So, before anyone can really answer the question, are you looking at…
Individual Income taxes? Corporate Income taxes? Taxes in general?
Obvious_Chapter2082 on
The article seems to be focused on corporate taxes and not individual, so the top rate we’ve ever had was around 53%
From what I can tell by reading the article, they’re not running any kind of regression to reach their conclusion, but basically just looking at a couple of variables and imputing causation. In the real world, there’s **plenty** of other factors that impact growth, and those factors change over time. We also know that the corporate tax base was **much** narrower back in the mid-1900s than it is today, which loosens the correlation between statutory and effective tax rates
We know that any growth we see is *in spite of* high corporate taxes, and not due to it, as higher corporate taxation reduces both investment and consumption
It’s also important to note that NIPA includes S corporations (which don’t pay corporate tax) in their corporate profit numbers, which skews the data further, especially when looking at after-tax corporate profits as a % of national income, because S corporations have exploded in popularity since the 1980s with traditional C corporations declining
snoopingforpooping on
That’s because rich people don’t spend they hoard. If You want to stimulate the economy you need to focus on the segments with the highest velocity of money which is low-upper middle income.
Knerd5 on
Higher taxes incentivize different things than lower taxes. Passing profits along to shareholders makes sense with low taxes but with higher taxes it might make more sense to pay workers better/provide better benefits/expand the business than pay the higher tax rate. Correlation doesn’t equal causation but it shouldn’t surprise people that cutting taxes leads to wealth inequality because once money makes it to the top it never leaves and in fact continues to grow. Velocity of money has cratered for a reason.
look_under on
The answer is pretty clear and before the Right-wing took over America in the 1980’s; Was a commonly understood economic concept
Higher top-marginal tax rates on Corporations, *incentives* the use of Capital inside the corporation and more broadly in the economy. The smarter business decision was to keep profits inside your company and do things like pay your employees more, build more factories and grow your business
Lowering corporate tax rates does the opposite and *incentives* the extraction of capital from corporations, distributing them to stakeholders. Giving the money to millionaires and Billionaires who horde the money and it doesn’t benefit the economy
This was called “voodoo economics” in the 1970s, everyone knew it was bullshit to just give all the money to the Rich, but over 40+ years of right-wing propaganda has all but removed these simple economic concepts from most peoples understanding
Its nolonger even taught in schools
ohhhbooyy on
Probably has nothing to do with WW2 wiping out industries in every country except for the US right? Or the fact that offshoring manufacturing expanded significantly in the 80s?
gtpc2020 on
Short answer is rich people don’t spend all the money they get. If you give a poor person $1 he will immediately spend it on his community, and that business will pay employees who will spend it and so on. You get over $1.50 of economic activity. You give a rich person $1, it goes into their portfolio, which you would expect to be 30% or more invested overseas. That’s why you only get $0.85 of economic activity. That reflects in lower US GDP.
rnk6670 on
I don’t understand why we are still discussing this.
The bottom line is: society is a complex interwoven, interdependent, construct. The economy is but one part of that.
This idea that some few of us are so much “better and hard-working“ then the rest of us that we should be able to hoard money at the expense of the rest of society is ridiculous and should be put to bed once and for all.
Of course, GDP slow slowed once we enabled the few to control the wealth of the many.
A study was done on this between the years 1965 and 2015. Countries that cut taxes had no better economic outcomes than countries that didn’t. The huge difference? Wealth inequality. In countries where taxes on the rich are low inequality is high.
Economic growth is often associated with liquidity — the more money moving through society, the more times it can be leveraged to generate additional wealth. The rich take a disproportionate amount of wealth, and higher taxes encouraged them to spend it instead of hoarding it away.
Before the GOP started practicing voodoo economics, this was universally understood.
Logical-Boss8158 on
This comments in this thread are trash lol – is there moderation here?
The real answer is that GDP growth slows over time as economies mature and other nations develop.
PRINCEOFMOTLEY on
If you have to give 90% away to the government why not just reinvest 100% back into the company? People got paid fairer wages, more benefits etc as there wasn’t an incentive to hoard. Increase the amount of pie you get to keep and people start thinking why not keep it for themselves.
ratpH1nk on
Because giving more money to people who already have more money than they can possibly spend does not grow the economy. You know what it does grow? The stock market.
12 Comments
The EPI brief is about corporate tax rates. Not individual income tax rates. Top marginal rates were only slightly higher than 50% for this. https://taxfoundation.org/data/all/federal/historical-corporate-tax-rates-brackets/
So, before anyone can really answer the question, are you looking at…
Individual Income taxes? Corporate Income taxes? Taxes in general?
The article seems to be focused on corporate taxes and not individual, so the top rate we’ve ever had was around 53%
From what I can tell by reading the article, they’re not running any kind of regression to reach their conclusion, but basically just looking at a couple of variables and imputing causation. In the real world, there’s **plenty** of other factors that impact growth, and those factors change over time. We also know that the corporate tax base was **much** narrower back in the mid-1900s than it is today, which loosens the correlation between statutory and effective tax rates
We know that any growth we see is *in spite of* high corporate taxes, and not due to it, as higher corporate taxation reduces both investment and consumption
It’s also important to note that NIPA includes S corporations (which don’t pay corporate tax) in their corporate profit numbers, which skews the data further, especially when looking at after-tax corporate profits as a % of national income, because S corporations have exploded in popularity since the 1980s with traditional C corporations declining
That’s because rich people don’t spend they hoard. If You want to stimulate the economy you need to focus on the segments with the highest velocity of money which is low-upper middle income.
Higher taxes incentivize different things than lower taxes. Passing profits along to shareholders makes sense with low taxes but with higher taxes it might make more sense to pay workers better/provide better benefits/expand the business than pay the higher tax rate. Correlation doesn’t equal causation but it shouldn’t surprise people that cutting taxes leads to wealth inequality because once money makes it to the top it never leaves and in fact continues to grow. Velocity of money has cratered for a reason.
The answer is pretty clear and before the Right-wing took over America in the 1980’s; Was a commonly understood economic concept
Higher top-marginal tax rates on Corporations, *incentives* the use of Capital inside the corporation and more broadly in the economy. The smarter business decision was to keep profits inside your company and do things like pay your employees more, build more factories and grow your business
Lowering corporate tax rates does the opposite and *incentives* the extraction of capital from corporations, distributing them to stakeholders. Giving the money to millionaires and Billionaires who horde the money and it doesn’t benefit the economy
This was called “voodoo economics” in the 1970s, everyone knew it was bullshit to just give all the money to the Rich, but over 40+ years of right-wing propaganda has all but removed these simple economic concepts from most peoples understanding
Its nolonger even taught in schools
Probably has nothing to do with WW2 wiping out industries in every country except for the US right? Or the fact that offshoring manufacturing expanded significantly in the 80s?
Short answer is rich people don’t spend all the money they get. If you give a poor person $1 he will immediately spend it on his community, and that business will pay employees who will spend it and so on. You get over $1.50 of economic activity. You give a rich person $1, it goes into their portfolio, which you would expect to be 30% or more invested overseas. That’s why you only get $0.85 of economic activity. That reflects in lower US GDP.
I don’t understand why we are still discussing this.
The bottom line is: society is a complex interwoven, interdependent, construct. The economy is but one part of that.
This idea that some few of us are so much “better and hard-working“ then the rest of us that we should be able to hoard money at the expense of the rest of society is ridiculous and should be put to bed once and for all.
Of course, GDP slow slowed once we enabled the few to control the wealth of the many.
A study was done on this between the years 1965 and 2015. Countries that cut taxes had no better economic outcomes than countries that didn’t. The huge difference? Wealth inequality. In countries where taxes on the rich are low inequality is high.
[weird that, huh?](https://academic.oup.com/ser/article/20/2/539/6500315)
Economic growth is often associated with liquidity — the more money moving through society, the more times it can be leveraged to generate additional wealth. The rich take a disproportionate amount of wealth, and higher taxes encouraged them to spend it instead of hoarding it away.
Before the GOP started practicing voodoo economics, this was universally understood.
This comments in this thread are trash lol – is there moderation here?
The real answer is that GDP growth slows over time as economies mature and other nations develop.
If you have to give 90% away to the government why not just reinvest 100% back into the company? People got paid fairer wages, more benefits etc as there wasn’t an incentive to hoard. Increase the amount of pie you get to keep and people start thinking why not keep it for themselves.
Because giving more money to people who already have more money than they can possibly spend does not grow the economy. You know what it does grow? The stock market.