Why can't we go back to the Eisenhower tax code?

[progressive85]

I suspect, just based on my knowledge of greed and how rigged the government is in favor of the rich and monied interests, that there's been a continuous, systematic effort by a coalition of conservatives, wealthy interest groups, lobbyists, donors, Wall Street, and the big business elite to lower tax rates for the rich over the course of the past 60 years.  JFK pushed for a tax cut, then Ronald Reagan, then George W. Bush, and the Democrats were never able to get it back to the higher rates pre-Kennedy.  From what I've heard, weren't those 50's tax rates very very high?*

*Does anyone also know if there were surpluses or deficits in the 1950s?

Can anyone explain how this happened?  Wouldn't we be able to have so much more revenue to do the things we all want to do: balance the budget, make huge payments to get us out of debt, and have the first surplus in 16 years if we simply just went back to a tax code where the people that actually had the most money to spare were asked to pay much higher rates?

Thanks... i just want to have some more information about it.. im not an economist so if you are, please explain (:

[progressive85]

Also: note I say "Eisenhower" but what i really mean is the 50s....  I imagine being a Republican, Dwight was not really a fan of those high tax rates. 

and does anyone know if there were tax cuts in 1953-1954 after Republicans had a trifecta?

[DC Al Fine]

Also: note I say "Eisenhower" but what i really mean is the 50s....  I imagine being a Republican, Dwight was not really a fan of those high tax rates. 

and does anyone know if there were tax cuts in 1953-1954 after Republicans had a trifecta?

Nothing material

[DC Al Fine]

From what I've heard, weren't those 50's tax rates very very high?*

Technically yes, effectively no.

Wouldn't we be able to have so much more revenue to do the things we all want to do: balance the budget, make huge payments to get us out of debt, and have the first surplus in 16 years if we simply just went back to a tax code where the people that actually had the most money to spare were asked to pay much higher rates?

Not really, no. See above.

[DC Al Fine]

To be less cryptic: You are decrying a combination of tax cuts and new loopholes arising since the 1950's and the 1980's in particular. The former is true but the latter is the exact opposite. It was much, much easier to reduce one's income tax burden through a variety of measures (e.g. More deductions, income smoothing, running quasi-personal expenditures through a business etc.) in the 1950's than now.  This resulted in next to no one actually paying the top rates.

I mean yes, the rich could probably stand to pay a few more percentage points, but the idea that the budget can be solved by taxing the rich is a farce.

[Gustaf]

Basically, all countries used to have super-high top marginal tax rates and then all countries scrapped them once we figured out it actually decreases revenue through incentive effects.

[Associate Justice PiT]

Basically, all countries used to have super-high top marginal tax rates and then all countries scrapped them once we figured out it actually decreases revenue through incentive effects.

     As it happens confiscatory tax rates really serve no purpose other than to, well, confiscate.

[Shadows]

That is not sustainable - The rich feel cheated losing their entire money & there are not enough social welfare schemes to placate the rich like in NORDIC.

Personally I feel the key thing is close loopholes & deductions for very rich & work very hard with other countries to have similar or a range in tax rates (so that people don't try to undercut each other) & close global tax havens & illegal Swiss Bank accounts.

Other that I would like to see a marginal increase to around 52-55% but I think with that Universal Healthcare, Tuition Free College & Infra investment could be boosted. That is a balanced plan. It will also help in getting revenues to cover programs & decrease the debt. I would not raise tax rates for people under 250K.

I think that is an acceptable solution. I think maybe a Huge 40-50% tax should be slapped on Super pac & lobbyist spending, corporate campaign funds etc. That would raise huge revenue & will disincentive such spending.

[parochial boy]

Basically, all countries used to have super-high top marginal tax rates and then all countries scrapped them once we figured out it actually decreases revenue through incentive effects.

The Laffer curve has been pretty discredited over the last few decades.

The countries that scaled back income tax rates in the 80s all saw substantial declines in income tax revenue (that of tens had to be recouped through regressive taxes like VAT). Furthermore, there is no clear link between reductions to the top rate of tax and economic growth rates post 1975.

[The Mikado]

I suspect, just based on my knowledge of greed and how rigged the government is in favor of the rich and monied interests, that there's been a continuous, systematic effort by a coalition of conservatives, wealthy interest groups, lobbyists, donors, Wall Street, and the big business elite to lower tax rates for the rich over the course of the past 60 years.  JFK pushed for a tax cut, then Ronald Reagan, then George W. Bush, and the Democrats were never able to get it back to the higher rates pre-Kennedy.  From what I've heard, weren't those 50's tax rates very very high?*

*Does anyone also know if there were surpluses or deficits in the 1950s?

Can anyone explain how this happened?  Wouldn't we be able to have so much more revenue to do the things we all want to do: balance the budget, make huge payments to get us out of debt, and have the first surplus in 16 years if we simply just went back to a tax code where the people that actually had the most money to spare were asked to pay much higher rates?

Thanks... i just want to have some more information about it.. im not an economist so if you are, please explain (:

This is really not how it works. In the 1950s we didn't have the Alternate Minimum Tax, or AMT, which says that you cannot add up deductions past a certain point and that there is a minimum amount of tax you must pay. Without the AMT, creative accounting could easily lead to minimal or even no income tax actually paid. Basically no one was actually paying 89% of their income in income tax.

[Shadows]

Talking about potential tax stuff, Buffet rule is critical & should be their for all super rich & corporations. Because no matter whatever tax you put they find some loophole & the effective tax rate is very low.

Buffet rule would solve a lot of problems!

[Southern Senator North Carolina Yankee]

On top of what everyone else has said, because you cannot go back to having Europe and Asia blown to pieces by war and in the process of recovering (buying/borrowing from the only source available, the US).

[IceAgeComing]

A better way to ensure that the wealthy pay their share is probably through a wealth tax rather than income taxes: especially since lots of the super rich don't get their money from income but rather capital gains, which for some reason is taxed at a lower rate in lots of countries countries.  One first step would be to fix that!

[parochial boy]

Capital Gains made wholly on the back of asset price inflation aren't really that productive for the economy though.

And a situation where ownership of assets is making more money than actual production then you have a situation where a low capital gains tax is creating a fairly perverse incentive.

A straight up wealth tax would be good; although really, we could start with at least taxing capital gains on the location of the asset, rather than that of the owner.

[parochial boy]

In as far as Capital Gains are largely made by the wealthy, and contribute to raising inequality, they are not economically gainful as the wealthy have a much greater propensity to spend. The fact that you can make a greater return from Capital Gains on existing assets as opposed to other forms of economic activity also creates a perverse incentive with how to spend money and effort.

A wealth tax on non-liquid assets wouldn't be too bad either, even if it forces people to sell such assets, that would create a downward pressure on prices, and make them (housing) more affordable. If we are that worried, we could also exempt from a wealth tax any housing that, for instance, the owner spent over 180 days a year in.

[parochial boy]

Actually, the wealthy have a much lower propensity to spend, since poor people need to spend basically all of their money for life needs, while rich people can still live quite well even while saving much of their income.

And what you described might again tank the housing market, which would wipe out any good impact such a policy might have. Also, the housing that is really expensive is in the form of rented property, which would not be impacted by what you are proposing (I think).

Apologies, I meant greater propensity to save - my first point doesn't really make sense otherwise; higher capital gains for the wealthy, and redistribution upwards isn't good economics as the wealthy are less likely to spend it.

My point about tanking the housing market was around house pricing, as buying a house is prohibitively expensive in probably most major cities these days.

A wealth tax, in the ideal applied to multi-million dollar wealth would mostly impact prime and super-prime properties, so hardly destroying any livelihoods, and prices lower down the scale would likely be less affected as demand remained broadly the same (more people able to enter the market as people already on it were able to purchase upwards).

[KingSweden]

Okay, just making sure.

I see what you mean, but most people in a city are not trying to buy a house anyway, especially since most of the houses in a city are segregated into a basically suburban area far away from downtown, and there wouldn’t be enough of them for the population of the city, anyway. Apartments are much more effective. I would probably try and condemn those older, rusting building and build affordable housing there instead.

The easiest thing to do would be to restrict who is allowed to buy in what neighborhood, but that is central planning, and would probably backfire anyway.

Or switch from a property tax to a land tax, which taxes the underlying value of the land rather than the property on it. I.e a parking lot is taxed at the same assessment as the skyscraper next door. What land use do you think derives more income and value to the owner now?

[Gustaf]

Basically, all countries used to have super-high top marginal tax rates and then all countries scrapped them once we figured out it actually decreases revenue through incentive effects.

The Laffer curve has been pretty discredited over the last few decades.

The countries that scaled back income tax rates in the 80s all saw substantial declines in income tax revenue (that of tens had to be recouped through regressive taxes like VAT). Furthermore, there is no clear link between reductions to the top rate of tax and economic growth rates post 1975.

The Laffer curve is not discredited, it's almost trivially true. What may have been discredited is the exact shape of the Laffer curve assumed as a justification for specific tax cuts.

The tax cuts in the 80s in e.g. the US were pretty dramatic and not just about the top marginal tax rate. Most studies I've seen in recent years indicate the inefficiency of rates at those levels. Simple cross-country regressions aren't great tools for analyzing any economic policy.

[Maxwell]

I'd like to go back to the first round of Reagan Tax Cuts and completely avoid that disastrous second round of tax cuts.

[Pericles]

Sure the rich should pay more tax but that is too far. 19 50s tax rates stifled growth and incentives. That's why JFK slashed taxes.

[Shadows]

This is Post FDR growth, ofcourse FDR was doing massively higher than these numbers!
How on earth is post-Reagan growth better than the 50's or 60's or 70's ?



Unemloyment Data !

[Shadows]

What has changed in the massive inequity & distribution of wealth where most people are left out in the growth!

[Shadows]

The bottom half of the population is essentially in a recession since Reagan !



Piketty Split



2015 IMF Report on Trickle Down failure !

[Rjjr77]

I suspect, just based on my knowledge of greed and how rigged the government is in favor of the rich and monied interests, that there's been a continuous, systematic effort by a coalition of conservatives, wealthy interest groups, lobbyists, donors, Wall Street, and the big business elite to lower tax rates for the rich over the course of the past 60 years.  JFK pushed for a tax cut, then Ronald Reagan, then George W. Bush, and the Democrats were never able to get it back to the higher rates pre-Kennedy.  From what I've heard, weren't those 50's tax rates very very high?*

*Does anyone also know if there were surpluses or deficits in the 1950s?

Can anyone explain how this happened?  Wouldn't we be able to have so much more revenue to do the things we all want to do: balance the budget, make huge payments to get us out of debt, and have the first surplus in 16 years if we simply just went back to a tax code where the people that actually had the most money to spare were asked to pay much higher rates?

Thanks... i just want to have some more information about it.. im not an economist so if you are, please explain (:

The economy is quite a bit different than it was then.

Also republicans were not tax cutters for a long time, supply side economics did not really come about until the implosion of classical Keynesian economics in the 1970s

[Rjjr77]

Basically, all countries used to have super-high top marginal tax rates and then all countries scrapped them once we figured out it actually decreases revenue through incentive effects.

The Laffer curve has been pretty discredited over the last few decades.

The countries that scaled back income tax rates in the 80s all saw substantial declines in income tax revenue (that of tens had to be recouped through regressive taxes like VAT). Furthermore, there is no clear link between reductions to the top rate of tax and economic growth rates post 1975.

The Laffer curve has not been discredited. You may not agree with placement on the curve but the Laffer curve is still accepted by economists as factual. This is a problem with the general misunderstanding of economics, the Laffer curve states that 100% and 0% taxation will bring about no revenue. The point is to find the maximum spot on the curve, some may think it's higher, others lower., but the theory of the curve itself is correct.