrial competitor) was in ruins, wealth was very much more tied up in factories and plant, and less in equities and other soft assets. The currency was still tied to the gold price. It may as well have been another planet compared to today.
    - Teever 2y ago
      What do you feel that the top marginal tax rate should be in western countries today?
      - alvah 2y ago
        It depends - Western countries exist in a fiat currency world without a gold price tether, so governments that are sovereign in their own currency do not depend on tax receipts to provide services (the Eurozone is a different kettle of fish due to the common currency and lack of defined horizontal stabilisation). Generally, if governments foresee the need to encourage economic activity, they should reduce tax rates. If they predict their economy is or will become overheated, they should increase tax rates. If they wish to buy votes from people who don't understand how money and tax work in an untethered fiat currency world, they should increase tax rates into the 90%+ range; however, this will cause economic disruption with some time delay, which those responsible will hope they can blame on the party in power at the time of the disruption. Yes, I am more cynical now than I was 20 years ago.
  - WalterBright 2y ago
    No. Those rates were never paid, as the tax code also allowed for all sorts of deductions and tax shelters. What Reagan did was lower the tax rate in exchange for getting rid of those deductions and tax shelters. The trouble with tax shelters is they tended to be crummy investments. The tax code incentivized shifting investment money from productive investments to crummy investments. This is not good for the economy. Or look at it this way. If Musk was taxed at 91%, there would be no SpaceX, Starlink nor Neuralink. What wealthy people do is invest the money (you can only spend so much money on fine dining and snazzy clothes). Investing the money creates jobs and wealth that make the rest of us prosperous.
    - Teever 2y ago
      The idea that a 91% top marginal tax rate would stifle investment or innovation is misleading. Sure the ultra-wealthy will always use deductions and shelters to lower their effective tax rates, but even with those, they still paid significantly higher rates than the ultra-wealthy do today. And the economy didn’t collapse under those high rates—in fact, it grew at about 4% annually, and we built a thriving middle class. Wealthy individuals and corporations still invested because the tax code encouraged reinvestment into productive ventures like infrastructure, research, and business expansion rather than hoarding wealth. Reagan’s reforms didn’t simply eliminate crummy tax shelters—they slashed the top rate to 28%, which kicked off a massive concentration of wealth. And the idea that the wealthy always reinvest their money into productive ventures is a just-so story that is more myth than reality. A lot of that wealth today goes into stock buybacks, speculative assets, and offshore accounts that don’t create jobs or grow the economy. Musk and his ventures are a terrible example. SpaceX and Starlink wouldn’t exist without billions in government contracts and subsidies. Public money was a huge driver of their success, not just private capital. The idea that lowering taxes for the ultra-wealthy benefits everyone just doesn’t hold up to scrutiny. But let's flip things, What tax rate do you think the ultra-wealthy should be subject to? Why that number? Personally, I don't claim to know enough about economics to be certain about this but I feel that the 1950s-1960s in America was a time of great growth for the middle class and government funded technological development and that the tax policy of the time likely played a large part in that.

Well, it seems to me that the current situation of ever increasing wealth inequality is unsustainable. Can you suggest some sort of middle ground?

by Teever 2y ago

Well, it seems to me that the current situation of ever increasing wealth inequality is unsustainable. Can you suggest some sort of middle ground?

WalterBright 2y ago

There's no limit to people's ability to create wealth. Creating wealth made the US the richest country in the world. Why would you want to stop that?

Teever 2y ago
Would you support a return to the top marginal tax rate of 91% on the ultra-wealthy, like it was during the 1950s and 60s, when the U.S. economy was booming, infrastructure was being built, and income inequality was much lower?
- alvah 2y ago
  Correlation != causation. The US economy in the 1950s and 1960s was a very different beast - Europe (the main industrial competitor) was in ruins, wealth was very much more tied up in factories and plant, and less in equities and other soft assets. The currency was still tied to the gold price. It may as well have been another planet compared to today.
  - Teever 2y ago
    What do you feel that the top marginal tax rate should be in western countries today?
    - alvah 2y ago
      It depends - Western countries exist in a fiat currency world without a gold price tether, so governments that are sovereign in their own currency do not depend on tax receipts to provide services (the Eurozone is a different kettle of fish due to the common currency and lack of defined horizontal stabilisation). Generally, if governments foresee the need to encourage economic activity, they should reduce tax rates. If they predict their economy is or will become overheated, they should increase tax rates. If they wish to buy votes from people who don't understand how money and tax work in an untethered fiat currency world, they should increase tax rates into the 90%+ range; however, this will cause economic disruption with some time delay, which those responsible will hope they can blame on the party in power at the time of the disruption. Yes, I am more cynical now than I was 20 years ago.
- WalterBright 2y ago
  No. Those rates were never paid, as the tax code also allowed for all sorts of deductions and tax shelters. What Reagan did was lower the tax rate in exchange for getting rid of those deductions and tax shelters. The trouble with tax shelters is they tended to be crummy investments. The tax code incentivized shifting investment money from productive investments to crummy investments. This is not good for the economy. Or look at it this way. If Musk was taxed at 91%, there would be no SpaceX, Starlink nor Neuralink. What wealthy people do is invest the money (you can only spend so much money on fine dining and snazzy clothes). Investing the money creates jobs and wealth that make the rest of us prosperous.
  - Teever 2y ago
    The idea that a 91% top marginal tax rate would stifle investment or innovation is misleading. Sure the ultra-wealthy will always use deductions and shelters to lower their effective tax rates, but even with those, they still paid significantly higher rates than the ultra-wealthy do today. And the economy didn’t collapse under those high rates—in fact, it grew at about 4% annually, and we built a thriving middle class. Wealthy individuals and corporations still invested because the tax code encouraged reinvestment into productive ventures like infrastructure, research, and business expansion rather than hoarding wealth. Reagan’s reforms didn’t simply eliminate crummy tax shelters—they slashed the top rate to 28%, which kicked off a massive concentration of wealth. And the idea that the wealthy always reinvest their money into productive ventures is a just-so story that is more myth than reality. A lot of that wealth today goes into stock buybacks, speculative assets, and offshore accounts that don’t create jobs or grow the economy. Musk and his ventures are a terrible example. SpaceX and Starlink wouldn’t exist without billions in government contracts and subsidies. Public money was a huge driver of their success, not just private capital. The idea that lowering taxes for the ultra-wealthy benefits everyone just doesn’t hold up to scrutiny. But let's flip things, What tax rate do you think the ultra-wealthy should be subject to? Why that number? Personally, I don't claim to know enough about economics to be certain about this but I feel that the 1950s-1960s in America was a time of great growth for the middle class and government funded technological development and that the tax policy of the time likely played a large part in that.