> You’d certainly see some people under that system change their behavior to avoid the higher rate, which could significantly impact how much revenue it generates
Which is the real point. It's intended to do something to rein in out of control executive compensation. Particularly stock compensation which gives execs an incentive to do short term price manipulation.
(Edit: that's what it did the last time the top rate was this high before Reagan cut it. CEO pay was more like 30x ordinary workers, not 300x)
This sort of talk is just pure envy driven fantasy.
I'm not convinced they could achieve much with 2% more.
The truly wealthy people do not gain their wealth through income. They get it through capital gains ( stocks, homes, asset value increases ). Capital gains ( long term ) are taxed at 20%.
Your sentiment that the truly rich make their money outside of a typical paycheck is correct though. It’s a balancing act of how do we tax people who have accumulated so much wealth in capital vs taxing capital so much that people don’t invest in it.
I don’t pretend to have the answer there but spreading disinformation that professional working people would be hurt by a 70% rate on every $1 over $10 million is pretty irresponsible.
Just like lowering the highest tax bracket and tax rate lowered the tax brackets and tax rates below it. Creating a new highest tax bracket will do the opposite.
But then again, it's my opinion not "disinformation".
To make statements that a 70% bracket above $10 million would negatively affect professions that are typically upper-middle class (not $10 mil/year) is misleading at a minimum.
So first: how many doctors, lawyers, software developers, traders, small businesspeople, or etc. make over $10M in income? (You wrote "small business," but to be clear, we're not talking about business tax rates, we're talking about personal income.) In 2016, less than 20,000 IRS returns showed combined adjusted gross incomes of $10M or over. (That includes married couples pooling their income.)
So for the incredibly vast majority of taxpayers, adding another tax bracket higher than the ones established now would have no effect at all. Period. Given that the top tax bracket in 2019 doesn't kick in until an AGI of $510K (or $612K for married), what are we talking about? Say, a new 50% tax bracket that starts at 5M and a 70% one that starts at 10M? How many people would truly be affected by this? Far under a million. Quite likely well under 200K.
My mother had a financial adviser years ago who half-joked that his life goal was to pay personal income taxes of $1M a year. That gets at an essential truth that people who think that this tax would "hurt" people seem to miss. If I was in a position where a 70% marginal tax rate on income over $10M a year had any material effect on me whatsoever, it's not an exaggeration to say that I'd be too rich to care.
The super rich make about half their income via capital gains, and the rest via various forms of income such as dividends, business income, etc. So such a change would certain impact at least a reasonable portion of their income. It does raise the question of whether a flat rate for capital gains makes sense.
That just means that the capital gains tax needs to be made progressive like income tax to cover those people.
If we're reforming income tax, there's no reason to not reform the capital gains tax at the same time.
Yes, they do. Gaining wealth is income. (It may be income that is subject to favorable tax treatment, but it's still income.)
> They get it through capital gains ( stocks, homes, asset value increases ). Capital gains ( long term ) are taxed at 20%.
You can add a new top bracket and tax long-term capital gains as normal income at the same time. Though if you do the latter, you should also:
(1) Allow recognizing expected income for tax purposes in advance of realizing them, and also allow deferring large windfalls over a period of years, and
(2) Inflation-correct asset basis values and balances of anticipated income on which tax has been prepaid.
Not many devs are making 1m+ salaries.
Edit: To the people downvoting, I'm well aware that the current bracket won't be taxed at 70%. But there is a lot of room between $500K and $10 million. And I have feeling that there will be many brackets between the current top bracket and the new one.
So, you are arguing against your feeling, and not the actual proposal at issue?
> The New York Democrat kicked off a debate within her party in a Jan. 6 interview with "60 Minutes" during which she said she would support setting the highest tax, which she said would kick in at individuals 10 millionth dollar of income, at 70 percent.
Edit: I stand corrected. The picture in the article doesn't mention the new $10m tax bracket, but the actual poll question did.
> "AB2: Currently the top tax rate is 37%. Would you favor or oppose a tax proposal that would apply a 70% rate to the 10 millionth dollar and beyond for individuals making $10 million a year or more in reportable income?"
But it doesn't take a revisionist to see that shows that raising the top marginal rate won't doom the economy, like many incorrectly claim.
The coincidence does falsify the argument that raising tax rates would prevent economic expansion.
It's almost like they have an ideological reason to sow confusion on this subject!
The estimates i have read online say that it should raise like $70 to $100 billion a year. However does anyone here really believe someone making $40 or $50 million a year are not going to find tax shelters for their income and are going to stand paying 70 cents on the dollar in taxes.
Also when the article states they make more they should give more. What about a lottery ticket winner. Like the one who won $1.6 billion, so like $1.1 billion of that would be paid in tax. That is a great scheme for the governement.
I just dont think it will generate the money people think it will and will incite more class warfare.
You'd think so given how frequently the "it was once 91%!" phrase comes up. Regardless of tax rates, the amount of GDP gathered from taxation revenue has been pretty stable: https://en.wikipedia.org/wiki/Hauser%27s_law
Nowadays people can pressure their friends and family to vote and dilute lobbying pressure.
How impactful was the Norquist crowd in 2018?
You can talk about policies all you want but the GOP are substantially better politicians than the DNC could ever hope to be.
This simple yes/no question doesn't allow an accurate response. How about splitting it: Would you favor/oppose the rate hike if other tax rates were reduced? Would you favor/oppose the rate hike even if other tax rates weren't reduced? Or, to put it another way, would you favor giving the federal government more money via more taxing on the rich without any reduction in other taxes?
The difference in the answers will often tell you what side of the financial political line people fall on and their confidence in government. Of course, even this is too general of a question.
I don't know if that's true. But it makes sense that people earning more than $10M don't show it in the W2.
That's why we should be carefull with excessive taxes for bussiness - if some companies go bankrupt, or lay off 20% of their workforce as a result it might be a net loss to society.
And before you start arguing that sometimes companies make money on shady things: yes, they do, but then you don't punish them for that with taxes, there are criminal laws for such things.
None of this is illegal, but it's hard to argue a benefit to society in general.
Personally, I don't think it's right to have more than 50% tax rate at any level, and beyond say $50k/year would say that a 20-30% tax all the way up without deductions would be better. Eliminate corporate taxes, limit corporate capital holdings requiring either reinvestment or divestment to shareholders (who are then taxed).
Simplifying and automating the system better would work better for everyone involved. But confusion keeps Intuit/H&R Block and others in business.
It's a fallacy verging on propaganda to argue that a reform should not be pursued because another policy can be used as a loophole. All that means is that the reform needs to be more holistic to be successful.
Saying this differently and with purposefully fake numbers, if (at your current pre-tax income) increasing your income by 50% would only give you 5% of that in cash you can use, would you really do that? Or do you have alternative use of your time (like leisure) that would give you more happiness?
You may say you would, but the reverse calculation then applies: if you would lose 5% extra cash by cutting your pre-tax income by 50%, wouldn't you do it? Many people would. Just look at the number of people who want to work 4 days or less.
Of course this assume income is a function of time spent working but it is very often the case.
The resulting elasticity will be different for everyone, but there will be a non null elasticity at the population level.
The effect may only be measured at the population level to take into account the difference between people, even if we can predict it is likely to be very low close to 0% and very high close to 100
That work is of little value to society or the government.
The effective tax rate was lower primarily because 91% was the top marginal tax rate. Even those who paid the top marginal rate still had most of their income taxed at lower marginal tax rates, just as it is today.
Also, a large number of exemptions still exist today.
I do not support raising taxes on anyone. I support cutting spending and removing most government programs. Raising taxes has always had the impact of removing disposable income which impacts businesses and eventually impacts the individual.  I would rather see all government expenses become fully transparent, in addition to showing all money spent on lobbying down to the cent. Every government project should have public documents that detail a full project break-down and what money what spent specifically on what.
 - https://www.infoplease.com/homework-help/social-studies/fisc...
I'm also in the minority but my view on this has changed a lot in the past few years. I don't understand why there isn't a "maximum income" regulation actually. If you make $20M/year, do you really need more?
Taxes are not a punishment, though they may be a disincentive. Taxes are also not a payment in exchange for services.
"Those one-percenters make too much; make them pay their fair share!"
"Smoking is bad; raise taxes on tobacco products"
> "Those one-percenters make too much; make them pay their fair share!" "Smoking is bad; raise taxes on tobacco products"
That first pseudoquote is not presenting taxes as a punishment. It's presenting them as a fulfillment of social responsibility to "pay a fair share." The second one is presenting them as a disincentive for a harmful behavior.
Do we have any study or proof demonstrating that if we applied a 100% tax rate above $20M/year people would just stop working?
And I don't see that as a punishment. The money not spend on crazy CEO incomes can be used to pay other workers better, or invest in innovation since that's what you brought up.
I would likely stop working. Pay me $20M + $1 and let's check...
The 2016 campaign had absolutely nothing to do with the size of the government. Trump's campaign promises included $550 billion federal investment in infrastructure, deporting all illegal immigrants, and providing health insurance for everybody, paid for by the government.