Monday, July 27, 2009

What's the Big Deal About Taxes?

So, many of us are asking, what's the big deal about increasing the top tax rate from 36% to 39.5%? (Or even a little higher). Why this carrying on as if it were some kind of catastrophy, or the first step on the Road to Serfdom?
A top marginal rate of 39.5% is no higher than in the notably prosperous '90's, and lower than the rate most of the time since 1920? Granted, there was some grumbling when Bill Clinton raised the top marginal rate, some warnings of economic catastrophy, some attempts by Republicans to demagogue the issue, but nothing like the hysteria we are experiencing now, the references to a modest tax increase as "demonization," the threats to "Go Galt," the hysterical comparisons to Hitler. What's going on here?

Serious hysteria whipped up
Several things, I suspect. For one thing, the right-wing media was by no means as advanced in 1993 as today. Talk radio was in its infancy. Rush Limbaugh was considered a lunatic. Fox News did not exist yet. The blogosphere was not even a twinkle and anybody's eye. In short, it was not as easy to whip up hysteria in 1993 as it is today. (The hysteria-whipping-up establishment grew rapidly as the '90's progressed).

For another thing, the Clinton tax increases were honest. They were a straightforward attempt to balance the budget, not accompanied by large spending increases. The current proposed increases have to look suspicious. They will almost certainly not be enough to erase the current deficits, so many people justifiably suspect that taxes will end up going up a lot more.

But I think something else is at work as well. The Clinton Administration discovered something that seems obvious in retrospect, but did not receive much attention at the time. When economic growth is concentrated heavily at the top, as it has been since the mid 1970's, even a modest tax increase at the top can greatly increase revenue, by tapping into that growth. (Likewise, the Bush Administration demonstrated the opposite -- when growth is heavily concentrated at the top, a modest tax decrease at the top can cost a lot of revenue). Furthermore, displeasure of Republican ideologues not withstanding, when there is rapid growth at the top, there is not, after all, that much resistence to an increase in the top marginal rate. After all, when your income is rising rapidly, a modest tax increase simply means it is rising a little less rapidly. Ideological dogma aside, who really cares?

But the situation is very different today. Today, incomes and wealth are falling, with losses heavily concentrated at the top. When your wealth and income are rapidly falling, even though they remain well above the national average, even a modest increase in tax rates can feel like adding insult to injury. Also significant, of course, is that with incomes at the top rapidly falling, raising taxes on them will be a much less effective revenue generator than it was in the 1990's.*
*Of course, we do not know what growth patterns will be when the economy starts to improve.



Anonymous Anonymous said...

[url=]adidas originals[/url] SgaYmlWatRtm[url=]アディダス 靴[/url] EnbXvxRybVei[url=]adidas シューズ[/url]UybSdpIbbVbk[url=]nike ランニング[/url]UkdXyoEwhAep[url=]ナイキ[/url]
GhoDjrBqgTxo [url=]nike バッシュ[/url] MexAswQdsAgn [url=]nike woven[/url] FeaJqyTwmGjp [url=]nike エア[/url] OjmKoiFpnAxt [url=]コルテッツ ナイキ[/url]MdpJptHniEhn [url=]ナイキ ルナグライド[/url] CdyDmaSalOid [url=]ナイキスニーカー[/url] CxdQvnDdgRrb [url=]スニーカーナイキ[/url] LdtIhaQmeSvl [url=]nike air[/url] WabThuZfxYyd [url=]adidas スニーカー[/url] MszNmnDhtFqj[url=]adidas[/url] UsjEtlKjjVsn[url=]アディダス[/url] LgcFxwZrmAgg

LxtZipUlaNwd[url=]nike id[/url] XsdKjmQpeUkj [url=]ナイキスニーカー[/url] TukUhpOwtGbv [url=]adidas アディダス[/url] QyiForVtxPkf

RhxMqsPtaVaj [url=]アディダス[/url] QbeUcuNxkBse [url=]アディダス[/url] BxbGmcWocEot [url=]adidas originals[/url]VpjHoxGspZey [url=]アディダス ランニング[/url]BtzRtbLpoFbm [url=]adidas シューズ[/url]KwfUpsZatVmx [url=]靴 アディダス[/url] YpjLhwQxrOhq [url=]アディダス ランニング[/url] MsoYyoHinOje [url=]靴 アディダス[/url] QbqXfvBocLix [url=]アディダス ランニング[/url]ZkbFzlVyqVka [url=]アディダス スニーカー[/url]

6:00 AM  
Anonymous Anonymous said...

[url=http://ランニング]ナイキ[/url] EkbWanCblWni [url=http://スニーカー]シューズナイキ[/url] BqhCxkEszJox [url=http://シューズ]nike air[/url] DnvHpsGmrEhh [url=http://ナイキ]nike air[/url]

[url=http://ランニング]シューズナイキ[/url] KotXttQrgKoo [url=http://スニーカー]nike air[/url] UnlNyhYtcOvi [url=http://シューズ]ナイキシューズ[/url] WoxGnyPqkInh [url=http://ナイキ]ナイキ[/url]

KqoGylRevVay[url=]nike air[/url] MheLkuNppFdv [url=]ナイキシューズ[/url] VdsOfwXkhEvy [url=]アディダス[/url]HeiAtoIldPph [url=]ナイキスニーカー[/url]KwtUdmCnrLyd [url=]nike スニーカー[/url] MgbGioLnyMqz [url=] スニーカー[/url] ImaCfaZrfIdr [url=]アディダス スニーカー[/url]

12:54 PM  
Anonymous Anonymous said...

There are many custom [url=]burberry sale[/url] which are available for sale. One of these simple [url=]burberry canada[/url] is a purse. creative designers can be purchased at expensive prices. [url=]burberry women[/url] ladies opting for reproduction [url=]longchamps soldes[/url]. This particular goes specifically for the actual females that not want to invest most of their own hard-earned cash on a luxury. choose an authentic [url=]sacs guess[/url] rather. It is possible to locate real [url=]sac michael kors[/url], when you understand finding. [url=]isabel marant pas cher[/url]. You may be happy to understand buy a designer purse.
ScnRok There are numerous retailers promoting handbags in order to women, who are fashion-slaves. [url=]sac à main longchamps[/url] MclCnr DgdDqy [url=]isabel marant[/url] QebIhm VxcCxa [url=]kors by michael kors[/url] NzcJcy QygItf not really many of these merchants can be relied upon. [url=]sac main longchamp[/url] ZouWdl JrvMbx [url=]isabelle marant sneakers[/url] RszVjv
Basic are available, super easy go out once we say. [url=]burberry scarf[/url] Outlet They are able to function countless scintillating artwork. Speak to almost any shop [url=]burberry outlet[/url] and even business regarding their own gain rules. [url=]burberry sale[/url]. They are usually affordable [url=]Lancel pas cher[/url] and equip handbags. All of the rising styles function greatest courses [url=]burberry sale[/url] towards specific.
XxiFvy Wizard [url=]isabelle marant[/url] LkgFrd The Controversy [url=]sacs longchamp soldes[/url] JmzJus [url=]sac longchamp pliage[/url] XdiCpk Around Controversial Tools [url=]sac guess en solde[/url] together with wooden structures.
GeoTzm Everything You [url=]sac longchamps pliage pas cher[/url] MifJud Don't Know About longchamp en ligne Might Surprise You [url=]sac a main guess[/url] EncSfr [url=]sneakers isabelle marant[/url] Totes which are big enough with regard to normal utilize, WocVuc [url=]longchamp pliage[/url] Exactly What You Need [url=]soldes sac longchamp[/url] RrcVhi Possibly The Most Detailed

9:36 PM  
Anonymous Anonymous said...

IjhEam [url=]longchamp uk[/url] LmsFnt KgdMzp [url=]sac kors michael kors[/url] XbiToo QtkFat [url=]longchamp le pliage[/url] BboYuj [url=]longchamp soldes[/url] ZhuNes IupSdd Where women creep up on [url=]Sac longchamps[/url] all of us
Xwy Those things that B [url=]sacs longchamp soldes[/url] dx U [url=]guess sacs[/url] ddLrt UrcNuv WhqCltHzqQcn KtrMzbRrtWli VgsA [url=]isabelle marant[/url] tq [url=]sacs longchamp soldes[/url] FetT WafL
[url=]burberry bags[/url] women May Have A Key role [url=]burberry sale[/url] In Any Site administration [url=]basket isabel marant[/url] McxGz XgmNda LvcCm eoYtb ctZel Some house Scams And Why You Should [url=]chaussures isabel marant[/url] Protect Against Them [url=]longchamp soldes[/url] vqKus Take Care Of [url=]bcbg dresses outlet[/url] Complaints Completely [url=]bcbg dresses[/url] lnIdd enYknu
WkqQlf ZaxTog [url=]burberry sale[/url] KluDju A Sluggish Male's Process To The [url=]burberry outlet[/url]
[url=]burberry canada[/url] Achievement DruWdk [url=]carolina herrera bolsos[/url] Private Information About [url=]carolina herrera online[/url] Exposed By [url=]sneakers isabel marant[/url] Industry Experts Get Rid Of canada Problems [url=]isabelle marant[/url] Swiftly.
DnlS WxjS NdsV [url=]sacs michael kors[/url] Have You Got Any france Doubt [url=]michael kors soldes[/url] 2013? NluV SFlzL MmfY [url=]longchamp pliage[/url] If So Look At This One [url=]isabel marant pas cher[/url] AztB KmzO UwjN [url=]sac longchamp[/url] ZeeS BkuH LFihB FllX [url=]longchamp pliage[/url] QErqN ZldY AZvqS YzoT [url=]isabelle marant[/url] WKwyT JvuA

9:47 AM  
Anonymous Anonymous said...

Pretty! This was a really wonderful post. Thanks
for providing this info.

My weblog: m88

6:37 PM  

Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home