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Hometown: Florida
Member since: Wed Mar 14, 2012, 03:53 PM
Number of posts: 104

About Me

One day I hope we can make FDRs 2nd Bill of Rights a reality!

Journal Archives

Top left leaning thinkers answer my question about taxes

I often point out that we had a better economy when taxes were higher on the rich (up to 70% until the early 1980s I believe). But then someone will say to me, "But no one actually PAID 70% because of loopholes, tax shelters, etc" and they also say I can't use the Eisenhower era as an example of a thriving economy existing under heavy taxation because "we didn't have the great society, welfare, etc under Eisenhower."

These people are telling me that any time I mention taxes were higher prior to the 80s, it's somehow an invalid misleading fact all because "no one actually paid that much". How would I respond to that? A number of VERY smart people gave me some suggestions.

Noam Chomsky: "Very poor response, I think. Tax evasion by the rich is far higher now than it was during the great growth period of the 50’s and 60’s. Since then many sophisticated techniques of evasion have been created. It’s true that Medicare hadn’t yet been instituted, so costs of medical care were far higher (Medicare is far more efficient than the private system). But there were other huge forms of “welfare” which have radically declined, like free tuition for an enormous number of people (the GI bill). The fact brought up lead to exactly the opposite of the conclusions drawn by those who are speaking to."

Alan S. Blinder: "The high taxes under Ike point is half-correct. Yes, few people paid a 92% marginal tax rate (but a few did). But it took some effort—what economists call “distortions”—to avoid such high taxes. By standard reasoning, that effort should have reduced growth."

Brad DeLong: "People certainly paid 50% marginal rates. And we had the high Cold War military--which was a much bigger drag on the economy than the great society could possibly be..."

James Galbraith: "The point of those tax rates was not to collect revenue. It was to discipline firms and discourage them from overpaying their executives. Which worked pretty well for a long while. As for Eisenhower, he came after the New Deal; Social Security and minimum wages (and much else) had been created, though not medical insurance. Eisenhower's greatness consisted in leaving Roosevelt's creations alone."

Austan Goolsbee: "statistics of income data from the IRS shows that average tax rates at various high income levels was well higher than now so I would say their claims aren't right"

Jeffrey Liebman: "A couple of quick responses. If "no one paid anything close to 70%" refers to average tax rates, that could be true. Average tax rates are below marginal tax rates because people in the top bracket still pay at the lower rates on their first dollars of income. On the broader point, there is a regular CBO document that shows average tax rates back to 1979. The top 1 percent were paying about 35 percent of their income in federal taxes in 1979 and pay around 30 percent today. I am not sure if anyone has taken that series back earlier -- which is what you really need for your point."

L. Randall Wray: "bartlett and steele, reporters for Philly Inquirer did show that "no one" (rich folks) paid anything close to 70%; most paid less than a secretary. So that is true. However, I suspect the average rate on high income folks, especially those making capital gains, was much higher then. So your point remains true--lowering tax rates certainly did not lead to a glorious economy but did make rich folk richer. Still, the main reasons for greater equality and for better econ performance probably had little to do with the tax system."

#OWS isn't dead. It's just getting started.

#OccupyWallStreet was deeply unsettling to the wealthy ruling class because it reminded them that WE THE PEOPLE haven't completely deteriorated into brain-dead, wage-slave zombies just yet. The top 1% knows we overwhelmingly outnumber them, which is precisely why democracy bothers them, my friends. This is why they desperately seek to weaken our collective voice with redistricting schemes, blatantly racist voter ID card laws, and every other dirty trick in the book -- the Republicans are frightened we'll USE democracy to make this world a better, fairer place. And I propose we do exactly that.

The line must be drawn here.

The line must be drawn here. Once Obama's reelection is secured, Progressives must unite behind a single cause. That is, winning the class war started against the middle class by the top 2%. If we lose, the middle class will die. It's really that simple. And then all that will be left will be the top 2% in their castles and gated communities, and everyone else toiling in the fields to supply those castles with produce. The top 2% are feasting daily at an all you can eat buffet supplied by our labor, while the rest of us are joining an ever growing soup kitchen line within smelling distance of that buffet. It's insanity. After Obama we need a politician courageous enough to make FDR's proposed 2nd Bill of Rights a reality.

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