Quote: (12-31-2012 03:38 PM)speakeasy Wrote:
In the 1950s the USA's top tax rate was over 90%...just to put things in perspective. As much as people complain about taxes, by historical standards, they're damn low. At least marginal income tax.
Of course, there were other factors at play too. The USA was the only economy in the developed world that WASN'T a pile of bombed out rubble. The dollar was incredibly strong. And the rich never really were hurt much by the high marginal rates because they had tax lawyers and tax shelters galore.
So we have to be very careful about these analogies. There's more than meet's the eye.
Oh, by the way -- take a look at the stats about tax revenue as percentage of GDP. Marginal rates really don't mean that much. The percentage has been pretty constant over the years. Why? Because in the end, people have just SOOO much tolerance for taxes. Raise marginal rates enough, and people go underground, or leave. See Gerard Depardieu.
Quote: (12-31-2012 03:38 PM)speakeasy Wrote:
Of course the pie can grow for everyone. Problem is, the pie may grow rapidly for one demographic and hardly at all for another. We don't have just one economy. We don't all suffer equally when the shit hits the fan. Nor does the rising tide lift all boats. Incomes for normal people in America haven't changed in 30 years relative to inflation. Incomes at the top echelons have exploded in the same time-frame.
Think about something like the GM bailout. The stocks our government bought have been at a loss. But the rich will eventually pay for it. This will allow lower and middle class people to keep working. When you step back and look, it's a great example of an indirect transfer of wealth. And probably about the most benign type you can have. Rather than paying people welfare to sit at home, you are paying people to do something productive. If the rich have the money, then it's money well spent in my opinion.
"Income Inequality" is a useless metric.
Suppose in Year 1 we have one guy who makes $100k, and another guy who makes $30k. Next year, the first guy makes $200K, and the second guy makes $60k. Both guys have doubled their income, but income inequality is TWICE as great as in the previous year.
Which situation would YOU want?
In other words, if the pie gets bigger, my proportional slice ALSO gets bigger, even as the relative difference may INCREASE.
This basic understanding of rates of change is beyond most leftists. It's why so few take calculus.