After years of hearing Conservative rants about lowering taxes to boost the economy, it almost sounds illogical to say the opposite. Last week I heard a compelling counter to their failed theory.
Last week while listening to the Thom Hartmann radio program on AM 1510 here in Boston I had an "Uh-huh" moment! He was talking about tax rates and how high tax rates for the wealthiest people helps to stimulate the economy. From the early 1900's to the Reagan disaster in the 1980's tax rates on the highest income earners were as high as 94% on those profiting over $200,000 in 1944 and 1945.
After listening to the Conservative theory that low taxes = strong economy you would think that a 94 tax rate would devastate the economy. After listening to Thom explain a better reality, I finally can refute their failed theory.
When after earning say a million dollars you were taxed on almost the entire remainder, what would you do? The Conservative answer is you would stop trying to make money and the economy would slow down. But as an entrepreneur I know that is wrong. People who own businesses and build businesses do it because they love to build businesses (and the money can be good too).
If it came down to either not making anymore money or handing 94% over to the IRS I would say neither. I would do the only logical thing, invest more money in my company. I would build better products, pay employees better and create a stronger, sturdier business.
In America we used to build strong businesses and have strong industries. This was due to a tax policy that fostered investment in your business instead of lining your pockets with substantial amounts of money.
Should we tax people who profit over a million dollars 70,80,90% of their income? Maybe it would bring back a stable economy. An economy that supports all Americans.
Check out a list of the historical tax rates in the US. http://www.truthandpolitics.org/...