Jude 2

Here's a dose of reality for those who are upset about Obama's proposed tax rate hike from 35% to 39.5% on income over $250,000. Check out the eight years after WWII, for example. Look at the Reagan years of prosperity. Look at the Clinton years of prosperity.

Historical Income Tax Rates & Brackets

If Obama is a Marxist, America has been nothing short of Communist for most of the last ninety years. I say let's tax the bankers at 95% and break a record!

Notice that under Reagan taxes were heavily cut. Going up can't be a positive thing for the economy.

Notice the jump from the beginning of the chart and then into the 1920's. That's sad and no wonder our economy hit rock bottom.

Yes Tim, the present tax code is communist and sad and that does not excuse Obama or anyone else nor does it give them a right to raise ANYONE's taxes.

Again I haven't received an extra dime on my check.

As far as I'm concerned, 1913 is a watershed moment in our nation's demise. Look, in 1897, the SCOTUS said the personal income tax was a direct tax and in violation of the Constitution; so, the 16th Amendment made it constitutional.

Before the Civil War, there was no income tax; the Union Congress then imposed a 3% tax on incomes between $6,000 - $10,000 to fund the war. In today's money, that'd be between $60,000-100,000. 3%. Then, they eliminated it altogether before trying it again in the late 1890's, when the SCOTUS said it was unconstitutional.

If we're going to go back, let's go all the way back. The fact is that this nation was not founded on the use of the income tax, and it shouldn't exist today. There are other means of funding, such as the fair tax. Tax expenditures, not wealth. It makes much more sense fiscally and in terms of economic fairness.



I edited the figures above from my earlier post on the value of the 1868 dollars today. Got to thinking of it, and it didn't make sense. Double checked the site I used and it was not what I thought. I misused it. Sorry.

I think with out a doubt the fair tax is the way to go. Tax based on what you can spend! Which means you:

1. You pay what you can afford for taxes, by your spending habits!
2. studies show they would get more revenue
3. the economy would take a great turn for the better
4. How many jobs may not go overseas with no employee tax
5. cost on goods will go down
6. possible chances for more jobs and raises since there is more money in the business.

To me it is a simple method Instead of 14,000 pages of tax code (not sure if that is accurate it maybe 6000 pages, I cant remember)

Tim thank you for posting that chart that is very informative and I get your point as well.

Full Quiver wrote:Notice that under Reagan taxes were heavily cut. Going up can't be a positive thing for the economy.

Notice the jump from the beginning of the chart and then into the 1920's. That's sad and no wonder our economy hit rock bottom.

Yes Tim, the present tax code is communist and sad and that does not excuse Obama or anyone else nor does it give them a right to raise ANYONE's taxes.

Again I haven't received an extra dime on my check.

To illustrate the historic point, I made some Excel graphs from GDP growth data from the U.S. Department of Commerce's Percent Change From Preceding Period in Real Gross Domestic Product data and the Tax Policy Center's Highest Historical Marginal Income Tax Rates for the years 1930-2008. I started at 1930 because it was the earliest year for which the Department of Commerce provided data.

In this graph the red line indicates the top marginal tax rate. The blue line represents the rate of GDP growth. Note that for the period the average rate of growth (3.46%) is relatively constant, independently of the top marginal tax rate. Note also that the average top marginal tax rate is 64.07%. Thus, for the period, an average top marginal tax rate of 64.07% has correlated to a 3.46%. This is slightly higher than the growth rate range that is considered sustainable by some economists (1.5-3%).


The second graph is a scatter plot that depicts the same data as in the first graph, with the rate of GDP growth along the x axis and the top marginal rate along the y axis. Note that the highest GDP growth takes place when the top marginal tax rate is above 60%. In general, rates above 60% correspond to the higher rates of growth in GDP. Also in general, whether top marginal tax rates are below or above 50% is not a predictor of positive or negative GDP growth.



These actual data fairly correlate to the summary by blogger "Angry Bear" in the blog Tax Rates and Economic Growth, which contains this chart that shows that during the period 1953 to 2005, the highest rate of GDP growth correlated to a top marginal tax rate of between 50% and 60%.



Please note that I believe that a growth rate of even 1% is unsustainable when growth is defined as debt, as it is defined by our current monetary system. I believe that tax rates are a red herring. High or low, they are not a predictor of anything except, within our current monetary system, continued growth at unsustainable rates. The problem is not tax rates; the problem is that our system defines debt as growth, and debt that grows at an average rate of 3.64%, regardless of tax rates, is debt that will cause our economy to implode.

IN OUR CURRENT SYSTEM, GROWTH, NOT TAXATION, IS THE PROBLEM.

dolfan wrote:If we're going to go back, let's go all the way back. The fact is that this nation was not founded on the use of the income tax, and it shouldn't exist today. There are other means of funding, such as the fair tax. Tax expenditures, not wealth. It makes much more sense fiscally and in terms of economic fairness.

I would support the fair tax. But when it comes right down to it, even if everyone's taxes were zero our economy would still eventually implode because of the more fundamental problem: growth is debt, and our system demands growth/debt at an exponential growth rate. If we get a nice, new inboard motor, we'll still sink if we have a hole in the boat.

Tim Elston wrote:

dolfan wrote:If we're going to go back, let's go all the way back. The fact is that this nation was not founded on the use of the income tax, and it shouldn't exist today. There are other means of funding, such as the fair tax. Tax expenditures, not wealth. It makes much more sense fiscally and in terms of economic fairness.

I would support the fair tax. But when it comes right down to it, even if everyone's taxes were zero our economy would still eventually implode because of the more fundamental problem: growth is debt, and our system demands growth/debt at an exponential growth rate. If we get a nice, new inboard motor, we'll still sink if we have a hole in the boat.

Now, that's true.