Mark Ames in a nutshell (which is exactly where nuts belong);
“The eXiled has set up an emergency “deficit crisis” website calling on America to restore President Eisenhower’s top tax rate on the wealthiest 0.1% Americans: RATFOCR. Everyone agrees that the Golden Age for America’s middle-class was under President Eisenhower, when the top tax rate reached 91% for the wealthiest Americans.”
There you have it. 91% taxes is confiscatory. Why not 100%, though? I mean, if it’s all so righteous, just take everything and split it up. Why stop at 91%?
The point is who decides what’s rich? $250000 sounds like a lot of money to most people, including me. But if you have a lot of expenses and are a businessman in New York, it might not be. Of course, here comes Felix Salmon to say let’s just check your bank balance and tax you if you have $5 million plus. But, suppose you got that $5 million by not having a family, scrimping and saving, and suppose you actually earned much less than $250000, say $100,000? Suppose you have sick relatives or you wanted to bankroll some charity dear to your heart, or to spend the end of your life pursuing your dream, after years of deferring it? What if you hold the savings for an extended family or for relatives living in unstable countries? Who sorts all that out? Mark Ames?
How fair is that? You not only didn’t get the use out of your money, you didn’t get interest from it, because the banks were speculating on it and losing money, and now you have to subsidize the people who spent their money (and got the use of it) or actually debased or stole other people’s money?
I haven’t studied Eisenhower’s tax policies, but if this was his tax-rate, the economy was prosperous in spite of it. Income disparities today are extreme, but they are caused by all kinds of hidden and open subsidies and redistribution schemes. Undo them and you won’t have to confiscate property.
The tax rates were that high, but (and there is always a but with tax codes) very few paid that due to write offs and loop-holes. This was part of he reason the atlertive minimum tax can from, the rich not paying taxes.
One reason that pro-big gov or tax the rich people like to claim that a high tax rate is a good thing is because under Eisenhower we had high taxes and large growth. What they love to ignore is that post ww2 there was a pent up demand for goods and services due to the war. FDR rationed goods, set prices, and limited spending. On top of that there was forced savings, you were urged to buy war bonds and war stamps. Having cash in large amounts was seen as being pro-Germany/Japan.
Then the war was over and the bonds started coming due in the early 50’s. Most of the growth was due to people saving less and spending war savings.
Oh, yes, of course. The postwar economy.
That’s silly. The whole world situation was different.
America had a huge surplus, the rest of the world was not competitive..
America was the victor.
I thought he was referring to some particular tax structure or subtlety I didn’t know about.
I say tax people not on the amount of income or wealth, but how they came by it. A tax that only claims wealth not truly earned in the first place would be impervious to accusations of “envy.” We would not be grabbing and stealing rightfully earned private wealth but merely reclaiming that which leaked out of the common wealth.
I have sitting here two pretty substantial econ texts (Mankiw and McConnell) and each acknowledges. that all taxes cause deadweight loss, except for those on something of fixed supply, such as land; and that land rent is surplus not earned by any act of production or service. Shouldn’t these two facts alone dictate our revenue base?
Landholding as such puts nothing into society, yet it gets to extract wealth (rent) from it. A tax on the rental value of land, then, is precisely a tax on unearned wealth and nothing but unearned wealth. Call it LVR, land value reclamation. You could tax away nearly 100 percent of land rent (as Henry George urged, in the context of abolishing every other tax). It would not decrease productivity in the least; rather, you’d enhance it, since you’d do away with speculation and waste of precous space, especially in prime locations.
While private occupation and exchange of land are undoubtedly expedient for development of a society, private rent collection brought us the wealth imbalance we have today. This is one of the conventions the Founders imported unquestioned, from Europe. Most did a brisk trade as land speculators, so no wonder.
Another facet of this is that since for most common purposes land value is about location with respect to the benefits of public and private investment, then LVR is in reality a fair price for benefits received — like any market transition.
Then there is efficiency. A tax on land sites, unlike just about anything else, is nondistortionary. It’s not like there’s a land factory that will suspend production or move overseas if you tax it too high. It also lies outdoors and in plain view, unlike “income” (which is difficult to even define), and doesn’t require vast bureaucracies to assess and enforce; just the system already in place in every county, with added measures to ensure complete transparency and professionalism.
Therefore, for justice and efficiency, levy the unearned value of land ( minus improvements). Milton Friedman endorsed the idea, but I wish he’d endorsed it more loudly and more often.
Of course, being largely a State jurisdiction, this wouldn’t satisfy the pols in Washington since they want to control revenue extraction and spending top-down. They wouldn’t want a bottom-up revenue system like under the Articles of Confederation. However, States could begin shifting their internal revenue collection off usefl work and investment and onto land value. This would of necessity affect Washington’s take, in a roundabout way.