Top Marginal Tax Rate
By Barry Ritholtz - May 16th, 2009, 4:00PM
Interesting charts from Strategas Research Partners:
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Source: Strategas Research Partners, March 2009.
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
May 16th, 2009 at 4:05 pm
chart needs some modifiers.
“No Tax Increase” ??
we should be so Lucky..
May 16th, 2009 at 5:41 pm
Puzzled as to what it proves. Long periods between tax increases lead to hard economic times?
May 16th, 2009 at 5:42 pm
Well, first of all, effective marginal rates have gone up a lot over the years due to the loss or phase-out of deductions.
Second, the total tax burden has gone up a lot, if you include social security taxes, state and local taxes, fees, etc.
There’s very little utility to be gained from this chart.
May 16th, 2009 at 5:57 pm
The depicted comparison is largely meaningless.
A more meaningful comparison would be between the top marginal rate, and federal REVENUE.
Most of those who want to see higher marginal rates seem not to understand that a higher marginal tax rate does not equate to higher revenues. There is also the political reality that there is a zero percent chance of eliminating most deductions for those in the top bracket. Which leads to the question, given the political realities as they are, what is the top marginal tax rate that will produce the maximum revenue?
May 16th, 2009 at 6:09 pm
Article entitled:
“Income Tax Receipts Stay Constant Even as Tax Rates Decline”
http://www.heritage.org/research/features/BudgetChartBook/Income-Tax-Receipts-Stay-Constant-Even-As-Tax-Rates-Decline.aspx
May 16th, 2009 at 6:33 pm
DL: Heritage Foundation only knows one song. “Anything good for the rich is good for the country.” They are are still trying to justify Laffer’s curve, which was an unintentional homonym.
May 16th, 2009 at 7:02 pm
Raise ‘em up!
May 16th, 2009 at 7:02 pm
This is the reason why I do a Roth IRA instead of a traditional one. Taxes now are historically low, and I have a feeling that they will be much higher in the future (and I’ve felt this way BEFORE the new Administration got their gubmint spending grove on).
I wonder what percentage of the very wealthy actually pay the top marginal rate. I have a feeling they are getting most of their income via dividends and long term capital gains (haha).
Agreed Mike in NOLA – Laffer curve is a real knee slapper.
May 16th, 2009 at 7:31 pm
What the graph tells me is that either government spending has to go down substantially (unlikely) or the top marginal tax rate is going to be heading up – if one believes in mean reversion.
May 16th, 2009 at 7:48 pm
DL,
forget the brain-washed, you’re point: “Most of those who want to see higher marginal rates seem not to understand that a higher marginal tax rate does not equate to higher revenues.” is, absolutely, Correct.
Crusty old goats*, notwithstanding.
* M in NOLA
May 16th, 2009 at 8:39 pm
former GAO Comptroller General David Walker said sometime last year:
“If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and some people would be talking about whether the company’s management directors needed a major shake-up”.
“The federal government’s total liabilities,” Walker explained, “translates into a de facto mortgage of about $455,000 for every American household and there’s no house to back that mortgage. In other words, our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases.”
*****************
Now with the $12 Trillion bail out of Wall St ‘too big too fail banks’ it’s probably $650,000 for every American household
May 16th, 2009 at 8:57 pm
I really like David Walker.. but he perpetuates the myth.. for the last time (i promise) i will share this with TBP readers. It is entitled “Why Do We Have Taxation?”
http://www.safehaven.com/showarticle.cfm?id=5407
Mark, you of all people should appreciate this! I’ve posted it before…
May 16th, 2009 at 9:04 pm
km4, i have always admired and respected David Walker.. I would appreciate your opinion on the steve saville piecce and perhaps you’ve followed my QE/reflationary stance and would care to comment. Thanks for the quotes, btw.
May 16th, 2009 at 9:09 pm
So, the top marginal tax rate now is about where it was in 1930. We’ve come full circle. Could that have somehow lead to some of the problems we face today which were similiar to problems back then? Think about it.
May 16th, 2009 at 9:16 pm
As a taxpayer, I’ve been through most of this, and the fact is, money always gets taken care of, and the under- represented get f*****. The “tax rate” has some kind of meaning to the sheeple, but not to the insiders.
Reagan did the Tax Simplification Act and hit middle income people right between the eyes. Clifford Trusts to protect money for college education disappeared as a tax advantage. But they were there and dead as a shelter. Nothing to do but pay. Well, you couldn’t cancel them.
And so exactly how big and complicated is the tax code now? It’s not enough that the capital gains rate is so ridiculously low compared to what middle income people with no chance to “shelter” income, people with money that can afford tax experts really should not be paying any tax at all. Didn’t someone recently post a British video about that?
When properties can be exchanged without any recaptured depreciation then it’s game over, and has been that way for several years now.
And BO is not going to fix the tax code. Care to guess why?
May 16th, 2009 at 9:27 pm
My taxes were 40-41% this year… not including sales tax on purchases.. figured by: property tax + state tax + federal income tax divided by unadjusted gross earnings… that’s why i don’t worry about tax rates.. i don’t see how i can pay more..
May 16th, 2009 at 9:35 pm
A trust is pretty cool. If my sister and I take no pay and keep the money in the trust the taxes are much lower than if we paid ourselves. We can both live off of our savings until the trust is dissolved and then we can get the accumulated money that has only been taxed at a much lower rate.
May 16th, 2009 at 9:49 pm
@karen
Wait for the stamp tax-and it is coming.
May 16th, 2009 at 9:52 pm
karen,
see: “In the historical example described above, the government created strong demand for essentially worthless pieces of wood by requiring that all taxes be paid using these formerly worthless objects.”
–from your link.
this is, exactly, what the USG does by giving “Legal Tender” status to FedRes ‘Notes’, only we borrow those ‘Notes’, from an unaudited Private Bank, from an intermediary–the FedRes.
and: If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.
~
If you think you can do a thing or think you can’t do a thing, you’re right.
~
It has been my observation that most people get ahead during the time that others waste.
~
It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.
~
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
http://www.wordpower.ws/quotations/henry-ford-quotes.html
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
~~
though, w/this: ” i don’t see how i can pay more..” try: Cap n’ Trade for starters, believe it, it’s EZ to pay more, and you will be–as long as you continue to comply..
~~
Samuel Adams quotes:
Were the talents and virtues which heaven has bestowed on men given merely to make them more obedient drudges, to be sacrificed to the follies and ambition of a few? Or, were not the noble gifts so equally dispensed with a divine purpose and law, that they should as nearly as possible be equally exerted, and the blessings of Providence be equally enjoyed by all?
~~
A general dissolution of the principles and manners will more surely overthrow the liberties of America than the whole force of the common enemy…. While the people are virtuous they cannot be subdued; but once they lose their virtue, they will be ready to surrender their liberties to the first external or internal invader…. If virtue and knowledge are diffused among the people, they will never be enslaved. This will be their great security.
~~
The liberties of our country, the freedom of our civil Constitution, are worth defending at all hazards; and it is our duty to defend them against all attacks. We have received them as a fair inheritance from our worthy ancestors: they purchased them for us with toil and danger and expense of treasure and blood, and transmitted them to us with care and diligence. It will bring an everlasting mark of infamy on the present generation, enlightened as it is, if we should suffer them to be wrested from us by violence without a struggle, or to be cheated out of them by the artifices of false and designing men.
http://quotes.liberty-tree.ca/quotes_by/samuel+adams
May 16th, 2009 at 9:55 pm
karen Says @ 9:04 pm
Yes there are way too few David Walker’s in government today.
Regarding Saville his summary nails it “without the underlying demand created by taxation there is a good chance that the purchasing power of today’s national currencies would collapse. Taxation is therefore a critical component of the current monetary system, but not for the reasons most people think”.
Unfortunately after 30 yrs of rank propaganda from the monied elite about taxes elite, deficits don’t matter, and other self serving bullshit we have this….
America is going down…these facts don’t lie !
1) The projected budget deficit for 2009 is $2 trillion
2) The debt-drowned United States debt is already 350 percent of G.D.P and rising fast i.e. $53 Trillion in unfunded liabilities )
3) The Fed is now holding $10 Trillion of ‘assets’ ( mostly toxic ) transferred from too big to fail banks.
4) Other countries are now buying less of our debt
May 16th, 2009 at 9:56 pm
Does anyone know if this will work?
On Jan12 SPY had a high of 88.91 and has paid 56 cent div. SSO had a high of 25.61 and has paid 11 cents. So say you bought 1000 SPY at 88.9 which would mean you bye (88.9/25.61)*500= 1,735 Shares of SSO. Now you would collect .56*1000=$560 div and pay .11*1735=$190. For a net of $370. As of Fri you’d have essentially made nothing on SPY (minus $200) itself but would have made 25.61-24.4 or 1.2*1735= 2082+370-200=$2200 on an investment of 88,910 or 2.47% or about 7.4% annually.
May 16th, 2009 at 10:01 pm
Sorry it should say “short 1735 shares of SSO” Doh!
May 16th, 2009 at 10:23 pm
mark.
“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.” False.
~
“If you think you can do a thing or think you can’t do a thing, you’re right.” True
~
“It has been my observation that most people get ahead during the time that others waste.” True
~
May 16th, 2009 at 10:27 pm
@karen:wow. Never did the math. People escape fed tax. Not the other taxes unless they want to live in a tent on Kauai. Which is sounding better all the time. I met someone that was actually doing that and incredibly happy with it. Cougar bait.
But you’re in CA. In Orange County. Didn’t they go broke? And so so much wealth. How did that happen? And no one went to jail did they?
May 16th, 2009 at 10:33 pm
karen,
re: the one you think is False: There is, currently, No Money in Circulation.
Though, I’d think that Ford’s point was that ‘Money’ is 1.) transient, and 2.) powerless, by itself.
IOW, one may have Currency, but it is, simply, useless w/o one’s wits..
~~
thetanman,
what’s your goal? some type of “CD-equivalent” that yields a higher return?
May 16th, 2009 at 10:36 pm
phx. what in the heck is “cougar bait.” yes, i am in OC.. the costco was bumper to bumper shopping carts tonight as it was last night.. speaking of kauai, my husband is living there now, and has just rented an oceanfront/sandfront “shack” for $2500 /month… people are “happy” on kauai because they are either totally ignorant, stoned, on perpetual unemployment, or …
May 16th, 2009 at 10:40 pm
Mark, come on… please speak english for one evening. No money in circulation? I took a pile of money into circulation last week. I have a pile of money in my drawer. I took more $ out of the atm machine tonight. Every time I walk in the Costco, I say to the admissions checker, is the machine working tonight?
May 16th, 2009 at 10:59 pm
karen,
that ‘stuff’ you’re referring to is Currency, it isn’t Money.
see: MONEY. Gold, silver, and some other less precious metals, in the progress of civilization and commerce, have become the common standards of value; in order to avoid the delay and inconvenience of regulating their weight and quality whenever passed, the governments of the civilized world have caused them to be manufactured in certain portions, and marked with a Stamp which attests their value; this is called money. 1 Inst. 207; 1 Hale’s Hist. 188; 1 Pardess. n. 22; Dom. Lois civ. liv. prel. t. 3, s. 2, n. 6.
2. For many purposes, bank notes; (q.v.) 1 Y. & J, 380; 3 Mass. 405; 14 Mass. 122; 2 N. H. Rep. 333; 17 Mass. 560; 7 Cowen, 662; 4 Pick. 74; Bravt. 24; a check; 4 Bing. 179; S. C. 13 E. C. L. R. 295; and negotiable notes; 3 Mass. 405; will be so considered. To support a count for money had and received, the receipt by the defendant of bank notes, promissory notes: 3 Mass. 405; 3 Shepl. 285; 9 Pick. 93; John. 132; credit in account, in the books of a third person; 3 Campb. 199; or any chattel, is sufficient; 4 Pick. 71; 17 Mass. 560; and will be treated as money. See 7 Wend. 311; 8 Wend. 641; 7 S. & R. 246; 8 T. R. 687; 3 B. & P. 559; 1 Y. & J. 380.
3. The constitution of the United States has vested in congress the power “to coin money, and regulate the value thereof.” Art. 1, s. 8.
4. By virtue of this constitutional authority, the following provisions have been enacted by congress.
1. Act of April 2, 1792, 1 Story’s L. U. S. 229.
1. Sec. 9. That there shall be from time to time, struck and coined at the said mint, coins of gold, silver, and copper, of the following denominations, values, and descriptions, viz: Eagles; each to be of the value of ten dollars, or units, and to contain two hundred and forty-seven grains and four-eighths of a grain of pure, or two hundred and seventy grains of standard, gold. Half eagles; each to be of the value of five dollars, and to contain one hundred and twenty-three grains and six-eighths of a pure, or one hundred and thirty-five grains of standard gold. Quarter eagles; each to be of the value of two dollars and a half dollar, and to contain sixty-one grains and seven-eighths of a grain of pure, or sixty- seven grains and four-eighths of a grain of standard gold. Dollars, or units; each to be of the value of a Spanish milled dollar, as the same is now current, and to contain three hundred and seventy-one grains and four- sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver..
http://legal-dictionary.thefreedictionary.com/money
CURRENCY. The money which passes, at a fixed value, from hand to hand; money which is authorized by law.
2. By art. 1, s. 8, the Constitution of the United States authorizes congress “to coin money, and to regulate the value thereof.” Changes in the currency ought not to be made but for the most urgent reason, as they unsettle commerce, both at home and abroad. Suppose Peter contracts to pay Paul one thousand dollars in six months-the dollar of a certain fineness of silver, weighing one hundred and twelve and a half grains-and afterwards, before the money becomes due, the value of the dollar is changed, and it weighs now but fifty-six and a quarter grains; will one thousand of the new dollars pay the old debt? Different opinion may be entertained, but it seems that such payment would be complete; because, 1. The creditor is bound to receive the public currency; and, 2. He is bound to receive it at its legal value. 6 Duverg. n. 174.
http://legal-dictionary.thefreedictionary.com/Currency
and, just for a tweak, ‘atm machine’ is a redundancy, even if you’re ‘speaking english’..
May 16th, 2009 at 11:16 pm
@karen: Do you know what a”cougar” is in the current vernacular?
Ask MEH. I’m sure he can give you about 25 pages that go all the way back to some time in BC. But he’s still a good person.
And so exactly why you are in OC while He’s in paradise? Don’t quite get that.
May 16th, 2009 at 11:22 pm
US PHX,
I looked it up: http://onlineslangdictionary.com/definition+of/cougar
~
a middle-aged woman who seeks out much younger men.
~
seems correct, from the context..
May 16th, 2009 at 11:39 pm
@MEH: Correct. Good job again.
May 17th, 2009 at 12:31 am
@Karen 8:57
How does this apply pre-1913 or are we to assume it is the same in an primarily excise tax model?
May 17th, 2009 at 12:57 am
hoffer posts:
“If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.’
I hear you Mark- money is definitely overrated- some of the best times I’ve had in my life are when I had zero money or used very little money-
a few years ago- out of the blue- I got a plane ticket to Hong Kong for a couple hundred bucks- stayed in hostels- hooked up with folks from all over- made my way to Beijing- then on to UlaanBaater- had a great time- using very little money-
you could stay in resorts- but what fun is that- you’re surrounded by the same people you were trying to get away from- might as well stay home-
as Ivan Ilych ponders before his death- “What if my whole life has been wrong?” – that is what will be crossing your mind if you’ve only lived your life for creature comforts and amassing of wealth-
as I tell my kids- as you get older and you look back on your life- you don’t remember the fine shoes you had to have or the fine furniture- you remember the people you knew and the things you did
May 17th, 2009 at 1:10 am
Oh my, Mark you are so right on the redundancy. Thank you for the correction… never claimed perfection : )
Phx, as for the cougar, I am newly 50, very middle aged, I guess, so you got that part right; but I have never been with a man younger than myself and am not seeking one. : ) I appreciate their compliments though, I will admit that..
In reply to Cursive, i’m sorry, i have no clue how to answer that question.
May 17th, 2009 at 1:27 am
We’ve got to “soak the rich”.
You know, people like, KAREN.
May 17th, 2009 at 1:30 am
As a renter, I also pay $600 more per month than the section 8 folks. Let’s split the difference and say that I pay an extra $300/month or $3600/year AFTER taxes. That’s about $6,000 of salary. (I’ve *never* seen anyone add that back into the tax rate.)
May 17th, 2009 at 1:38 am
I do feel very “picked on” tonight.. do i really deserve it?
Wunsacon, that’s why i dislike the tax rate talk… it’s non-sensical in most instances… i especially dislike our income tax with it’s incentives/deductions/credits.. they will never allow some sort of stepped up flat tax, however; but i actually think the government would collect more revenue if they did.
May 17th, 2009 at 1:51 am
@Karen 9:27 pm
“My taxes were 40-41% this year…….. i don’t see how i can pay more..”
Maybe you’re missing some deductions or should look into optimizing.
Anyways, when your country is in dire financial condition, the government raises taxes where there’s money. In West-Germany you had the solidarity tax after the re-unification with DDR. In Sweden all “high income earners” (>$5k/months) had their taxes increased by 5 % units (from 50% to 55%). During WWII the top income taxes were 90% in the US.
Just wait and see, you’ll be happy you only paid ~40%. It can only get higher.
May 17th, 2009 at 2:02 am
super, thank you for that thought as I put myself to sleep now, lol. well, now it will be more like cry myself to sleep… : ) leaving tomorrow for SF.. graduation ceremony at Berkeley to attend on Monday.. let’s see how many of the intelligent thinkers I know find jobs post graduation…
May 17th, 2009 at 7:32 am
Mark: “forget the brain-washed, you’re point: “Most of those who want to see higher marginal rates seem not to understand that a higher marginal tax rate does not equate to higher revenues.”
You misunderstand my point. Laffer’s thesis has never been validated, but it suits the rich as an argument, and they won’t let it go.
We wouldn’t been in a position of needing much higher marginal tax rates if the rich had been actually forced to pay the marginal rates we’ve had for the past 20 years and if budgets had been in some kind of balance. Instead, each session of Congress has introduced some new tax shelter for the rich and, for the past 6 years there has been not even the charade of pay as you go. “Deficits don’t matter.”
You’ve had the big money people like those who have brought the country low paying capital gains rates on what is essentially a salary. Knowing you are a talk radio kind of guy, you could focus on Soros. However, at least he’s honest about what a scam this all has been. The rest of the robber barons all claim they were getting rich w/o taxes as a patriotic duty. They scream bloody murder about class warfare when their sweet deals are taken away. Krugman actually predicted that phrase would be used when tax giveways were reversed.
Since we now have a president controlled by the same class, the only option is raising taxes on those without shelters – us.
May 17th, 2009 at 7:46 am
In last weeks house vote to end liar loans, 114 Republicans voted against the measure…
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/07/AR2009050702985.html
…so you don’t have to worry about money, because, eventually, when the GOP regains power, they will bring back the liar loans and you’ll be able to get all you want.
May 17th, 2009 at 8:54 am
Well. on the other hand there is a bit of information to be gleaned from the chart, in addition to the main premise. Look at federal spending as a per cent of gdp for the GD years…started at less than 5% and doubled to about 10%! Now look at the other end…now federal spending in this downturn is 60% and rising by the week. What does that tell me? Well, my guess would be that government control of investment will be with us to a MUCH greater degree for our lifetimes…I don’t see how the country can get off this kind of narcotic easily…and since what powers government spending?? Yep, taxes…should see some wonderful tax rates the next few years..
Future choices will still be default, inflate the debt away, or massive tax rates, or maybe selective combinations of all 3…
May 17th, 2009 at 8:55 am
30 per cent, not 60. But the point is the same…
May 17th, 2009 at 8:58 am
“In last weeks house vote to end liar loans, 114 Republicans voted against the measure…”
everyone wants to discriminate against liars? who will be next- fibbers, exaggerators and whatnot . . .
go GOP- you know where to make a stand
May 17th, 2009 at 8:59 am
To me, it is more interesting to look at the $level that the highest marginal rates begin. If you do, you immediately will notice that the highest marginal rates used to be reserved for the ultrawealthy. Over time, the $level has been reduced to the point where a much larger percentage are paying the highest rate. This gives the really wealthy more ‘cheerleaders’ for less taxes. Clever, they are…..
May 17th, 2009 at 9:00 am
Why taxes are chosen over printing money?
Without doing a long thesis on this, my guess would be that it is easier to target specific groups with taxation than it is with money printing/inflation.
For example, workers are better protected than retirees during times of inflation.
But since no one wants higher taxes and the creditors (those with the wealth, mostly 55+) do not want inflation, there will be huge power struggles in the years ahead.
Something tells me we should be looking that the population pyramid to see which one will take over.
I think it will be both… they’ll try to tax the heck out of the young AND be forced to print print print.
May 17th, 2009 at 9:08 am
@Mark 10:33
7.4% for the risk averse is pretty good. Using Russel 2000 IWO and 3x bull PCX the gain would be about 33% since Jan 1! Of course as these 3x decay, the returns will fall, but looks like easy money with no risk. The levered EFTs will continue to decay.
May 17th, 2009 at 9:17 am
http://allbusiness.washingtonpost.com/government/government-support-business-small-assistance/12329562-1.html
Big Decline in Franchise Lending Predicted by a New IFA Study
Fewer new Banana Republic stores, I guess..
May 17th, 2009 at 9:32 am
@ danm 9:00
Fascinating. I hadn’t thought about the generational dynamic from that perspective. I have a new outlook on the way these issues will play out over time. Aging baby boomers will resist inflationary moves and younger generations will resist higher taxes. It’s kind of like the social security dynamic in reverse.
May 17th, 2009 at 9:43 am
@MEH 10:33pm
“that ’stuff’ you’re referring to is Currency, it isn’t Money.”
Oh, pshaw, another “gold is money” fool.
Tell me Mark, can you use your “money” to fill up your vehicle at the gas station? Buy groceries? Pay the mortgage/rent? Purchase an airline ticket, or anything else?
No? I guess I’ll stick with your “currency”, even with all its flaws and foibles. To my way of thinking, “money” is what one uses as a medium of economic transactional exchange, and “currency” in an instantiation of that money.
To confuse a commodity like gold or silver with money is falling prey to a wingnut meme.
Of course, JUST LIKE A COMMODITY, the value of currencies fluctuate with comparative supply and demand. But the difference between money and a commodity is that one can actually use money to purchase anything. It’s in the lengthy list of references you so eagerly cite.
At the moment, the USD currency is (against all logic and reason) still performing comparably to gold. At some point the inflation being baked into the economy will ignite and the dollar will plummet, and ALL COMMODITIES (including gold and silver) will head for the moon, some more rapidly than others. I’m betting that oil will outperform gold, except during that period of time when fear of currency disintegration causes sheeple to flee the USD in droves, when gold (and silver) will incur a fear premium. Once that fear premium evaporates, the sheeple will return to using the only currency available to buy stuff. But they are not likely to stash savings there.
May 17th, 2009 at 10:15 am
cn,
w/this: “Oh, pshaw, another “gold is money” fool.”
Don’t do that. I was, merely, defining Money per the Constitution and the Original Coinage Act.
see links..
Personally, I don’t really care if one wants to use Peppercoin, S&H Greenstamps, or Chuck E. Cheese Tokens..”Legal Tender” Statutes need to go.
The Real Problem is: We are “Money” illiterate. And, we our borrowing our Currency, from a Private, never audited, Bank, at Interest. Currency that has been, and can be again, issued Directly from the U.S. Treasury..
May 17th, 2009 at 10:22 am
OK, way late again to this thread but having pushed through all these comments no one touched on an important observation. Why is it that we experienced the most sustained, real growth almost at the highest marginal tax rates?
May 17th, 2009 at 10:31 am
We didn’t, DM. And one thing some of you are missing is that in the past there were tremendous numbers of deductions, which we don’t have today. In the Carter era of 70% marginal rates, you could, for instance, income average, which today is reserved for farmers and fishermen. There were any number of dinks and dunks like this.
And in past threads I have written of people I knew who simply “stopped working” when the reached the 70% rate, and then began to work hard again the following January 1.
May 17th, 2009 at 10:32 am
Pull up a chair, grab some popcorn, this puppy is just getting started…..
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/17/MNKV17K2OV.DTL
May 17th, 2009 at 10:36 am
In discussing money, currency and coinage, it is useful to have a little history inserted. The background on this coin and the decision-making process which informed its creation serves to underscore the aberrant nature of the US’ behavior regarding our currency. Integrity is a necessary ingredient of prosperity (wealth is another issue-any scumbag can be rich).
http://en.wikipedia.org/wiki/Maria_Theresa_thaler
May 17th, 2009 at 10:45 am
Mike,
w/this: “You misunderstand my point. Laffer’s thesis has never been validated, but it suits the rich as an argument, and they won’t let it go.”
That is the point, Laffer’s ‘thesis’ has nothing to do with it. there are hundreds of papers that speak to the micro- and macro- effects of High Tax regimes. The very vast preponderance, of which, noting decreasing Economic activity, and a morphing of Economic activity into the “gray”/”black”-Markets , to avoid Taxes..
see: http://scholar.google.com/scholar?hl=en&lr=&q=%22economic+effects+of+high+taxes%22
for starters, the results list is close enough to show that these Topics/Issues are well-studied, from many angles.
~~
ahab,
it’s, a lot, like that.
May 17th, 2009 at 11:07 am
WRT Senator Vitter-
Is it true that he has proposed an amendment to the tax code which allows for a tax rebate on diaper expenses if you have your prostitute prepare your taxes? And there will be an additional tax credit if you are able to get your wife to appear in a press conference after the scandal breaks?
What would they say in Bayou Sarah about his cavorting?
May 17th, 2009 at 11:07 am
@ MEH 10:15
“We are “Money” illiterate. And, we our borrowing our Currency, from a Private, never audited, Bank, at Interest. Currency that has been, and can be again, issued Directly from the U.S. Treasury.”
Amen, brother. May all who read this understand it. May they also become another voice for a return to sound money.
May 17th, 2009 at 11:09 am
Why is it that we experienced the most sustained, real growth almost at the highest marginal tax rates?
———————–
Maybe the US economy was immature with lots of low hanging fruit to be picked
Maybe there is no correlation between growth and marginal tax rates (you can have economic growth under any type of regime)
Maybe because the middle class was so huge that not many were truly affected by the marginal rate
etc.
May 17th, 2009 at 11:13 am
@ MRegan 11:07
Can you dumb that down for me? The obtuseness of your remarks were a bit too much for my comprehension. Also, what does WRT refer to?
May 17th, 2009 at 11:17 am
Cursive-
WRT stands for ‘I’m yanking yer chain.’
May 17th, 2009 at 11:24 am
It also appears that federal spending as a per cent of gdp basically increased in per centage during wars (Korea, Vietnam, Middle East) except for the notable exceptions of the GD and 2007 onward…I do think the last 12 months are new history and that the outcome is unpredictable, other than it will probably be bad..
May 17th, 2009 at 11:33 am
BR: I’ll one-up you with a slightly different chart (you’re more than welcome to borrow it!) here’s the relationship between maximum personal income tax rates and national debt, GDP and population!
Using the tool at the link with the most recently available data, the maximum federal income tax rate suggested by where the data will be by the end of this year is over 68%. [$12.500 trillion in national debt, $14.085 trillion for GDP, and an estimated population of 307,000,000 - the debt and GDP data are the projected nominal values for the year.] This year and next may see quite a few Roth conversions.
May 17th, 2009 at 11:37 am
@ MRegan 11:17
OK, but what of Bayou Sarah? I know a lot of bayous, but Sarah is unknown to me. Particularly not one in or around Old Metairie?
May 17th, 2009 at 11:37 am
this should warm our hearts: “…HM Revenue and Customs staff will be able to examine people’s financial transactions on the scheme’s database and search for evidence of undeclared earnings or bank accounts.
The disclosure will likely to provoke further concern over the £5.5 billion project, which has been condemned as a waste of money and an invasion of privacy.
Campaigners have already raised fears the Home Office, police, and security officials would have access to the scheme’s database.
The scheme’s log records each time an ID card is used to verify a person’s identity when they make a high value purchase, open a bank account or take out a mortgage.
Tax officials could use the system to look for cases where large numbers of high value purchases have been recorded, which might indicate that a person earns more than they declare.
The database will also include information on checks made by employers that job applicants are eligible to work in Britain. This could alert the taxman to people who have undeclared second occupations…”
http://cryptogon.com/?p=8608
Gee, Mike, I wonder how they figured all that out..Whatever gave them the impetus?
and, b4 anyone says: “That’s in the UK, not here!” ask yourself, Are you Sure?
~~
Cursive,
I can only hope that People begin to take the Time to figure out how they are being enslaved.
We are welding our own Manacles, and many of us do not even know how to light a Torch.
May 17th, 2009 at 11:38 am
Also speaking about top marginal tax rates, sometimes people just write silly little articles..
http://www.nbcwashington.com/news/local/Md-Republicans-Quick-To-Blame-Weak-Revenue-On-Millionaires-Tax.html
Md. GOP Blames Weak Revenue On ‘Millionaire’s Tax’
May 17th, 2009 at 11:47 am
thetanman Says: May 17th, 2009 at 9:08 am
first, I was, merely, asking a Q:
second, you’ve, already delineated one/some of the pitfalls..
third, pick a stock you know something about, one you don’t mind being Long.
then, understand that a simple Covered-Call Writing program will deliver ~20+ % annualized–in most Market enviros..
see, as an ex.: http://finance.yahoo.com/q/op?s=MO
and, as always, remember: Nothing is ‘Risk-Free’, even the USTreas complex..
May 17th, 2009 at 11:51 am
>> Why is it that we experienced the most sustained, real growth almost at the highest marginal tax rates?
Maybe there’s a lower ROI when the rich spend discretionary income on yachts than when that money is spent by almost anyone else on almost anything else.
May 17th, 2009 at 11:55 am
Bayou Sarah- at St. Francisville. You cannot believe the number of unusual confluences which occurred there prior to the Civil War.
Audobon, Jefferson Davis, Aaron Burr, the proto-Texans, Beaumarchais’ daughter, Tyler(?). Where do you the West Florida Rebellion was launched? Where did Bowie get his knife. Just a ‘backwater’ now.
May 17th, 2009 at 11:57 am
“where do you think the”
sorry
May 17th, 2009 at 11:58 am
Just a ‘backwater’ now.
MR–
if you don’t erase the Past, peep have a bad habit of remembering where they came from, and what their Kin stood for, and against.
May 17th, 2009 at 12:30 pm
MH-
I’m with you,
My great-great grandma’s maternal uncle James McElroy owned land down there on Thompson’s creek -he’s listed in an 1820 census. 60 or 80 acres. People’s histories are complicated and unusual. Her grandson, my grandfar, was a personnel director for Sears in Minneapolis at the end of WWII and he unilaterally abolished the two-tier payscale at the Sears plant which previously had paid whites more than blacks for the same job. He almost lost his job over it. He was called down to Chicago and if General Wood hadn’t backed his play- Sears Catalog Stores and Merchant Stores would never have existed.
May 17th, 2009 at 12:43 pm
Interesting………….Now you can’t blame the Reagan tax cuts for the deficits in the 80s.
Thanks barry!
May 17th, 2009 at 2:30 pm
@ MRegan 11:55
Well, I’m somewhat embarrassed, but I have never made it to St. Francisville (several failed attempts including a wife with a terrible hangover). I do rember Fulwar Skipworth and the Republic of West Flordia from 7th grade history. Thanks for education, I will now put this on the research list. Still, this geographical reference seems more relevant to Bob Livingston than David Vitter, other than that Vitter is now more politically relevant than Livingston.
May 17th, 2009 at 10:29 pm
new poster.
everyone,
you just keep,
blowing my mind.
i am a guru,
but with lots of questions.
@ironman “This year and next may see quite a few Roth conversions.”
scenario:
i have 80k in self-directed ira money which can be converted to a roth.
i can max current $’s into a roth.
i can also max into a 401k (currently @27% but thinking 33% if BHO gets progressive).
i don’t have enough money to max everything at once considering the 80k would require 22k up front.
any thoughts on how i should be taking advantages of the rules, tax-wise?
a
May 18th, 2009 at 12:06 am
You missed the National Debt Road Trip where BO is by comparrison doing 174 mph….
http://bluelori.blogspot.com/2009/05/take-ride-in-debt-car.html
May 18th, 2009 at 12:33 pm
I AM SORRY FOR SPAMMING YOUR BLOG
The stock market keeps going higher
dow 14000 soon according to experts
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajgUp7xQIn6c&refer=home
May 25th, 2009 at 4:55 am
[...] 25, 2009 Cool graph from Strategas Research Partners via Ritholtz, is a good reminder of two [...]