Tuesday, October 7, 2014
Miscellaneous 179
1) Woodrow Wilson, Herbert Hoover, Franklin Roosevelt, the governments of Canada and Sweden in the 1970s, California over the past 30 years, even Dwight Eisenhower - they all tried to tax their way out of a deficit and into prosperity, AND THEY ALL FAILED. When are these politicians finally going to realize that catapulting good money after bad isn't necessarily the best way to go (though, no, I'm not opposed to a modest increase in taxes as a part of an overall deficit reduction package, a la, Bowles-Simpson)?............2) The federal government collected twice as much revenue per taxpayer ($5,700 versus $2,600) when the top tax rate was 50% than when it was 70%. Please explain to me here why this isn't an optimal situation.............3) Much has been made about the top 1%'s income having risen rapidly since the Reagan era (and, please, keep in mind here that this population changes significantly from year to year, decade to decade), as a result of the tax-cuts, ostensibly. But I really want folks to think about this one. The income statistics are based on gross income and what the tax-cuts did was to allow people to keep more of this gross income, and, so, the fact that the end result of this policy was people making more gross income tells us what, exactly? It tells me that if you allow people to keep more of their own money, they're probably going to be willing to work more and harder to make more of it (and the fact that the government ultimately gets more revenue is a benefit as well).
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6 comments:
Ho-hum; trickle-down. Great theory, doesn't work but we sure keep keep trying .
$5,700 per taxpayer @ 50% versus $2,600 per tax-payer at 70% - I call that working....And we didn't even have an income tax until 1913 and the 19th Century in the U.S. was one of the greatest periods of economic growth in all of human history.
And the reason that lower top marginal rates often lead to higher revenue is two-fold. a) Rich people have far more creative ways to shield their money and hence not pay the taxes and b) people and their money are mobile; the fact that tens of billions of dollars of wealth have been leaving high tax states such as CA, NY, and MA, the fact that when the Swedes hiked their top tax rate to 80-something% many of their most successful people left that ice box and moved elsewhere.............And then there's the whole incentive thing in that why in the hell would anybody ever want to make X more number of dollars if the government was going to steal 70, 80% of it?
The 'greatest period of economic growth in all human history', we
note, resulted from a number of factors besides tax policy: Weyerhauser reducing the northern
pine to stumps, railroads receiving huge land allotments, severe and frequent recessions,
a few wars here and there, no
or ineffective worker organization, teapot dome stuff....many things drive economies. At my age, I still think the Eisenhower era was the peak of US economic history thus far, despite high taxes, especially in the large part of the population sharing the growth.
And every one of these recessions (almost all of which were caused by central banking) went away without the government doing a damn thing. Yes, there was cronyism but why do liberals always blame that on free markets and not on the government stooges (Lincoln, Clay, etc.) who do the dirty deed?......And look at the trend lines for standard of living and life expectancy since the birth of Christ. They were basically 2 flat-lines for 18 centuries and only started to take off when a) free markets/free trade started to emerge and b) inexpensive and plentiful fossil fuels were discovered.......As for the '50s, it was a pretty stagnant era in which we had at least 3 recessions and taxpayers contributing only about $2,600 a year to the government - this despite a 94% top tax rate!
Fossil fuels; am reading a history of industrial technology
and the introduction of the steam engine. I had to laugh a bit at
the first uses for steam. In
England, the mining, smelting,
cotton weaving etc. began with the use of water wheels. It was recognized that running water was
a limited resource, given the rapidly expanding factory system.
So, the original use for the first
steam engines was to pump water
back up to the top of the water wheel! The technology race has its bumps....
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