So, when does one prove causation? Because by any economic metric, the times when we've been fiscally strong is when the top marginal tax rate was higher than 36% currently. When they lowered it in 2001 from 40% while going to war, it created net zero jobs during the entirety of the Bush administration (and starting leaking jobs en masse during the crisis in 2008).
One could argue that Reagan's administration saw some powerful growth, adding 15 million net jobs; but, again, he maintained a >50% top marginal tax rate average through his tenure.
The Clinton administration growth rate was even more powerful (arguably) than Reagan's, seeing 23 million net jobs during his tenure, and that was when top marginal rates were nearly 40%.
An outlier, and a very powerful one, is when we saw the largest uplift from post-war growth phase to absolute juggernaut boomtime, was during the 50s, when top marginal tax rates were 90%. Somehow, I doubt we'll ever go back to that time (both in growth and taxation), but we can see that the times of growth was when top marginal tax rates were over 40%. Dip below, no room to grow.
* how much (usually as a % GDP) should / does a govt take?
* how does that tax burden get shared out
the first is an issue of services provided by govt, but thesecond is an issue of fairness.
If you want more services you need to pay. As a % of GDP the USA takes about 26-28 % whereas pretty much every other Western country is between 35 and 45%.
My take on that is welfare costs. Full health and pension support for all the USA is going to be expensive, and will probably bring the US in line with Europe
the issue now is fairness - but even taut is really about ability. The easy targets are the middle classes - they have money but rarely enough to take advantage of tax loopholes
but if all the money is now held by the richest 2% then the richest 2 % will pay. The alterntive is no government
we all live by the 1930s maxim - I rob banks because that's where the money is. If the richest people in society have the money, that's where the bank robbers / IRS will go.
> Full health and pension support for all the USA is going to be expensive, and will probably bring the US in line with Europe
btw, the US government already spends more per capita on health care than the Canadian government does, yet Canada has a (mostly) public health care system and the US has private system where even people with insurance can go bankrupt from medical costs.
I've heard a number of people (Grover Norquist included) make the claim that although the top marginal tax rates were higher, there were a far greater number of tax exemptions available. I have no idea how true this is, and I'm not aware of anyone who's studied the actual income, wealth, and taxes of America's rich over the decades.
In addition, the point at which the top tax rate kicks in has varied quite a bit throughout the 1900's. For instance, in the 1950's, when we had a top marginal tax rates over 90%, the top bracket also kicked in at 400k, which would be nearly 4 million in todays dollars. That's why merely looking at the top marginal rate is kind of misleading.
90% of the top bracket..? That seems like honest robbery to me, like saying "I'm sorry. You're not allowed to make a lot of money. The government needs this money."
Why should it be possible to write it all off? These systems seem to be completely in disagreement with each other? Why not keep it less than 50%, just make it harder to write things off O.o
Because, in liberal (small-l, read: the West) democracies, the notion that taxation policy should be used to encourage productive behaviours and discourage unproductive ones is deeply-enshrined. Thus do we give tax breaks to people who start companies, create jobs, or invest in same, and further penalize with a luxury tax those who just go and buy a big fuck-off yacht. We give tax breaks to local farmers, but tax cigarettes and booze.
If we had the kind of tax structure you propose, we'd equally reward those who invest their money in growing companies, and those who blow it on hookers and blow. Some libertarians would claim this as a just tax system, and that the free market would determine how and where people invest, but this is not an idea that has much purchase among economists, social scientists, or the political elite.
Asking Grover Norquist for advice on economics is like asking Pat Robertson to explain what causes hurricanes and earthquakes (hint: he says it's something about the sexual orientation of some people).
What answer would that be? Because looking here[1], the effective tax rate during our largest job growth (Clinton Administration) was also when we saw the largest effective tax rates for the 10, 5, and 1%.
I guess I have to correlate until we run out of data, then checkmate or something.
this debate is so complicated that you can easily take data to support any side of the argument
for eg. the effective rates don't match up for the 80s but they do for the 90s. they also don't take into account capital gains, which is what most of the top 5, 1% etc. pay
then if I was arguing the other side of the debat I would say that this data hasn't been normalized for purchasing power
One could argue that Reagan's administration saw some powerful growth, adding 15 million net jobs; but, again, he maintained a >50% top marginal tax rate average through his tenure.
The Clinton administration growth rate was even more powerful (arguably) than Reagan's, seeing 23 million net jobs during his tenure, and that was when top marginal rates were nearly 40%.
An outlier, and a very powerful one, is when we saw the largest uplift from post-war growth phase to absolute juggernaut boomtime, was during the 50s, when top marginal tax rates were 90%. Somehow, I doubt we'll ever go back to that time (both in growth and taxation), but we can see that the times of growth was when top marginal tax rates were over 40%. Dip below, no room to grow.
IMHO (with evidence), of course.