Wednesday, January 7, 2015
On Income Redistribution (Which is Actually a Huge Misnomer in that Initially it Wasn't "Distributed" but Earned)
It will always reduce overall income in that a) the people whose money is being taken (confiscated, if you prefer) will be much less likely to earn additional taxable income and/or invest to improve the value of their property and b) the people on the receiving end of the unearned money will be much less likely to earn additional income in the now and/or invest in strategies (education, job related training, inservicing, etc.) to improve future earnings. It's all about the incentives, people.
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Odd, about incentive as
being driven by money. Perhaps in
sales or among the 'golden parachute" crowd. Most of the folks I was around, scientists,
engineers, academics- were more interested in job satisfaction:
the few who were constantly asking for raises were not worth it. IMO, some are satisfied with
the necessities and some level of comfort and security and are very glad that their job is unique, interesting, important and appreciated..and good business leaders are aware of that.
I suspect that a lot of them who said, "job satisfaction", were probably lying and would have protested vociferously if the government suddenly said that they were gonna take 70%.
To me the big problem with such redistribution schemes is that those doing the redistributing take a huge cut for themselves.
The tax rate on total income earned has never been 70%, even when the top marginal tax rate was 90%. And the economy did pretty well! (Just so there is no mistake, I am not advocating a 90% top marginal tax rate.)
Yeah, used to be common to take 70%. 1936-1981, according to my historical tax sheet. I guess folks protested vociferously then...they still do..and probably
will forever. Here in Idaho, it
is fairly reasonable; they take
$5563 of $80 grand/ $38391 of half a million..7.8% of everything
over $53520/yr. So, would folks
limit their earned income to that?
We also tax all food, which to
avoid, rich or poor, would mean
not eating. (Which would do me
a lot of good, actually, for awhile)
Jerry, when the top tax rates were 91% and 77% in 1954 and 1964, respectively, the average amount of revenue collected by the federal government was $2,600 per person, and when the top tax rate was 50% in 1984, that amount had grown all the way to $5,700 per person (adjusted for inflation), a 119% increase. Please, explain to me again why those higher tax rates are better for the economy.
It's basic economics, BB. When you subsidize something you get more of it and when you tax something you get less of it.......And I didn't mean to imply that people are motivated only by money. I myself have taken lesser paying jobs at various junctures in my career simply to reduce stress, for example.
And when Borg and Bergamn left Sweden, 85% of zero was what exactly?
The growth rate of the economy has slowed as we have lowered taxes. Kansas is the most recent example of the effects of cutting taxes on the wealthy and corporations.
That's absurd, Jerry. The economy took off after Harding, Kennedy, and Reagan cut the top tax rates and states like Texas are doing far better than states like California. And look at Sweden. It was the 3rd richest country on the planet until socialism started hammering it with 80 something percent tax rates (dropping it all the way to 14th) and it only recovered when the rates went back down to 50 something percent.
Reagan cut taxes on the rich and the deficit soared so he raised taxes on the middle class. He raised taxes something like 11 times.
Analyses of the U.S. economy over the last 80 or so years shows, based on GDP, that the optimum top tax rate for economic growth is around 60 %. I would have no problem with adding some tax brackets at the top end and upping the top rates.
Analysis by who, Jerry, the Paul Krugmans of the world? And GDP is a very imprecise measure of an economy. Yeah, we had a huge GDP during WW2 but the economy as a whole was a basket case and even I can create GDP, for Christ sakes. All that I'd need to do would be to hire you to dig holes in my backyard and then hire wd to fill them up again. Instantaneous GDP!
Google angry Bear. I've provided thby links before.
Ok, Will, you don't like analysis of data, let's look at this. When we had a high top marginal tax rate, we had a strong and growing middle class. People could buy their first car, their first house, and raise a family on a single income.
Now we have a low top marginal tax rate and the middle class is virtually destroyed, wages are stagnated, homes are priced out of the reach of most people, and it takes a two person income just for families to survive.
Which do you prefer?
Instant GDP. Yes it is. You hire someone, they do work, they get paid, they spend the money on other services and goods. Other people earn money providing those services and making those goods. Is there something wrong with that? What should we do instead?
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