The reckoning of runaway government - Opinion Journal: "
Get ready for a 70% marginal tax rate." "
Many Democrats demand no changes to Social Security and Medicare spending. But these programs are projected to run ever-growing deficits totaling tens of trillions of dollars in coming decades, primarily from rising real benefits per beneficiary. To cover these projected deficits would require continually higher income and payroll taxes for Social Security and Medicare on all taxpayers that would drive the combined marginal tax rate on labor income to more than 70% by 2035 and 80% by 2050."
10 comments:
It's pretty hard to take seriously any argument that leads off with, "First, as college students learn in Econ 101, higher marginal rates cause real economic harm." Whether college students are exposed to such a philosophy in Econ 101 depends on the professor, but it's silly to pretend that it's some sort of fundamental truth. If the author is going to forfeit his credibility in his opening salvo, I don't need to read any further.
(That said, a 70% marginal tax rate would most likely be counterproductive.)
Most Macro econ professors will at least discuss the Laffer Curve. It's up to you to guess where we are on the curve. I'm certain 70% is well to the right of the peak. I'm not motivated to work hard now for 50% of my pay. At 30%, I won't give a damn.
Many economists will also teach the high government spending will "crowd out" private business investment - whether it'spaid for with taxes, debt, or inflation.
> I'm not motivated to work hard now for 50% of my pay. At 30%, I won't give a damn.
Of course, this assumes that one has to "work harder" to earn $5 million per year than to earn $2 million per, which is probably not generally the case. Has Bill Gates really worked thousands of times harder to amass his net worth than I have to accumulate my own piddling, barely positive sum? I don't begrudge him for his wealth, but neither do I think that, when he got to $20 billion, he thought, "Damn, I should work even harder so I can get to 30!"
By the way, for what it's worth, the New Palgrave Dictionary of Economics "reports that estimates of [the peak of the Laffler Curve] have varied widely, with a mid-range of around 70%" (per Wikipedia).
Unfortunately, I'm not Bill Gates and have yet to produce an idea worth $billions. Like 99% of the population, I have to show up every day and grind it out at work.
There has been lots of debate on the top of the Laffer Curve - and no way to settle the arguement. A quick internet search found estimates ranging from 15 to 70%.
I think government has a duty to keep taxes as low as possible - not at the point of max revenue.
I'm not motivated to work hard now for 50% of my pay. At 30%, I won't give a damn.
Two words: Puh-leeze. As always, Bram is almost just about at the point where he might nearly consider giving serious thought to flirting with the idea of whether he should eventually weigh making contingency plans for Going Galt™.
No more Bram? The economy trembles!
Let's keep this conversation civil, stupid.
I'm not sure where the tax rate should be but sending more than one-third to the government seems excessive.
On that note, my boss just got back from Hong Kong and he was marveling at the conspicuous wealth. I told him that I read (one of PJ O'Rourke's books) that the British overseer of Hong Kong essentially told everyone: "Just don't steal and kill each other and I'll leave you alone."
Boom - economic prosperity - right alongside the same people eating rice three-meals-a-day (Mao era).
Bram deserves a little ridicule for his neverending farewell tour to our American economy. Waiting for him to bite the bullet and go already is like trying to catch the Who's last concert.
Just imagine how much faster his imaginary exit would be if the marginal tax rates weren't at the lowest percentage of his lifetime... or his parents'.
I'm not talking about going Galt. I'm talking about purposely staying below Obama's magic "rich" income levels because I can't be bothered to earn more.
I have an MBA and consulting experience, but I'm laying low right now in a corporate office as an analyst. I could double my pay in a job that requires extensive travel and long hours.
Why? All the high-earners above me are getting laid-off. If I did commit to that kind of position and risk, I get to keep less than half of the additional income. Why bother? Seriously?
How much harder is Mr. Goodbye willing to work for 30 cents on the dollar? Do you actually work or just leech off the rest of us?
Your very unremarkable decision-making process has been shared by literally millions of Americans through history, Bram, including myself. It doesn’t pack the dramatic punch you think it does.
What's goofy are your periodic pronouncements, and always in conjunction with those darned Dems. Why does your choice seem to make you so cranky, particularly in the mildest taxation climate of your lifetime? If Obama’s “rich” income levels are magic, then Reagan was Dumbledore.
As for your last sentence, do you think we’re on talk radio? Does it make you feel more sure of yourself to pretend that every non-dittohead is a bum, with their pockets full of food stamps and their lips attached to your wallet?
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