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

[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.

[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).