I don’t care if you are agreeing with another poster, don’t resort to name-calling in GD.
And continuing the cycle is not helpful.
[ /Modding ]
I meant it in jest. I was actually going to put a smiley after it, but I suppose it still would have skirted up against the rules. My apologies.
People were pretty happy in the 1950s and 60s with a 90% marginal rate. It’s the mythical time when America was really America, the kind of era that conservatives want to return to. It can’t have been all that bad.
IdahoMauleMan specifically mentioned allowing people to pass their estates to their children. not corporate tax rates.
Rep. Linda Sánchez Introduces Legislation to Shift Tax Burden Back to Billionaires
S.3533: Responsible Estate Tax Act
The estate tax repeal is set to expire in 2011. There are a number of bills in Congress that are seeking to modify the estate tax before then. One thing I noticed in looking through the Thomas register is how many of them, both Republican and Democrat, carve out exemptions for farmers. As if a family farm is somehow more valuable or more moral to own than a family business or a family estate.
Leaving aside who these happy people were (MY ‘people’ weren’t particularly happy during the 50’s and 60’s), there was certainly a large decline in the happiness quotient during that period. And I note that you didn’t mention the 70’s or early 80’s.
As I’ve said before when you have made similar statements, the US could afford, if that’s the right word, such rates at the time because we were the only game in town. Our infrastructure hadn’t been destroyed, and we hadn’t lost millions of working age men or had our cities blown the fuck up. It makes a bit of a difference.
However, as the rest of the world put itself back together (in large part because of us) and stated to get back to work, that became less and less sustainable, until it basically bottomed out in the 70’s, when the misery levels reached a peak.
It’s funny that after hugely lowering taxes that the happiness level came back up while the government didn’t exactly go bankrupt due to cutting taxes from 90+% to 30+%…did it? In fact, I dare say we had more services than we did when the tax rates were ridiculously high. As you say, couldn’t have been all bad…
-XT
You’ve got to give the stimulus to people who would spend it. You’d be better off limiting stimulus cheques to people who earn $50 or 60 000 or less. These people are almost to a man living month to month and would spend the vast majority of the money, pumping it into the economy, which is what you want. People earning over 100K are going to save the vast majority of the dough, or at least a much higher percentage than low/middle income earners.
Basically giving the money to over 100K earners is replicating what’s happened i9n the US economy over the last 30 years and why everything is so screwed up now. 60% of all income growth in these years has gone to the top 1% and a lot of that money, instead of being earned by low/middle incomes and then being spent and pinballing round the economy, making everybody richer, has gone to a small number of people who’ve invested it, pumping a larger and larger share of national income into capital markets which have become more and more bubbleicious. The last time the top 1% made as high a share of the national income as they do now was 1929. Go figure.
40% of the stimulus is tax cuts. And the stimulus is designed to tackle an economic situation where economic indicators were showing a faster collapse of the economy than even 1929 and a situation where interest rates were already zero and couldn’t be cut any more, along with an enormous existing deficit. A slightly different situation than 2000.
The rich getting richer is not good for the economy of the poor. Yes, rich people are statistically more likely to be good at getting richer. Poor people less so. But Richie Deeppockets’s ability to enrich himself does not in itself indicate that he has any capacity or inclination to improve the public welfare.
If one thinks of the poor as a depressed sub-economy & the rich as an inflated sub-economy, then redistribution is logical on Keynesian grounds.
What do you mean “we could only afford thos erates because we were the only game in town”? Where is this happiness index you speak of? And the government didn’t go bankrupt from slashing tax rates but it sure rang up some pretty impressive deficits, no?
We had a virtual monopoly on manufacturing during that period…a world wide virtual monopoly.
You tell me…you brought it up.
It was ringing those up already, and our economy was stagnating. At least after we slashed those rates our economy started working again, which lead to that whole 90’s thingy where we weren’t ringing up those impressive deficits, at least not as badly. And we did all that PLUS got more services and without taking taxes back to the 90+% level. How did we do that exactly, if high taxes are the key?
-XT
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So our comparative advantage over other countries meant that we ownwd all international trade and made vast profits from exports, allowing us to maintain high tax rates?
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You brought up a “happiness quotient” and “level” which you stated went up and down at various times. What is this thing you speak of?
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Our economy suffered stagflation in the 1970s due to two massive oil price hocks which screwed the entire global economy up. We actually did a lot better than everybody else, countries like Britain needed to get IMF loans. The economy did not grow any faster once taxes were cut, the only thing that grew faster was the deficit level. That whole 90s thingy was due to tax increases and when Clinton was trying to force them through congress we were told by the people who brought us the deficits that tax increases would lead to economic meltdown. Then in the 2000s we got renewed tax cuts and renewed record deficits, economic meltdown etc.
But there is ample capital out there. I agree with Voyager when he essentially said if an economies problem is lack of fluid capital, increase that but if it is lack of demand (or something else) then increase that.
Income of the top 1% has grown dramatically. Corporate profits tripled. Corporations have nearly 2 trillion in reserve wealth they aren’t using. The wealthiest 1% control about 24% of income. If that money was being invested to create more technological innovation, more jobs, more middle class security then great. I’d be a supply sider liberal. But that doesn’t seem to be the case.
Did the wealthy suddenly start making far better decisions, resulting in tripling of corporate profits and doubling of income for the top 1%? I seriously doubt it. So the concept that good decisions = riches doesn’t hold. The rich made good decisions in the 50s and 60s when their share of national income stagnated or declined.
But there are no jobs. Both GDP growth and job growth in the last 10 years have been either slightly below average (for GDP) or anemic for job growth. So flooding the US economy with supply side capital didn’t work.
http://krugman.blogs.nytimes.com/2008/01/28/why-doesnt-bush-get-economic-credit/
R&D has become more heavily funded by the private sector.
I would word it as “If you make good decisions you are more likely, but definately not guaranteed, to become secure, stable and middle class than if you make bad decisions”. Only about 1% of the country can be rich at any time, but far more than that can make good decisions. I know people who live comfortably in high expense cities on $1000/month because they know how to make good economic decisions. I know working poor, lower middle class, middle class and upper class (don’t personally know any ‘rich’ people) who all make good economic decisions within their own income brackets.
I disagree with the premise that making good decisions is more likely to lead to riches. I think things like demographics, location, luck, timing, etc play a bigger role than you seem to feel.
Also, like others have said, many of these rich people recently collapsed the global economy.
I don’t think good decisions = rich by any means. I think there are too many other variables to being rich, and I think good decisions are much more likely to make you stable and middle class than rich.
No; it’s because if you are rich you can afford to repeatedly fail and try again until you get lucky. Most new businesses and products fail. If you aren’t rich and you fail you are pretty much ruined.
Actually government is extremely important in R&D; companies tend to leave basic research to it and make money off what our tax dollars paid for.
No. It’s who you know and who your ancestors were that are most important as to whether or not you are wealthy. That, and ruthlessness. Competence or even effort have little to do with it.
It’s called “going into debt”. We funded those tax cuts the Republican way; slash taxes for the wealthy, live high now, pass the debt on to your descendants.
You say the 50’s and 60’s were great, and that proves that 70% tax brackets work okay.
You also claim that the deficits that have been see n in recent decades are due to tax cuts.
But of course, this can be flipped around on you : In 1950, federal government spending was 15% of GDP. Today, federal government spending is 25% of GDP.
If federal government spending had been held to the same percentage of GDP as it was in 1950, the government would be running huge surpluses right now at current tax rates (1.4 trillion less spending in this year alone, plus elimination of interest payments).
Furthermore, if you look at this chart of government spending as a percentage of GDP, you’ll see that Reagan’s deficits were caused by spikes in spending, and Clinton’s surpluses were caused by a large drop in government spending.
When Bush was elected in 2000, total federal spending was back down to 18 percent of GDP. When Bush left office, it was back up to 22%. That difference accounts for about 580 billion dollars a year. In other words, had George Bush just held government to the same size as a percentage of GDP that it had been when he took office, he also would have finished his two terms with a surplus.
Here’s a chart of government revenue over the same period. Notice that it’s almost a straight line that has varied betwen 16 and 20% of GDP.
So we have a situation in which GDP has been growing well for 60 years, and government has been taking a relatively consistent slice of GDP each year to pay for itself, and thus government revenue has been increasing with GDP in a sustainable fashion.
At the same time, government spending has been rising at a rate much higher than the rate of GDP growth, and thereby consuming an ever-increasing share of GDP.
And you’re telling me this is a revenue problem, and not a spending problem?
Also notice that in the long run, the cuts in tax rates did not affect government revenue very much. It looks to me like the variations in government revenue come because of variations in the business cycle. Revenue dropped in years in which there were recessions. It grew during years of high economic growth. The fact that revenue has been this constant despite some rather large changes in taxes over the years suggests to me that there are offsetting effects. Higher tax rates don’t result in as much revenue as you’d think, and lower rates don’t cost as much as you’d think.
It also suggests to me that it would be very, very hard to close the budget gap with tax increases. Even during the Clinton surpluses, government revenue was still only about 20% of GDP. Trying to get federal revenues up to 25% looks to be very difficult. Even the Bush tax cuts coupled with a recession only resulted in a revenue drop of about 2% of GDP.
The U.S. has a spending problem, not a revenue problem. If you want to say it’s a revenue problem, then you need to extract about 10% of GDP more in taxes out of the public, when American tax revenue has not fluctuated by more than 3% of GDP in the past 60 years. Try doing that without cratering the economy. You’re probably looking at a 20% VAT to make that work. You can’t do it with higher income taxes - there isn’t enough income to tax unless you start taxing the entire middle class more.
In either case, you’d be taking America not back to a time before the Bush tax cuts, but to an era of bigger government and higher taxation than its ever seen.
One other thing - we appear to be talking past each other because I’m talking about fiscal policy in the general case, while you guys are talking about the current recession. In the current recession, there is no doubt that there is a demand-side problem. Business is sitting on 2 trillion dollars in capital right now. They aren’t investing it in part because of the lack of demand.
But outside of the special conditions of this recession, my point is that economy growth does not come by taxing people and using the money to stimulate demand. In fact, that doesn’t even work in a recession. You have to borrow the money and spend it. If you tax it and spend it, there is no net stimulus.
nevermind
Only 2%?
The tax cuts alone cost us $2.5 trillion (cite [PDF]).
The gross debt increased from $5.6 trillion in January 2001 to $10.7 trillion by December 2008.
So, the increase was $5.1 trillion. By my math that makes the tax cuts responsible for 49% of the increase in the budget deficit under Bush.
Depends on how you look at it I guess.
Oh, 52.5% of those tax cuts went to the 5% wealthiest in the US. For that we got crappy job growth, underemployment and a smashed global economy.
I would call that a colossal failure of giving money to the rich to stimulate the economy.
Assuming that $2.5 trillion figure is correct, that’s 1/6th of GDP, not 2%.
$2.5 trillion for all the years the tax cut was in effect (not just one year).
Missed edit window.
It’s not accurate, but $1.8 trillion seems to be a fair estimate. That’s 12%.