Comment on Correcting the Top 10 Tax Myths
Rivalarrival@lemmy.today 2 days ago
The Laffer Curve does show that there is a point at which tax rates rise so high that tax revenues begin to fall (and where reducing the tax rate would therefore increase tax revenues).
Marginal tax rates above this point compel taxpayers to increase deductible expenses: They spend more. They buy more goods; they spend more on labor.
The 91% top-tier tax rates we had for most of the 20th century did not stifle business. They promoted it.
Chucklestheclown@hilariouschaos.com 2 days ago
That is false. The economist explains that. It’s in the myths. Nobody paid that.
Rivalarrival@lemmy.today 2 days ago
You didn’t read my comment.
You saw “91%” and thought I was repeating “Myth” #4. I was not. You either didn’t read my comment, or you didn’t understand what you were reading.
Of course they didn’t. Nobody paid that amount, because if they were close to the top tier, they would “increase deductible expenses”, as I said:
That additional “business” spending put their net, taxable income back under the line. That additional spending turned into paychecks for workers selling goods and services.
With the punitive top-tier tax rate, businesses models targeted the line. When they found themselves $10,000 north of the line, their options were to either accept $900 of that as profit, or pay a “business expense” of $10,000 to stay below it.
As you said: Nobody paid that 91% tax. All of them stayed below the line. All of them either spent their excess income, (or reduced their revenue) to stay below. That tax rate encouraged the kind of spending that became your parents’ / grandparents’ paychecks.
Which is why they earned higher wages for less productivity than you.
Without those punitively high tax rates (that nobody paid), that spending didn’t happen. Instead of spending their excess earnings and creating paychecks for other people, they raked off the profits and bought securities.
Instead of creating paychecks for workers, they become larger shareholders of the companies employing those workers.