And taxes stayed pretty much just that way for the next 15 years, until the early 1960s. Importantly, this was one of the most successful eras in US economic history. The middle class boomed, the economy boomed, and the stock market boomed. And all with the top marginal income tax rate over 90%. This suggests that the Republican mantra about high marginal tax rates killing the economy is, well, a bunch of crap.
Henry Blodget, “THE TRUTH ABOUT TAXES: Here’s How High Today’s Rates Really Are”, Business Insider
Blodget is not the left’s fool, errand boy, or mouthpiece. He spent time on Wall Street and attracted AG Spitzer’s sufficient attention to necessitate a change to his career path that divested him from securities trading forever.
That said, when Blodget collects and presents facts about the economy and, in this case, tax rates, it’s not as if we’re getting the information from Ed Schultz or, for that matter, Glenn Beck.
Here’s a tip for the holidays!
Keep the link to this blog post handy. Should the discussion with friends, family, and co-workers turn to politics, the economy, and taxes, I invite you to plagiarize as much of my comments below as you like. (I can’t speak for Blodget, so you should probably give him his due credit.)
BLODGET: Today’s government spending levels are indeed too high, at least relative to the average level of tax revenue the government has generated over the past 60 years. Unless Americans are willing to radically increase the amount of taxes they pay relative to GDP, government spending must be cut.
YOU/ME/WE: I am in favor of spending cuts beginning with the military and corporate subsidies. I am not in favor of cutting social safety net programs….. with one caveat.
I am in favor of a means test for Social Security benefits. I favor means testing that would progressively reduce and ultimately exclude benefit payments to wealthy retirees.
Heresy, you say? Not at all!
It’s not *your* money. Social Security is *not* your personal savings account. It’s a social contract between the present-day youth and the able-bodied with the present-day elderly, infirm, and indigent. That’s why it’s called SOCIAL SECURITY.
I also favor radically increasing the taxes on upper income earners and corporations. They benefit the most from our society and our system of government. It’s time they start paying for it proportionately and appropriately just the way they did during the Golden Age of America. They seem to have done just fine back then. I’m confident that they’ll find a way to somehow survive again.
BLODGET: Today’s income tax rates are strikingly low relative to the rates of the past century, especially for rich people. For most of the century, including some boom times, top-bracket income tax rates were much higher than they are today.
WE: Tea partiers especially seem to be incapable of accepting this fact. In doing so, they make themselves convenient and easily manipulated pawns for the rich and powerful. They also look and sound absurd in their demands for lower taxes, and they do damage to their movement, to the GOP, and to the whole country by nominating and electing people who also refuse to accept reality.
I’m done soft-pedaling this issue.
If you’re outside the wealthiest 2% and you’re still voting for tea party Republicans (and most Republicans, actually), you’re voting against your own economic self-interests and the economic self-interests of your fellow 98-percenters (see here and here).
That means you bear a big part of the responsibility and the blame for the weak recovery and the social divide plaguing our nation on issues like equality, voting rights, and science. I hope you come to your senses soon.
BLODGET: Contrary to what Republicans would have you believe, super-high tax rates on rich people do not appear to hurt the economy or make people lazy: During the 1950s and early 1960s, the top bracket income tax rate was over 90%–and the economy, middle-class, and stock market boomed.
WE: This is a real lay-up. Trickle-down economics, at best, is a failed theory. History and facts do not lie, and they have no bias. It has evolved from a “theory” to become an economic lie perpetrated on the easily manipulated by the rich to benefit the rich.
Someone out there in the 98% show me what has trickled-down to you.
BLODGET: Super-low tax rates on rich people also appear to be correlated with unsustainable sugar highs in the economy–brief, enjoyable booms followed by protracted busts. They also appear to be correlated with very high inequality. (For example, see the 1920s and now).
Periods of very low tax rates have been followed by periods with very high tax rates, and vice versa. So history suggests that tax rates will soon start going up.
WE: It’s obvious that rich people do *NOT* invest when their taxes are low, they hoard. When your income is high and your effective tax rate is zero, where’s the incentive to do anything but collect more and sit on it?
Oh. That’s right. Ayn Rand’s work of fiction is now conservative dogma, and the fact that history proves that progressively higher tax rates actually motivate reinvestment of excess earnings counts for nothing in the fantasy world perpetrated on some ordinary Americans by the Koch Party and their shills in the GOP.
Facts are facts. So long as a certain percentage of Americans are willing to suspend reality and believe the lies being told to them by the rich and powerful, we’re likely to have some amount of gridlock and deadlock.
I, for one, am happy to report that I detect a shift away from the siren call that is the lunacy and lie of trickle-down economics.
I detect a shift away from the extremism that is the hallmark of the tea party, thanks mostly to moderates in the GOP who are finally starting to speak up.
I also detect a growing appreciation among Americans that it is Big Money that represents the greatest threat to our society, our economy, and our way of life. So, while you’re here, why not lend your voice to the movement to #GetMoneyOut of politics? Money in politics is (or should be), after all, a bi-partisan issue, right?
News flash to conservatives: Liberal money helped to secure McAuliffe’s election.
Getting money out of politics is not some liberal or socialist idea. Both sides are spending tons of “secret and dark” money, and we’ve got to change that if we hope to have any real influence over our elected officials.
Everyone – conservative and liberal, Democrat and Republican and Libertarian and, yes, even tea partier – can help to change American politics by becoming a Citizen Co-Sponsor of the American Anti-Corruption Act.
Here’s the link to sign on with me: http://unitedrepublic.actionkit.com/event/cosponsor/9815/