A Rich Guys Case for (Much) Higher Taxes

  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 2:44 PM GMT
    This is a great article featuring the former Chief Economist from Sanford Bernstein dispelling the myths that raising taxes will hurt the economy, and instead demonstrating the correlation between higher tax rates and strong economic growth. Excerpts and charts below, but the whole article is worth reading:

    Ezra KleinDavid Levine isn’t most people. Levine is the former chief economist for the investment-management firm Sanford C. Bernstein. He is, as you might expect, a very rich man. But he’s one of those rich guys who, like Warren Buffett, is begging the government to raise his taxes.

    Levine has been following federal tax policy for most of his adult life. “My main job was to forecast the economy,” he shrugs. “So taxes are tremendously important to that. And tax policy changes are tremendously important.” And, to him, those changes mostly went the same way: cutting taxes on people, like Levine and his friends, who didn’t need tax cuts, as the working class struggled.

    He brandishes a table that tells the whole story: John F. Kennedy brought the top tax rate down to 70 percent. Ronald Reagan brought it to 50 percent, and then to 28 percent. Levine still sounds offended. “I was making seven figures,” he says. “They lowered my marginal tax rate to 28 percent. And the median American, he was paying a 15 percent marginal tax plus his payroll taxes plus the employer’s share of his payroll taxes, which comes out of his income. So he was paying, all in all, about 27.9 percent. And I was paying 28 percent.”

    “Under George H.W Bush and Bill Clinton it gets raised a bit more to 39.6 percent,” Levine continues. “But then George W. Bush comes in and cuts it to 35 percent and lowers the rate on qualified dividends to 15 percent. And by now I’ve retired. I’m living off investments. All my income is coming from qualified dividends. And so I’m sitting there in the 15 percent tax bracket. And I use the maximum charitable deduction every year. So my actual tax rate has been 7 percent every year since 2007!”

    It would be one thing, Levine says, if the economy had performed so much better after taxes on the rich were cut. But it didn’t. Some of the fastest economic growth of the post-war period came in the 1950s, when the top tax rate was above 80 percent. The slowest growth came in the 2000s, when the top tax rate was 35 percent. So the fastest income growth for the top 1 percent has come under the low-tax regimes, while the fastest income growth for the median American came when taxes on the richest Americans rose.

    In a recent paper, economists Emmanuel Saez, Thomas Piketty and Peter Diamond looked closely at the evidence on high-income taxation. “The question we were asking is, where is the point where the Laffer curve” — which tries to estimate when higher taxes lead to less revenue, because of either evasion or slower growth — “hits the maximum revenue,” says Diamond, who won the 2011 Nobel prize in economics. “You don’t want to be beyond that. But we argue you would like to be fairly close to that. Taking revenue from people making $1.2 million is better than taking it from other groups.”

    The answer, they find, is somewhere between 50 and 70 percent. Above that, you begin to lose more revenue than you raise. “So instead of the current Washington fight between Bush and Clinton tax rates, let’s think of the fight being between the Johnson/Ford/Carter tax rates and the tax rate we had after Reagan’s initial cut,” Diamond says, with a laugh.


    tax%20high%20rate%20vs%20growth.jpg?uuid
  • GQjock

    Posts: 11649

    Apr 17, 2012 4:37 PM GMT
    Well we sure as hell proved that Lower taxes sure don't

  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 4:51 PM GMT
    southbeach1500 saidHigher taxes do not cause economic growth to expand.


    And yet the overwhelming evidence is that they do.
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 5:06 PM GMT
    southbeach1500 said
    Christian73 said
    southbeach1500 saidHigher taxes do not cause economic growth to expand.


    And yet the overwhelming evidence is that they do.


    You're quite confused. Higher taxes do not cause increased economic growth.


    Yet every time we increase the top marginal rates we see amazing economic growth and expansion.

    If you're suggesting that's not the cause, you're welcome to offer an alternative explanation. Foregoing that, you can have a nice big glass of STFU.
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 5:10 PM GMT
    It goes like this:

    "TAX ME PLEASE!!! It's unacceptable that I should get away with keeping so much of my own money!!"


    *searches for every tax deduction in the book*
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 5:29 PM GMT
    southbeach1500 said
    Christian73 said
    southbeach1500 said
    Christian73 said
    southbeach1500 saidHigher taxes do not cause economic growth to expand.


    And yet the overwhelming evidence is that they do.


    You're quite confused. Higher taxes do not cause increased economic growth.


    Yet every time we increase the top marginal rates we see amazing economic growth and expansion.

    If you're suggesting that's not the cause, you're welcome to offer an alternative explanation. Foregoing that, you can have a nice big glass of STFU.


    You're quite confused. Higher taxes do not cause increased economic growth.


    Incorrect. It's really sad that you support policies without even being able to offer a mild defense. icon_lol.gif
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 5:33 PM GMT
    southbeach1500 said
    Christian73 said
    southbeach1500 said
    Christian73 said
    southbeach1500 said
    Christian73 said
    southbeach1500 saidHigher taxes do not cause economic growth to expand.


    And yet the overwhelming evidence is that they do.


    You're quite confused. Higher taxes do not cause increased economic growth.


    Yet every time we increase the top marginal rates we see amazing economic growth and expansion.

    If you're suggesting that's not the cause, you're welcome to offer an alternative explanation. Foregoing that, you can have a nice big glass of STFU.


    You're quite confused. Higher taxes do not cause increased economic growth.


    Incorrect. It's really sad that you support policies without even being able to offer a mild defense. icon_lol.gif



    You're quite confused. Higher taxes do not cause increased economic growth.


    tax%20high%20rate%20vs%20growth.jpg?uuid
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 7:04 PM GMT
    Yeah, that JFK was such a dumbass...


    "It is a paradoxical truth, that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates." - JFK


  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 7:06 PM GMT
    StudlyScrewRite said Yeah, that JFK was such a dumbass...


    "It is a paradoxical truth, that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates." - JFK




    JFK would undoubtedly be a fiscal conservative by today's standards.
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 7:17 PM GMT
    mocktwinkie said
    StudlyScrewRite said Yeah, that JFK was such a dumbass...


    "It is a paradoxical truth, that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates." - JFK




    JFK would undoubtedly be a fiscal conservative by today's standards.


    Do you people even read what you write?

    JFK inherited a top marginal rate of 90% which he lowered to 70% (the top of the Laffer Curve) and that did seem to stimulate the economy. Even Reagan initially brought it down to 50%.

    Once it gets below 30% (under Reagan) the economy seizes up, leading Bush 1 and Clinton to raise taxes, which leads to another economic expansion.
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 7:46 PM GMT
    southbeach1500 said
    Christian73 saidDo you people even read what you write?

    JFK inherited a top marginal rate of 90% which he lowered to 70% (the top of the Laffer Curve) and that did seem to stimulate the economy. Even Reagan initially brought it down to 50%.

    Once it gets below 30% (under Reagan) the economy seizes up, leading Bush 1 and Clinton to raise taxes, which leads to another economic expansion.




    You're quite confused. Higher taxes do not cause increased economic growth.


    You're quite confused. Higher taxes DO cause economic growth!!
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 7:59 PM GMT
    southbeach1500 said
    Christian73 saidDo you people even read what you write?

    JFK inherited a top marginal rate of 90% which he lowered to 70% (the top of the Laffer Curve) and that did seem to stimulate the economy. Even Reagan initially brought it down to 50%.

    Once it gets below 30% (under Reagan) the economy seizes up, leading Bush 1 and Clinton to raise taxes, which leads to another economic expansion.




    You're quite confused. Higher taxes do not cause increased economic growth.


    Again, if you have proof of such, please provide it. Otherwise, Shut the Fuck up.
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 8:06 PM GMT
    southbeach1500 said
    Christian73 said
    southbeach1500 said


    You're quite confused. Higher taxes do not cause increased economic growth.




    Shut the Fuck up.




    You liberals are all cut from the same drone cloth aren't you? Ill-mannered, angry, no social graces...


    Bob Beckel's not a liberal and neither am I. What we do have in common is being tired of the constant lying by people like you and Sean Hannity.
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 8:54 PM GMT
    Christian73 said

    Bob Beckel's not a liberal and neither am I.



    OMG that is the funniest thing I have ever heard you say!
    Thanks! I needed a good laugh.
    icon_lol.gificon_cool.gif
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 8:59 PM GMT
    StudlyScrewRite said
    Christian73 said

    Bob Beckel's not a liberal and neither am I.



    OMG that is the funniest thing I have ever heard you say!
    Thanks! I needed a good laugh.
    icon_lol.gificon_cool.gif

    He also said Obama is center right just like Reagan. icon_lol.gif
  • Posted by a hidden member.
    Log in to view his profile

    Apr 17, 2012 9:07 PM GMT
    socalfitness said
    StudlyScrewRite said
    Christian73 said

    Bob Beckel's not a liberal and neither am I.



    OMG that is the funniest thing I have ever heard you say!
    Thanks! I needed a good laugh.
    icon_lol.gificon_cool.gif

    He also said Obama is center right just like Reagan. icon_lol.gif


    He is. Look at the record and policies.
  • musclmed

    Posts: 3284

    Apr 18, 2012 12:53 AM GMT
    If one were to believe that Higher taxes will improve the economy.

    What is the mechanism ?

    The point is does that mechanism apply to the situation we have now?

    The final question without having world war 3 is who thinks its a good idea to raise taxes now?

    As for the Buffet rule, it would pay for less than a days worth of the federal government, but introduce alot of negative pressure on the economy.
  • creature

    Posts: 5197

    Apr 18, 2012 2:12 AM GMT
    southbeach1500 said
    catfish5 said
    You're quite confused. Higher taxes DO cause economic growth!!


    Higher taxes mean less disposable income which means less money that can be spent on hookers which means the hooker economy shrinks.

    (Just using hookers as an example, of course.) icon_wink.gif


    Higher taxes means less disposable income, but by what increase will we see significant shift in the propensity to consume?

    It is common sense that the rich are able to save more than those who are poor. By increasing the tax rate, for the most part you are impacting how much they save, not how much they spend.

    You can say 'higher taxes means less disposable income.' Everyone can agree on that. But this is not looking beyond the surface and understanding that those of higher tax brackets can withstand an increase in taxes and continue with their same behavior.