Thursday, July 14, 2011

TRUTH: US Top Margin, Capital Gains & Corporate Taxes Too Low

A story in the Business Insider (July 12, 2011) "The Truth About Taxes: Here’s How High Today’s Tax Rates Really Are" provides some helpful facts that are ignored (or unknown to) our legislative experts in Congress, both Republican and Democrat. I'll quote them right here -- they are words to live by:
  • Today's government spending levels are indeed too high, at least relative to the average level of tax revenue the government has generated over the past 60 years. Unless Americans are willing to radically increase the amount of taxes they pay relative to GDP, government spending must be cut.
  • Today's income tax rates are strikingly low relative to the rates of the past century, especially for rich people.  For most of the century, including some boom times, top-bracket income tax rates were much higher than they are today.
  • Contrary to what Republicans would have you believe, super-high tax rates on rich people do not appear to hurt the economy or make people lazy: During the 1950s and early 1960s, the top bracket income tax rate was over 90%--and the economy, middle-class, and stock market boomed.
  • Super-low tax rates on rich people also appear to be correlated with unsustainable sugar highs in the economy--brief, enjoyable booms followed by protracted busts. They also appear to be correlated with very high inequality. (For example, see the 1920s and now).
  • Periods of very low tax rates have been followed by periods with very high tax rates, and vice versa. So history suggests that tax rates will soon start going up.

Better yet, the article links to a series of slides by the title, "See the truth about tax rates >" that tell the same striking story: the only way to fix the economic mess the US finds itself in is to raise tax rates: the marginal income tax rate, the capital gains tax rate, the corporate income tax rate. Pay especially close attention from slide eight onward.

Slide no. 31 -- Top Income Tax Bracket -- Historical

Seriously, suck it up, get used to it, be real, be rational, this is not "tax and spend" malarkey as the Republicans will claim. It is reality. Truth. Facts. Like physics. Serious as a heart attack.

Don't believe the Tea Party toxic Kool Aid induced mantra that we can cut our way out of this mess. We can not. History proves it, over and over. The longer we wait, the more hurt will be inflicted on wage earners, while the uber-rich glide along feeling no pain.

Our best economic times, times of broad prosperity and a flourishing middle class, occur when tax rates on the rich (let's say more than $250K) are quite high. When tax rates are low, we get bubbles and crashes paid for by already beaten down wage earners.

Thanks  Business Insider, for your courage to speak truth to power. If only our elected representatives had the same courage...

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