(Untitled)

[visgoth]

Oh, look... Oil companies are among the most heavily taxed of the largest businesses in America.

CLEARLY we need a special tax to go after their "windfall profits."

And while I'm bitching about the fallacies of one part of the political spectrum, allow me to bitch about the fallacies of another part:

During the period of by far the greatest

Comments

[skreidle]

Mind if I quote this whole post? :)

[visgoth]

I'll unlock it.

[ravenblack]

Though to advocate devils a bit, it's possible that other facets of modern society have changed things such that a very high top marginal tax rate will ruin things (ie. it's now easier for a billionaire upset about a tax hike to take their ball and go home than it was in 1950).

Not saying this is the case, obviously, just that data from a society as different as fifty years ago may not apply the same way today.

[visgoth]

I am only presenting evidence that refutes the claim that high taxes on high earners prevents prosperity. Clearly that is not necessarily true, and taking it as a matter of faith is historically unsupportable.

I'm not saying lower taxes aren't helpful, or that higher taxes are. It is a complex issue and the politicians who are trying to boil it down to one thing in order to win votes are (deliberately or not) engaged in deception.

[ravenblack]

The part my devils-advocation was disagreeing with is
"that low marginal tax rates are clearly not required for it."
which to be the point you're saying now (and/or just to avoid my minor, unlikely objection) would be minimally rephrased as
"that low marginal tax rates are not clearly required for it."
or
"that low marginal tax rates were clearly not required for it."

[visgoth]

I think you are misreading my original post. The point I intended to make-and still maintain-is that low marginal tax rates on high earners are not an absolute requirement for growth and prosperity. Among the machinery of economy there isn't a cam that disconnects all power when it rotates through the "high marginal rates on high earners" portion. That isn't saying the machinery won't fail when certain other interactions take place at the same time.

My reply was only intended to clarify that I am not making (nor currently able to support) a claim that those low rates are unhelpful. But helpful and necessary are two different things.

Sorry if hasty wording obscured any of that. Or if figurative wording obscures it now.

[madkiwi]

The top tax rate in 1922 was 35%- on incomes over $100,000- $1.3 million in 2010 dollars. The rate climbed through the 1930s and 40s. There was no growth in the 1930s. Duh. There was no growth during that time, unless you want to count WPA projects, the Federal leviathan and war spending. Taxes skyrocketed during the Depression as Roosevelt needed to pay for all that (and punish the "speculators" who had "caused" the crisis- now where have we heard that again?). They had to stay high to somehow pay for the war.

The surge in growth in the 1950s and 1960s were a result of 20 years of pent up demand. Punitive tax rates (at insanely high income levels) had no chance of killing the economy. Luckily. In 1960 the 91% tax bracket applied to incomes over $400,000- the equivalent of $2.95 million today.

[visgoth]

Don't get me wrong, I'm not arguing for higher taxes. I'm rather fond of paying less.

But my assertion stands. There is evidence that high taxes on high earners do not necessarily prevent growth.

I hear all sorts of braying about how lower taxes and/or lower interest rates will stimulate business to create jobs, yet we are looking at historically low tax and interest rates, and businesses are sitting on their cash. Clearly something here is missing. Perhaps the missing element is nothing more than art-deco inspired illustrations of the "City of Tomorrow." I don't know.

Low tax and interest rates might be part of restoring prosperity, but by all available evidence they aren't the whole of it, nor, indeed, are they absolute requirements.

The evidence is the evidence, and it clearly refutes the claim I hear time after time on the radio and in the news; that high tax rates on high earners results in economic decline. Any claim otherwise should be examined very closely for confirmation bias.

[visgoth]

Also, the annualized growth in GDP during the 1930's was significant. Obviously part of that was bounce from the crushing the economy took from '29 to '32, but I think a claim that there was "no" growth in the '30s is unsupportable.

From 1930 to 1940, per capita GDP rose from about $6,000 to about $8,000 (despite dipping to about $5,000) in year 2000-adjusted dollars. If such growth were to happen today people would be shrieking in terror of the impending runaway inflation.

[partywhipple]

Confused... I know the tax rates used to be much higher but i thought they were not used the same way as they are now. As in, the base rate was 4% and then anything above that was for taxable income with taxable income being ridiculously loosely defined. I'm not a tax expert, or a history expert, so I will happily bow to your superior alien intellect.

Shit, did I let slip you're an alien? I mean, HA HA JUST KIDDING OF COURSE!!! *shiftyglance*

[partywhipple]

Also, too dumb to figure out the chart on your link. LOL

Wait, now i think i got it. Showing their total sales will just confuse poor intellects such as mine. Total sales are not taxed, is the profit after costs which are.

They have a lot of pretax earnings. interesting.

[visgoth]

I think it's notable that oil company profits as a percentage of sales are pretty much in line with other industries. I also find it interesting the two health care companies represented (McKesson and Cardinal Health) are running on very thin profit margins.

[ravenblack]

"Profit margins" are a thing I take issue with, especially for larger corporations where it is an extra blurry statistic.

If, for example, you're a health insurance company, and you take in an average of $1000 annually per customer, and pay out an average of $200 annually per customer, and you have a million customers, and, for simplicity, your entire system is automated so you have no staff and your running costs are negligible, what's your profit margin?

Answer: it depends if you, as the boss, take a wage+bonus+benefits annually of 800 million dollars. If you do, your company has an extremely slim profit margin, thus proving beyond a shadow of a doubt that you can't possibly decrease prices or be more generous with payouts or in any way improve your service, and any sort of legal reform will destroy your company.

[beckon]

One of my favorite quotes recently -

"rich people are rich because they don't spend all of their money. giving them more money not to spend is not going to help the economy. poor people are poor because they spend everything they have. giving them money just gives them an incentive to spend, usually on products sold by rich people."

[visgoth]

Good point. Where's that from?

[beckon]

Wish I could tell you, I've been bouncing around a number of sites and bloggers, had a number of conversations... and then I found that quote in my head fully formed. Pretty sure it's not mine, but I couldn't say from where.