Are Liberals Right When they Say Higher Taxes= A Better Economy?

Here is a great article discussing and ultimately debunking those claims with facts and history:

Liberals and progressives always make the claim that the American economy performed at its best when tax rates were the highest. Many will make the argument that the 1940s- late 1960s represented America’s economy at its best, before jobs were outsourced or off-shored. These liberals will not fail to mention that the top federal income tax rate on the wealthiest Americans was at 91% in 1960. Secondly, progressives tend to point to the 1990s, when the upper income tax bracket was 39.6% instead of today’s 35%. During this time of Bill Clinton’s presidency, we had a massive technological boom, robust economic growth and job creation, and a balanced budget. It seems to be a fact that the higher the tax rates, especially on the wealthy, the better off the country and economy. Who could argue that the 1960s or 1990s were worse than the time period between 2001-2011, when the upper income bracket on the wealthy was only 35%? In this piece, I will seek to explore the claims made by liberals, and try to debunk any myths or lies, while adding to the ongoing tax debate today.

FULL ARTICLE HERE: www.tabbarianreport.com...

If the higher taxes keep going to bail out banks, to middle eastern countries, and federal paycheques, I cannot see how it would help the economy.

The money would need to be used for things like infrastructure, and other job creating endeavors.
Even then it would depend on accountability and openness of the government.

Maybe it's in direct proportion to technology but something in the economy has become saturated, so throwing other peoples' money at it won't improve it.

Yes, we prospered during those times not because of higher taxes but because we were producing good high quality products that were designed to stand the test of time.
Then someone learned to cut corners and the rest is history.

It's a different world/country so you can no longer apply old principles and expect the same results and prosperity.
Technology may be advancing exponentially and in this fast paced world of everything from fast food, instant news and communications, we need plenty more of _blank_ across the board, just to satisfy the technological appetite for everyone on a global scale.
Since people want everything "NOW" we* have now been forced to mass produce product while sacrificing quality for quantity.

Btw, the technological boom in the 90's had nothing to do with Clinton, it was inevitable because of the internet boom that that revolutionized the way we now do things.
Bush Sr. mentioned this years before when he made reference to the "information super highway".

* rather, the Chinese

reply to post by Alxandro


Exactly! This article makes many of the points you just made, but it also adds that the plundering of wealth in the 1950s and 1960s, helped set up the horrible economic timeframe between 1971-1982. Moreover, it discusses how 1868-1912 was the greatest period of U.S. economic growth and there was no federal income tax at the time!

reply to post by KevinBally


There was no federal income tax at the time!
There was no federal reserve either !

reply to post by OLD HIPPY DUDE


Yup! They both hit us the same year, 1913. Will the Fed make it to 100 years of age? Possibly not.

reply to post by OLD HIPPY DUDE


Yup! They both hit us the same year, 1913. Will the Fed make it to 100 years of age? Possibly not.

America's tax code is a load of bollocks at the moment. You need lower taxes on the lower and middle classes (to foster consumer demand and thus economic growth), higher taxes on the wealthy (not too much higher but a situation where middle income workers are paying a far greater percentage in tax than the wealthy is Just Ridiculous) and massive cuts to the budget. A deficit of over a trillion USD is simply unacceptable and your interest payments for 2010 were almost 200 billion USD - a figure which will only get bigger unless you do something about it. All federal spending left over needs to be seriously re-evaluated and spent on things like infrastructure projects and incentives for businesses to stay in the US. As a Brit who enjoys universal healthcare I'm sad to say that Medicare and Medicaid need to be seriously reformed, as well as Social Security and the Military budget.

Now I'm no Republican or Tea Party type - were I in the States I'd probably vote Democrat - but you have to see that serious changes need to be made and ideals of high spending and low taxes need to be seperated from reality. The US economy is unsustainable and if left unchecked will drag the rest of the world economy down with it.

reply to post by UngoodWatermelon


Couldn't have said it better myself. But as the article in the link points out, America's definition of rich, when adjusted for inflation, as drastically changed between 1960 and today, and even more between 1900 and today. If you increase taxes on families of 4-6 (for example) making between $250,000-$1,000,000 per year, you will destroy the economy. As the article points out, a family on $250,000 a year only has $125,000 left after local, state, and federal taxes. If there are 5 people in that family, they each get $25,000 per year. That is a far cry from being rich! This group does a lot of consumption and job creating. So this is what happens if you lift the federal income tax on individuals making more than $200,000 or families making more than $250,000; The ultra-rich who make several million per year will use lawyers and great accountants to get around the tax increase as they did in the 1960s and 1990s (and as they do today), while this group between $200,000-$1,000,000 will get slaughtered from that increase. The way to get America's economy going or solving it's deficit is not through tax hikes on anyone. The deficit issue is 50% because of unemployment and 50% because of structural deficits. Therefore, you need ideas that create jobs. Infrastructure is a vital part of that. If you cut $300 billion from the defense budget and use it for infrastructure instead, you would create millions of jobs. Those jobs pay taxes, increase revenues, and decrease the deficit. BUT I PERSONALLY THINK, THIS SAME WEBSITE ALSO PRESENTED A GREAT PLAN FOR SOLVING AMERICA'S CRISIS: www.tabbarianreport.com...

reply to post by UngoodWatermelon


Why not just have a flat and fair tax across the board?
Same percentage for everyone, rich or poor.
That would be fair to all,
.... then again, that just makes too much sense for Wahington to do anything about.

reply to post by Alxandro


We have and always will have a progressive income tax system because wealthier people will be in a better position to shoulder the burden. If we had a "flat tax" across the board, wealthy people would pay less. Middle class and poor people would have to pick up the slack, but would be unable to do so because they are already having a hard time making ends meet as it is.

reply to post by hotpinkurinalmint


By flat I meant percentage, not amount.
Let's say something around 13% for all, rich and poor.
That would seem logical, but then Washington is anything but.

reply to post by Alxandro


Agreed..

In Sweden even traffic violation fines are based on the individuals income.

TO ALL OF YOU TALKING ABOUT FLAT TAXES ON INCOME, WHY NOT JUST A NATIONAL, FLAT SALES TAX ON CONSUMPTION? THIS WOULD HELP SOLVE THE PROBLEM OF OVERCONSUMPTION IN AMERICA AND CONVINCE PEOPLE TO USE THEIR INCOME TAX FREE MONEY TO PAY DEBTS, SAVE, AND INVEST INSTEAD? IT WOULD BE FAIR AS EVERYONE WOULD PAY THE SAME PERCENTAGE WHEN THEY BUY GOODS OR SERVICES. THE GOVERNMENT WOULD ALSO HAVE AN EASIER TIME WITH TAX COLLECTION, RATHER THAN ALLOWING 47% OF AMERICANS TO PAY NO TAX AT ALL, WHICH IS CURRENTLY HAPPENING WITH THE FEDERAL INCOME TAX. ON THIS SAME WEBSITE, THIS GUY LAYS OUT A GREAT PLAN TO SOLVING AMERICA'S ECONOMIC PROBLEMS: www.tabbarianreport.com...

reply to post by Alxandro


A flat tax is regressive; that is, it's a bigger burden on those with less money, because prices stay the same. Here, let me show you, using your example of 13%.

Let's say there's a young guy who for, whatever reasons, is stuck in low-income, minimum wage jobs. In my state, minimum wage is $8.65 an hour. That's a weekly paycheck of $302. with a flat 13% income tax, $39.26 of that goes to Uncle Sam, leaving our guy with $262.75. he has to pay bills, buy groceries, meet whatever emergencies pop up, an that paycheck. I dunno about you, but i've been in a few situations hwere forty bucks could make a big difference.

His neighbor however, for whatever reasons of his own, rakes in a cool annual salary of one million; or a weekly income of 19,230. 13% of that is $2,500, leaving him with just over sixteen grand to meet his weekly purchases. Now with sixteen grand there, is that $2,500 going to be a make-or-break amount? Unlikely.

Since both of these men face the same market prices, what ends up happening is that the low-income fellow loses a larger chunk of his buying power in that measly 39 bucks than his millionaire neighbor does with his two and a half grand. So while the neighbor is paying more dollars, the low-income guy is the one actually losing net wealth by comparison.

Either taxes or prices have to be progressive for the system to work at all. And since progressive pricing is very clearly a vastly more onerous and freedom-risking endeavor, progressive taxation is the way to go.

Originally posted by KevinBally
TO ALL OF YOU TALKING ABOUT FLAT TAXES ON INCOME, WHY NOT JUST A NATIONAL, FLAT SALES TAX ON CONSUMPTION? THIS WOULD HELP SOLVE THE PROBLEM OF OVERCONSUMPTION IN AMERICA AND CONVINCE PEOPLE TO USE THEIR INCOME TAX FREE MONEY TO PAY DEBTS, SAVE, AND INVEST INSTEAD? IT WOULD BE FAIR AS EVERYONE WOULD PAY THE SAME PERCENTAGE WHEN THEY BUY GOODS OR SERVICES. THE GOVERNMENT WOULD ALSO HAVE AN EASIER TIME WITH TAX COLLECTION, RATHER THAN ALLOWING 47% OF AMERICANS TO PAY NO TAX AT ALL, WHICH IS CURRENTLY HAPPENING WITH THE FEDERAL INCOME TAX. ON THIS SAME WEBSITE, THIS GUY LAYS OUT A GREAT PLAN TO SOLVING AMERICA'S ECONOMIC PROBLEMS: www.tabbarianreport.com...

The biggest problem with "flat taxes" and "national sales taxes" besides the Constitutional principles of taxation they seem to be antithetical to, is that these suggestions seem to be predicated on finding a replacement revenue for the income tax, as if the federal government can keep raking in the obscene amounts of money it does through taxation, and by simply changing the method of liability assessment, and levying of that tax, it will somehow be "fair". As Chief Justice John Marshall once said:

The power to tax is the power to destroy.

This remains as true today as it was in 1819 when Chief Justice Marshall spoke it. The difference is that in 1819 there was no such thing as an income tax, but today that tax is nearly 100 years old. The longevity of this immoral and unseemly perpetual tax upon income has only encourage government to run up a national debt over $14 trillion dollars huge, now. This income tax in perpetuity has only encourage a military industrial complex that has effectively managed to keep the United States in a perpetual war, or wars since the advent of income taxation. This income tax has generated enough revenue for the federal government to become the grossly overweight and bloated beast it has become.

We need to starve the beast, not look for ways to keep generating the same sort of revenue and hope to call it "fair".

reply to post by TheWalkingFox


You didn't respond to my argument for a flat, national sales tax. 15% on all goods and services. No more federal income tax at all. This solves the problem of overconsumption and encourages people to use their hard earned money to pay down debt, save, and invest= building the future! Everyone will have to pay because it will be automatic every time they buy. There will be no more 47% of Americans not paying taxes. Moreover, this won't increase the tax rate on the poor, but it will bring taxes down on the middle and upper middle class. If you close the loopholes, the extremely rich may actually end up paying a bit more in tax as well. This is the smart way to go (flat, national sales tax), not a "progressive" or "regressive" tax system, which are just words to convince you to support one over the other. Now I know you'll argue that the majority of the poor and lower middle class don't pay taxes, and this will force them to, but isn't that only fair, that everyone pay their part to support basic govt. necessities like national defense, the enforcement of contracts, protection of life/liberty/property, infrastructure, and education? These are functions that benefit everyone, and everyone should have to do their part as responsible citizen to support these important, but limited functions. This flat, national sales tax is good morality, good economics, and plain common sense.

reply to post by Jean Paul Zodeaux


I generally agree with your point. The country was better off in several economic ways before the creation of the federal income tax and the federal reserve system. However, given where we are today, a transition out is necessary rather than starving the system. Too many innocent, dependent people have become part of the system. I want to replace the income tax with a national sales tax for now, like Mr. Tabbara who wrote that 23 point plan, so that we don't cause total chaos overnight in America. Eventually, I would like to get back to no national income or sales tax. It worked before, and well I might add, and it will work again. Great points you make, but because a transition is necessary, Mr. Tabbara is right have a budget of $2.2 trillion for now instead of the current $3.8 trillion. As more people transition and get used to the new system, continue to transition back toward what made America great, during its greatest period of economic growth, from 1870-1912= no federal income tax (or sales tax), no federal reserve, and sound, gold backed money!

Originally posted by KevinBally
reply to post by TheWalkingFox

 

You didn't respond to my argument for a flat, national sales tax.

All sales taxes are "flat," so you're being redundant there.

15% on all goods and services. No more federal income tax at all. This solves the problem of overconsumption and encourages people to use their hard earned money to pay down debt, save, and invest= building the future!

When unicorns fly out my butt.

if states cannot function on sales tax (and they can't) then certainly a nation could not - even with massive cuts to spending. Second, it does not solve the problem of over-consumption at all; overconsumption is getting along just fine in states with sales taxes, after all. Similarly people are no more inclined to "save, invest, and pay debts" in such states.

Everyone will have to pay because it will be automatic every time they buy. There will be no more 47% of Americans not paying taxes.

I can't tell if you're honestly this confused, or if you're trying to troll me. first off, it must just burn you up that there are people who are so poor that progressive taxation skips over them; no doubt they need to be punished severely. To my mind, the solution to the "problem" of 46% of people not paying taxes is simply to close the tax loopholes at the top and work on the income problems at the bottom, rather than simply extending greater taxes to the poor.

Moreover, this won't increase the tax rate on the poor, but it will bring taxes down on the middle and upper middle class.

Then you don't understand market reality; don't worry, it's a common problem among anti-tax reactionaries. See, poor people buy poor goods, generally. These goods need to be replaced more frequently or, in the case of food, are generally less nourishing. The poor thus end up actually making more purchases and losing money. Poverty is cyclic, maybe you should learn about it.

If you close the loopholes, the extremely rich may actually end up paying a bit more in tax as well. This is the smart way to go (flat, national sales tax), not a "progressive" or "regressive" tax system, which are just words to convince you to support one over the other.

Actually no they're not. Progressive taxation gets higher with income, while regressive gets lower with income. These are mathematical, not political terms.

Now I know you'll argue that the majority of the poor and lower middle class don't pay taxes, and this will force them to, but isn't that only fair, that everyone pay their part to support basic govt. necessities like national defense, the enforcement of contracts, protection of life/liberty/property, infrastructure, and education? These are functions that benefit everyone, and everyone should have to do their part as responsible citizen to support these important, but limited functions. This flat, national sales tax is good morality, good economics, and plain common sense.

These services actually benefit the wealthy more. Think about it this way; who needs police more, the guy in a mansion or the guy in a refrigerator box? Who benefit from contract law more, someone who makes lots of contracts or someone who makes none? Who has more to lose from failure of national defense? Kings and caliphs get deposed and executed, the serfs just keep farming. Even Social Security benefits the wealthy more; they're more likely to live to reach the benefit age.

No reason to make Sam the beggar pay an extra 15% on his can of dinte moore beef stew in order to support police protection for Stew the Monopolist who evades the tax by ordering online and claiming a different nationality.

Originally posted by KevinBally
reply to post by Jean Paul Zodeaux

 

I generally agree with your point. The country was better off in several economic ways before the creation of the federal income tax and the federal reserve system.

Enumerate them.

As more people transition and get used to the new system, continue to transition back toward what made America great, during its greatest period of economic growth, from 1870-1912= no federal income tax (or sales tax), no federal reserve, and sound, gold backed money!

Do you believe that Harry Potter should be in the nonfiction section? Sorry buddy, learn a little history. While these were indeed great times for a handful of landed gentry and railroad monopolists, the nation was beset by several multi-year depression periods during this time, saw large economic downturns due to market saturations, had huge, sprawling breakouts of abject poverty, and constituted the period in which hte US government spent the most relative to its income in US history - it costs a lot to be in a constant state of conquest warfare, after all.