The Tippy Top Tax

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johnw
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The Tippy Top Tax

Catchy isn’t it “the tippy top tax”. Newly minted congressperson Alexandria Cortez says what’s old is new and it works .

Rep. Alexandria Ocasio-Cortez drew attention Friday for suggesting that the wealthiest Americans ought to pay a marginal tax rate of as high as 70% in order to fund a “Green New Deal.”

The freshly seated Democratic congresswoman from New York City noted there is historical precedent for a high tax rate for the superwealthy, as she said the following:

‘You look at our tax rates back in the ’60s, and when you have a progressive tax-rate system, your tax rate, let’s say, from $0 to $75,000 may be 10% or 15%, etc. But once you get to the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60% or 70%.’
Rep. Alexandria Ocasio-Cortez

That is great at least she’s really really thinking about how to fund her proposed 30 to 40 trillion worth of free stuff over the next ten years. But I think she hasn’t dug deep enough ,why not retro tax the super rich ? Take Nancy Pelosi for example ,her estimated worth is somewhere around 228 million....think what a nice bump it would be for the plan if they could assess say an additional 20 30 40% tax on her existing wealth .Sort of like a floor tax on existing inventory.
With the growing support for socialism among millionaire movie stars,politicians,business people they willl readily jump on board ....Maybe she could even have a catchy campaign song or slogan ,like Tax the rich feed the poor till there are no rich no more......

I watched the clip of Anderson Cooper interviewing Cortez ,the look on his face was a little puzzling. Was he trying to not burst out laughing ,was he wondering how they pumped that much air into one skull,or hey dopey I’m one of those rich people.......
Maybe we could start a betting pool when Nancy is going to bitch slap her into line.......

expat
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Much more likely AOC will

Much more likely AOC will bitch slap Trump via social media. The twitterer-in-chief hasn't just met his match. There. Is. No. Contest. The only thing Trump is better at is bankruptcy and stiffing contractors.

johnw
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I predict a ground swell

I predict a ground swell ,no a tsunami of support in congress for her plan. All those rich members have just been dying to find a quick and easy way to give back, and I’m sure many of their lobbyists patrons will heartily belly up support. Maybe her slogan could be “We’re going to tax those m***f****rs .”

Matt
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Why would anyone want to

Why would anyone want to revisit a time when there was no national debt, blue collar workers had benefits and middle class families could buy houses with one income? Thanks god for trickle down Reaganomics, outsourcing and the financial services industry! Any day now we’ll grow ourselves out of 18 trillion dollars in debt! Just gotta further reduce capital gains, the corporate rate and the top tier bracket! They’re the ones that make the jobs!

Moving Forward
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Thanks for sharing your

Thanks for sharing your wisdom about this subject, Matt, and I hope we'll soon read your thoughts on a great new thread --> Socialism = democratic Socialism?

Aren't you an expert in that field?

johnw
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Thank God we’ve finally found

Thank God we’ve finally found another “decider” in government.Cortez has taken the bull by the horns and decided what the fair share should be. I wonder if she has an OH ! moment when she looks at the 32% federal taxes on her first $3346 pay check....$1070. ... that’s a lot pairs of high heels every week.....

Ugenetoo
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Every time I see that dingbat

Every time I see that dingbat, all I can think of is the letter T on Sesame Street.

TTTTall TTTTeeth.

Economike
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Yes, marginal tax rates were

Yes, marginal tax rates were once 70% (and more).

Of course, the government never collected that. The effective federal rate (proportion of revenue to GDP) hasn't ever exceeded about 22%. Doesn't matter what the top rate is. The higher the rate, the lower the realized income.

Toolsmith
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Diminishing Returns.

Diminishing Returns.

Even leftists like The Beatles opposed high tax rates
- when it affected them ( "one for you, nineteen for me").

Economike
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Exactly, Toolsmith.

Exactly, Toolsmith. Diminishing returns.

Good point.

Matt
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So, Reagan and post-Reagan

So, Reagan and post-Reagan tax cuts changed nothing.

Got it!

Economike
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Matt -

Matt -

Tax policy isn't just a one-dimensional effort to raise revenue for government.

Tax rate is not tax revenue. Tax incidence is not tax burden.

Taxes distort incentives including, of course, the cost of realizing (for tax purposes) income. The Reagan tax cuts had a salutory effect on economic growth.

Just a suggestion for you. Take a break from mocking others and try to learn about David Ricardo's law of diminishing returns.

Matt
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Yes, diminishing returns. If

Yes, diminishing returns. If the highest tax rate is 70%, all those finance pros will stop putting in so many hours creating derivatives and accounting tricks, and all the gaming developers will only work 40 hours a week creating Call of Duty sequels. Profit incentive will be gone! Then where will we be? Parents home for dinner, taking their kids camping on the weekends. A real cluster!

Economike
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No, higher tax rates don't

No, higher tax rates don't reduce profit incentives. They merely change them.

When marginal rates were higher, accountants worked harder. If you really think higher tax rates create more opportunities for happy leisure, you're dumber than I would have thought. And that's not a high estimation.

Matt
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Ahhh, Egomike, so Ricardo was

Ahhh, Egomike, so Ricardo was talking about accounting! That’s quite a law! “The higher the tax rate, the harder accountants work.” Got it. Are they following a natural law, by which the universe simply does not permit an individual to be taxed at 70%?

johnw
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So just because an individual

So just because an individual is smarter,luckier,works harder ,has a brilliant concept or is just born into the lucky sperm club and they make more money they should be obligated to pay a bigger share of their income to the government,because of the “fair share “ concept? My question is does it cost the government more to protect this person ,or educate them,or build roads for them,or represent them in congress or any of the other benefits giverment bestows upon them? What is the basis for their obligation other than ,you should pay more because you have more?

Economike
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Matt -

Matt -

Ricardo's entitled his major work "Principles of Political Economy and Taxation." Which sums it up nicely.

And, yes, the law of diminishing returns accounts for the increasing demand for accounting services as marginal tax rates rise. The concept of diminishing returns applies to many and various phenomena. As it turns out, Ricardo was "talking about accounting."

Of course, it's a strawman argument to mock the idea that economics proves tax rates can't exceed 70%. However, to say that "incentives matter" is as close to economic truth as one can get.

You're welcome.

Toolsmith
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Reagan's tax cuts greatly

Reagan's tax cuts greatly increased economic activity AND tax revenue.

None of that helps if the government proceeds to spend all the increase, and then some. Which it did.

This is happening again...

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