Weren’t We Rich and Awesome When Taxes Were Higher?

This has been circulating around the Internet:

In the 1950s and 1960s when the top tax rate was 70-92%, we laid the interstate system, built the Internet, put a man on the moon, defeated Communism, our education system was the envy of the world, our middle class thriving, our economy unparalleled. You want that back? Raise taxes on the rich.

I take this apart. Comments welcome either here or there.

JRT

Peter Schiff often deals with this propaganda. He claims that no one actually paid these taxes. There were a lot of loopholes and people invested there money where it couldn’t be taxed. In addition, every clear thinking person should know that an economy cannot grow if the government steals nearly all of your income.
Furthermore, the economy has grown over the years not because of government interventionism but despite the latter.
http://www.facebook.com/people/Zebram-Zee/100002539017006 Zebram Zee

I think you should still post the article on this site, not the other one. Its seems better to have them all on one site, rather than on two or three different ones.
http://www.facebook.com/matthew.swaringen Matthew Swaringen

He’s trying to promote the other site, seems legitimate to me to be there. Double posting as an alternative wouldn’t meet the promotional aspect.
BD_Blues1961

The quote from Galbraith on doubling the budget…do you have a source for that quote? Is it in one of his books or a speech he gave? Would be really helpful for some research I’m doing and could not find on a Google search. Thanks!
http://pulse.yahoo.com/_LJAZOLPOC45V3CCCHD25CCLASI The Sinick

Tom -

Somewhat OT, but… I need you to comment on something. There is a piece in FSN today from William K. Black wherein he discusses Mitt Romney’s choice of Mr. Mankiw as economic advisor and a few other things, the paragraph below most notably:

“I start with a historical note that falsifies Mankiw’s claim that competition among governments is desirable. Mankiw makes an historical argument for his claim that competition among governments is desirable and notes that the “founding fathers were no fools.” In an odd way, we can thank our immensely successful Constitution to the demonstrated disaster produced by governmental competition engendered by the Articles of Confederation. The States competed vigorously – to aid their merchants at the expense of “foreign” States (their neighboring States). They competed to impose more destructive internal tariffs (and other trade barriers) so aggressively that they crippled commerce. This is one of the principal defects that led the committee appointed to reform the Articles to instead junk them and adopt our Constitution. The Constitution created a nation instead of a confederation. The interstate commerce and supremacy clauses were key provisions of the new Constitution because the framers knew that competition among the States and the new federal government could threaten our nation’s survival.”
__________________

Tom, can you comment on Mr. Black’s assertions regarding the ’disaster’ as he describes, of the Articles of Confederation and his position/s in general here, as they stack up to correct interpretation and factual historical evidence?

Thanks!!
David

Not Tom, but it’s interesting to note that this problem was the reason the Interstate Commerce clause was added to the Constitution, and contrary to the modern interpretation, it was originally added to prevent states from suppressing commerce – not for the federal government to do the same thing itself. Also, his problem still exists among the countries of the world.
Greg

taxes may have been high on paper but back in the 60s there were more loop holes so overall people ended up paying much less than the high tax. on the other hand today taxes are lower but they are enforced much more so one could end up paying more taxes under today’s low taxes than under the high taxes of 1960s-
Anonymous

Right. Taxes weren’t higher in the fifties. Tax rates were higher.

I favor much higher marginal tax rates myself, but I favor these rates only on consumption, so if Bill Gates wants to build himself a private castle or take a vacation to the moon in a year, he owes far more than the cost of this consumption as a tax, but if he wants to sponsor software development pursuing profit with the same income, he owes no tax at all. If he chooses to consume no more than I consume while earning billions more, he pays no more tax than I pay.

Bill Gates consuming no more than I is a professional investor with an effective “income” no greater than mine. Taxing the yield of his investments, when he doesn’t personally consume this yield, is only costly to beneficiaries of the investment, his employees, vendors and customers.

Somewhere along the line, “supply side economics” took a wrong turn. While asserting that higher tax rates lower state revenue, “supply siders” argued for lower tax rates. If higher tax rates lower state revenue, I want higher tax rates.
pipeoye

Wait. If you tax consumption of Gates, my firm that wants to produce vacation on the moon for very rich people will go banckrupt. Something’s wrong with this plan of yours and I will tell you what it is. Your will to steal from Bill (or me) on behalf of your supposed knowledge of my (or Bills) needs.
Dennisrshoup

What I find so curious about people claiming that the economy was so great in the 50s is that they forget that it was great relative to the rest of the world. Considering that Europe’s economy was devastated by WWII, it’s industrial capacity and labor force effected for years, this is kind of a weird argument. If you killed off a bunch of potential factory age workers, destroyed a bunch of factories and housing stock all over the rest of the industrialized world, the economy of the United States would look relatively dominant now as well.
Anonymous

If your firm can’t survive without selling vacations to the moon, it’ll fail anyway. Successful enterprises respond to changing markets.

I claim no knowledge of Gates’ needs, and I have no will to steal from him. I have a will to limit his authority to organize capital by writ of forcible propriety. A steeply progressive consumption tax would not raise Gates’ taxes. It would dramatically lower his taxes.

Shouting “theft” while defending some forcible imposition that you advocate just doesn’t impress me.