A 70% tax on income above $10 million; what do we think of this idea?

[DarthKyrie]

- Did I call it or what? Wheres my trophy? :

I gave you a winner. Is that good enough?

 

[blankslate]

Empirical research suggests the optimal marginal tax rate on high earners could be as high as 76%.

https://www.aeaweb.org/articles?id=10.1257/jep.25.4.165

Does that make you reconsider? While this certainly isn’t the last word, it should absolutely make you stop and think why you would label such a thing as crazy.

Maybe it was already posted but this video illustrates in motion with a billionaire who scoffs at the idea and an MIT economics professor who mentions that the optimal top marginal tax rate might be very high

Here is another video edited with some Curb your Enthusiasm music...
but there's more detail among the credits

Love how the host and Michael Dell have their hawty oh please how can one suggest that such high taxes not harm growth... puhleaze attitudes brought up short by a person who knows economic history just laying out the facts about that history


___________

 

[s0me0nesmind1]

Ok ok - someone please enlighten me on how high earners get to pay less taxes than the rest?

Just looked up current tax rates and the highest bracket pays 2-3 times more than the 2nd/3rd brackets where most people fall into.

Everyone keeps saying its the loopholes, so if you mention "loopholes" - please be specific to list out exact accounting techniques / tax code clauses that the wealthy are taking advantage of.

Just want to know how its done once I start earning that much

View attachment 2951

PAY MORE! PAY MORE! You're not paying enough!

The only leg they can stand on is capital gains tax rate is 20% tax rate for long-term capital gains (1+ year old)... That circumvents the respective 37% tax rate. The obvious reason is an incentive to invest... Also any investment is a risk. When a company goes belly-up who do you think takes the fall?

When the bottom half contribute $0 (and most are takers so effectively a negative amount) to federal income taxes, they honestly don't have a leg to stand on.

 

[fskimospy]

Maybe it was already posted but this video illustrates in motion with a billionaire who scoffs at the idea and an MIT economics professor who mentions that the optimal top marginal tax rate might be very high

Here is another video edited with some Curb your Enthusiasm music...
but there's more detail among the credits

Love how the host and Michael Dell have their hawty oh please how can one suggest that such high taxes not harm growth... puhleaze attitudes brought up short by a person who knows economic history just laying out the facts about that history


___________

It's very interesting to me just how much the preferences of millionaires and billionaires have set the conventional wisdom despite there being basically no evidence to support it. I mean how many people do you see on here or on TV that say 'taxing rich people at high rates is obviously insane' but are totally unprepared for the question - 'based on what'?

 

[hal2kilo]

It's very interesting to me just how much the preferences of millionaires and billionaires have set the conventional wisdom despite there being basically no evidence to support it. I mean how many people do you see on here or on TV that say 'taxing rich people at high rates is obviously insane' but are totally unprepared for the question - 'based on what'?

Oh come on. The old go to is that's it's immoral, because it's thievery. They got that in the bank.

 

[fskimospy]

PAY MORE! PAY MORE! You're not paying enough!

The only leg they can stand on is capital gains tax rate is 20% tax rate for long-term capital gains (1+ year old)... That circumvents the respective 37% tax rate. The obvious reason is an incentive to invest... Also any investment is a risk. When a company goes belly-up who do you think takes the fall?

Capital gains tax preference, reclassifying income as pass-through, mortgage interest deductions, SALT, etc.

As for providing an incentive to invest, the risk is why you get paid a percentage on your investment by the person borrowing your money, not why the government should subsidize your risk. Even if that were the case I see no reason for the government to incentivize paying other people to work instead of working yourself. The main reason for lower capital gains percentages is supposed to be that they are affected more significantly by inflation.

When the bottom half contribute $0 (and most are takers so effectively a negative amount) to federal income taxes, they honestly don't have a leg to stand on.

Again, if you count ALL taxes then all income strata in America pay taxes roughly in proportion with their share of national income. The lower levels do pay somewhat less than their share and the rich somewhat more but the gaps are not large. There is no reason to focus on federal income taxes only as your wallet doesn't care if a dollar is going to pay sales tax or income tax, it's a dollar out of your pocket either way.

If there's one myth I wish we could dispel it's the idea that high earners are somehow disproportionately taxed. The primary reason they pay most of the taxes in America is that they make most of the money, not because the overall tax code is unfavorable to them.

 

[Jhhnn]

The only leg they can stand on is capital gains tax rate is 20% tax rate for long-term capital gains (1+ year old)... That circumvents the respective 37% tax rate. The obvious reason is an incentive to invest... Also any investment is a risk. When a company goes belly-up who do you think takes the fall?

The investor class will invest anyway, regardless of their federal tax rate. It's not like they're actually going to work for a living or that doing so pays nearly as well as their ownership gig.

 

[bpatters69]

Here are my thoughts on the idea; please feel free to quote and poke holes in them:

• There is fairly strong consensus amongst economists that the idea taxation scheme for government is relatively high income taxes and relatively low corporate taxes. I encourage you to read the linked study - it's awesome - but basically the reason for this is simple: Corporations can more easily artificially move where they're located to lower-taxed communities. A high net-worth individual could move to the Bermuda, Monaco or the UAE... but theoretically it's hard to replicate the lifestyle in Canada or the United States and fewer would do this than you'd think. So the argument that these individuals would just move is likely not correct.

Nope. Ethnocentrism aside, the US is great but there are lots of other places in the world the Uber Rich could live. Trust me, you pass any law that hits high income earners with a 70% tax, they will leave plain and simple. Economics is nice but a highly flawed "science". Why? Humans do not all make rational decisions.

A low tax on corporations makes sense. When Trump passed his tax bill last year my company gave just about all of its 270k employees a nice, fat bonus that was plowed right back into the economy. Not sure if it is a good thing but we are still awash with cash.

• I think that wide disparities in wealth in a society is necessarily bad for that society. Put another way, generally speaking, all citizens who make between $50,000 and $10,000,000 in income a year have the same macro-level wants and needs from their community. They want the roads to be reasonably well maintained in their area. They want public parks for their kids to play in and access to good local healthcare and mostly send their kids to public schools. They vote for people who will take care of local and state-level concerns. The wants and need of someone making $100,000,000 a year, however, are probably quite different. They're not bad people just because they're making a lot of money, but their concerns aren't local; and if they are, they tend to be autocratic because they can put serious money behind a candidate or idea. The need to work with others in your community is dramatically lessened

Kind of agree. 3rd world countries are defined by most of the wealth being controlled by 10% or less of the population. Guess what? The US could be defined in similar terms but the pie is so large and we still have a relatively large middle class. Anyway, no one would argue on a macro scale that more money in the hand of many is not better than more money in the hands of the few. 100 people with some money are going to buy 100 cars vs 100 with no money who cannot buy any cars vs one rich guy who will only buy 1 car. I know.. too simplistic but it works.

• It would mean a significant investment into an area of dire need: Under Ocasio-Cortez's model, the money would be primarily sent towards revamping industries that drive carbon emissions. Ultimately we all need the planet to not get caught into a forever-warming cycle that ends up destroying most of the flora and fauna that exist today and leads to enormous population migration.

What are your plans for countries like India and China - 2 of the largest polluters and carbon emitters in the world? Do you think it will be easy to get them onboard?

​

 

[zinfamous]

Are you worried we should lower it to $100k/70%? I have a feeling someone making over 10M/year is not going to suffer in the slighest if you take 70% of everything after 10M. I do agree 70% seems a tad high assuming no deductions/write offs. Maybe 50-60%. It worked before and we boomed as a country. I thought conservatives were the ones who liked tradition and the old ways that works.

I believe the marginal tax rate was as high as 82% or something like that, up until about 1983. Then it was magically erased.

Weird isn't it, how wage growth essentially halted and the middle class started its precipitous decline into oblivion, and the rise in populist culture war nonsense (you know: issues that simply don't matter), all started happening at this exact same time?

Weird.

 

[Brainonska511]

I believe the marginal tax rate was as high as 82% or something like that, up until about 1983. Then it was magically erased.

In fairness, there used to be more ways to hide money and few ever paid that statutory rate.

Regardless, there seems to be a lot of research supporting substantial higher marginal rates at the top while also closing those loopholes people sail their yachts through. If I made $10 million+ per year, I'd have no problem paying the extra tax above $10 million. I'd be a freaking millionaire and easily have more than enough money to live how I'd want to live.

 

[blankslate]

how wage growth essentially halted

Part of that specifically was also due to how Alan Greenspan managed the interest rate he as I recall didn't want there to be too much demand for labor...

 

[dank69]

In fairness, there used to be more ways to hide money and few ever paid that statutory rate.

Regardless, there seems to be a lot of research supporting substantial higher marginal rates at the top while also closing those loopholes people sail their yachts through. If I made $10 million+ per year, I'd have no problem paying the extra tax above $10 million. I'd be a freaking millionaire and easily have more than enough money to live how I'd want to live.

You know what a popular way to "hide" money was? To give out huge year end bonuses to all the employees that helped them make so much money. You know, if Uncle Sam is just going to take most of it anyway, might as well give it to your employees instead and reinvest in the company for new equipment, etc.

 

[ch33zw1z]

You know what a popular way to "hide" money was? To give out huge year end bonuses to all the employees that helped them make so much money. You know, if Uncle Sam is just going to take most of it anyway, might as well give it to your employees instead and reinvest in the company for new equipment, etc.

The old timers I work with remember these things. Benefits used to be: pension, healthcare for family, many other perks, and of course bonuses that they claim were 10-20 times more than now. Not to mention weekend coverages were double time, now it's straight time....no shift differentials, 401k (no pensions), health insurance is 1000/month+, bonus is 1/3 a month of healthcare.

 

[Jhhnn]

The old timers I work with remember these things. Benefits used to be: pension, healthcare for family, many other perks, and of course bonuses that they claim were 10-20 times more than now. Not to mention weekend coverages were double time, now it's straight time....no shift differentials, 401k (no pensions), health insurance is 1000/month+, bonus is 1/3 a month of healthcare.

Now imagine contracting a big chunk of it out to the Chinese, automating more, breaking Union balls & keeping the difference, year after year. While paying peanuts in taxes.

 

[ch33zw1z]

Now imagine contracting a big chunk of it out to the Chinese, automating more, breaking Union balls & keeping the difference, year after year. While paying peanuts in taxes.

Yea, gen x and below will really notice in the near future, if they haven't already, assuming we stay the course.

 

[Jhhnn]

Yea, gen x and below will really notice in the near future, if they haven't already, assuming we stay the course.

Shee-it. It already happened to a lot of Boomers. As a group, more younger boomers are faced with poverty in retirement than older boomers. I count my lucky stars to have worked for the RTD for decades as a Tech, to have received good wages, benefits & now a pension even if the hours & working conditions often sucked for the first decade or so. More people should be so fortunate. We were actually growing the whole time & some of the people who came to us in economic downturns were damned near shell shocked. Screwed when the economy went to Hell in the early 80's. Screwed again in the S&L fiasco, the tech bust & the great recession of 2009. I know people who got screwed every time, time after time until they came to work for The Ride.

 

[zinfamous]

The old timers I work with remember these things. Benefits used to be: pension, healthcare for family, many other perks, and of course bonuses that they claim were 10-20 times more than now. Not to mention weekend coverages were double time, now it's straight time....no shift differentials, 401k (no pensions), health insurance is 1000/month+, bonus is 1/3 a month of healthcare.

yeah, it's also weird how dependable, universal benefits like that suddenly vanished at the same time CEOs were able to increase their personal wealth by 10 and 20 fold, the general pension idea was replaced with the 401k, and then this whole sector called "finance" was created, essentially to siphon money at 1% and 2% at a time from that gigantic wad of cash that was now essentially required from employee pay-out to replace the "suddenly broken and now-impossible-to-fund pension programs for some reason." At least there was always the big bad union scapegoat to blame in defense of the new genius plan from the Ronnie Rayguns cabal. ---because when you look at how much employer money will suddenly be required to fund this vast, and for some reason totally important Finance sector to exist, it is accurate to hypothetically look back on a situation that actually didn't exist, and apply the new paradigm as an argument for why Unions are not sustainable. ....er, "were well on their way to bankrupting this country!" yeah, that's it.

Don't pay attention folks: math is always better when we can disingenuously misapply it to retroactively defend preposterously terrible ideas that never passed any kind of smell test from the beginning, and of course were not in any way under the same stresses to the system that we simply invented later as a means to "effectively" argue for their eventual necessity.

It's just how the current Tax theft plan works: write out a bunch of $10 checks to the rubes, make them think they are earning some kind of free money, but just balloon the deficit by another 300% or whatever, then use the catastrophic deficit situation several years later to argue that we need to spend less! oh and of course it's not our fault. etc. Same fucking tired and obvious song for more than 4 decades from the god damn criminal GOP.

 

[ch33zw1z]

^^ yup, the proof is in the pudding so to speak. Suck it Middle Class - Republicans.

 

[hal2kilo]

yeah, it's also weird how dependable, universal benefits like that suddenly vanished at the same time CEOs were able to increase their personal wealth by 10 and 20 fold, the general pension idea was replaced with the 401k, and then this whole sector called "finance" was created, essentially to siphon money at 1% and 2% at a time from that gigantic wad of cash that was now essentially required from employee pay-out to replace the "suddenly broken and now-impossible-to-fund pension programs for some reason." At least there was always the big bad union scapegoat to blame in defense of the new genius plan from the Ronnie Rayguns cabal. ---because when you look at how much employer money will suddenly be required to fund this vast, and for some reason totally important Finance sector to exist, it is accurate to hypothetically look back on a situation that actually didn't exist, and apply the new paradigm as an argument for why Unions are not sustainable. ....er, "were well on their way to bankrupting this country!" yeah, that's it.

Don't pay attention folks: math is always better when we can disingenuously misapply it to retroactively defend preposterously terrible ideas that never passed any kind of smell test from the beginning, and of course were not in any way under the same stresses to the system that we simply invented later as a means to "effectively" argue for their eventual necessity.

It's just how the current Tax theft plan works: write out a bunch of $10 checks to the rubes, make them think they are earning some kind of free money, but just balloon the deficit by another 300% or whatever, then use the catastrophic deficit situation several years later to argue that we need to spend less! oh and of course it's not our fault. etc. Same fucking tired and obvious song for more than 4 decades from the god damn criminal GOP.

Let's face it. The 401K program benefitted Wall street way more than the investors in the program. Also, I would like to know how the F Romney was able to hide millions in his.
The effers always win and come out on top, no matter what us pleeps try.

 

[Chromagnus]

the general pension idea was replaced with the 401k

I agree with most of what you are saying but 401Ks have replaced pensions largely because pensions have proved to be unsustainable. Granted pensions are unsustainable because people are either bad at math or don't listen to the people who are good at math. Pensions just fundamentally don't work well because most people/companies fail to properly manage them.

At least 401Ks are honest about the fact that it's all built up on a gamble. Pensions just lied about it and guaranteed money they couldn't deliver.

 

[ch33zw1z]

I agree with most of what you are saying but 401Ks have replaced pensions largely because pensions have proved to be unsustainable. Granted pensions are unsustainable because people are either bad at math or don't listen to the people who are good at math. Pensions just fundamentally don't work well because most people/companies fail to properly manage them.

At least 401Ks are honest about the fact that it's all built up on a gamble. Pensions just lied about it and guaranteed money they couldn't deliver.

Retirement, it's a gamble. Well played lol

 

[Chromagnus]

Retirement, it's a gamble. Well played lol

The stock market is a gamble. Everyone is completely free to not put their retirement in the stock market but if they do they are taking a risk. Pensions are also invested in markets and they got in trouble because they were essentially guaranteeing stock market returns that they couldn't deliver on. Both 401Ks and pensions gamble money on the stock market, I just think 401Ks are more honest about that fact.

On the bright side it is a gamble that in the long run has always gone up so it's still a smart gamble to make but there are plenty of examples of people that weren't smart and stayed too aggressive as they got older that got burned by the downturns.

 

[ch33zw1z]

The stock market is a gamble. Everyone is completely free to not put their retirement in the stock market but if they do they are taking a risk. Pensions are also invested in markets and they got in trouble because they were essentially guaranteeing stock market returns that they couldn't deliver on. Both 401Ks and pensions gamble money on the stock market, I just think 401Ks are more honest about that fact.

On the bright side it is a gamble that in the long run has always gone up so it's still a smart gamble to make but there are plenty of examples of people that weren't smart and stayed too aggressive as they got older that got burned by the downturns.

I'm not completely free to put my retirement savings wherever I want if I want to get my employers 401k contributions. It's the boat the middle-class is in. And in fact, if you're hired by my employer after 2014, the contribution match is less than half of the 2006-2014 agreement. It's not getting better for the next generation unless there's a change.

 

[Jhhnn]

I agree with most of what you are saying but 401Ks have replaced pensions largely because pensions have proved to be unsustainable. Granted pensions are unsustainable because people are either bad at math or don't listen to the people who are good at math. Pensions just fundamentally don't work well because most people/companies fail to properly manage them.

At least 401Ks are honest about the fact that it's all built up on a gamble. Pensions just lied about it and guaranteed money they couldn't deliver.

That's not really true. The only reason it works that way is because management has been free to outsource labor. As the population of the pension pool dries up the system is starved for funding. They also used pension promises in lieu of wage increases, knowing they couldn't deliver when the time came. It's not like they planned on sticking around until it happened, either. They're long gone, cashed out & retired. See ya, chumps.

Pensions depend on partial funding from working members of the plan & always will. They pay it forward to support retired members. I did it myself for decades.

 

[Chromagnus]

I'm not completely free to put my retirement savings wherever I want if I want to get my employers 401k contributions. It's the boat the middle-class is in. And in fact, if you're hired by my employer after 2014, the contribution match is less than half of the 2006-2014 agreement. It's not getting better for the next generation unless there's a change.

I don't disagree with anything of this, the first company I worked for after college had a pension program but you had to have started working their one year before I started to be eligible. Baby boomers don't realize how good they had it. Between rising costs of college, healthcare and the worsening of employee benefits millennial are really in rough shape going forward. Not to mention continued growth in income inequality making things worse and worse.

Circling back to the thread topic, this is why I'm totally fine with creating a new/higher tax bracket to try and help the middle class. I'm not sure if 70%/$10M is the right number but I agree with the principle.