When the US had high tax rates that wasn't class warfare. There was no redistribution of wealth from the rich to working and middle class families. We earned it. We worked for it. And then came the PATCO strike, our right to collective bargaining was under attack, the right for Labor to sit at the table as an equal to Capital. Then came outsourcing, they had come for our jobs. Now with the mortgage crisis, they have come for our homes.
Taxing the rich is not punishment.
Its not about class warfare, lets shoot that down right away...
High mariginal rates reward smarter investment.
When the top marginal rate was in the 90%+ the effective rates were 40-45%, when the top rate was 70% the effective rates were 32-34%. Yes we took huge sums from the uber rich, and gave large portions back to the uber rich. The rich that took their private capital and built factories and business's here in the US got a huge tax break for that smart community oriented investment. We gave huge tax deductions for investing in emerging tech and markets, to incentivize US job creation. To incentivize US innovation.
Todays effective rates are about 31-33% roughly the same they were back in the 1970's. Gone are the deductions and exemptions that spurred US job creation and innovation, rates are at historically low points. All those incentives to create jobs in America are gone. Incentives to innovate, incentives to foster leading edge technological developments.
Do you see a pattern yet? ...Let me continue...
Lets say you are a billionaire....why should you build a factory to make solar panels or wind turbines for a 5 to 10% return, when you can make (20, 25, 30%) far more speculating on commodities?
The picture I'm trying to paint is one of incentives to the flow of capital...
High taxes should not be about punishing the rich. Hi taxes in the past were about creating a stable society, where smarter investments are rewarded. Those exemptions and deductions are a great way to make capital flow where we want it to, instead of willy nilly everywhere, or not at all, like we see now. The right wing likes low taxes with fewer exemptions and deductions to "level the playing field". But what that does is make currency and commodities speculation more profitable than say building factories that produce solar panels and create US jobs......
The level playing field... is really crooked
The right wing "Market ideologists" dont like to pick winners and losers in a market, so the "level playing field" becomes this alter that some grovel before. And how much profit a corporation makes in the next fiscal year becomes more important than long term visionary thinking, like industrial and energy policy looking forward 20 or 30 years. Higher taxes also means less money goes into speculation, so less money goes into speculative bubbles, so recessions arent as broad or deep.
Older, mature large markets will dominate, become hard to control, steer, and tend towards senescence and receive legislative favoritism. Emerging markets are overwhelmed. And until the regulatory and tax policies are changed, this will continue.
Yes, be thankful you have a job ! Heeee Haaw!
6:24 PM PT: IF you want to join Keynesian Kossacks, let me know, I'll send you an invite.