Arguing for a 90% top tax rate

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The guy isn’t wrong that when we taxed the crap out of rich people we still had rich people, but we could also build bridges and roads without making them toll roads to pay for them. (Seriously, every new highway in the Austin area is a freaking toll road). I’m not saying 90%, but these guys won’t be hurting any if they stop dodging existing taxes and pay an even higher percentage.


No matter what the tax brackets have been over the decades, total Federal receipts as a percentage of GDP have not varied all that much – 16 to 20%, IIRC. However, what we spend the money has changed. For example, defense spending has trended down and spending for social programs has trended up.



Why not 100% in exchange for room and board?

The Captain


Except we didn’t include all that much in the “income” that we taxed at 90% back then. Leaving aside the fact that Howard Hughes or J. Paul Getty certainly had “f you that’s why” money, they also faced a tax code that was even more porous in terms of what earnings were treated as taxable income and what you could deduct. Which is part of the reason Dr. Bob’s observation that tax receipts as a percent of the economy haven’t changed much - the post-Eisenhower revisions to the tax code often included both lowering the top marginal rate and broadening the scope of what earnings were taxable as income.

In the end, what creates Musks and Buffetts has nothing to do with the marginal tax rate. It’s the definition of taxable income. Buffett’s managed to pay so little income tax in his life not because his marginal rate is unfairly set compared to his secretary. It’s because he’s been allowed to increase his personal wealth by about a hundred billion dollars and only the tiniest fraction of it has been treated as taxable income, at any marginal rate. Ironically, Musk has probably ended up paying far more in actual taxes than the other famous mega-billionaires (Buffett, Zuckerberg, Bezos) because of his goofing around with Twitter, which forced him to sell a bunch of his micro-basis Tesla shares and thus realize income.

People like Tiedrich who talk about the marginal tax rate, rather than the definition of taxable income, are playing a mug’s game. Elon Musk doesn’t care (going forward) if he’s taxed at 35% or 60% or 90% of his taxable income, because he can pretty much avoid having taxable income for the rest of his life if he wants.


None of this discussion makes any sense.

We live in a longer period of counter cyclical economics that has entered an inflationary period that will last as long as forty years.

Taxes on the rich are raised to cut off inflation. They are a tool in this regard.

In the 1950 to 1987 period the rich were so pi$$ed at their tax rate. They created creatures of resentment like Murdoch. As taxes came down inflation rose until 1980 when interest rates spiked.

The balancing of rates and taxes for an industrial build out and the containment of inflation is our primary goal. Perhaps an older cliche we need to optimize our economy. We have had 40 years with next to no economic policies. A void is not a policy.

The question is what should taxes be on the rich twenty years from now?

We know after 1950 that taxes on the rich coming down were a disaster. But what is high comes down. What is low goes up.

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