Why the 1% should pay tax at 80%

[MindMover]

In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled, from less than 10% in the 1970s to over 20% today (pdf). A similar pattern is true of other English-speaking countries. Contrary to the widely-held view, however, globalisation and new technologies are not to blame. Other OECD countries, such as those in continental Europe, or Japan have seen far less concentration of income among the mega rich.

At the same time, top income tax rates on upper income earners have declined significantly since the 1970s in many OECD countries – again, particularly in English-speaking ones. For example, top marginal income tax rates in the United States or the United Kingdom were above 70% in the 1970s, before the Reagan and Thatcher revolutions drastically cut them by 40 percentage points within a decade.

At a time when most OECD countries face large deficits and debt burdens, a crucial public policy question is whether governments should tax high earners more. The potential tax revenue at stake is now very large.

For example, doubling the average US individual income tax rate on the top 1% income earners from the current 22.5% level to 45% would increase tax revenue by 2.7% of GDP per year – as much as letting all of the Bush tax cuts expire (only a small fraction of them lapsed in January 2013). But of course, this simple calculation is static: such a large increase in taxes may well affect the economic behaviour of the rich and the income they report pre-tax, the broader economy and, ultimately, the tax revenue generated. In recent research, we analyse this issue both conceptually and empirically using international evidence on top incomes and top tax rates since the 1970s.

http://www.theguardian.com/commentisfree/2013/oct/24/1percent-pay-tax-rate-80percent?CMP=share_btn_tw

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I put this comment in good reads for a very good reason ...

[unblock]

1. they'll never agree, but we need to make the rich harder work for the money.

rich people shouldn't think of handing money to poor people as a moral failing or anything of the sort.

they should see it as a challenge, how do i get all that money the government is giving the poor into my pockets? yes, that's right, by providing goods and services that they need! isn't that what they always boast that they're so good at?

the whole point of a functioning economy is to get goods and services into the hands of the people who need them. taking excess income from the rich and handing it to the poor gets them to do exactly that.

not to worry, even taxing the rich at something like 80% would still leave them rich. moreover, it would deliver to them millions of customers with cash to spend.

call it the trickle-up theory if you like.

[Erich Bloodaxe BSN]

2. The estate tax on the 1% should be at least 80%.

I actually don't begrudge people wealth they earn themselves, although I also don't believe you can actually 'earn' some of the amounts people are given for their 'work'. But the real problem is intergenerational wealth transfers creating oligarchic dynasties.

As I've said before, though, I would be amenable to a loophole that allowed them to bequeath 100% of their accumulated wealth, as long as no more than, say, 5 million at a shot went to any one person. So your billionaire couldn't simply pass that billion on to one person. Either he'd get 800 million taxed away if he wanted to give his entire fortune to one person, or he could simply spread it across two hundred different heirs at 5 million a pop and not pay any estate taxes. Those two hundred new millionaires would stimulate the economy far more than a single new billionaire.

[appalachiablue]

4. +1.

[appalachiablue]

3. When Hollande was elected a few years ago French millionaires like actor Gerard Depardieu

moved to Belgium to avoid the tax increase on the top level. What you're saying is right, but the rich will run and relocate if this should ever become legislation, at least in these times. There's a post here on DU about uberwealthy buying land in New Zealand for airstrips to land their private planes that can hold up to 30 people or so. Also super ships large enough for rich people have 'homes' in are around, thus to escape any adverse conditions on land for a long, long time. They are way, way ahead of us, have the resources to plan and take action. The progressive tax system worked in the past, but in the last 35 years rich are very used to $.

A grandfather paid probably 90% taxes pre WWII, his sons 70% and they lived well, provided jobs that were unionized with benefits and gave back to society through philanthropy. There was no complaining about the government, Uncle Sam or DC. That kind of attitude was unthinkable and bordering on treason in their view.
There were no mansions, yachts or ostentation. They were smart, hard working, educated in free public schools and affordable colleges, 2 on the GI Bill. Education and discipline were emphasized, a good sense humor was appreciated. They were thankful for the opportunities and resources the US provided and loved their country which they or their ancestors defended in wars from the Revolution to Korea.

Ronald 'Dutch' Reagan began in 1981 the era of eliminating the strong US middle class, the government safety net, and liberal social democracy in favor of anti-govt. and pro-business policies, large tax breaks for the rich, supply side, voodoo-trickle down neoliberal economics, neoconservative foreign policy and (not) free trade that has ended the Golden Age in America when many, not all had a chance at a decent middle class life between 1935-1985. It was the largest middle class the world has ever seen. In 2013 for the first time the US fell behind Canada for the largest middle class. Canada is no. 1, the US is no. 2.