US tax rate history - A return to the glory days

[ParticleGrl]

Reality doesn't depend on how I think about it. Reality is that 100% of taxes are not used for national defense.

Right, the government provides national defense AT A PROFIT. It then does with its profits what it wants.

 

[russ_watters]

If I don't support [condone] a traffic law, is it theft if I'm fined for violating the law?

Theft is tough to apply here, but the name the founders gave is "tyranny of the majority." We've reached the typping point beyond which the majority, who pay no federal income taxes, can freely raise the taxes on the minority who pay them. That can only drive us to ruin.

 

[Ivan Seeking]

Unfortunately, the people paying the bill are not the ones receiving the services for most of the spending.

The biggest driver of long-term debt are entitlements. Are you saying that you are exempt from entitlements?

 

[Ivan Seeking]

Theft is tough to apply here, but the name the founders gave is "tyranny of the majority." We've reached the typping point beyond which the majority, who pay no federal income taxes, can freely raise the taxes on the minority who pay them. That can only drive us to ruin.

So fluff and hyperbole aside, I take it the answer is no.

 

[turbo]

When I was a kid, my parent paid for my education twice - first through taxes, and then by paying tuition for our private school.

My wife and I never had kids. Clearly we should be credited for our lack of usage of the school system.

In fact, we should just make it a fee for services. That way only rich kids would get an education. Right?

My wife and I never had kids, either. Should we have gotten yearly rebates on our municipal property taxes? Unfortunately, when the big-box stores moved into our town, killing lots of small retailers, they brought in lots of low-wage, part-time jobs with no benefits. That meant an explosion of cheap little apartments and trailer parks, AND an explosion of school costs. We had to leave that town after our property taxes went up over 30% in one year, while the taxes on commercial properties remained flat.

 

[Ivan Seeking]

You missed the other half of the issue: higher taxes mean less money in the pockets of taxpayers. So that's something most people care a great deal about.

It could only mean less money in people's pockets if more revenues were collected. The assertion was that tax rates have little influence on revenues [presumably he meant on a per-capita basis].

 

[Al68]

In the analogy (which I clearly find ridiculous, I was simply pointing out that his tax = theft stance is a bit shaky), shareholders were people that live in the country. The taxes aren't an investment, but rather a bill for services. You don't get more say in what Mars does just because you eat more Snickers bars.

I agree with your main point here, but my stance isn't "tax = theft". Taxation is a method of collection, used for both theft and legitimate debts owed. Taxation is a tool used for theft, not theft itself.

 

[Ivan Seeking]

I agree with your main point here, but my stance isn't "tax = theft". Taxation is a method of collection, used for both theft and legitimate debts owed. Taxation is a tool used for theft, not theft itself.

And the defintion of "theft" is whether or not you agree with a particular program or see it as fair?

 

[Al68]

If I don't support [condone] a traffic law, is it theft if I'm fined for violating the law?

No. Traffic enforcement has a cost, and traffic law violators owe that cost.

It could only mean less money in people's pockets if more revenues were collected.

That's false. It means less money in peoples' pockets because the higher tax rates result in less wealth created.

 

[Al68]

Right, the government provides national defense AT A PROFIT. It then does with its profits what it wants.

Taking profits by force is still theft. Theft can be called profit without changing the fact that it's theft. For example, the money a bank robber has left after paying for his expenses is his profit from the robbery, and he does what he wants with his profits. Still theft.

 

[Ivan Seeking]

No. Traffic enforcement has a cost, and traffic law violators owe that cost.That's false.

But I don't support the law. It is just more tyranny of the masses. Same goes for schools.

It means less money in peoples' pockets because the higher tax rates result in less wealth created.

Since Clinton, we have had the lowest tax rates since just before the great depression. I see no evidence to support your assertion.

What I do see that is that we gave huge breaks to corporations under Reagan and funded the outsourcing of our own jobs.

 

[Al68]

And the defintion of "theft" is whether or not you agree with a particular program or see it as fair?

Nope, I have clarified that many times in this thread.

 

[Al68]

Since Clinton, we have had the lowest tax rates since just before the great depression. I see no evidence to support your assertion.

My assertion was basic economics: taxation results in less of that being taxed. Here's a couple of links, the first one is probably the best explanation:

http://online.wsj.com/article/SB10001424052748703514904575602943209741952.html?KEYWORDS=hauser
http://en.wikipedia.org/wiki/Hauser's_Law

 

[Ryumast3r]

My assertion was basic economics: taxation results in less of that being taxed. Here's a couple of links, the first one is probably the best explanation:

http://online.wsj.com/article/SB10001424052748703514904575602943209741952.html?KEYWORDS=hauser
http://en.wikipedia.org/wiki/Hauser's_Law

Since you love the other graph, let's pull out one that shows that lower taxation does not result in more growth:

Here we see that there are many ups and downs (drastic even), even if the tax rate remains constant. Even with the top marginal tax rate at 91% the growth sometimes jumped to over 7% (which is pretty much the highest the graph ever reaches). Sure, there was a spike after the 1984 tax cuts, but then it goes back down, and another cut doesn't stop it from going down again.

In fact, when Bush Sr. cut taxes more, GDP growth actually went negative. Two of the three years with the most economic growth were in the 50's with the top tax rate of 91%.

In short: There is no visible correlation between tax rate and GDP growth.

The link's whole "get a piece of a bigger pie" thing is a farce.

 

[drankin]

I don't understand how the economy can improve if more money is taken from the private sector by the government. How does less money become more because the government has it? I don't care who you take it from.

 

[Ryumast3r]

To continue the last post (hit reply early... haha whoops).

Let's look at Income Growth now:

This gives much of the same story as the GDP growth.

We see some small growth in Median income, a measure of how the avg. american is doing, when the top-bracket taxes were cut in the mid-1960's and the 80's, however we see income decreases after the the late-80's tax cuts, and see some increase after the tax increases of 1993 (clinton-era). 1974 had the worst median income decrease, with a tax rate of 70%, but it also saw the highest median income growth. No correlation again.

Now let's look at wage increases:

Surprise surprise, we have mixed results again!

Growth in hourly wages did increase in the 80's following the reagan tax cuts, though it took two years for that to happen... but, just like GDP and Median income growth, they decreased following the late 80's cuts, spiked upwards after the 1993 tax increase.

Wages grew at a good rate (1% or more, usually more) all throughout the time when the top tax rate was 91%. In fact, it wasn't until 72 (tax decrease) that the growth was less than 1%. If we look at the time that the tax rate was 50% or less (19 years), we see that 8 of those years saw an increase of less than 1%.

Now let's look at job creation:

Negative means decrease in unemployment (in essence, job creation). So, even though the top tax rate goes down, we see unemployment remains essentially the same. Three of the four largest increases were when the top tax rate was 91%, the fourth being the largest, happened when it was 70% in 1975. The mixed results speak poorly for those who see cutting taxes for the rich as a way to incite job creation (significantly).

So, can you tell what our conclusion is yet?

Overall data strongly refutes any arguments that cutting taxes for the richest americans improves economic standing of the lower or middle classes or the nation as a whole. To be sure, everything in these graphs are dependent on MANY MANY factors, not just tax policy. However, what these do show is that any attempt to stimulate growth by cutting taxes for the rich (only talking rich here), HAS NOT worked over the past 50 years, so why should it work now? Why would it work in the next 10?

Put simply: Bush's top-bracket tax is ineffective, and will not cause any growth. Unless, of course, you're talking about the growth of the deficit.

 

[ParticleGrl]

Taking profits by force is still theft. Theft can be called profit without changing the fact that it's theft.

The profits are collected via the bill for national defense. Where is the force? You are provided a service, the government provides that service at a profit, and then uses its profit as it sees fit.

If taxation is force, we are back to tax=theft, which we all agree is shaky.

don't understand how the economy can improve if more money is taken from the private sector by the government. How does less money become more because the government has it? I don't care who you take it from

We all agree (I hope) that money can be spent on capital investment that can grow the economy.

Certain government functions that do create innovation and growth (R&D and infrastructure development, health care (debatably)) probably can't be handled private enterprise effectively- its the problem of public goods. But taking too much money from the private sector can obviously be constrictive.

 

[Ryumast3r]

I don't understand how the economy can improve if more money is taken from the private sector by the government. How does less money become more because the government has it? I don't care who you take it from.

Because the government provides a comparatively stable employer when compared to the private sector. Reliable jobs leads to reliable amounts of spending. In a recession, a big problem is that spending decreases.

Just because "the government has it" doesn't mean it doesn't end up back in the hands of the people who work for the government, who then purchase food from non-government stores, and, if they're feeling lucky/wealthy, maybe a good commodity or two.

This is not to say that if all money is taken by the government we'd have an ideal society, to be sure that's not going to happen. It'd be really stable (see: Communism, where the money is extremely predictable), but there's no growth, and, in the case of tried-communisms, there was no incentive to work, so there was negative growth.

Economies that are not entirely controlled fluctuate. They go up and they go down (maybe not at a set rate, or with a set period, but you cannot grow to infinity). Regulating the economy, taking money out of the private sector and controlling it via government, helps reign in the amount of growth that occurs, but it also limits the effect of recessions/depressions. Without control (theoretically, and I'm not an expert in this field, so someone please feel free to tell me if I got some of this wrong), depressions would be worse than anything we've seen, though the periods of growth would also be much bigger than what we have seen.

 

[russ_watters]

It could only mean less money in people's pockets if more revenues were collected. The assertion was that tax rates have little influence on revenues [presumably he meant on a per-capita basis].

Fast moving thread: I think you missed the graph in post 2...

 

[russ_watters]

So fluff and hyperbole aside, I take it the answer is no.

Getting hung up on the label is a thoughtless way to dismiss real facts that many consider to be a problem:

-It is a fact that the number paying no federal income tax is about 50% and growing.
-It is a fact that Congressional Democrats recently tried to raise taxes on high wage earners, further widening that disparity.
-It is a fact that Democrats campaign on the above.

While you may not be bothered by these facts, some people are. But dismissive as you want to be, they are still facts.

 

[Char. Limit]

This thread is hilarious to watch. Both sides bickering and calling each other names... it's a real hoot. Just remember, whenever you make another post in this thread, there is someone laughing at every word you write. And that someone is me.

EDIT: As a side note, if people don't want to pay an extra (see that word, extra?) five dollars on a bridge, here's an obvious solution: close down the bridge. It's obvious that the people don't want it, so why should they get to use it?

 

[WhoWee]

This thread is hilarious to watch. Both sides bickering and calling each other names... it's a real hoot. Just remember, whenever you make another post in this thread, there is someone laughing at every word you write. And that someone is me.

EDIT: As a side note, if people don't want to pay an extra (see that word, extra?) five dollars on a bridge, here's an obvious solution: close down the bridge. It's obvious that the people don't want it, so why should they get to use it?

I agree with your assessment of the bickering. However, the better approach to the bridge is a toll road (perhaps)- IMO.

The more serious side of this discussion however (IMO) was demonstrated in my Post number 22:

"If an investor has $1,000,000 to invest in a small business and the bank will loan an additional $1,000,000 to start a business that might provide $500,000 in income for 20 years - is it a good investment - given a 91% tax rate as suggested by the OP?

Would you risk $2,000,000 to earn $45,000 per year - or would you leave your money in passive investments earning the same $45,000 per year?"

The "idea" of imposing extreme tax rates - to perpetuate out of control Government spending - is no joke.

 

[Char. Limit]

Personally, I support raising taxes - on everyone. I also support a drastic reduction in spending, but I feel that raising taxes on everyone is a necessary maneuver. I figure... 50% will do. We hardly need a 91% tax, but I think 50% will do. Because the fact is, if we keep going at the rate we're going, with lowering taxes and raising spending, our economy will not last the decade.

EDIT: And if there is a tax to support spending, like with the bridge, I'll be glad to pay it. I can go with two less energy drinks in a year.

 

[Dale]

If the top marginal tax rate makes no difference in revenues, then no one should complain about raising rates. Either you collect more money or you don't.

Huh? This comment makes no sense. I don't collect the money, it gets collected from me. And although it doesn't help the government, it sure hurts me. So why wouldn't I complain? There is a big down side for me and no up side for anyone else.

 

[Dale]

The biggest driver of long-term debt are entitlements. Are you saying that you are exempt from entitlements?

Yes, by law I am exempt from receiving most entitlements, while I pay for others to receive them. Btw, I am glad that you recognize that the biggest driver of long-term debt is entitlements.

 

[CAC1001]

The profits are collected via the bill for national defense. Where is the force?

No govenrment service is provided at a profit. The government funds its services via taxes. As for the force, tell the IRS you have decided not to pay your taxes this year.

You are provided a service, the government provides that service at a profit, and then uses its profit as it sees fit.

"Profit" isn't really applicable to the government.

If taxation is force, we are back to tax=theft, which we all agree is shaky.

Taxes are theft. It is the forcible taking of people's money. But it is a necessary theft in order to fund a government so we can have a free society with laws.

 

[Al68]

The profits are collected via the bill for national defense. Where is the force? You are provided a service, the government provides that service at a profit, and then uses its profit as it sees fit.

Taxation is force. Using it to collect a legitimate debt is not theft. Using it collect a "profit" to use for other things is theft.

If taxation is force, we are back to tax=theft, which we all agree is shaky.

That's logically false, and would only be true under the assumption that force=theft, which nobody has claimed.

The action I'm calling theft is the same action you would call theft if it were performed by a private party illegally instead of by government. It's not a fundamentally different definition of theft. The difference in our views is my rejection of the claim that government approval converts a particular action from theft to non-theft.

 

[CAC1001]

Overall data strongly refutes any arguments that cutting taxes for the richest americans improves economic standing of the lower or middle classes or the nation as a whole.

Depends on the tax cut. If you cut the rate down from say 90% it can have a huge effect (look at Britain for example), on the other hand, if you cut the rate from say 39.6% to 35%, not so much. Remember also that quite a few of these tax cuts have been accompanied with the closing of certain loopholes.

To be sure, everything in these graphs are dependent on MANY MANY factors, not just tax policy. However, what these do show is that any attempt to stimulate growth by cutting taxes for the rich (only talking rich here), HAS NOT worked over the past 50 years, so why should it work now? Why would it work in the next 10?

Generally tax cuts for "the rich" have been accompanied by tax cuts for everyone, thus creating a combination of both supply-side and demand-side tax cuts. Reagan's were a combination and so were President Bush's.

 

[CAC1001]

Because the government provides a comparatively stable employer when compared to the private sector. Reliable jobs leads to reliable amounts of spending. In a recession, a big problem is that spending decreases.

But the government doesn't create any wealth. All spending that is done by government employees is done with money that was first taken out of the private sector. Generally, I would say if you see higher taxes and decent growth, the argument would be more that the higher taxes aren't infringing on economic growth all that much, not that the higher taxes are responsible for the growth. One also would need to look at the loopholes with such higher rates.

Just because "the government has it" doesn't mean it doesn't end up back in the hands of the people who work for the government, who then purchase food from non-government stores, and, if they're feeling lucky/wealthy, maybe a good commodity or two.

True, but it was just transferred is all, away from the private-sector that had it to the government.

This is not to say that if all money is taken by the government we'd have an ideal society, to be sure that's not going to happen. It'd be really stable (see: Communism, where the money is extremely predictable), but there's no growth, and, in the case of tried-communisms, there was no incentive to work, so there was negative growth.

Communism wasn't really stable either. There were constant surpluses and shortages. Many Soviet enterprises produced their own tools, trucks, tires, etc...because they couldn't rely on separate enterprises to do this. They also would stock up on things because of the shortages (as opposed to modern companies that often have things arriving just-in-time).

Economies that are not entirely controlled fluctuate. They go up and they go down (maybe not at a set rate, or with a set period, but you cannot grow to infinity). Regulating the economy, taking money out of the private sector and controlling it via government, helps reign in the amount of growth that occurs, but it also limits the effect of recessions/depressions. Without control (theoretically, and I'm not an expert in this field, so someone please feel free to tell me if I got some of this wrong), depressions would be worse than anything we've seen, though the periods of growth would also be much bigger than what we have seen.

That is how the early American economy tended to perform. Certain areas of the country would go through enormous booms, then depressions, then booms again, then depressions. However, I think that was back in the days before we had a national monetary policy.

 

[russ_watters]

They were asked to pay $5 a year for the bridge. I don't know why everyone wants to make this more complicated than it really is. Unwilling to accept, or totally confused by the way they think?

Ok, let me try again another way:

They were asked in the referendum something to the effect of:

--------------------------------------------------------------------
Would you like to pay an additional $5 a year in taxes to fix this bridge?
A. Yes
B. No
--------------------------------------------------------------------

You are looking at the question narrowly and concluding from a "no" answer that such people aren't willing to spend $5 to fix a bridge. But that isn't necessarily true. What irritates people like me about these questions is they are narrowly focused, often precisely for that reason - to force people into a position they don't want to be in. What I would prefer is if the question had a third option:

C. Instead of paying an additional $5 a year in taxes, take $5 from the paving and snow plowing fund to pay for the bridge repair.

That third option is a viable option. The lack of that option on the ballot could irritate me enough to answer "No" if it is left off, but clearly someone who would select option "C" is willing to pay $5 to fix the bridge. He's just not willing to pay $5 more to fix the bridge.

The problem here, as I see it, is that you aren't recognizing that Republicans see an option "C" that they aren't being offered. Frankly, I think that's the biggest piece of the reason we're in the current mess: we're allowing our politicians to ask us flawed questions and as a result we're giving contradictory answers:

-If you ask the public if it wants a tax cut, it will say yes.
-If you ask the public if it wants more services, it will say yes.

Politicians ask these questions, get two "yes" answers, and thus: debt. Instead, they should ask:

-Do you want a tax cut or more services.

Really, we should be demanding that they offer the question in that form. Better yet, we should be demanding that they balance the budget. If we demand that they balance the budget, they will be forced to characterize their questions in proper terms.

After the results of this vote, I doubt anyone will bother with another initiative. Until after the bridge collapses, or is shut down for only bicycle and pedestrian use, which is already being considered.

You missed my point. What I'm saying is that if they had asked the question properly, they wouldn't have to re-ask it, it would have passed the first time.

Though I'm not sure if there are laws that regulate what can and cannot be voted upon. It sure would have been interesting if we could have voted on whether or not to appropriate enough money to get us into the Afghanistan and Iraq wars though. How do you think the nation as a whole would have voted if they'd been told it would raise everyone's taxes by 5%?*

*Ballpark guess. May be too high or low by an order of magnitude. No time for maths. Late for work. Again...

I was late for work again too, no worries...

Unfortunately, you can't predict the cost of a war, so you can't ask people ahead of time for financial authorization. And if you ask them halfway through, you may end up turning a victory into a defeat. See: Iraq. If we had suddenly pulled out in 2005, the Middle East would be a much uglier place today than ended up being.

So let's start with the easy ones: let's start with properly framed questions about straightforward budget issues.

And things are getting worse. At least the typical Democrat and Republican mantras of "tax and spend" and "small government, low taxes" could each theoretically lead to a balanced budge. But now the Democrats realize that high taxes don't sell and the Republicans realize that cutting services don't sell, so instead we have 'spend and spend more' and 'big government, low taxes', both of which lead us deeper and deeper into debt.

 

[Char. Limit]

Here's a properly framed question:

The people refused to pay for the bridge. Never mind what options we COULD have given them, they were given two options, pay for it with additional money or don't. What should happen to the bridge now?

My answer would be "shut it down". Yours?

 

[WhoWee]

Here's a properly framed question:

The people refused to pay for the bridge. Never mind what options we COULD have given them, they were given two options, pay for it with additional money or don't. What should happen to the bridge now?

My answer would be "shut it down". Yours?

Sell it to someone who will make it a toll road.

 

[russ_watters]

Here's a properly framed question:

The people refused to pay for the bridge. Never mind what options we COULD have given them, they were given two options, pay for it with additional money or don't. What should happen to the bridge now?

My answer would be "shut it down". Yours?

My answer is: ask me a fair question or I won't give you any money and I won't vote for you next time you come up for re-election.

 

[CAC1001]

It's quite predictable how these threads degrade, and it would be funny, if the arguments were not so inane and illogical.

Example: My nearest neighbors are tea-party supporters. He is now retired, but has never made more than $40K in a year, since he worked low-skill jobs in a tannery. His wife works a seasonal job, and they have her elderly mother dependent on them, so essentially, they pay no income taxes. Their son works only seasonal part-time jobs and his wife is an aide at the local hospital, plus they have two very young children to claim as dependents, so they pay no income taxes, either.

In contrast, my wife and I own more property than either of them, so we pay more property taxes, ~50% of which goes to pay for the public school system that educates the two little kids. How can these Tea-Partiers be so fearful of rolling back Bush tax cuts for the wealthiest 2% if they can never be effected by the roll-back?

Because maybe they are against it on principle? One thing I don't get about many on the Left is they accuse the Right of being "selfish" and "voting for their own interest," but then they rail when lower-income people on the Right are against raising taxes on higher-earners. Not everyone votes according to how something will affect themselves, certain people do vote according to principle. These same Left, who think of themselves as "selfless" have no problem on voting for tax increases on people aside from themselves it seems.

Lies and distortions from the right, because these people can repeat a couple of slogans, but can't logically explain how they could possibly be effected by rolling back Bush tax cuts on the top 2%.

They could be affected if some of those top 2% are small businesses that pay those rates, and might end up having to lay off some people. However, the two main reasons I would think of for being against such increases are:

1) Principle. There's a saying that the politician who promises to rob Peter to pay Paul can always depend on the support of Paul. But sometimes Paul is principled.

2) Oftentimes, if the government increases revenues, they'll just increase spending even further. So many people are against any tax increase unless there would be a guarantee that the government would work to reduce spending or keep it controlled.

Still, it's pretty sad to see people at the bottom of the economic ladder carrying water for the wealthy on the far right, based not on rational self-interest, but ideology.

Yes, how DARE people vote on principle as opposed to strictly their own self-interest. I also find it hilarious to see a left-leaning guy railing about people not voting for their self-interest!

The US cannot hope to grow its way out of these huge deficits by handing more tax cuts to corporations and wealthy individuals.

Arguing to not increase taxes is not the same as arguing for more taxes. IMO, we need to increase taxes on the poor and middle-income, not the "rich," because too many of the poor and middle-income pay zero federal income taxes right now.

Trickle-down is a farce.

As said before, there is no such thing.

Sadly, the same crowd that you see at rallies with "No Socialized Medicine" signs is also well-dotted with "Hands off My Medicare" signs, so although retirees seem to love Medicare, they think that government can't be trusted to provide an affordable insurance option for the masses. Disconnect, anyone?

They're right, because Medicare is unsustainable. If we try applying it to the masses, government rationing will result.

And yes, my neighbors have the "taxes=theft" slogan down pat, even though the income tax credits that they get more than erase any tax burden and in fact result in checks for money that they never paid in the first place. It's pretty sad.

Not really, as they're just stating a fact. The fact that they may not pay any federal income taxes due to the laws that have been passed by the federal government doesn't mean they can't support the argument that taxes equal a form of theft.

As long as US citizens are ill-educated and gullible, they will be susceptible to jingoism and posturing of politicians.

It is high time to simplify the tax code, and move to a more progressive system, in which high-income earners pay more in income taxes, and low-income people are not nailed with higher and higher sales taxes (a national sales tax is Herman Cain's favorite solution).

Two things:

1) You just said that many in the middle and lower incomes pay no federal taxes. Now you do a 180 and claim they are being made to pay more and more??

2) Herman Cain supports the Fair Tax, which would eliminate the federal income taxes, and has a way of providing a subsidy to the poorest who would struggle due to the sales tax. Nancy pelosi has talked about a VAT tax, if a VAT tax was implemented, who do you think would get hit the most? The poor and middle-income. In addition, all the revenue from the VAT would then make the Democrats clamor for a lot more spending, saying that any attempts to cut the budget are "ridiculous" as we have plenty of money now.

Low-income people have to spend most of what they earn, so they would have to pay the bulk of any national sales tax, reducing their buying power, and that would damage any positive effect that their consumption might otherwise have on our economy.

As said, the Fair Tax takes this into account and has a way of countering that. Also, there would be no more federal taxes.

BTW, during most of the last decade in which I could still work, I was comfortably in the top 2% of earners every year. I doubt that many (if any) of the right-wingers that mob the P&WA threads are in that bracket, so why parrot GOP talking points that are aimed to protect the wealthiest? It seems quite illogical, like British taxpayers fawning over the royal family.

Many on the Right vote according to principle, not self-interest. Many on the Left love to accuse the Right of being "selfish," but then when the Right vote in a completely unselfish manner, the Left rail because it undercuts their plans.

 

[Dale]

Sell it to someone who will make it a toll road.

Good answer.