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View Diary: Tax Cuts Are Theft (85 comments)

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  •  Wrong. I've explained over and over that (0+ / 0-)

    this idea just wrong -- those top marginal rates were imposed on such high incomes for the time, and were subject to so many deductions, exemptions, and shelters that almost no income by anybody was subject to those high rates.  

    Here's the proof, in CBO statistics.  Look at the SECOND chart on that link, which is what people actually PAID in federal individual income tax rates --- the "Effective Individual Income Tax Rates."  Again, that's the second chart on that link.

    Look at the year 1979 -- when the top marginal rate was 70%. The top 1% paid an effective individual income tax rate of 21.8%.  Significantly, in 1986 the Tax Reform Act of 1986 drastically reduced the availability of exemptions, deductions, and shelters, and re-structured the Tax Code.  Now look at 2000, the last year of Clinton's term, when the top rate was 39.6%.  In that year, the top 1% paid an effective individual income tax rate of 24.2%.  Here's the deal:  the rich paid MORE in federal individual income taxes under Clinton than they did when the top marginal rate was 70%.  That's just fact.  The idea that the rich paid a whole bunch more in federal individual income tax rates before the Reagan tax cuts, when the top marginal rate was 70%, is DEMONSTRABLY FALSE.

    Stop spreading the myth that "the rich paid a lot more in income taxes before Reagan, and we did just fine." The CBO says that's wrong.  The only reason I don't go beyond 1979 -- back to Eisenhower -- is that is as early as the CBO numbers go.  But the Eisenhower to rates were only on incomes over something like $2.5 million a year in today's dollars, and STILL were subject to all those deductions, exemptions, and shelters that were in place in 1979, before the Tax Reform Act of 1986.  

    Overall, in ALL taxes, the rich did pay more pre-Reagan than they did during Clinton -- that's chart 1. But that's because of the dramatic decrease in capital gains taxes -- the corporate income tax rate -- NOT because of the difference in the top marginal rates.  In other words, under Clinton, the rich paid MORE in federal income taxes (which, because that is a tax on earned income, falls most heavily on the "working rich" -- the doctors, lawyers, CPA's, architects, engineers, professional couples, small family business owners, etc.) and LESS in capital gains taxes (which is more applicable to the income of the uber rich, CEO's and hedge fund managers) than they did before the Reagan tax cuts.  

    If you want to make a "cause and effect" link, the highest taxes on the rich in modern history came in 2000 and 2001, right before and into a recession.  That's what those on the right will say.  That's why it is wrong to do some kind of simplistic "higher (or lower) taxes do x, y, or z to the econmomy."  It is much, much more than tax rates that cause economic upswings or downturns.  

    •  So Many Lies, So Little TIme (1+ / 0-)
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      mataliandy

      So I'll just keep to the obvious and simple:

      Overall, in ALL taxes, the rich did pay more pre-Reagan than they did during Clinton -- that's chart 1. But that's because of the dramatic decrease in capital gains taxes -- the corporate income tax rate -- NOT because of the difference in the top marginal rates.

      Capital gains taxes aren't corporate taxes.  They're individual taxes on investment money--as opposed to money gotten for working.

      The deeper problem is that you're ignoring how much vastly more the super-rich had circa 2000 than they had circa 1980. The top 0.01% gained much more than the top 1%.  But you're treating them all as one lump of people.

      •  Actually what I am trying to do is (0+ / 0-)

        distinguish between the "working rich" -- working professional couples at $250,000 and up, for example -- and the "uber rich" -- the CEO's, hedge fund managers, trust fund babies.  

        The first group actually does work and earn what they are paid, even though they are very very well paid.  

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