Forum Post: A case for raising taxes on the rich and raising wages for the rest
Posted 11 years ago on Sept. 24, 2012, 2:59 p.m. EST by jrhirsch
(4714)
from Sun City, CA
This content is user submitted and not an official statement
First let's take a look at economic history to see how our ideas about taxation actually worked in the past. From 1958 to 1968 the U.S had 10 of the best years in memory. Average income grew by $13,000 with the lower 90% sharing 62% of that gain. All income levels benefited.
http://stateofworkingamerica.org/who-gains/#/?start=1958&end=1968
The top marginal tax rates were much higher than today. Income tax 90% then, 35% now, corporate tax 50% then, 35% now, and capital gains tax 25% then, 15% now.
http://visualizingeconomics.com/2011/04/14/top-marginal-tax-rates-1916-2010/#.UDHMt6AsFGg
According to people who favor low taxation, we should have had a much weaker economy. The fact we had a strong economy was probably due to a stronger union presence, which kept low and mid income wages up, and higher taxes on the rich which meant a lower tax rate on the low to mid income workers.
One way to look at economics is to compare it to a human body. Blood flow being analogous to money flowing through our economy. If the blood flow is shunted to the head, as with high profits and low taxes for the rich, the legs and arms do not receive enough blood flow and can't function properly. The economy slows, unemployment rises.
The period from 1998 to 2008 had relatively low marginal tax rates with the result being the bottom 90% having negative growth in income.
http://stateofworkingamerica.org/who-gains/#/?start=1998&end=2008
We should have had a healthy economy if the trickle down theorists were right. Lets try another period. 1919 to 1929. Low taxes for the rich, but the result for the lower 90% was just a 4% increase in income.
http://stateofworkingamerica.org/who-gains/#/?start=1919&end=1929
Directing money back to the low and mid income workers by increasing taxes on the rich and reducing profits by increasing wages actually makes the overall economy healthier. It may not sound fair, at least for the rich, but it is fair for the majority, the entire body. Why should one part of the body suffer so that another part can benefit?
There are people who favor austerity as a means to fix the economy. Cutting off the supply of money to the legs of the body of our economy, the lower and mid income workers, diverting the flow of wealth where it is not needed. It's a recipe for another great depression. For those who agree with this approach, try applying tourniquets to both legs and tell us how much it improves your health.
No one paid anywhere close tot hat then, just like they dont now.
I think the stronger union presence was a major factor. Not even so much from the unions, but the fact that Americans as a whole were much more engaged with what was going on around them.
The country today is hopped up on pills, glued to their iphones, kind of just going through the motions.
While it's true, not a lot was collected on the 90%- 92% top margin, there was a big difference in the percentages paid. see the chart in the link; http://www.ritholtz.com/blog/2011/04/corporate-tax-rates-then-and-now/
they weren't as blinded by tv propaganda back then.
TWO NEW TAX IDEAS
Capital Gains Tax The lie that low capital gains tax stimulates the economy must be exposed. If I buy 100 shares of stock from you, I hope the stock will go up. Just a gamble. There is no “stimulation” of the economy. The company makes no money. The country makes no money.
Just a gamble. There is no “stimulation” of the economy.
The profit should be taxed as ordinary income.
However – this capital gains tax should be zero: If a company sells its own stock to me and uses the proceeds to hire in America or buy American products, I should pay NO capital gains tax when I sell, because my original purchase DOES stimulate the economy.
Corporate Taxes – a simple solution.
For American companies based in America, there should be an alternate minimum tax - no loopholes or deductions – based on earnings ( profits ) - maybe 20%.
For those companies NOT based in America that sell products in America there should be an alternate minimum tax - no loopholes or deductions – based on sales ( not earnings ) in America - maybe 20%.
The difference between earnings and sales here would stimulate manufacturing and basing companies in America.
Obviously, both of these concepts are only concepts .
Those on the inside would have to flesh out the details and the numbers to cover all of the details and plug the loopholes.
If you just took ALL the wealth...from all the top 1% it wouldn't make a fraction of difference of our deficit you asshole. Obama knows this...he just plays the class warfare game to get votes...and you idiots believe him.
Moron liberals see our country as broke and reply..."but we have more checks"
The top 1% make roughly 20% of all income, about $3 trillion. We have a budget deficit of $16 trillion. Technically it could be paid off in about 7 years.
you're silly.
don't you realize the behavior and activity of those who earn all that money would be effected if you taxed it all?
what do you expect these people to do? behave like any other year as 100% of their earnings are taxed year after year after year?
seriously, are you an idiot?
this is left-wing, 0 life experience, stupid young, self-esteem education on display like never before.
I fear morons who think like this are the new normal and people with any critical thinking skills are soon to be the weirdos.
so sad.
Stinkyhippie made the point "If you just took ALL the wealth...from all the top 1% it wouldn't make a fraction of difference of our deficit"
Clearly it would.
If you took ALL or most of the wealth from the top 1% or even the top 10% or 20% for redistribution, you can only do that once. Once you've taken all their money or most of it, they don't have any more money or much less of it. Then those people will stop creating wealth and jobs here but instead take what ever they have left and create wealth somewhere else that allows them to keep more of what they earn. No one of any income bracket continues to work if everything or even a majority of everything is taken from them. By taking everything or most everything, incentive is gone. With incentive goes aspirations, dreams, invention, creativity, prosperity and jobs for the rest of us.
And meanwhile, the govt keeps taking and spending money it doesn't have. Now they will have to take it from more and more people of the middle class. Which means the middle class will sink further into poverty as it is already doing. As the govt has more dependents to take care of with the rising poverty levels, more needs to be borrowed. Then when China finally calls in it's loans, do we become a Chinese territory? When the credit card comes due, do we become Greece with riots in the streets? A government dependent country with no more money to give it's dependents?
Keep in mind too that the more citizens that become dependent on government, the more powerful the gov't is and the less liberty and power the citizens retain.
This is an interesting link and leads to other important links on this topic. http://www.quora.com/How-much-money-could-the-US-gain-by-confiscating-all-individual-wealth-above-1bn
Only do it once? These people have annual profits.
Make 2 million this year.... same next year... maybe even more... People are not a CEO or whatnot for only a year.
Also no one is suggesting to take all of their income.
They're not going to let you take all their money. After the first time, they will move it, legally or illegally, to hide it or profit from it elsewhere. What makes you think any idiot would let the government take most of their income and then stay here to let them do it over and over again. These people didn't get wealthy by being stupid. They have the money to move themselves and their business to tax friendly countries like Canada and others. The government ends up losing revenue and the country loses jobs.
that's the dumbest argument.
No they're not going to move their established business to a new market in a new country because a 5 percent tax increase. also most corporations are global. America is a huge market. They're not going to leave it.
And again no one is suggesting taking all of their income.
First of all, I was responding to the post of taking ALL the wealth not a tax increase of 5%. You're changing the argument. But in response to your new argument of raising taxes 5% on them. They will just pass that on to the consumer as part of their overhead. The ones that see fit, WILL move their operations. That's what's been happening for years. The US has the 2nd highest corporation tax rate in the world at the moment. First is Japan. http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
Don't you understand that is why corporations have moved their businesses overseas now. That's why more and more of our jobs are outsourced. To increase taxes will just make more of them do more of the same.
Solve the problem of outsourcing by enforcing trade agreements to abide by American labor standards
We do not use slave labor in this country because it is wrong. We are not supposed to exploit the poor and the desperate. That is not what this country is supposed to be about.
Also in 1958 to 1968 they were not taking all the wealth either. Currently the CEO's and elites are taking all the wealth. That's bad for the economy and it's bad for the 99% specifically the half of this country working 40 plus hours a week for 26,000 dollars a year, while the company they're helping to profit rakes in billions.
The elites are accruing so much wealth because of the financial sector corruption and the lack of important regulations not the tax code. The enforcement of the community reinvestment act in 1993 started it and then the abolishment of Glass-Steagle put it on steroids. The Fed keeps propping them up with their quantitative easings. This is what broke down our economy and heightened the income disparity. That's what we need to fix.
As far as outsourcing, it's has more to do with the tax code than labor. You can find cheap labor anywhere if that's what you are looking for even here in America but you're still paying the 2nd highest tax rate in the world. There's no incentive to bring corporations back here.
As far as trade agreements, there hasn't been one passed since 2007 and you're right, the ones we have are not enforced. There are a couple of other things that need to get done in the way of trade: Reinstate the Trade Promotion Authority Complete negotiations for the Trans-Pacific Partnership Pursue new trade agreements with nations committed to free enterprise and open markets
And when it comes to China: Increase resources to prevent the illegal entry of goods into our market Increase resources to pursue and support litigation against unfair trade practices Use unilateral and multilateral punitive measures to deter unfair Chinese practices Designate China a currency manipulator and impose countervailing duties Discontinue U.S. government procurement from China until China commits to these.
As far as the initial argument that started this post, when you take all the money from the rich and give it to the rest, there will be no one left to take it from. The way to fix things is to fix the financial sector and get rid of the corruption and rigged laws that benefit Wall Street. It is Wall Street and the corrupt government that has screwed the rest of us. Let's get that fixed first.
He doesn't understand fractions.
@stinkyhippie
Your name shows your lack of intelligence.
Thanks for making it so easy to recognize the hate filled ignoramus that you are!
You may go now.
Don't descend to their level.