Maybe you think that raising the tax rates on the uber wealthy will raise more revenue.... I'm here to tell you it wont. This is one issue that Bill Clinton got right, increased economic activity will increase revenue. Clinton knew this and made sure under his stewardship the US economy bubbled and burped to a relatively healthy state.
While the top tax rate has gone up and down, from a low of 28% to a high of 94%, revenues have been fairly steady since 1940.
So then what the Farck is all the bruhaha about?
I'm sure if we raised the top rate to say....80% or 90%, like it used to be, we'd have a jump in revenue the next year, but we all know that the Uber wealthy will restructure themselves and the revenue party will be over.
What sort of society do we want?
I want a society where working and middle class families aren't taxed out of the economy. I want a society where most families can take care of their own, where most families don't have to resort to government handouts. I want a reality where most families can send their kids to college. And since the 1980's these realities became dreams and faded memories, while economic oppression became the reality.
Have you felt it, economic stress, sometime over the last couple of years?
Low tax rates like we've had since Reagan are still considered progressive, but they have a regressive effect, taxing the working poor and middle classes out of the economy, as a result families are less capable of taking care of their own, and more often than not rely on government hand outs.
When tax rates are high enough, the working poor and middle classes are engaged in the economy. The point is having a large and vigorous middle class that can participate as citizen legislators, send its kids to college, so those kids can invent lots of cool stuff for the corporations to make money off of. Consider kids as assets. How do you make best use of those assets? Educate those assets of course. Remember California used to have free college, until a certain Governor (Reagan).
I love the above chart, its from the Heritage Foundation, they made the chart to show that high tax rates don't raise more revenue, and whoops, it also shows that low tax rates don't raise more revenue. (This is one reason why we will the war of ideas in the long run). Just in case you aren't familiar with the top tax rates over the course of the last 80 years or so, I conveniently happen to have one from 2005:
The Progressive Policy Institute says basically the same thing, comparing real low tax rates to real high tax rates.
By itself, economic theory cannot choose between the two cases, and hard economic evidence does not fully support either side.
As you can see, Reagans 28% raised no more revenue as a percent of GDP, than when Ike jacked up the top rate to 94%. (IIRC there was a recession caused when Ike went too high) I fail to see any real relation to tax rates and revenue, but I do see a relation to low tax rates and economic oppression (Do you see those 2 yellow lines?).
Not too long ago Thom Hartmann wrote:
"Progressive taxation has a long history: As Jefferson said in a 1785 letter to James Madison, "Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." Hartman concludes, "Progressive taxation has helped create every middle class in the First World, and without it the middle class will vanish."
As a percent of GDP, revenues are incredibly consistent, Something I think Bill Clinton clearly understood when he raised the top rate a little and concentrated on getting the economy really ramped up, as GDP increased so did revenue, and over time Clinton was able to balance the budget. And do note that the economic stimulus happens first, and balancing the budget occurs later. FDR wanted to balance the budget in 1937, after all GDP in 1936 was a touch higher than inn 1929, 1936 was a good year, nearly 14% GDP growth, hours worked were down, wages were up But FDR made the mistake of cutting back about 2/3rds the WPA and CCC money in 1937, causing a recession. FDR learned his lesson and brought back the stim packages he had cut, plus he added a 200 ship navy building program. BTW it was this depression era fleet that beat Japan in the Pacific.
If all you want to do is balance the budget, then just get the economy cranked up. If you want the idea, called democracy to work, where folks get involved in participatory government, then you must stop economic oppression in the form of a tax system that taxes the majority of us out of the economy, and leaves running for office an entitlement for inherited money.
So at this point I am renewing my call for an increase of the Individual top tax rate to at least 60%, and using a minimum of 10 tax brackets to get the proper progressivity amongst the top income earners. And as clammyc said in a recent dairywe're only talking about the top half of one percent of income earners. In simple terms if you have individual income, not family income, of 90k, you'll see a tax break.
I'm not just talking about letting the Bush tax cuts sunset, I'm talking about sunsetting Reagans 60% tax cut for the richest amongst us. Its time they pay their fair share. They're called Fat Cats for a reason, well its time a for a diet kitty kat.