I mean, she is actually homeless. Sleeping on a couch on a friend’s teacher’s apartment isn’t exactly secure. She’s not on the street, but that’s not really necessary to be homeless.
Shmidny
Right, I’m aware, I was trying to say that out of choices tuition, place to live, and Robin actually voting for what they campaign for, maybe Becky didn’t pick place to live. But I think the next strip negates that now anyway.
“90% marginal tax rate on income over 10 million dollars” means that you get taxed 90% on any income OVER 10 million dollars, but not on the portion UNDER 10 million, regardless of how much you make.
That is:
Make $5 million: $0 marginal tax paid (other taxes still due, of course).
Make $10 million: $0 marginal tax paid
Make $11 million: $900,000 marginal tax paid.
Make $110 million: $9 million marginal tax paid.
When the starting floor of the tax is set at such a high point that it’s more than practically anyone actually NEEDS for their yearly income (as with the $10 million suggestion in the comic), it’s nowhere near as harmful as naysayers typically portray it.
It’s not really radical, that tax only effects income over 10 million dollars and it is a tax rate that we had in the 1950’s and 1960’s. It isn’t new. It would not be the problematic mess that people like the Koch brothers want you to believe. It’s just we have come to the point in Capitalism where it has become problematic in and of itself. It requires the existence of “have’s” and “have not’s”, basically requiring the suffering of people to work.
Matthew Davis
Which, of course, is ironic because the conservative movement likes to laud the 50’s without acknowledging that little aspect of their prosperity.
Do you know how marginal tax rates work? Marginal means you’re not getting taxed 90% for all of your income, just for the bit that’s over $10mil. So if you make $10.000.001, you’re getting taxed 90% for $1 (the bit that’s over $10mil) and a lower rate for the rest.
Also, do you make over 10 million dollars? Not just over, but significantly over? Do you have any idea how much that is? It doesn’t mean you have over 10 million dollars. It means you get over 10 million more dollars every month. Do you know what you can buy with that much money? Because the answer is everything, with enough left over to invest in a few ventures. It’s an obscene amount of money. Hell, even if you did only get to keep 10% of it, that’d still be over $1mil a month, which is enough for a truly decadent lifestyle.
Jon Rich
Everything there is right, except that it’s calculated by *year,* not by month.
oz
while that’s a necessary correction, I’d still be obscenely happy to get $1mil in a year
From 1954 until the early Eighties the top marginal rate of federal income tax in the USA was 91% (on incomes over $200,000 per year). And some states had state income taxes in addition.
Alexandria Ocasio-Cortez occasionally mentions raising the top marginal rate of income tax to 70%. I suppose that the reason that she has chosen that figure is that what little evidence there is of a maximum in the Laffer Curve puts it at a marginal tax rate of 70–75%.
Otl1999
Actually, it was 91% until 1964. It then dropped to 70% through 1981 – which may be why Ocasio-Cortez chose that number. Subsequent to that it dropped substantially, and since the late 1980s has varied between 28% and Just under 40%.
Probably more significant to the (very) wealthy (who generally depend on “passive” income rather than “earned” income), capital gain and qualified dividend income rates are much lower (a maximum of 20%). I haven’t heard any proposals to deal with that, though Warren apparently proposes a tax on accumulated wealth. Given the opportunities to stash/hide wealth, I don’t have huge hopes that such a tax would be successful.
thejeff
There have been proposals to treat long term capitals gains as regular income, though I’m not sure any high profile politicians have made them recently. There are some issues with doing so – like handling losses.
One of the more interesting side effects of a wealth tax would be disclosure. We really have very little direct information about who has how much wealth . It’s all estimates.
I’m not sure how much wealth hiding there would be. Most of the ways to hide wealth are counterproductive. The point of wealth is to generate more wealth. A million dollars in the market with a return of 8% is better than a million dollars buried in the back yard being eaten away by inflation, even if you have to pay a 2% tax on the money in the market.
There will certainly be some, but mostly rich people want their cash out making more cash.
SONIC SEZSAYS
“Kids, there’s nothing more cool than a 90% marginal tax rate on income over $10,000,000. But if someone tries to tax you in a way that makes you impoverished, that’s no good.”
I’m not an economics expert, but I’m pretty sure that noone would actually pay those taxes. They would just spend their earnings in new investments / projects so that their bottom line remains below $10 mil.
So the idea isn’t to take money from the rich, it is to prevent the rich from hoarding money, and instead forcing them to invest it into new ventures, creating jobs and keeping the money in circulation.
Except that the tax take on this would be extremely minor because if you’re making 10 million a year then you’d have an army of lawyers and accountants to make sure you don’t pay anything close to 90%
The marginal tax rate is NOT the same as the actual tax rate. Even if the marginal tax rate is 99% and you haven’t hired a single lawyer or accountant, you’re not going to be paying that much in actual cash.
Yet_One_More_Idiot
I have no idea what a marginal tax rate is as opposed to an actual tax rate…but here in the UK, the top rate of income tax has been steady for many years now at 45% of everything after the first £150,000.
dg
see joyfullofdreams’ reply for a concise summary.
Positron
That’s actually exactly what a marginal tax rate is. In this case, 90% of every dollar *after the first 10 million*. If implemented in the UK using your example it would mean paying 45% of everything above 150k pounds and then 90% of everything above 10 million pounds. The reason Americans are being so specific about it being a marginal rate is because the Republicans are pretending it’s 90% of *all* income if you earn over 10 million, rather than 90% of the excess, or margin, above that.
chris73
The point still stands though, this tax won’t earn much because anyone making that much money will have it sorted that they won’t be paying much, if at all on anything above the 10 million so why have it in the first place other than to make people feel better about “punishing” the rich
Its dog whistling at its finest
3oranges
Taxes aren’t punishments. When you ride on a bus, you’re not being punished by paying a fare. When you live in a society and make massive profit from the environment it provides you, you’re not being punished by paying for upkeep.
So let me turn that around: is there any reason [i]not[/i] to have it in the first place, other than to make people feel better about “giving a free ride” to the rich? Dog whistling at its finest, indeed.
Maybe we could make decisions based on what works best (which is [i]not[/i] letting inequality grow forever) rather than the kind of emotional appeal that can be turned both ways just as easily.
chris73
Taxes aren’t punishment I agree but extra taxes that serve no reason certainly are punishments, in this case punishment for being wealthy
Inequality is not the problem, being poor is the problem. Compare me to Warren Buffet and yeah its really unequal but I’m doing all right so bringing Warren Buffet down by extra taxes wont maker a blind bit of difference to me at all
However helping the unemployed find work certainly will so maybe the USA could look at lowering the company tax rates to the same levels as the Scandinavian tax rates
BBCC
A marginal tax rate is not a punishment either. It’s a way to force the mega rich to pay their share in taxes. Yes, they’ll try to get around it – that means there needs to be work done on implementing it (like closing loopholes and tax havens). That doesn’t make it a bad idea.
Second of all, I’m glad you’re doing alright. Others aren’t and strengthening the social security net would be beneficial for them. Unless you’re making 10 million, you’re not going to be affected by such a tax.
Scandinavia also has a strong social security net so I dunno why you think one’s something the US should emulate but not the other. Even ignoring that lowering taxes on large corporations and companies never actually helps – see: Last years tax cut from Trump.
chris73
“It’s a way to force the mega rich to pay their share in taxes.”
The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
The top 50 percent of all taxpayers paid 97 percent of total individual income taxes.
thejeff
Yeah, that’s because the bottom 50% don’t have the money. What little they have goes to bare necessities. Should we make it strictly fair and require the bottom 10% to pay the same as the top 10%? The bottom would have to borrow and the top could pay it out of petty cash, but it would be fair, right? They call that a head tax or a poll tax and it’s horrendous.
Surprisingly the share of the total income tax revenue the top 1% pay has been going up, even as we’ve lowered rates. That’s because those lowered rates lead to more wealth and thus more income for the top 1%. They pay a larger share of the total income tax than they did decades ago because they have more money and proportionally everyone else has less.
Note that they pay a lower percentage of their income than when rates were higher, but their income is enough more to overcome that. Because money makes money.
You want them to pay a lower share of total income taxes? Tax them more for a few years. Tax their accumulated wealth. Spread it out to the rest of us and magically, you’ll see their share drop.
It’s a stupid metric and it always comes up in tax arguments.
BBCC
The top three riches people in America are Bill Gates, Warren Buffett, and Jeff Bezos. All three have numerous, numerous articles about how they commit tax avoidance. Yeah, I’m gonna say that’s not paying their share.
I’m not doing your google searches for you because you want to be a bootlicker, Chris.
BBCC
That last comment was uncalled for and for that I will apologize, but I stand by the top part – it’s been in the news several times (for all three) and it’s not difficult to find.
3oranges
But everything I’ve seen investigate the question says that not just poverty, but high inequality is itself a problem. It’s negatively correlated with quality of life and distorts both economic and political processes to the point where only the ultra-wealthy get a say, and then things other people want gets ignored.
You already can see examples of this in the US, where for instance single-payer health care is actually something a majority of people support. And yet as far as the parties are concerned, it’s an untenable position. That’s not just a problem of poverty; even middle class people can be ruined by medical expenses, and yet right now even middle class people are not having their interests represented.
If you don’t think massive inequality is a problem, I can see thinking high marginal tax rates are purely punitive. But that ignores why people want them, which is that they think massive inequality is a problem, and I would say the data definitely backs that up.
thejeff
Worse, wealth makes wealth. Once you’ve got enough wealth you can invest, live off the income that generates, plowing some of it back into the principal and your wealth just grows.
Assuming your return on investment is higher than the rate the economy grows – which it traditionally has been, those with significant investment income inevitably control a larger and larger portion of the economy – leaving less and less to be split among the rest of us.
Putting a cap on how obscenely rich you can be isn’t punishment. It’s sanity. Lowering taxes on businesses and the rich fixes NOTHING. Trickle down DOES NOT WORK
And “helping people get jobs” does fuck-all to address poverty when incredibly profitable corporations like Amazon don’t even pay all their workers a living wage. Not to mention all those people who literally CANNOT work.
chris73
Well thats simply not true. Company tax in Norway, Denmark and Sweden is all considerably lower than the USAs company tax.
Those countries have many other differences – more social supports, more worker’s rights, higher individual taxes and if I recall correctly less loopholes than our company taxes. The nominal rates here may be higher, but many large profitable companies wind up paying little or nothing.
BBCC
Also, the tax structure works differently. Instead of flat rates, many are proportional (ex. ‘giving two percent of your income’).
Uly
The ultra rich may have paid a larger share of their income in income tax – but that’s what the hell income tax is supposed to be like! It’s a progressive tax! They paid a heck of a lot less of their income in sales taxes.
Correct. Anyone subject to this tax will easily find ways around it. These workarounds will distort the economy in ways that reduce efficiency, and most likely lead to even greater complications in the tax code. I’m not speculating here, this is what happened in the past when marginal rates were higher.
But, hey, soak the rich always plays well in some quarters. Never mind that the US already has one of the world’s most progressive income tax structures. People at the top already pay a percentage of taxes that’s greater than their share of income.
not someone else
I mean they’ll do that literally no matter what the tax rate is, plenty of billionaires already pay no taxes or get refunds, not to mention what corporations do. That’s more of an argument for more and different kinds of tax reform in addition to raising the rates back to what they used to be.
Ethics Gradient
They find ways around it, marginal tax rate or not.
Tax havens have to be clamped down. Tax havens have to be transparent, for a start.
Then there’s the whole problem with franchises. For example Starbucks cafes are franchises which usually run at a reported loss, but the parent company runs at a massive profit.
Essentially, a Starbucks in South Africa, say, is a pump from the South African economy to the US.
Companies like Amazon work on the same principle. The worse thing is that HMRC connive in such tricks.
Matthew Davis
Or, you know, actually invest in their business and community in order to lower their tax burden instead of being rentiers, the way it worked back when we had a 90% rate before.
Liquid Len
Yeah, this.
But this was also at a time when stock buybacks were illegal too, so the excess couldn’t just be exclusively shoveled to the shareholders.
Positron
The idea that you think the US has some of the highest income tax rates for high earners suggests you don’t know any examples of tax rates outside the US. For starters, no-one is expected to pay more tax than the income they earn. Second, the highest tax bracket in the US is 37%, as one commenter mentioned the UK is at 45%, and Australia is at 45% as well. Canada is a bit better at 33% for the top bracket. Not only that, but your brackets have way higher thresholds – as a single taxpayer in Australia I have to make the equivalent of only 125k USD to hit a 45% tax rate, whereas in the US I’d need to hit 4 TIMES that at 500k. Since Canada’s top bracket kicks in from 150k USD equivalent they’re not actually as generous as they seem on the surface either. That means that, in practice, the US has a pretty generous income tax rate for high earners by comparison with other western nations.
thejeff
It’s not clear to me the tax code is any less complex than when marginal rates were highest or that rich people are any less dedicated to finding loopholes.
More importantly, it’s hard for me to see that the economy was any less efficient in any sense I care about back when we had high marginal rates than it has been since. Those were the boom post war years. Massive growth, broad prosperity, the growth of the middle class. Since Reagan’s tax reforms that drastically cut the top rates and supposedly reduced loopholes, the rich have gotten dramatically richer and the rest of us have stagnated. Even overall growth has been much slower.
There are certainly other external factors at play but it’s hard for me to accept that the tax policies in place during that period were really a huge drag on the economy and the policies since are boosting it, when the outcomes were reversed.
Deathjavu
Yes, people will find ways around the law, so clearly the solution is to just make it legal. I hear this argument on everything from gun control to abortion. *Facepalm*
Regardless of the particular issue at hand, is anyone actually swayed by arguments like that? The hole in that reasoning is big enough to fly a fucking jumbo jet through it.
People are gonna have abortions anyway, so it might as well be safe, legal, and affordable. Anti-abortion policies are deliberately designed to harm and punish women, and nobody cares what happens after the baby is born. If I’m missing something, let me know.
Deathjavu
The problem is that it’s simultaneously fallacious and unconvincing to people on the other side, which is kind of a twofer bad argument? Arguments being, something you have invested in and therefore have, on some level, an interest in winning?
Individual sovereignty of body, the fact that no one goes looking for the guy to face said penalty, the fact that no one wants to support the baby living with the impoverished uneducated 16 year old that basically cannot, it is not possible for her to do this alone, the fact that I thought that we (at least where I live) settled this “get your goddamn religious beliefs out of my government” thing *checks* 243 years ago? Those are all great arguments imo.
“People are gonna do it anyways” is…I don’t even know what that is. Let’s just file it away as “not good enough”.
thejeff
I think the distinction with abortion is that “women are going to do it anyways” leads directly to women bleeding out from botched back-alley abortions. “safe” is critical part of that argument, in a way it isn’t in most of the other variations of the argument. There’s a reason the coathanger is such a potent symbol
“People are going to do it anyway and the consequences will be horrific” is a different argument than “People are going to do it anyway, so why bother.” It’s a harm reduction approach.
Of course much of the anti-abortion movement doesn’t care about harm reduction, since they see it as punishment for sinning.
Kryss LaBryn
Another version of that was the one Governor Schwarzenegger made a few years ago, when he cut funding from women’s shelters (which funding provided fully half their operating costs) by 100%: “We can’t completely resolve this issue, so why bother even trying.”
It’s such a bizarre and stupid way to look at an issue. I mean, ideally, if there’s a problem, you fix it, yeah? But if you can’t completely resolve it straight off, acting to at least mitigate it is better than just throwing up your hands and doing nothing. That whole “best is the enemy of the good” and all.
I mean, really, it’d be like saying, “I’ve got a cold and I feel like shit and I can’t cure it, so there isn’t even any point to me taking some cold meds so I don’t feel so crappy while I get over it.”
Or, “My car ran out of coolant and is overheating and I don’t have any more coolant to use with me. I could top up the radiator with water, which would at least stop the engine from seizing while I limp to the store or a mechanic for fluid; but since that won’t immediately fix my problem of not having any coolant, I’m just gonna run it dry rather than using something that helps, but isn’t quite as good in the meantime.”
“I don’t have an alarm system on my house, so why even bother locking the door? I can’t afford to put up security cameras to deter or prosecute potential burglars, so why bother trying to slow them down or prevent them getting in at all?”
“There’s always going to be some murder, even with the death penalty as a deterrent, so why bother making murder illegal in the first place?”
“Rich people are always going to be able to find some loopholes to avoid paying their full tax bill, so why bother closing any of them at all?”
276 thoughts on “Marginal”
Ana Chronistic
IDontKnowWhatIExpected.gif
ValdVin
Becky’s got her Howard Beale moment!
Oh, wait…
3oranges
I guess she got tips from Roz instead.
sunflowerofice
Well she got shoved in front of the people and will likely be hidden away for a while, at least in a speaking format.
Leorale
This is a dream I didn’t know I had until it came true for Becky.
Kyrik Michalowski
So I am going to guess that Becky did not choose changing her policies as 2 of the 3 since Robin is trying to keep her quiet?
newllend(henryvolt)
It feels more like Robin trying to stop Becky from blurting out juicy details about her love life and or sex life.
Shmidny
Robin DID call her homeless in yesterday’s strip, maybe she was being honest and not just saying it for clout?
thejeff
I mean, she is actually homeless. Sleeping on a couch on a friend’s teacher’s apartment isn’t exactly secure. She’s not on the street, but that’s not really necessary to be homeless.
Shmidny
Right, I’m aware, I was trying to say that out of choices tuition, place to live, and Robin actually voting for what they campaign for, maybe Becky didn’t pick place to live. But I think the next strip negates that now anyway.
Stephen Bierce
Let me tell you how it will be (chung chung)
It’s one for you NINETEEN for me! (chung chung)
‘Cause I’m the Tax Man! Yeah, I’m the Tax Ma~an!
m-m
SRV FTW!
Ethics Gradient
thatsnotwhatamarginaltaxratemeans.jpg
Agemegos
Tell it to the Beatles.
Ethics Gradient
Those Well Known Rich People.
Annonymouse
Tell that to Her Majesty’s Revenue and Customs who kept the poor poor and made the rich poor if they were not part of the protected classes.
Ethics Gradient
Those potholes ain’t fixing themselves.
Woden
“90% marginal tax rate on income over 10 million dollars” means that you get taxed 90% on any income OVER 10 million dollars, but not on the portion UNDER 10 million, regardless of how much you make.
That is:
Make $5 million: $0 marginal tax paid (other taxes still due, of course).
Make $10 million: $0 marginal tax paid
Make $11 million: $900,000 marginal tax paid.
Make $110 million: $9 million marginal tax paid.
When the starting floor of the tax is set at such a high point that it’s more than practically anyone actually NEEDS for their yearly income (as with the $10 million suggestion in the comic), it’s nowhere near as harmful as naysayers typically portray it.
Woden
Typo: “Make $110 million: $9 million marginal tax paid.” Should have been:
“Make $110 million: $90 million marginal tax paid.”
Woden
Dangit, and the $11 mil one should have been $9 mil. I really messed that up. =/
Woden
Wait, no, that one’s right…
abysswatcher1993
Becky is taking economy classes from AOC and Dave Strider. She is going to save the world one day.
Piotr W
I don’t know… a 90% tax? This is way too radical…
Arioch
It’s not really radical, that tax only effects income over 10 million dollars and it is a tax rate that we had in the 1950’s and 1960’s. It isn’t new. It would not be the problematic mess that people like the Koch brothers want you to believe. It’s just we have come to the point in Capitalism where it has become problematic in and of itself. It requires the existence of “have’s” and “have not’s”, basically requiring the suffering of people to work.
Matthew Davis
Which, of course, is ironic because the conservative movement likes to laud the 50’s without acknowledging that little aspect of their prosperity.
Solarn
Do you know how marginal tax rates work? Marginal means you’re not getting taxed 90% for all of your income, just for the bit that’s over $10mil. So if you make $10.000.001, you’re getting taxed 90% for $1 (the bit that’s over $10mil) and a lower rate for the rest.
Also, do you make over 10 million dollars? Not just over, but significantly over? Do you have any idea how much that is? It doesn’t mean you have over 10 million dollars. It means you get over 10 million more dollars every month. Do you know what you can buy with that much money? Because the answer is everything, with enough left over to invest in a few ventures. It’s an obscene amount of money. Hell, even if you did only get to keep 10% of it, that’d still be over $1mil a month, which is enough for a truly decadent lifestyle.
Jon Rich
Everything there is right, except that it’s calculated by *year,* not by month.
oz
while that’s a necessary correction, I’d still be obscenely happy to get $1mil in a year
Agemegos
From 1954 until the early Eighties the top marginal rate of federal income tax in the USA was 91% (on incomes over $200,000 per year). And some states had state income taxes in addition.
Alexandria Ocasio-Cortez occasionally mentions raising the top marginal rate of income tax to 70%. I suppose that the reason that she has chosen that figure is that what little evidence there is of a maximum in the Laffer Curve puts it at a marginal tax rate of 70–75%.
Otl1999
Actually, it was 91% until 1964. It then dropped to 70% through 1981 – which may be why Ocasio-Cortez chose that number. Subsequent to that it dropped substantially, and since the late 1980s has varied between 28% and Just under 40%.
Probably more significant to the (very) wealthy (who generally depend on “passive” income rather than “earned” income), capital gain and qualified dividend income rates are much lower (a maximum of 20%). I haven’t heard any proposals to deal with that, though Warren apparently proposes a tax on accumulated wealth. Given the opportunities to stash/hide wealth, I don’t have huge hopes that such a tax would be successful.
thejeff
There have been proposals to treat long term capitals gains as regular income, though I’m not sure any high profile politicians have made them recently. There are some issues with doing so – like handling losses.
One of the more interesting side effects of a wealth tax would be disclosure. We really have very little direct information about who has how much wealth . It’s all estimates.
I’m not sure how much wealth hiding there would be. Most of the ways to hide wealth are counterproductive. The point of wealth is to generate more wealth. A million dollars in the market with a return of 8% is better than a million dollars buried in the back yard being eaten away by inflation, even if you have to pay a 2% tax on the money in the market.
There will certainly be some, but mostly rich people want their cash out making more cash.
Delicious Taffy
SONIC
SEZSAYS“Kids, there’s nothing more cool than a 90% marginal tax rate on income over $10,000,000. But if someone tries to tax you in a way that makes you impoverished, that’s no good.”
Ob
I’m not an economics expert, but I’m pretty sure that noone would actually pay those taxes. They would just spend their earnings in new investments / projects so that their bottom line remains below $10 mil.
So the idea isn’t to take money from the rich, it is to prevent the rich from hoarding money, and instead forcing them to invest it into new ventures, creating jobs and keeping the money in circulation.
Jhon
Squeeze them until it does trickle down.
Zemgosl
Becky is the definition of grace under pressure apparently.
Jess
Truly rising to the occasion! Look at that grin in the last panel.
Bicycle Bill
90% is a little excessive, Becky. 75% would be more than adequate.
Doom Shepherd
Still making 10 million + a year. A person who can’t live on that is too dumb to be allowed to have money.
Semiautodidactic
I like that the best response to this is already the alt-text
ProfessorDetective
My thought exactly. Like 80%, max.
Puckish Rogue
Except that the tax take on this would be extremely minor because if you’re making 10 million a year then you’d have an army of lawyers and accountants to make sure you don’t pay anything close to 90%
But hey its all about the feelz I guess
Uly
The marginal tax rate is NOT the same as the actual tax rate. Even if the marginal tax rate is 99% and you haven’t hired a single lawyer or accountant, you’re not going to be paying that much in actual cash.
Yet_One_More_Idiot
I have no idea what a marginal tax rate is as opposed to an actual tax rate…but here in the UK, the top rate of income tax has been steady for many years now at 45% of everything after the first £150,000.
dg
see joyfullofdreams’ reply for a concise summary.
Positron
That’s actually exactly what a marginal tax rate is. In this case, 90% of every dollar *after the first 10 million*. If implemented in the UK using your example it would mean paying 45% of everything above 150k pounds and then 90% of everything above 10 million pounds. The reason Americans are being so specific about it being a marginal rate is because the Republicans are pretending it’s 90% of *all* income if you earn over 10 million, rather than 90% of the excess, or margin, above that.
chris73
The point still stands though, this tax won’t earn much because anyone making that much money will have it sorted that they won’t be paying much, if at all on anything above the 10 million so why have it in the first place other than to make people feel better about “punishing” the rich
Its dog whistling at its finest
3oranges
Taxes aren’t punishments. When you ride on a bus, you’re not being punished by paying a fare. When you live in a society and make massive profit from the environment it provides you, you’re not being punished by paying for upkeep.
So let me turn that around: is there any reason [i]not[/i] to have it in the first place, other than to make people feel better about “giving a free ride” to the rich? Dog whistling at its finest, indeed.
Maybe we could make decisions based on what works best (which is [i]not[/i] letting inequality grow forever) rather than the kind of emotional appeal that can be turned both ways just as easily.
chris73
Taxes aren’t punishment I agree but extra taxes that serve no reason certainly are punishments, in this case punishment for being wealthy
Inequality is not the problem, being poor is the problem. Compare me to Warren Buffet and yeah its really unequal but I’m doing all right so bringing Warren Buffet down by extra taxes wont maker a blind bit of difference to me at all
However helping the unemployed find work certainly will so maybe the USA could look at lowering the company tax rates to the same levels as the Scandinavian tax rates
BBCC
A marginal tax rate is not a punishment either. It’s a way to force the mega rich to pay their share in taxes. Yes, they’ll try to get around it – that means there needs to be work done on implementing it (like closing loopholes and tax havens). That doesn’t make it a bad idea.
Second of all, I’m glad you’re doing alright. Others aren’t and strengthening the social security net would be beneficial for them. Unless you’re making 10 million, you’re not going to be affected by such a tax.
Scandinavia also has a strong social security net so I dunno why you think one’s something the US should emulate but not the other. Even ignoring that lowering taxes on large corporations and companies never actually helps – see: Last years tax cut from Trump.
chris73
“It’s a way to force the mega rich to pay their share in taxes.”
How much more is fair in your world?
https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-u-s-taxpayers-paid-majority-of-income-taxes-in-2016
The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
The top 50 percent of all taxpayers paid 97 percent of total individual income taxes.
thejeff
Yeah, that’s because the bottom 50% don’t have the money. What little they have goes to bare necessities. Should we make it strictly fair and require the bottom 10% to pay the same as the top 10%? The bottom would have to borrow and the top could pay it out of petty cash, but it would be fair, right? They call that a head tax or a poll tax and it’s horrendous.
Surprisingly the share of the total income tax revenue the top 1% pay has been going up, even as we’ve lowered rates. That’s because those lowered rates lead to more wealth and thus more income for the top 1%. They pay a larger share of the total income tax than they did decades ago because they have more money and proportionally everyone else has less.
Note that they pay a lower percentage of their income than when rates were higher, but their income is enough more to overcome that. Because money makes money.
You want them to pay a lower share of total income taxes? Tax them more for a few years. Tax their accumulated wealth. Spread it out to the rest of us and magically, you’ll see their share drop.
It’s a stupid metric and it always comes up in tax arguments.
BBCC
The top three riches people in America are Bill Gates, Warren Buffett, and Jeff Bezos. All three have numerous, numerous articles about how they commit tax avoidance. Yeah, I’m gonna say that’s not paying their share.
I’m not doing your google searches for you because you want to be a bootlicker, Chris.
BBCC
That last comment was uncalled for and for that I will apologize, but I stand by the top part – it’s been in the news several times (for all three) and it’s not difficult to find.
3oranges
But everything I’ve seen investigate the question says that not just poverty, but high inequality is itself a problem. It’s negatively correlated with quality of life and distorts both economic and political processes to the point where only the ultra-wealthy get a say, and then things other people want gets ignored.
You already can see examples of this in the US, where for instance single-payer health care is actually something a majority of people support. And yet as far as the parties are concerned, it’s an untenable position. That’s not just a problem of poverty; even middle class people can be ruined by medical expenses, and yet right now even middle class people are not having their interests represented.
If you don’t think massive inequality is a problem, I can see thinking high marginal tax rates are purely punitive. But that ignores why people want them, which is that they think massive inequality is a problem, and I would say the data definitely backs that up.
thejeff
Worse, wealth makes wealth. Once you’ve got enough wealth you can invest, live off the income that generates, plowing some of it back into the principal and your wealth just grows.
Assuming your return on investment is higher than the rate the economy grows – which it traditionally has been, those with significant investment income inevitably control a larger and larger portion of the economy – leaving less and less to be split among the rest of us.
Fart Captor
Putting a cap on how obscenely rich you can be isn’t punishment. It’s sanity. Lowering taxes on businesses and the rich fixes NOTHING. Trickle down DOES NOT WORK
And “helping people get jobs” does fuck-all to address poverty when incredibly profitable corporations like Amazon don’t even pay all their workers a living wage. Not to mention all those people who literally CANNOT work.
chris73
Well thats simply not true. Company tax in Norway, Denmark and Sweden is all considerably lower than the USAs company tax.
https://taxfoundation.org/how-scandinavian-countries-pay-their-government-spending/
thejeff
Those countries have many other differences – more social supports, more worker’s rights, higher individual taxes and if I recall correctly less loopholes than our company taxes. The nominal rates here may be higher, but many large profitable companies wind up paying little or nothing.
BBCC
Also, the tax structure works differently. Instead of flat rates, many are proportional (ex. ‘giving two percent of your income’).
Uly
The ultra rich may have paid a larger share of their income in income tax – but that’s what the hell income tax is supposed to be like! It’s a progressive tax! They paid a heck of a lot less of their income in sales taxes.
Wizard
Correct. Anyone subject to this tax will easily find ways around it. These workarounds will distort the economy in ways that reduce efficiency, and most likely lead to even greater complications in the tax code. I’m not speculating here, this is what happened in the past when marginal rates were higher.
But, hey, soak the rich always plays well in some quarters. Never mind that the US already has one of the world’s most progressive income tax structures. People at the top already pay a percentage of taxes that’s greater than their share of income.
not someone else
I mean they’ll do that literally no matter what the tax rate is, plenty of billionaires already pay no taxes or get refunds, not to mention what corporations do. That’s more of an argument for more and different kinds of tax reform in addition to raising the rates back to what they used to be.
Ethics Gradient
They find ways around it, marginal tax rate or not.
Tax havens have to be clamped down. Tax havens have to be transparent, for a start.
Then there’s the whole problem with franchises. For example Starbucks cafes are franchises which usually run at a reported loss, but the parent company runs at a massive profit.
Essentially, a Starbucks in South Africa, say, is a pump from the South African economy to the US.
Companies like Amazon work on the same principle. The worse thing is that HMRC connive in such tricks.
Matthew Davis
Or, you know, actually invest in their business and community in order to lower their tax burden instead of being rentiers, the way it worked back when we had a 90% rate before.
Liquid Len
Yeah, this.
But this was also at a time when stock buybacks were illegal too, so the excess couldn’t just be exclusively shoveled to the shareholders.
Positron
The idea that you think the US has some of the highest income tax rates for high earners suggests you don’t know any examples of tax rates outside the US. For starters, no-one is expected to pay more tax than the income they earn. Second, the highest tax bracket in the US is 37%, as one commenter mentioned the UK is at 45%, and Australia is at 45% as well. Canada is a bit better at 33% for the top bracket. Not only that, but your brackets have way higher thresholds – as a single taxpayer in Australia I have to make the equivalent of only 125k USD to hit a 45% tax rate, whereas in the US I’d need to hit 4 TIMES that at 500k. Since Canada’s top bracket kicks in from 150k USD equivalent they’re not actually as generous as they seem on the surface either. That means that, in practice, the US has a pretty generous income tax rate for high earners by comparison with other western nations.
thejeff
It’s not clear to me the tax code is any less complex than when marginal rates were highest or that rich people are any less dedicated to finding loopholes.
More importantly, it’s hard for me to see that the economy was any less efficient in any sense I care about back when we had high marginal rates than it has been since. Those were the boom post war years. Massive growth, broad prosperity, the growth of the middle class. Since Reagan’s tax reforms that drastically cut the top rates and supposedly reduced loopholes, the rich have gotten dramatically richer and the rest of us have stagnated. Even overall growth has been much slower.
There are certainly other external factors at play but it’s hard for me to accept that the tax policies in place during that period were really a huge drag on the economy and the policies since are boosting it, when the outcomes were reversed.
Deathjavu
Yes, people will find ways around the law, so clearly the solution is to just make it legal. I hear this argument on everything from gun control to abortion. *Facepalm*
Regardless of the particular issue at hand, is anyone actually swayed by arguments like that? The hole in that reasoning is big enough to fly a fucking jumbo jet through it.
Delicious Taffy
People are gonna have abortions anyway, so it might as well be safe, legal, and affordable. Anti-abortion policies are deliberately designed to harm and punish women, and nobody cares what happens after the baby is born. If I’m missing something, let me know.
Deathjavu
The problem is that it’s simultaneously fallacious and unconvincing to people on the other side, which is kind of a twofer bad argument? Arguments being, something you have invested in and therefore have, on some level, an interest in winning?
Individual sovereignty of body, the fact that no one goes looking for the guy to face said penalty, the fact that no one wants to support the baby living with the impoverished uneducated 16 year old that basically cannot, it is not possible for her to do this alone, the fact that I thought that we (at least where I live) settled this “get your goddamn religious beliefs out of my government” thing *checks* 243 years ago? Those are all great arguments imo.
“People are gonna do it anyways” is…I don’t even know what that is. Let’s just file it away as “not good enough”.
thejeff
I think the distinction with abortion is that “women are going to do it anyways” leads directly to women bleeding out from botched back-alley abortions. “safe” is critical part of that argument, in a way it isn’t in most of the other variations of the argument. There’s a reason the coathanger is such a potent symbol
“People are going to do it anyway and the consequences will be horrific” is a different argument than “People are going to do it anyway, so why bother.” It’s a harm reduction approach.
Of course much of the anti-abortion movement doesn’t care about harm reduction, since they see it as punishment for sinning.
Kryss LaBryn
Another version of that was the one Governor Schwarzenegger made a few years ago, when he cut funding from women’s shelters (which funding provided fully half their operating costs) by 100%: “We can’t completely resolve this issue, so why bother even trying.”
It’s such a bizarre and stupid way to look at an issue. I mean, ideally, if there’s a problem, you fix it, yeah? But if you can’t completely resolve it straight off, acting to at least mitigate it is better than just throwing up your hands and doing nothing. That whole “best is the enemy of the good” and all.
I mean, really, it’d be like saying, “I’ve got a cold and I feel like shit and I can’t cure it, so there isn’t even any point to me taking some cold meds so I don’t feel so crappy while I get over it.”
Or, “My car ran out of coolant and is overheating and I don’t have any more coolant to use with me. I could top up the radiator with water, which would at least stop the engine from seizing while I limp to the store or a mechanic for fluid; but since that won’t immediately fix my problem of not having any coolant, I’m just gonna run it dry rather than using something that helps, but isn’t quite as good in the meantime.”
“I don’t have an alarm system on my house, so why even bother locking the door? I can’t afford to put up security cameras to deter or prosecute potential burglars, so why bother trying to slow them down or prevent them getting in at all?”
“There’s always going to be some murder, even with the death penalty as a deterrent, so why bother making murder illegal in the first place?”
“Rich people are always going to be able to find some loopholes to avoid paying their full tax bill, so why bother closing any of them at all?”
Uly
A marginal tax rate of 90% isn’t the same as paying 90% of your income in taxes.
ProfessorDetective