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View Diary: Rallies against austerity on Tuesday (118 comments)

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  •  FYI (5+ / 0-)
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    elwior, bkamr, Massman, Matt Z, Sychotic1

    when the top marginal rates are above 50%, and the loopholes are closed so they can't shuffle it to the Cayman Islands, the top earners invest their income in their businesses, rather than using their income in speculation and other things that make up the "casino economy". It's historical truth.

    liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

    by RockyMtnLib on Sun Mar 13, 2011 at 04:21:51 PM PDT

    [ Parent ]

    •  There's no data to support that (1+ / 0-)
      Recommended by:
      VClib

      since it has never happened in this county.

      During the Eisenhower years, there were so many loopholes almost nobody paid the top rates on much income.  A lot of them still existed until the Tax Reform Act of 1986.  

      The highest effective individual federal income tax rates on the top 1% (according to the CBO) was during the end of the Clinton years.  (And the right points to the cause and effect of the Recession of the early 2000's, but that was primarily caused by the bursting of the dot-com bubble, which is also what helped to fuel the growth before that. )

      That's a nice idea about those top rates discouraging the "casino" mentality, but there's (as far as I know) no data to back up that notion.  If you have some, I'd love to see it, since I haven't seen any non-partisan study to demonstrate that.  

      •  There most certainly is (4+ / 0-)

        data to back it up:

        http://www.thomhartmann.com/...

        It doesn't matter if it's Thom Hartmann's site. The data he linked to is from the IRS, census data, bea.gov and bls.gov.

        At the very least it puts the lie to the idea that lower taxes increases productivity and creates jobs.

        liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

        by RockyMtnLib on Sun Mar 13, 2011 at 04:41:55 PM PDT

        [ Parent ]

        •  That's kind of laugable (1+ / 0-)
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          VClib

          There are two obvious huge problems with that, problems that are obvious to anyone with a basic understanding of tax policy.

          First, he talks about "top marginal rates."  Top marginal rates are absolutely meaningless -- let me say that again, meaningless -- without consideration of the income taxed at that rate, including the deductions, exemptions, shelters, etc.  That's why the top 1% paid MORE under Clinton's top marginal rate of 39.6% than they did under Carter's top marginal rate of 70%.  You need to look at EFFECTIVE federal income tax rates -- the CBO data on that is the second chart here.   Yep, that's what it says -- the rich paid MORE under Clinton even the the top marginal rate was a little more than half of what it was under Carter.  Top marginal rates don't mean squat.  Hartmann knows that.  

          Second, he talks about "correlation."  Again, correlation is meaningless.  Correlation does not mean causation.  Correlation just means that something happened at the same time.  Causation is what matters -- and causation in economics is very very difficult to prove, because you can't control for variables.  Hey, the Beatles happened at the same time as the huge growth in GDP during the 60's.  There's definitely "correlation" there.  Did the Beatles CAUSE that huge growth in GDP?  I seriously doubt it.  

          Anybody who uses "top marginal rates" to show a "correlation" either (1) doesn't understand basic tax policy or (2) does understand basic tax policy and is intentionally misleading.  

          •  There isn't just one example (1+ / 0-)
            Recommended by:
            Massman

            When it happens again and again and again, there's a little more than coincidence and correlation without evidence of any causation.

            It happened in the 20s/30s. Top marginal rates may not be what people actually pay, but it would mean they pay more than they do now.

            Any slowdown during the Carter years was due to an energy crisis and inflation, not due to too high taxes.

            Don't just look at the United States. Look at other developed countries such as Denmark.

            liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

            by RockyMtnLib on Sun Mar 13, 2011 at 05:15:58 PM PDT

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            •  Again, data would be nice (1+ / 0-)
              Recommended by:
              VClib

              rather than simply making assertions without any support.  

              Top marginal rates in the 20's were high on income over what would amount to well over $10 million a year in today's dollars -- nothing like the $250,000 a year people are talking about now for the top rates.   And without consideration of exemptions, shelters, deductions, and where that top marginal rate started, you absolutely cannot say "they pay more than they do now."  You just don't know.  Obviously, if we had the 1920's system today (adjusted for inflation), everybody under around $10 million a year would pay nada.  Zilch. Is that what you are supporting?  (I'm certainly not.)  So, no, you can't say "they would pay more than they do now" under a 1920's system, even without considering what taxable income those rates applied to even for multimillionaires.    

              And if you believe that correlation equals causation, then you must believe the Kennedy Tax Cuts (so named because he pushed for them even though they were passed in 1964 after his death) caused the biggest growth we've had in modern history in the 1960's.  That's the "correlation" conservatives point to.  Do you think those tax cuts caused that huge economic growth?    

              The problem with correlation is that both the right and the left can find instances where correlation of the thing they support matched with a good economy, and correlation of the thing they don't like matched a bad economy.  (Conservatives say the high Clinton tax rate cause the recession in the early 2000's, for example).    

              Correlation is just as meaningless as top marginal rates.  They are both easy to talk about, but don't mean squat without more data.  

              •  The difference is that (0+ / 0-)

                when Ike departed the top marginal rate was over 90%. Kennedy whittled it down into the 70s. He didn't take it down anywhere close to 35%.

                Again, top marginal rates may not be what the top earners actually pay, but the clear problem with federal finances is in revenue, not in non-defense spending.

                liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

                by RockyMtnLib on Sun Mar 13, 2011 at 05:53:02 PM PDT

                [ Parent ]

                •  But the data shows (1+ / 0-)
                  Recommended by:
                  VClib

                  that the top 1% paid MORE under a rate of 39.6% than they did under that 70% top rate.  That's the CBO data in the link I gave you.  

                  Have you abandoned the notion that very high top marginal rates "cause" people to invest more?  It seems so.  While it's a popular notion around here, I've never found any solid data to back it up.  (There are lots of popular notions around here that just aren't true when you look at them, but that's for another day.)

                  As for what we are going to have to do about the country's deficit/debt problem, please look at my comment below -- "people need to be realistic."  Reinstating the Clinton tax rates on the top on two-income households of $250,000 and above raises only about $70 billion a year.  That's negligible when we have a $1.5 trillion annual budget.  

                  Tax rates on the rich are going to go up.  But there aren't enough rich people to bring the deficit down to what Obama calls "sustainable levels."

                  Any realistic view of the numbers leads to the inescapable conclusion that we are going to have to do a combination of broad-based tax increases (on the rich, on corporations, and some on everybody else as well) AND spending cuts -- on defense, but also in other areas.  

                  If you are realistic, the numbers don't add up any other way.  

                  •  OK coffee (0+ / 0-)

                    what areas do you suggest should be cut? You ask me for data, I ask you for specifics.

                    Do you see any part of the social safety net as "nice things to have" but that we need to consider sacrificing? If so, please offer specifics.

                    Sorry. I don't buy the idea that there aren't enough wealthy to put a dent in our deficit - especially when more than a few of the largest corporations pay ZERO income taxes.

                    Don't you think that declining wages for middle and lower class Americans may have a little something to do with revenue shortfalls too? As well as the unemployment/underemployment problem?

                    The middle and lower classes have sacrificed plenty at the federal as well as at state and local levels. Many of the cuts that are already being proposed would cost a lot of jobs but also leave a lot of desperate people in a lurch.

                    liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

                    by RockyMtnLib on Sun Mar 13, 2011 at 06:25:08 PM PDT

                    [ Parent ]

                    •  I gave some specifics in my post below (1+ / 0-)
                      Recommended by:
                      VClib

                      I think you can raise a few hundred billion a year -- maybe $200 billion ($70 billion Clinton rates on incomes over $250,000, another $30 billion on millionaire surtax, and $100 billion increase in corporation revenue) realistically.  (And that corporation increase is extremely optimistic -- more likely less than half that is realistic.) You'll probably have to get another $100 -- $200 billion from some kind of tax that is more broad-based.  

                      I can't imagine any scenario (looking at the numbers) that you are going to do more than $500 billion a year on the revenue side, and that's with big increases not only on the rich and corporations, but also some kind of broad-based revenue increase.  It would by far be the biggest tax increase in history -- and that's by a LOT.  (Repeal of the Clinton tax cuts on everybody, which includes raising taxes on low - income earners and reducing the EITC -- is only around $370 billion a year, if I remember correctly, and before last December's deal, that increase in revenue of $370 billion was going to be "the biggest tax increase in history.")

                      Then, you can downsize the military operations by another $100 or $200 billion, tops.   (Our military budget is now around $700  billion total, if I remember correctly.) Again, that's very deep cuts, as far as government spending goes - closing bases, layoffs, all that kind of thing.  There's no way this President or this Congress is going to completely gut Defense.  Not. gonna. happen.  Cuts, yes.  Gutting, no.    

                      Our annual deficit is over $1.5 trillion.  You've got to find another several hundred billion  a year somewhere.  

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