Top tax rates were at 70% when Microsoft and Apple were founded

[CrusaderFrank]

What's the point of raising tax rates?

 

[Toro]

As a Canadian citizen, I think it would be totally awesome if America raised the top tax rate to 70%. What a boom north of the border!

In the meantime, what matters is not the highest marginal rate but the highest effective rate, which includes all the write-offs and loopholes one can exploit. And the highest effective rate when MSFT and AAPL were created was much lower than 70%.

File:US high-income effective tax rates.png - Wikipedia, the free encyclopedia

 

[Toro]

You response is a failure -- unless you can show how that "tax structure" of yours would offset the 70% top rate.

Your thread is a failure. Do you really think things like that made no difference? Depreciation schedules were different, calculation of earnings was different. It was all different. You cannot compare the two based on just one factor.

Then go ahead -- do a full comparison and prove me wrong. Or name a single tax provision that would at least begin to offset the 70% top rate.

I have no problem raising taxes, and I think they should go up more so on the wealthiest than everyone else. But you're living in La-La-Land if you think that a 70% marginal rate won't have significant negative effects. Besides being a terrible economic idea, it is rooted in deep-seated envy and class warfare. If I were a tax lawyer or the mayor of Zug, I'd be all for it. Otherwise, it's a horrible idea.

As for why the OP is a fail ...

During the high-tax, high-inflation 1970s, tax shelters began to be marketed aggressively, especially for farming, gas, oil, movies, real estate and business equipment. There have been plenty of other tax shelters, too. “Every conceivable device, animal or property has become a candidate for a tax shelter,” remarked former IRS commissioner Roscoe Egger. Tax shelters have been set up to produce azaleas, roses, almonds, jojoba beans, macadamia nuts, chinchillas, cows, horses, minks and trout, to name a few. Often the result has been gluts. For example, the number of movie releases went up faster than theater revenues. Tax-driven real estate development exceeded demand, and the amount of vacant office space surged — contributing to the collapse of S&Ls during the 1980s.

The Pleasures And Perils of Tax Loopholes | Jim Powell | Cato Institute: Commentary

No way do we raise the amount of tax revenues the proponents of a 70% tax rate think it would.

 

[Koios]

It's amazing how a conservative will wrap their lips around any rich man's cock.

Actually they hate Gates and Buffet, who were both outspoken at the time the cuts went into effect.

But they have more business lobbyist spunk on their blouses than Monica Lewinsky on crack.

I'll give you that.

 

[Koios]

What's the point of raising tax rates?

To make them higher and....

Raise revenue
Speed economic growth
Improve redistribution effect
Lessen inequality

 

[ilia25]

As a Canadian citizen, I think it would be totally awesome if America raised the top tax rate to 70%. What a boom north of the border!

In the meantime, what matters is not the highest marginal rate but the highest effective rate, which includes all the write-offs and loopholes one can exploit. And the highest effective rate when MSFT and AAPL were created was much lower than 70%.

File:US high-income effective tax rates.png - Wikipedia, the free encyclopedia

Well, of course with 70% being the top marginal rate, the effective rate would be always lower than that. Not because of the particular loopholes, but because 70% is what they were paying on incomes above $200,000. So if your income was $300,000, only a third of it would be taxed at 70% rate, the rest will be taxed at lower rates.

And that is what we should have -- high marginal rates, which should kick in at a quite high income levels (at least 500,000). They actually encourage the small business owners to invest the business revenue, as opposed to pocket it as personal income.

 

[ilia25]

What's the point of raising tax rates?

The point of rising top marginal rates:
1. Cut the budget deficit while providing enough funding to the social programs.
2. Rise the after tax income of 99% by reducing their taxes.

 

[ilia25]

Your thread is a failure. Do you really think things like that made no difference? Depreciation schedules were different, calculation of earnings was different. It was all different. You cannot compare the two based on just one factor.

Then go ahead -- do a full comparison and prove me wrong. Or name a single tax provision that would at least begin to offset the 70% top rate.

I have no problem raising taxes, and I think they should go up more so on the wealthiest than everyone else. But you're living in La-La-Land if you think that a 70% marginal rate won't have significant negative effects. Besides being a terrible economic idea

I though I pretty much proved that it isn't.

, it is rooted in deep-seated envy and class warfare

'Cmon, there are objective reasons for that. Pre-tax incomes become more and more unequal in the past 30 years. If we are not doing anything about it, it means a fast raising living standards for 1% and stagnation for the rest.

During the high-tax, high-inflation 1970s, tax shelters began

Because high-tax, or high-inflation? Taxes were higher before that, why then shelters became so popular in the 70s?

 

[bripat9643]

I guess they forgot to tell Steve Jobs and Bill Gates that high tax rates kill incentives to innovate.

Most of the innovation at Microsoft and Apple came long after top marginal tax rates were lowered to 50% and then 28 % by Reagan. Windows wasn't published until long after Reagan left office.

 

[Toro]

And that is what we should have -- high marginal rates, which should kick in at a quite high income levels (at least 500,000). They actually encourage the small business owners to invest the business revenue, as opposed to pocket it as personal income.

No it won't. It won't cause an increase in investment. Partnerships are often taxed at the personal rate. If it is a corporation, all they have to do is keep it in cash accounts and defer it.

What it does is encourage tax avoidance and tax evasion. I can promise you that if my marginal tax rate is 70%, I will do whatever I can to avoid that tax, including taking it offshore.

 

[bripat9643]

Well, of course with 70% being the top marginal rate, the effective rate would be always lower than that. Not because of the particular loopholes, but because 70% is what they were paying on incomes above $200,000. So if your income was $300,000, only a third of it would be taxed at 70% rate, the rest will be taxed at lower rates.

And that is what we should have -- high marginal rates, which should kick in at a quite high income levels (at least 500,000). They actually encourage the small business owners to invest the business revenue, as opposed to pocket it as personal income.

Yeah, it "encourages investment" by taking away the means.

That's pure distilled idiocy, there.

 

[Toro]

I though I pretty much proved that it isn't.

Nope. Because this tax isn't aimed at guys making a couple million dollars a year. It's aimed at guys making $50 million a year. Those guys don't care if they are exempt at $250k

'Cmon, there are objective reasons for that. Pre-tax incomes become more and more unequal in the past 30 years. If we are not doing anything about it, it means a fast raising living standards for 1% and stagnation for the rest.

I don't have a problem with raising taxes. I said that earlier. But raising it to 70% will create distortionary behavior and will do little to raise the standards of living for everyone else.

Because high-tax, or high-inflation? Taxes were higher before that, why then shelters became so popular in the 70s?

People figured it out. The inflation caused people to look at ways of protecting assets, and tax lawyers discovered schemes to shelter income. That's the point. People will figure out how to avoid the taxes if taxes are too high.

In Ontario, to cap costs in Canadian Medicare, the government effectively claws back ~90% of doctors' billings above a certain amount of hours worked. So doctors simply don't work beyond their allowable hours. That is an effective tax. Doctors are incentivized to not work. So they don't.

 

[ilia25]

And that is what we should have -- high marginal rates, which should kick in at a quite high income levels (at least 500,000). They actually encourage the small business owners to invest the business revenue, as opposed to pocket it as personal income.

No it won't. It won't cause an increase in investment. Partnerships are often taxed at the personal rate. If it is a corporation, all they have to do is keep it in cash accounts and defer it.

I said small business owners. As for corporations, they will keep it in cash accounts till when exactly?

What it does is encourage tax avoidance and tax evasion. I can promise you that if my marginal tax rate is 70%, I will do whatever I can to avoid that tax, including taking it offshore.

There isn't much that you can do w/o risking a jail time. Or you can live the country.

But raising it to 70% will create distortionary behavior and will do little to raise the standards of living for everyone else.

No, it will not. Bill Gates started MS just as well with 70% rate. And the US economy was growing very fast in 50s/60s, when the top rate was at 91%.

I can tell you a secret about human behavior. For a businessman, or a highly skilled professional it does not matter whether he takes home 10 million, or 4 millions after paying the rest in taxes, as long -- and this is important -- his peers are in the same situation.

It is never about the absolute numbers, it is about how you stand relative to the others. Not to mention that many are highly motivated by things other than money. People like Bill Gates or Steve Jobs I'm pretty sure are among them.

People figured it out.

It took people 30 years to figure out the tax shelters? Yeah, right.

In Ontario, to cap costs in Canadian Medicare, the government effectively claws back ~90% of doctors' billings above a certain amount of hours worked.

I'm not suggesting a cap on hours worked. That is a stupid idea.

 

[The Rabbi]

What's the point of raising tax rates?

To make them higher and....

Raise revenue
Speed economic growth
Improve redistribution effect
Lessen inequality

Tax incrases on the wealthy never raise revenue to what is projected.
How do you speed economic growth by taking more money from people?
Yes, it redistributes income from the most productive to the least productive. How is this positive?
What's wrong with inequality?

 

[editec]

Less taxes did not equal more jobs or a better economy or a decrease in the deficit.

And coincidently neither will MORE taxes, I suspect.


Contrary to what you are being told, kids, TAXES do not make or break an economy.

 

[Stephanie]

It's amazing how a conservative will wrap their lips around any rich man's cock.

you are a disgusting person

 

[Stephanie]

Yes, I do! Why wouldn't I?



We should rise the capital gain tax as well.

Why don't we stop the bullshit here and tell the truth for once.
You guys want to get as much money as you can in the hands of government as possible.

BS is that claim of yours. What we want the rich to pay their fair share. And not "to the government", but to seniors and disabled, to support children in poor families, to support our military, etc.

well aren't YOU just special..go get rich and do it yourself..but if not, then DEMAND other people who are DO IT..
here's a clue, go demand all them RICH congresscritters you vote for GIVE up all their monies and do what you want..

 

[ScienceRocks]

How about instead of punishing success? Why not give the poor and middle class a better education???

Seriously.

 

[ScienceRocks]

I will fight the left as I know you want to do what Chavez and Castro did. Unacceptable. Our living standards would drop through the floor.

 

[ScienceRocks]

There isn't even a debate as we have a long history of blood to judge you people with.