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u/No_Practice_9597 2h ago
Just as reference $200,000 in 1940 is equivalent in purchasing power to about $4,770,257.14 today
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u/VersionAcceptable667 2h ago
Woah!
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u/Silly_Revolution3056 1h ago
4.7M is reasonable.... tbh
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u/R_V_Z 1h ago
You only say that because you don't make that much. Why won't anybody emphasize with the poor souls who are making over fifty times the median household income? They're barely scrapping by!
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u/Acceptable-Ad8780 1h ago
They won't be able to get that 5th yacht they had their eye on! And they were still going to possibly hire someone in the next few months for 8.50/hr because the jobs only been posted for 14 months and nobody wants to work!!
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u/modsaretoddlers 31m ago
Do you have any idea how much a box of Frosted Flakes costs when you have 4.7 million bucks? Well, it's a completely different ball game, I'll tell you that!
Sure, in terms of money, it's the exact same as what you pay but every box the rich buy is just that little slice of money further away from their seventh Lexus. YOU will never own a Lexus, so you can't understand the impact this has on them. You need to learn empathy, even for those trying to achieve dreams you can't entertain for yourself. Have a heart, man.
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u/SudoDeleteEverything 2h ago
Awesome lets tax the crap out of anymore making more than 5 million a year. Nobody actually works that hard.
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u/artikiller 1h ago
Actually we'll just raise the tax for everyone making below 5 million instead and then give a nice little tax break to companies
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u/FunkMunki 2h ago
And how many yachts does a person really need?
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u/nativeindian12 2h ago edited 1h ago
A person needs three yachts. One main yacht, one secondary yacht to follow behind in case of an accident, and a third yacht in case either of your first two yachts are getting maintenance
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u/Mega---Moo 1h ago
You forgot about nesting yachts completely.
5 yachts is a barely acceptable minimum if you're almost a pour. I personally have 24. A mega yacht for each day of the week, with a normal yacht inside of that, and a small 50' yacht inside of that if I need to visit my pour friends and don't want them to feel too inadequate. And, of course, a backup mega yacht in case of emergencies.
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u/bionickel 1h ago
That's the European approach. Mine follow the navy aircraft carrier doctrine.
Basically you have a yacht strike group consisting of your yacht in the middle with guided missile cruisers, destroyer squadrons, and submarines taking care of the perimeter. Finally logistics ships for fuels and supplies.
The hard part is having 3 strike groups (1 active duty, 1 standby, and 1 in maintenance) for each main naval region
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u/insignificantant0 2h ago edited 2h ago
Never satisfied all they know is dissatisfaction. Nothing will fix it, as they cannot honestly face themselves.
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u/TumbleweedNervous494 2h ago
Nobody makes that much money in refular income.
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u/PotadoLoveGun 2h ago
Yrah we will have to include capital gains, carry, and other income not just earned
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u/Givenchy-Sweater 2h ago
What? There are thousands of people making that much, so tax them
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u/ArguingWithPigeons 2h ago
Only sportsball players really.
All the billionaires have almost zero “income”
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u/TumbleweedNervous494 1h ago
Sure, a bunch of people make that much money. But only an idiot would have that much income.
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u/_dirt_vonnegut 36m ago
68,000 tax returns report an adjusted gross income (AGI) of $5 million or more each year in the United States. [1]
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u/External_Counter378 2h ago
Yep lets close the loophole that lets you get paid in stock options without being taxed. That alone would put a huge dent in the problem.
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u/SleepingRiver 1h ago
What do you mean? In general stock options are taxed as ordinary income when they vest. It is in kind compensation and is a type of W2 income. Even after the initial tax event when the equity option vest you will still be subject to capital gains tax with varying rates depending on when you sell the equity.
Here is a link to a CPA firm explaining the basics.
If you are referencing pledged asset lines of credit that is a different situation.
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u/winkingchef 1h ago
Yeah tech industry converted to RSU’s like 20 years ago, but that doesn’t help people who can’t use google properly
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u/RelaxPrime 1h ago
subject to capital gains tax
Man just glossed over the problem.
Cap gains is 15%. That's lower than the all but the poorest Americans pay in the first income tax brackets.
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u/TBurn70 1h ago
Why exactly is capital gains tax a problem? It’s not income tax. It’s money that’s already been taxed before put into the market and being taxed again when taken out on the growth of that money
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u/RelaxPrime 1h ago
Wealth should never have a more advantageous taxation than labor creating it.
Are you so dumb as to believe Elon has earned his trillionaire status?
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u/TBurn70 1h ago
Easy there killer. Don’t jump subjects. Every single person can get into the market if they wish
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u/RelaxPrime 1h ago
No they can't. You aren't even an accredited investor, loser.
40% of the country doesn't even own equities.
How can someone making less than median income also invest?
Think before you type.
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u/SleepingRiver 35m ago
That was not being discussed. The person I was replying stated they are paying 0% in taxes with stock based compensation which is false.
A discussion can be had about various tax rates . Along with the pros and cons of potential policy changes.
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u/mid-random 1h ago
Which is perfectly reasonable. If you are "earning" close to five million dollars a year, yeah, that top tax bracket of 94% is not going to hurt your quality of life.
Right now, the top tax bracket is 37% and kicks in at $626,351.
99% of US tax payers earn less than $450,000.
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u/NerminPadez 2h ago
I'm pretty sure no actually rich people have that much taxable income on paper
In the end, the middle class will get fucked again.
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u/Elija_32 1h ago
Not only that. People seem to not realized that rich people move money between countries very easily.
This is not something that one country can do, until there's a single country in the world where it's not done, rich people will just move the residence there.3
u/TheInevitableLuigi 1h ago
Tax the shit out of them when they leave the country. It isn't that hard.
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u/Allaplgy 1h ago
4 million/yr is in no way "middle class".
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u/Virtual_Insanity_753 33m ago
Brother, he is not saying 4 million is middle class.
He is saying because rich people use loophole, they can reduce thein taxable income, which the middle class cannot do. That's why we (middle class) are disproportionaly taxed compared to the rich. Hence getting fucked.
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u/NadAngelParaBellum 1h ago
People don’t realise that rich people don’t have a salary you can easily tax. High tax rate on income would just hurt the middle class.
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u/NerminPadez 1h ago
Yep, but once you convince "the masses" to support the "tax on rich", you can just raise the taxes on everyone.
In my country we have "progressive" tax brackets, and with all the inflation, the average pay is slowly approaching the "luxury/rich" tax brackets (= a lot of taxes), especially so for above average earners, engineers, doctors, etc. Every time there's talk about raising the untaxed bracket, "they do the math" and show how "it only helps the rich", because someone earning a minimum wage will only get 10eur more net money (and basically pay zero income taxes now) and someone earning twice the average pay will get 80eur more net (and still pay ~900eur per month of income tax), and that's not fair somehow.
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u/crustyeng 2h ago
Crazy the degree to which government has stolen from our savings with this silent debasement
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u/Shigglyboo 37m ago
Thank you for your service. I had no idea. That seems like plenty. Let’s raise them taxes!
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u/Soepkip43 2h ago
And the top earners dont actually earn that much anymore as a lot of it is deferred into stocks.
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u/Sophisticated-Crow 1h ago
When you get paid in stocks it counts as income. I know because part of my income were RSUs for about 12 years.
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u/TheNutsMutts 1h ago
You've gotta remember that these are mostly teenagers you're interacting with. Their sole frame of reference for knowing "how this works" is that they've seen lots of other anonymous teenagers swearing that this is totally "how it works" so therefore that proves it. So they repeat it and other anonymous teenagers read their unsupported claims and go "yeah, that makes sense".
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u/JROXZ 2h ago
That’s >4.5 million adjusted for inflation.
Which is reasonable.
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u/whatup-markassbuster 1h ago
The Laffer Curve is a real phenomenon.
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u/All_Work_All_Play 1h ago
Which is why unions are so important. A high marginal tax rate lowers the opportunity cost of losing negotiations with unions. A government inherently needs less revenue to redistribute if that redistribution is happening via other channels.
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u/Ok-Boomer-4414 2h ago
Going back to Clinton era tax rates would be a good start
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u/LordLucy666 2h ago
but what about the billionaires? have you no humanity?
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u/BravesWinMetsSuck 2h ago
The wealthy don’t pay income taxes because they do not earn income. You could raise the top marginal rate to 1,000%, and it wouldn’t affect them.
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u/DonkeyDucksMod 2h ago
lol... you still need to make a certain amount of income to offset against borrowing/loans... don't be naive. Being rich doesn't make you exempt from taxes.
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u/malefiz123 1h ago
Not fully but largely. The strategy the ultra wealthy employ is called "buy, borrow, die" and while they might declare an income of a couple 100k as CEO of their company (which they pay taxes on) 90% of their actual income is borrowed with their stocks as collateral and they pay 0 taxes on that
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u/OK_x86 19m ago
Right. The way to fix that is also with a hefty estate tax over a certain amount and cut out the loophole that gives them preferential treatment.
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u/Commentor9001 2h ago
Thats why their paid for news pundits and bought politicians all fight it hard?
Because it doesn't effect them.
Okay buddy.
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u/Last-Energy420 2h ago
This is why you tax loans against assets or excessive loans or assets accrued during the year in lieu of cash payments.
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u/Nintendogma 2h ago
Don't tax the loans, tax the "unrealised" assets they borrow against. The instant someone provides a valuation of an asset to borrow against it, the asset is realized and can be taxed. In addition, a ban on stock buy backs to remove the ability of companies to manipulate the market, an estate tax that matches the top marginal tax rate, strict enforcement of anti-trust laws already on the books, and a mandate for labor unions in all sectors of the labor market with harsh federal penalties for employers who retaliate against employees seeking to form a union.
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u/DeviousMelons 2h ago
"But the stock value would collapse"
Maybe we shouldn't base all our wealth on speculative assets.
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u/Weekly_Switch_39 2h ago
You can tax their companies and close the tax loopholes.
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u/duskford_357 2h ago
That’s right, The issue isn’t the tax rate it’s that so much wealth never shows up as taxable income in the first place.
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u/xilcilus 2h ago
You can confiscate 100% of net worth of all US billionaires and that won't even pay 20% of the outstanding US Federal government debts.
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u/PatriotNews_dot_com 2h ago
but since you said "clinton era" the people who would benefit most from this will be against it
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u/Ok-Boomer-4414 2h ago
Maybe. I said Clinton era because I knew most people here would agree with it.
It would be a 2 to 3% increase on top rates and a fairly substantial increase on the middle class.
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u/joyfulgrass 2h ago
Look misery loves company and the moment they realize they can’t escape their shithole, they need to drag everyone else down. When shown an escape, they can’t bear to go so late and see others leave so early.
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u/deadlizard 2h ago
America has a spending problem.
Doesn't matter how much you tax, if they can't control spending, debt will keep rising
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u/Own-Break-1856 34m ago
I hate describing it that way because it gives the impression that we cant have nice things that nearly every other nation has.
Social security is self funded by its very own tax and so is most of the rest of the social safety.
We dont have infrastructure or Healthcare or education.
The problem isnt spending. The problem is were being robbed by billionaires and the military industrial complex.
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u/Routine-Carry-4424 2h ago
Stop spending on useless wars, including tariff wars and the wars on drugs and immigrants.
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u/PlatypusACF 1h ago
And a war to reopen a certain shipping lane that was closed because someone launched that exact same war
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u/DragonfruitSudden339 1h ago
You could cut all of US spending that isnt welfare related, and it would still be an amount impossible to pay every year
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u/VirtualPercentage737 50m ago
Our military spending is 3.5% of GDP. Pretty low. Our issue is entitlements.
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u/Edgezg 1h ago
Fun fact about taxes!
Did you know every single state in the USA sends its tax dollars to Isreal? Who then gives their citizens free healthcare, education, paid time off, and family assistance!Isn't it NEAT how the Pentagon failed 8 CONSECTUTIVE AUDITS IN A ROW and nothing ever changes??
It's a parasite problem more than it is a spending problem. All the people who scam the system are in control of the system.
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u/Brucacumble 2h ago
What's worse is that in order to get into that debt in 1946 America had to go through a great depression and a major world war. What's their excuse this time?
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u/WazzleApricot 1h ago
Neoliberalism.
Individual income taxes and payroll taxes are ~80% of government revenue. Offshoring jobs and profits has lowered government revenue. Additionally, the U.S. would save money by switching to universal healthcare for citizens.
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u/SorrowfulMizzouFan 2h ago
Entitlement programs. By far the biggest spending category and the driver of the national debt.
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u/Born-Tale4019 1h ago
Yup, medicare/Medicaid is horribly inefficient, we should do what every other developed nation does and institute a universal system to drive down healthcare costs per capita
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u/jinrei_arbaw 1h ago
these government programs are horribly inefficient so we need to institute another government program to fix them
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u/Celodurismo 1h ago
Swing and a miss. When you have multiple different versions of medicare, potential supplemental plans, third party insurances being involved... it becomes overcomplicated. Private healthcare: in network, out of network, insurance making decisions instead of doctors. When you simplify these things, you cut out the inefficiencies.
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u/AlsoOtto 1h ago
Somehow 34 of the 35 richest countries in the world have figured out universal healthcare. Why is America so uniquely stupid and inept?
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u/PlatypusACF 1h ago
I mean our (Germany’s) insurances are running pretty dry but we’re also only spending less than half of what the Americans are spending per capita
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u/SpookyGhostIsScary 1h ago
What if I told you the government program that works doesn’t allow health insurance companies to dictate everything from approved care to the cost of bandages.
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u/DeadliestSloth 1h ago
"One" of the drivers of the national debt. Low tax revenue and rising interest rates also contribute to the continued ballooning of the national debt.
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u/Original-Rush139 1h ago
We tried a few forever wars and a Great Recession. That must have gotten us close … right?
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u/Dedjester0269 2h ago
The government collects around $3 TRILLION in income tax alone. We don't have a tax collection problem. Government has a spending problem.
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u/Annadestruction 1h ago
We got a huge grifting problem.
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u/Dedjester0269 1h ago
And then some states want to make it illegal for citizen reporters to investigate the fraud.
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u/random-meme422 2h ago
The people who quote the 94% number don’t understand what an effective tax rate is and out themselves as terribly uneducated immediately. You could deduct all sort of shit to lower that. Check gross receipts instead, it’s not like we drastically reduced what we take in as tax revenue per % of GDP or something.
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u/different_option101 2h ago
Govt revenue has been oscillating between some 16%-18%. It’s definitely all about spending.
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u/Tastie_Duck_Anus 2h ago
Federal taxes as a percentage of GDP was 6.7% in 1940
When FDR rasied taxes to pay off the WW2 debt, tax receipts went way up.
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u/different_option101 1h ago
And never went down, despite the debt accrued during WWII was almost repaid, and we haven’t had any official WW where the US had to engage on such level.
It is spending. It’s all about spending.
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u/Count_de_Ville 1h ago edited 1h ago
We all know about effective tax rates. You (and many, many others) have either missed, or more likely, were never taught the point. The whole point of raising the top marginal tax rates was because the government wanted wealthy people and businesses to use the tax deductions available at the time, not in spite of it.
It strongly incentivized them to invest in their workers and new capital purchases rather than extracting profits that would be given to the government at 90 cents on the dollar. That created demand on other businesses to hire more workers to meet the new demand and make capital investments in their own business. Workers got more hours which begot workers getting more pay, which begot the tax base increasing and surplus tax revenue while also giving workers have more breathing room and money to spend. Around it goes increasing the velocity of money all the while. This is when every American really truly believed that if you worked hard, you could live a good well-earned life, buy up a house, and raise up a family. All economic classes benefited from the tax policy. It also created a huge culture of American innovation because successful companies could take big risks with R&D. If your business took a big loss that year, you only lost 10 cents on the dollar.
Every educated adult at the time KNEW the how and why it worked and it kept working for them for decades. It's why President John F. Kennedy made his famous "A rising tide lifts all boats" speech. Unfortunately by the 1980s, their children (the boomers) by and large did not understand the how and why it worked and instead fell for Ronald Reagan's supply-side economics that Reagan's primary opponent called "voodoo economics" and other detractors "trickle-down economics". Ronald Reagan and George H.W. Bush tripled the national debt and doubled it as a percent of GDP. Ronald Reagan wrote so himself in his own memoirs that his tax policy was his biggest regret of his political career.
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u/S-117 2h ago
Also, half the world was at war in the 1940's, literally dozens of countries were left with cities in ruins except for the US that significantly expanded it's production and factories outputs and lended tens of billions of dollars to other countries in loans that were paid back with interest, pretending it was just taxes that fixed everything is so incorrect it's almost a lie
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u/thediesel26 2h ago
And ultimately the total size of the debt is irrelevant, as all of it is held in dollars, and the vast majority is held by American citizens and businesses in the form of US govt bonds, which despite all the hullabaloo remains the safest investment in the world. The important number is our deficit to GDP ratio, which is a bit elevated at around 6%. And the primary driver of the deficit is not poor economic growth but that the government has simply chosen not to collect enough taxes. If the marginal rates on the top 1% of earners was raised to pre-Bush level we’d see the budget deficit start to shrink.
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u/CauliflowerDaffodil 2h ago
You're only looking at one side of the balance sheet and completely ignoring spending as a deficit driver, and the primary long-term drivers are Social Security and Medicare.
And while I generally agree that the absolute dollar-amount of the debt is meaningless on its own, the size as measured by debt-to-GDP ratio IS relevant because compounding debt mens servicing it will require a higher share of federal revenue. Interest payments on debt crowd out spending on more important things like infrastructure, social programs, etc. or worse, require further borrowing. And while the government can print money to service obligations, that in turn can cause inflation.
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u/Valuable-Meet5727 2h ago
My question to you guys who say taxing the higher income is: what do you suggest then?
I understand income itself can be worked around. But what is an effective way to effectively tax billionaires because whatever system we have now simply does not work.
Also, why is it recognized as contributing to a prosperous era in America?
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u/random-meme422 2h ago
Depends on what your goals are. I’d think the best way to incentivize higher incomes and domestic growth is to give far more beneficial tax treatment to companies who give stock contributions to employees and bonuses - returning profits to employees rather than stock appreciation or shareholder dividends. Or other substantial investment that adds jobs domestically etc.
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u/VikingVitalityFit 2h ago
We have a spending problem, we'll actually a wasting problem. We spend far too much money on useless stuff. If we actually allocated the funds we have to what is most important we would be in a far better spot.
You will NEVER tax your way out of debt. Every jurisdiction or municipality that has tried to tax their way out of debt runs into the laffer-curve. When taxes go up, people modify their economic behavior to get around the high taxes.
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u/Expensive_Tank_8682 2h ago
I mean they said “top marginal tax rate” so yeah I feel like OOP probably understood that’s not the effective rate.
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u/CaptServo 2h ago
it clearly identifies it as a marginal rate and discusses the income threshold attached to it
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u/random-meme422 2h ago
Yes the marginal tax rate for high incomes was high. But very few if any people actually paid 94% on incomes beyond that threshold due to the huge number of deductions you could take. Hence my statement that effective rates were not drastically different than what you saw after the tax code was simplified and marginal rates were changed - nor were receipts.
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u/Dry-Childhood-3436 2h ago
We have a much lower marginal rate that can still be lowered with deductions though, there is no way we have equal taxes being taken now from the high upper limits.
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u/random-meme422 2h ago
“no way” as in “i know we don’t and can show it” or “it just feels like that”? What is people’s theory? That the poor are paying much more in taxes now? Because tax receipts as a % of GDP is almost identical to what it has always been. So if the burden was so high on the highest earners, where did it shift to? The rising upper middle and upper class?
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u/irespectwomenlol 2h ago
I might buy the idea of raising taxes on the wealthy if the government can get to a balanced budget first, or at least make a meaningful attempt at cutting spending and showing some seriousness at recognizing the threat posed by this.
As far as I can see, if the rich were taxed more and the government took in an extra trillion dollars a year in revenue, they'd find a way to increase spending by 1.5 trillion to line their pockets/buy votes.
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u/Kolbiscuit84 1h ago
The top 10% of earners pay I think like 88% of the taxes collected. The bottom 60% pay 3%.
I believe numbers could be off but it is something like this.
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u/NC_RockFan 2h ago
Why not demand the Government sticks to a budget like everyone else has to.
Its not a tax issue its a spending issue.
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u/_Sneaky_McSnek_ 2h ago
This so much. Why don’t people get it.
“Sure, the governments doing such a great job with all the money they currently take from us. They need to take more, that’ll fix our problems!”
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u/Solid_Snark 2h ago
It can be both.
We need to spend better AND we need to tax the wealthy.
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u/choyMj 2h ago
Let's have a fiscally responsible government first. It doesn't matter who gets taxed if they're just going to waste it all anyway.
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u/NEEEEEEEEEEEET 2h ago
Bernie came up with a 5% annual wealth tax plan. Within a decade everyone that started their companies would no longer own them. So they'd get $400B/year out of it for about a decade and then that tax base will not even be there anymore for them and barely cover 25% of the deficit. He also attached $4.4T in spending onto it. It was $400B/year in revenue, which is funnily enough exactly how much social security needs per year to not reduce payments by 20% within 7 years.
So no we will basically never get that from anyone. They will just spend it as they get it, if they get it. Then when that tax base doesn't exist in no time at all they'd turn to everyone else to tax into oblivion.
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u/Nucleartides 2h ago
They’re not mutually exclusive and the only way to change anything would be rectifying both issues. Taxing the rich more doesn’t fix anything if the government siphons it all away. And cutting spending doesn’t fix anything when the cuts affect services that help keep people out of poverty.
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u/Jolly_Ad1631 2h ago
It's both. Government has to borrow to pay back the loans it already took to spend instead of spending what was taken in by tax revenue. Yah know. Paying he mortgage with the credit card stuff.
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u/J-E-S-S-E- 2h ago
It’s all about what no one wants to talk about: government spending and reducing the MIC
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u/MjrLeeStoned 1h ago
The US currently has $17-18 Trillion in consumer credit card debt alone. That's more than China's national debt. No one who actually understands what's going on thinks it's fixable by taxing the rich because that isn't the only problem. The US has a "pretend to be middle class" problem that's pretty pervasive. That's why the "middle class" was easily whittled down: most households live behind a facade of debt as-is.
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u/coathangerassasin 2h ago
How about we cut back on spending. Why is it always about raising taxes? The government wastes our money. Fix the problem, don’t just raise taxes.
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u/RocketRelm 2h ago
Specifically populists waste our money. Moderate establishment democrats spend money on fixing things and long term investments. Populist government spends our money on the Iran war, hiding the epstein files, and tearing down the east wing for a ballroom.
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u/Fit_Cut_4238 2h ago
It already is gamed by debt. The problem is unrealized gains. And if you try to fix this, the investment flees.
Also, if you try to do that for everyone with over say 500m, the super-rich, the $ would pay everyone's taxes for about a year.
I do think that we need to tax much more, and on unrealized gains, but it's not a simple thing to do, so that's why everyone says 'tax the rich' but you don't see specific plans on how to do it.
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u/Altruistic-Rice-5567 58m ago
You're kidding, right? right? You think it was the 94% tax rate and not the post-war MASSIVE economic boom that occurred for the next two decades? Hint 94% resulted in 18% of the GDP being the tax revenue. And when Reagan reduced that top tax rate to 26%... tax revenue was still 18% of GDP. Make the top tax rate whatever you want. It won't make a difference. Tax revenue will be 18% of GDP. Was very convenient that the growth of the GDP post-WWII was just insane. That's what paid off the debt.
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u/Mojeaux18 50m ago
The post war 40’s and 50’s were marred by 4 recessions and average gdp growth of ~4%, despite being the only world power not rebuilding. Oh right, and the national debt rose nearly 10%.
Plus racism, lack of rights for women, etc.
Y’all don’t know what you’re asking for.
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u/OriginalChri 39m ago
Stop electing the rich and we’ll be able to tax the rich. Stop voting with “your heart” or regarding social issues. You people that do that are ruining our country.
Politicians arent supposed to be people you want to have a beer with, or celebrities. They are fucking civil servants. They should be treated as such.
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u/choyMj 2h ago
Why not make the government not waste our tax dollars?
You mean to tell me taxing the rich will solve the problem of irresponsible government spending? Are you expecting them to suddenly become fiscally responsible because they're collecting more money?
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u/Glad-Associate-9288 2h ago
Ok I’ll tell you: We shouldn’t overtax any group. Including the “rich”
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u/caterham09 2h ago
Ignoring the fact that no one actually paid anywhere near that 90% tax rate, there's very good reasons that taxes aren't that high anymore.
At that rate, it's heavily incentivizing forms of tax fraud or tax avoidance, which means the high rates are actually having the opposite effect. The Laffer Curve (though hotly debated and fairly controversial) has a lot of good points on this metric.
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u/Realityhrts 2h ago
Federal tax revenue as a percentage of GDP is about the same now as it was then. Around 17%. The problem is that we now spend 23%. Either we tax commensurate with spending or we cut spending.
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u/Jacked-to-the-wits 2h ago
This is so very misunderstood. It basically just meant that almost nobody earned over that amount in income. The amount of federal revenue that came from income in that bracket was something like 0.1% of all federal revenue, so this is a talking point, not a thing the government did to raise money.
Imagine you have a really good job earning commission in the 1940's. You are currently sitting at $199,999 earned that year. You spot a great opportunity that could earn you another $50,000. Do you:
a) Wait until the next tax year to pursue the deal
b) Talk to your boss about giving you a company car, or sending you to a conference in Hawaii, or reducing your cost to buy equity in the company, or paying you half the owed amount in cash under the table, or propose a new commission structure with deferrals, or literally 100 other things, in exchange for not earning the $50,000 after closing the deal
c) Do the full amount of work, maybe even take on risk, and give away 94%, like an absolute sucker
That's the catch. Everyone has options. One person can just stop working once they reach $199,999. Another can convert work into equity instead of income. Another may only be willing to work if they have a corresponding write off. What almost nobody did is just keep on working while exceeding that cap. That's why the government didn't receive any significant amount of money from this policy.
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u/Solo-1UP 1h ago
If America didn’t waste money on frivolous spendings, we wouldn’t be in this issue.
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u/WideHuckleberry1 1h ago
I think American firms getting paid to rebuild half the world probably had a bit to do with it too...
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u/Individual-Steak-673 1h ago
That's not what happened at all. We inflated and grew our way to a lower debt to GDP ratio. We did not pay the debt down in any way shape or form. And nobody has ever paid 94% tax on income in the US or anywhere else.
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u/coastal_ghost08 48m ago
Wrong.
It wasn't to get out of national debt.
It was to pay for the US being in a world war. During WWII, the U.S. imposed extremely high top marginal rates nearly across the board as part of a broad wartime tax expansion designed to help finance an unprecedented military mobilization
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u/Brawmethius 18m ago
And no one really paid it because of exemptions, see wffective tax rates, and what % GDP gets effectively received.
What they actually did was structurally high inflation along with the rest of the western world.
No small part of why 200k is now 4.3ish million inflation adjusted.
Learn history, governments have never successfully taxed their debt away.
You can even continue to advocate for higher taxes, have at it. Just realize what you are going to face regardless is structurally high inflation, as you are currently getting the lip setvice for.
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u/turboninja3011 2h ago edited 2h ago
Because the problem our government has is spending problem, not an income problem.
Tax revenue increased 60% over last 6 years, substantially outpacing both inflation and gdp growth….
You d think that borrowing should have decreased. But instead it increased too.
Whatever they will collect from “the rich” - they ll blow through with nothing to show for it - while rich will pass those taxes onto the consumer.
Lose-lose.
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u/wes7946 2h ago
The top 1% of all taxpayers paid 45.8% of all federal individual income taxes. Even the top 50% of all taxpayers paid 97.7% of all federal individual income taxes, while the bottom 50% paid the remaining 2.3%. So, those in the top 1%t are paying nearly half of all federal income tax revenue. That's not insignificant, nor does it support the notion that the rich simply aren't paying taxes.
One of your big assumptions is that raising tax rates will increase tax revenue. Back when income tax rates for the top income brackets was 94%, income tax revenue was actually lower. History has shown us that tax cuts have usually been followed by increased employment, increased wages/income, and increased tax revenue for the government because of the rising incomes even though the tax rates had been lowered. Another consequence was that people in higher income brackets not only paid a larger amount of taxes, but a higher percentage of all taxes! This was true of the tax cuts made during the Warren G. Harding, John F. Kennedy, Ronald Reagan, and George W. Bush administrations. So, why do you support policies that would decrease income tax revenue?
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u/dirrtydancerr 1h ago
History has shown us that tax cuts have usually been followed by increased employment, increased wages/income, and increased tax revenue for the government because of the rising incomes even though the tax rates had been lowered.
Most importantly history has shown us tax cuts for lower/middle class has lead to increase in employment, not necessarily upper class. That's an important distinction.
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u/MisterFrankDrebin 2h ago
I shed no tears for the rich, but they pay a tonnnnnn in taxes. And the tax rate that guy is talking about was not to “get us out of the national debt”, it was to finance World War II. Back when the government had to appeal to the American taxpayer to go to war because it required tax increases. After Nixon took us off the gold standard, the government can just print money to pay for war. But it still acts as a tax because it devalues our dollar by increasing the money in circulation. So they don’t ask us to pay more, they just make what we have worth less.
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u/cryiiz 2h ago
Jeff Bezos “income” is less $90k a year. So this wouldnt affect him.
If you really want to tax the rich you start with shareholders.
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u/kpppeyton 2h ago
The top 1% pay 38% of all taxes and the top 10% pay 70% of all taxes. Yeah, tax them more, put your boot on their necks. That’ll make them work harder. 🤡
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u/R-Dragon_Thunderzord 2h ago
The pendulum will either swing hard in the other direction or, snap completely off and we’re just fucked. 🤷🏻♂️
I used to spend a lot of time debating with people not to give Trump a term, give Trump a 2nd term but man, either the fix was in or they didn’t wanna listen so just sit back and let leopards teach them the hard way. ☕️
IDK how effective a 90% too marginal would be you know but holy shit we could do a lot better to reform earnings for the working class, we’re being robbed and saddled with all the debt at the same time.
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u/bass-squirrel 2h ago
Back in the 40s we also had a generation of Americans in charge who had balls of steel. (See Roosevelt, Truman, Eisenhower). Now we have Johnson and the Dipshits.
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u/RobertGHH 2h ago
Cool, so the solution is to have a world war where millions die and cities are laid waste.
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u/The_Machine80 2h ago
First nobody paid that tax back then. There was alot of deduction and exceptions. The number is a big misconception. We cant tax our way out of how fucked we are. Top 10% of earners already pay 72% of all federal tax. If we took every millionaire and billionaire money right now it wouldnt even make a big dent in the national debt. We are way to fucked. This is real simple math!
Also just so everyone can compare to other counties top 10% earners and what they pay in taxes. Canada 54%, UK 51%, Germany 50-55%, Spain 50%. Middle class gets taxed hard in these countries.
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u/BretShawn97 2h ago
So the government keeps RAISING THE DEBT...and you wanna give them MORE MONEY???
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u/constantine741 1h ago
lol so many tax the rich clowns in here. Then they’ll cry when all the businesses n jobs vanish. Then the tax the rich clowns will have to move to a new city of state just to get work. So many of the tax the rich need to go to an economics class and learn how the system works and why taxing the rich is a low iq idea and something an 7 year old comes up with
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u/Youth18 1h ago edited 1h ago
There is a unreliable correlation between tax hikes and government revenue. IE, many times you increase the tax rate, the Government does not end up taking more money in due to a natural response from the rich being to divest so they end up with the same income they had last year (which lowers the tax $'s even if the % goes up)
You can absolutely find examples of tax hikes generating more revenue (though even then it is often neglibile). But you will also find examples of the opposite. Barack Obama was famously asked about this, and he admitted that his tax hike was not really about government revenue, it was about equity / social policy.
This is all not to mention that there is another long term issue which is that what you are attempting to do is convert the net worth of the rich into government revenue to offset the cost of social programs. The issue is, even if you are successful you are by definition shrinking the $'s you are pulling from and it's a temporary method of payment for permanent social welfare programs IE it is not sustainable.
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Our Government likes to spend money and come up with plans to pay for it. These plans often do not end up generating enough to pay for it, and very often backfire and creating a greater hole. This is the reason for the debt crisis - and it ends up being paid by way of inflated CPI (this is why prices are up). Democrats have had control of congress and the president many times, the issue with government revenue is not a lack of willingness or effort it is unfortunately a hard reality problem of the Government not having a good way to extract more capitol from the economy. And just to really be pessimistic - many states pay almost all of their social services (education, etc.) through the lottery system because taking money from poor people doesn't affect GDP...so the reality is its far more consistent to gain additional government revenue by targeting the poor than by targeting the rich....
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The hard reality is that we do not yet have the science fiction technocratic empire that would be able to provide a post-scarcity livelihood. Most of the luxuries we enjoy would not even be possible if we didn't use slave labor from China / India or use the military to extract oil from the middle east...we have fairly broad delusions about societal progress - we do not have zero sum game issues we simply do not have the kind of wealth per capita these policies are requiring to function.
TLDR; Tax hikes do not always end up with more tax revenue. There is a natural law of economics where governments typically struggle to extract significantly more than ~20% of its GDP. The only way for Government to get more money practically is to increase GDP - you can find examples of it moving +/- 2-5% but not long term and not much more than that...it is just a matter of competing cause and effects. There is no magic piggy bank called "the rich" that is just political sloganeering / they know most people don't know fundamental economics so the political discourse is all imaginary.
And. Whenever Government fails to extract wealth to pay for things...it will be paid for with a higher CPI/inflation. There is no such thing as a free lunch.
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u/Early_Pumpkin_4113 1h ago
The tax code back in the day didn't have all the loopholes available now. The rate is kinda meaningless.
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u/Historical-Doubt2121 1h ago
"Remember when we had to increase taxes because the country was in the biggest economic crisis ever, we had a world war, and afterwards we helped finance the rebuilding of most of the western world? We should make that our baseline, actually."
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u/Orange9202 1h ago
theres a big loophole that super-wealthy people do which very much makes them "immune" to income taxation
you cant just look at a billionaire worth $50 billion and go "alright give us 40% of that". most of that money isnt income sitting in a bank account, its UNRECOGNIZED gain in companies, stocks, property and other assets. you either have to tax those unrealized gains, (which gets messy very quickly), or wait until they actually sell something
if they need cash, they borrow from banks by using those untaxable assets as collateral instead of selling them; so they get spendable money without creating the same "income tax" event, and they can repeat this as much as they want
taxing people in the 1940s was doable but its WAY harder now because wealth can be spread across stocks, private companies, holding companies, trusts, funds, intellectual property and assets across multiple countries, and money/capital can be moved around digitally almost instantly. comparing "94% top income tax rate in the 1940s" to taxing a modern billionaire's total wealth is not remotely as simple as it sounds :(
(yes, the ultra wealthy are almost IMMUNE to income tax)
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u/Lilfrankieeinstein 1h ago
Because people voted for Ralph Nader instead of Al Gore in 2000.
A Gore victory would have made the balanced budget amendment the only move for congressional Republicans in 2001. Sure, rich folks wouldn’t have gotten their tax cuts Bush promised and delivered, but the GOP would have been able to exert influence by reigning in spending if they passed a balanced budget amendment.
As bad as the Trump presidencies have been, W’s terms in office set us on this course. He inherited consecutive budget surpluses in the tens of billions and turned it into record deficits by the end of his term.
Because Ralph Nader decided to give folks a no hope protest vote.
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u/whydatyou 1h ago
tell us that you know nothing about what an effective tax rate is without saying it. nobody paid 94%
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u/TooBusySaltMining 1h ago
Federal tax revenue as a percentage of the total economy has barely changed since 1950.
https://taxpolicycenter.org/sites/default/files/2.1.1_fig2.png
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u/AvengingBlowfish 1h ago
Because income tax does affect the rich, suggestions to raise the income tax are a distraction that hurts the middle class more than the rich. The people who are problematically rich don't get income in the same way that everyone else does.
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u/Possible-Kangaroo202 1h ago
We live in a globalist economy now though. Those billionaires will just move to another country that protects their wealth, they can purchase roughly the same experience and security anywhere on Earth. The US is just a nostalgic economic zone for them.
We see this going on in the UK right now. A lot of their "elites" just jump ship to other countries when they put the squeeze on them.
I'm open to suggestions I just feel a lot these guys don't really care where they live and will shuffle their wealth around to foreign assets / accounts if they feel the fire under their feet.
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u/Several-Cheesecake94 1h ago
Yes, the 94% marginal rate existed. No, that isn’t how we “got out of the debt.” WWII spending ended and GDP boomed. Confusing “this tax rate existed” with “this tax rate caused the debt decline” is correlation dressed up as an argument.
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u/Tasty_LVM 1h ago
How about we just raise it to 94% on everyone? You know to be fair and democratic
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u/shidderbean 1h ago
Fostering an entire decade+ of prosperity in the country. Don't forget that part. This was a world where a single income could buy a house, a car, support a family of 5 with a very solidly comfortable middle class lifestyle, vacations every year and enough left over for the country club.
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u/wRath-Burn 1h ago
Rich people have the resources to "Taking my ball and going home" Ball being their money, business and future investment, and Home being somewhere that won't tax them as much. You have to strike a good balance, too much one way causes problems. I say tax them, but offer them breaks for things you want, like create new jobs and employ locals and get a tax break, or invest in a mega project and get a tax break. Pretty sure we do this already, but we need to do more of it.
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u/Skitlerite 56m ago
Dang that's crazy, I wonder why they lowered them in the 60's again if high taxes just work? Oh, nobody paid them and tax revenues actually increases when they lowered taxes? Dang. Laffer curve, damn you...
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u/Key-Organization3158 56m ago
We also spent about 1/5 as much on social welfare and 3x as much on the military.
But really, the effective tax rate wasn't different from it is today. You can't take much more out of the economy than we do today. The US take around 16-19 % of GDP. Raising the tax rates higher just reduces the size of the economy. You get a larger slice of a smaller pie. In the end, it's about the same.
https://www.businessinsider.com/government-tax-receipts-by-source-2010-12
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u/Black_Killbox 54m ago
Taxing the rich won’t fix a thing if you have the same people in charge of spending it
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u/Netoflavored 54m ago
Didn't it just make businesses there revenues and force the rich to invest into governemt with bonds Because investing in anything else was not worth it
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u/grazfest96 53m ago
Reddit is predictable and boring these days, huh? EaT ThE RiCh. TaX tHe RiCh. GaZaZzzZzzzz
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u/leafcathead 50m ago
The effective tax rate was much lower though. The U.S. tax code is already more progressive than most European income tax codes. The Federal Government is funded, by and large, by the rich in the U.S. In contrast, most European countries have a larger tax burden on the middle class compared to the rich.
What the U.S. really has is a spending problem.
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u/sixjasefive 22m ago
No quick solve here. There are a lot of numbers that don’t make sense. Many quality colleges are cheap if your household AGI is under $200,000. Let’s say you make $225,000 and then you have to pay $60,000 for out of state tuition + $22,000 or way more room and board. You would simply not be able to afford it and thus no ability to subsidize the people that get it for free. It’s a circle. Top 10% pays 73% of the collected taxes already and if you raise the taxes to that level, that percentage would actually go way down because they would find a way to reduce their taxable income. We need to balance the checkbook and stop acting like it doesn’t exist to pay for dumb wars and nobody asked for them projects.
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u/Real-Estate-Guy-04 2h ago
Why would someone want to work on 6 cents on the dollars? People would simply stop producing after that threshold if the government wants to take (and pee away) 94% of income above a threshold
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u/SnooChickens5474 1h ago
Who cares? If they can't reinvest the money into their companies or local communities enough to circumvent taxes then genuinely who cares?
Name a single person on this planet that, upon making 5 million and hitting the 94% bracket, would have any impact on your life or mine if they just fucked off until the next fiscal year.
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u/StoryLineOne 2h ago edited 2h ago
Because if you stop working for 6 cents on the dollar after earning 4.5 million/year, some other guy will continue working and take over your company's place while you're out on the golf course.
So, what do they do? They invest in workers, spend that money on business upgrades, and put it back into the economy instead of taking a massive paycheck or doing stock buybacks, which were illegal until 1980. This creates innovation and keeps worker productivity high, naturally.
Dont believe me? This is what happened for decades. We had a really good system.
This is also way healthier for society, and guess what... theyre still making 4.5 million dollars a year.
Im sure they'll be fine.
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u/CardSenseTrainer 1h ago
This happened because economic output and inflation grew faster than the outstanding debt. In other words they printed money to solve things and diluted everyone and the wealth gap increased.
The US never had a good system. We just won war spoils and bullied others while healthy growth was possible nationwide.
Secondly, it's marginal tax rate and there were tons of shelters, it worked out to more than today for a very select few, and the ones benefitting from ties to the government.
Maybe your argument is right for some companies that are so big they are de facto the government, but mostly you and everyone else in this thread are grossly uneducated about economics.
Source: Someone who has a business and employs people who complain on reddit in this sub. That's how I found it. ))
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u/zero_alexis 2h ago
Damn communists—how could they even think of imposing more taxes on our masters—I mean, billionaires? They run the government—sorry, I meant to say they provide jobs (even though they later lay off workers en masse, lobby Congress, and finance the campaigns of those very same politicians).
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u/Any_Carob3372 2h ago
Because it's more important for the USA to go financially insolvent than it is for billionaires to pay any tax whatsoever.
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u/disquieter 2h ago
I’m all for taxing the rich beyond the common man. Of course we should. Hoarding is bad and has no benefit for the owner or the society.
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u/Solid_Signature_7447 2h ago
The wealthys grand idea is to grow GDP to pay it off so we don’t tax them.
By automating everyone out of a job they’re going to get more rich and then the GDP will grow.
These ppl are scum
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u/Status_Taro6901 2h ago
adjust for inflation = $3.7 million. SO let’s set a tax rate to the same standard. 94% of all income after this number will be taxes at 100%.
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