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TAX CUTS: Wealthy paid higher rates in the past

Letter by Charles L. Allyn, Tacoma on Dec. 10, 2010 at 1:07 pm with 68 Comments »
December 10, 2010 2:06 pm

Regarding “Tax Cuts, Stop class warfare, Democrats,” (Letter, 12-10), the writer should realize that upper bracket tax rates have been much higher in the past. For instance, the average of all upper bracket tax rates since 1913 when income tax began is just under 60 percent.

During World War II and up to 1962, the upper bracket tax rate was 91 percent. From 1963 until 1981 the upper bracket tax rate was 70 percent. During this time period, the national debt decreased as a percentage of GDP from over 100 percent to only about 33 percent.

So, you see that raising the upper tax bracket rate from 35 percent to 39.6 percent should not be that big a deal, considering where it will have to go in the near future to get our country fiscally responsible!

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  1. Help me with this logic… because rates were higher in the past then moving from 35% to 39.6% is as you say, “should not be a big deal”.

    OK, again help me understand when enough is enough. Is there in your world, a top tax rate that we should not go over.

    I ask that you bear in mind that the top 1% pay 38.02% of the income tax share, 5% = 58.72%, 10% = 69.94%. The bottom 50% pay 2.7% of the total income tax. Basically if you earn less that @$33,000, you are in the bottom 50%. My source… the IRS (Oct 2010)

    When you take money out of your pocket their is less to spend on the consumer based economy we depend on, we don’t make as much as we have in the past.

  2. Seeing as the most prosperous times for America (post -WWII through the 60s) saw rates around 70% for the top bracket, it is more than a little difficult to buy the logic that higher rates for the top bracket will crush the economy – especially since the W cuts have been in place for the past 10 years – and his administration had the worst jobs creation numbers since Hoover.

  3. After the Bush tax cuts were enacted income tax revenue jumped from approx 800B to about 1,200B.

    Job creation is affected by tax policy as well as other variables. But Bush had 54 months of consistent job growth, a record by the way.

    We also had a 90% tax rate, doesn’t make it right.

  4. rr98411, you are a hoot.
    Here is the truth about the Bush jobs.
    Mr. Bush boasted about 52 consecutive months of job growth during his presidency. What matters is the magnitude of growth, not ticks on a calendar. The economic expansion under Mr. Bush — which it is safe to assume is now over — produced job growth of 4.2 percent. That is the worst performance over a business cycle since the government started keeping track in 1945.
    http://www.econdataus.com/empterm.html
    I try not to go back to the sad Bush years, but when someone else uses them to make a false point it leaves me no choice.

  5. What were the income tax rates in 1789? Zero.

    That is the ideal scenario. Taxes are a necessary evil, like the government. The objective should be to minimize them, not think up ever more ways to tax and spend. Those that worship at the altar of “social justice” should emigrate to Europe where their god is held in higher esteem–or used to be. Lately, he’s looking none too healthy.

  6. I wonder how many entitlement programs there were back then. How many people depended on the government for their basic daily needs.

  7. … abortion was illegal back then too… this could get interesting if we base our morals and legislative standards by what was done in the past.

  8. sumner402 says:

    We all pay less now than we did 80 years ago and some wonder why the Govt. is broke.

    Bottom line we are going to have to pay more and get less.
    It’s that simple.

  9. aislander says:

    Here’s beerBoy arguing, in spite of the fact that he KNOWS better, that things were better when high earners were paying 70%. Trouble is, they never did. It is maddening to fight the same battles over and over with the same disingenuous, tendentious…I can’t use the word I’d REALLY like to use…

  10. bobcat1a says:

    Public hangings and debtors prison, slavery, women were not allowed to vote or sign contracts, life expectancy was 40 years, infant mortality was 50%. Yeah, 1789 was a golden age. May all you reactionaries have all you want of it, but spare the rest of us.

  11. bobcat1a we love ya for that last post! How short their memories are.

  12. The last 2 posters evidently didn’t read the letter.

  13. rr98 – the other shoe is that most of Bush’s jobs were minimum wage, no beneifits jobs that replaced the well paying professional and manufacturing jobs that were sent overseas.

    roxey – tax and spend is better than borrow and spend, and leave the debt to your grandkids.

    Tw and Bc1 – only white men could hold office, and a woman and all her real property became the Husband’s property.

    Islander – you would not have so many battles to refight if you knew history better.

  14. aislander says:

    So…xring: Are saying (oh so snidely) that people actually PAID those 70 and 90% rates of which you lefties are so fond? Because if you ARE saying that, then YOU know nothing about history…

  15. aislander is arguing that economically things are better under the Bush cuts then any time other than the 2nd batch of Reagan cuts or prior to WWI.

    C’mon dude…..try reality.

    And read some of Bernie Sanders’ extremely long speech. That bit about auto workers making half the wage as their fathers did should convince anyone that things are so much better now.

  16. aislander is also trying to argue that a 35% rate is higher than the past’s 70% rate.

  17. sumner402 says:

    It is maddening to fight the same battles over and over with the same disingenuous, tendentious..

    How ironic!

  18. spotted1 says:

    thewho…yes, abortion was illegal, but the government was not paying for it either. Nor was it paying for those folks, their kids, and their health insurance.

    However, we did have an extreme issue of dealing with foreigners coming into our country. That uncontrolled flood of illegal aliens into our country is the base cause of all of our issues today. Perhaps if we had stopped that flood of illegal aliens back then, rather than waiting so long to stem the tide now, we would not have these issues.

    Or, back to the letter, how about we all just pay a flat 35% – 39% tax and call it good. I mean if it is no big deal for those making a lot of money, it is good for those making less than 33000.

  19. Agreed, backed to the letter… just because the rate was higher in the past doesn’t make it right. Adjusted for inflation… who cares?

    Can anyone state with some reason, what is the acceptable rate that government should have from the money that YOU work for, that you earn each and everyday… anybody got a figure?

  20. redneckbuck says:

    One and one thing only is chasing jobs overseas…..Unions

  21. “what is the acceptable rate that government should have from the money that YOU work for, that you earn each and everyday…”

    In a household, those who can contribute financially, do, to the extent that they can, in order to guarantee the welfare of that household. The breadwinner(s) assume the greatest responsibility for providing the financial resources necessary to keep that household solvent. The “rate” of that involvement isn’t set, as the household will falter if expenses exceed any arbitrarily set rate.

    Although it may seem unfair to tax those who are more able, at a higher rate, asking those who haven’t the ability to pony up at the same rate as our wealthier citizens is futile.

    I would suggest that we stop whining about what we are asked to contribute, and start working at ways to put our country back in the black; back on the road to prosperity.

    Spending needs to be controlled, and not everyone is going to totally agree on where and how much we spend.

    But, lack of income is our biggest problem. We all should be willing to invest whatever we can to see that our country doesn’t fail, economically, which means that those with the most must be willing to invest the most. After all, they’re the ones who gained the most when our economy flourished.

    Otherwise, we all fail.

  22. Add xring to the list of those that didn’t read the letter.

    At least he admits it’s a spending problem.

  23. Then again Po, there are those in the “household” who are content sitting on their butts while reaping the benefits of the others that contribute… and then have gall to complain if and when they are called upon to contribute. They just want your cake and eat it too.

  24. sumner402 says:

    One and one thing only is chasing jobs overseas…..Unions

    And that is simply your uninformed biased opinion.
    One that thinking people laugh at.

  25. Although there are those amongst us who fit that description, thewho, I’m willing to bet that the vast majority of us are willing to contribute whatever is necessary; to do what it takes to make it work.

    It would be stupid to allow the boat to sink because someone would not row.

  26. Actually, it’s the unions that fought to keep those jobs here.

    Corporations exported those jobs.

  27. aislander says:

    I meant to write that beerBoy said that things were better BECAUSE high earners paid a 70% marginal rate. Things may have been better in his estimation, but it wasn’t because of that. With ALL of the shelters and dodges that were available then, NOBODY came CLOSE to paying those rates, and revenues were about the same percentage of GDP that they are now and always have been–REGARDLESS of the putative rates on the “rich…”

  28. aislander says:

    Unions don’t PROVIDE jobs, Polago, businesses do–unless one is a union boss, that is, like Trumka or Stern, that is. Then YOU guys get to support them…

  29. meant to write that beerBoy said that things were better BECAUSE high earners paid a 70% marginal rate.

    Even so….that is not what I said. I pointed to a correlation between high rates and good economy, never claimed causation.

  30. Just so you don’t miss my point – the correlation between high rates and good economy doesn’t demonstrate that high rates support the economy BUT it does tend to give lie to the claim that high rates are a causative factor to a bad economy.

  31. Unions don’t PROVIDE jobs

    True, all unions do is, through collective bargaining, help labor to have better wages, benefits and working conditions.

  32. xring, were you worried about borrowing and spending when the Democrats passed that $800 billion “stimulus” package that has seen the unemployment rate go nothing but up? Cry me a river. I’m for cutting taxes and cutting spending until the debt is gone, the deficit is gone, and income is in balance with outgo. Clear?

  33. redneckbuck says:

    Unions do not benefit the company. They just make it harder to get rid of bad employees. There was a time when unions were needed, but now they are forcing businesses to produce products elsewhere. Ever wonder why a Ford truck costs 50k? Union wages are the reason.

  34. redneck – you claim to be educated yet you continue to be obtuse.

    Unions don’t exist to benefit the corporation.

    Unions exist to benefit the employees.

    Starting salary for US autoworkers is now $14/hr – half of what it was a generation ago.

  35. sumner402 says:

    Thanks glen beck, your whining about unions makes me want to support them even more.
    If it weren’t for unions holding the pay scale at a higher level we would all be earning 3 bucks or less an hour, with no bennys, no vacation no safety, nothing, just like it was before the evil unions came about.

    Oh and your lies about the auto workers pay, proven wrong years ago.

  36. aislander says:

    Why is GM now owned by the federal government? Unions.
    Why is Chrysler now owned by–whom: the federal government and Fiat? Unions.

    Do you think monopolies are wrong? The Wagner act created a union monopoly. Is that wrong, too, or is it different if the monopoly is socialist-approved?

  37. Redneck, – one thing only chasing jobs overseas . . . Unions.
    You don’t think the fat cats wanted to avoid OSAH and Environmental Laws?

    TW – I was responding to specific comments, when I respond to the letter I state that’s what I am responding to.

    Islander – Businesses provide the jobs, but workers produce wealth by producing product. The Union’s job was to that the workers had a safe workplace and got a fair, living wage for their work.

    It was not the Unions that mismanaged GM and Chrysler into bankruptcy. Nor was it the Unions who got American car buyers not purchase GM and Chrysler products.

    Oh and Unions have been charged under the Anti-trust and restraint of Trade Laws far more often than Corporations.

    Roxey – I refinanced my house and had no problems due to the stimulus. Wish what you want, your policies will not produce your desired ends.

  38. aislander says:

    It was the unions, xring, that made it impossible for GM and Chrysler to make a profit on the cars they DID sell, unless those happened to be luxury SUVs. When the price of gasoline went up to $4 per, that exposed their weakness. The Wagner act allowed unions to act as a monopoly and made it impossible for the companies’ management to resist the insane demands…

  39. The unions made it possible for the average Joe to compete with the stranglehold corporations had on labor. It was corporate incompetence and unfair offshore competition and cheap imports that led to their lack of profit.

    People like aislander would like to see unions and their members fail. People like aislander like watching others fail.

    People like me like to see Americans prosper, like we did before the Bush tax cuts and when we had meaningful tariffs controlling the flow of job killing imports, when unions were strong and America was prosperous.

  40. aislander says:

    Coincidence, Polago, does not mean correlation. When America was the only country standing after WWII, it could withstand the unions’ extortion, but when the rest of the world caught up we were left chained to a millstone with an albatross around our neck and any other metaphors I can think of to indicate that unions are a drag on everyone. We prospered then IN SPITE of the unions, not because of them…

  41. aislander says:

    How do high taxes help ANYONE prosper, Polago? And don’t use coincidence to again try to prove correlation…

  42. aislander says:

    that should have read: …to again prove causation…

  43. aislander says:

    And in the prior instance…

  44. redneckbuck says:

    xring- unions and environmental laws, give me a break. Unions protect one thing, union bosses power and pocketbook

  45. circular logic is the restating of a premise in a different way and believing then that that proves the premise.

    How do high taxes help ANYONE prosper

  46. sumner402 says:

    prove causation…

    Which oddly enough aislander is what everyone here has been begging YOU to do for a very long time.
    Why can’t you do it?

  47. redneckbuck says:

    Do unions make it possible to produce cheaper products? Pro Union or con, the employees may benefit, but they pass the costs of those improvements on to the consumer in the form of higher priced products.

  48. “And don’t use coincidence to again try to prove correlation…”

    That alone will put you totally out of business, aislander, as the master provider of coincidental causation.

    I don’t believe that it’s coincidental that our country flourished economically while union membership was at it’s peak, which proved that a strong middle class is the foundation of a strong economy. Our manufacturing base and family wages made us the envy of the world. We’ve sold our manufacturing jobs to the lowest bidder, and our economy falters, as predicted. That’s no coincidence.

    Whether union membership is the cause or the effect of a prosperous economy, it is a significant indicator of where we are economically.

  49. redneckbuck says:

    If we all worked with a union, making 70 dollars an hour like UAW, How much would a head of lettuce cost, loaf of bread?

  50. Any good shopper, myself included, redneckbuck, would agree that finding the best price for each item purchased is good for that person’s personal economy. Where your logic falls apart is your lack of appreciation for the overall economic benefits to buying that which is manufactured closest to home, so that the money spent will circulate within that immediate community, promoting local prosperity.

    Compare that with choosing a foreign made product over an American made product, simply because that foreign product is less expensive. The money spent on the foreign product leaves the country, while our local talent remains unemployed.

    I’ll gladly pay a little more, if it supports our economy rather than that of a foreign country. My lifestyle is greatly enhanced by the prosperity of my neighbors.

    Maybe it gives you a warm feeling to see homes in your neighborhood sitting empty, redneckbuck, but I would rather my neighborhood was filled with prosperous, tax paying, family wage earning, American, union members.

  51. sumner402 says:

    making 70 dollars an hour like UAW

    Which of course they don’t make but hey, the truth just gets in the way of a good rightwing talking points anti-union, anti-worker, anti-middle class, anti- American, whine doesn’t redneck?

  52. sumner402 says:

    Do unions make it possible to produce cheaper products?

    Are they supposed to?
    No they are not they also do not prevent the production of quality products no matter the retail cost.

  53. A prosperous working and middle class provides a market for goods and services.

    Remove the market and businesses go bankrupt.

  54. aislander says:

    That all works, xring, only if people produce MORE than they suck up. If not, a slow downward spiral begins, accelerating as it gets closer to the drain. That’s where we are now. People getting 80 or 90% of their salaries plus gold-plated health plans from the day of retirement until death thirty or forty years later are not producing. The working years are for taking steps to be able to take care of oneself. Instead today’s workers are taking care of yesterday’s. And there won’t be enough working tomorrow to take care of THEM…

  55. Islander and Redneckbuck: If it was not for Unions Wages, who would have been able to buy all the stuff produced by American Businesses?

  56. It’s like the dog chasing it’s own tail.

  57. t_w, a very good analogy.

  58. aislander says:

    It all works, xring, if everybody who CAN produce DOES produce. That way the pie gets bigger and there is enough to care for those who cannot take care of themselves. But as soon as people start to believe there can be a free ride, and begin acting on that belief, the downward spiral begins. Then it becomes time for the tough love advocated by Benjamin Franklin…

  59. red – the entry wage for autoworkers is $14/hr.

    That $70/hr number you cite is based upon benefits and retirement – not what is recorded in a paycheck.

    CEOs are making over $1,000 a MINUTE for making bad decisions that then require taxpayers to bailout. Maybe it’s management, not labor that is the problem.

  60. The $70 is the based upon payout to all past employees for retirement benefits averaged to only the current employees.

  61. If the retirement payout is a problem for US autoworkers then it is clear that they did not invest the retirement funds wisely.

  62. aislander says:

    beerBoy writes: “That $70/hr number you cite is based upon benefits and retirement – not what is recorded in a paycheck.”

    So WHAT? It is still that much out of the company’s resources. What the hell does it matter what you CALL it?

  63. Well gee aislander, just about every other institution invests the retirement benefits as part of the costs of the employee’s compensation package in order for it to have a return that will pay for the entire duration of the retirement.

    Do you have any concept of how budgets work?

    The funds for retired employees’ retirement were invested during the employees’ employment in a (hopefully) diverse and balanced portfolio. It is set aside for retirement. Therefore it is not a draw upon current resources. Unless, of course, the Market crashes (another argument against private investment of SSI).

  64. To claim that retirement benefits paid to retired employees is somehow the cost of current employees’ compensation packages you have to ignore the investment of funds during the retired employees’ employment.

    In other words:

    It is a LIE.

  65. aislander says:

    So, what percentage of union members’ pensions are fully funded, beerBoy? That ain’t the way it works. What percentage of government pensions are fully funded? What percentage of Social Security is fully funded? EVERYBODY kicks the can down the road, intending (or at least promising) to pay future pension and health obligations from future revenues. Ponzi schemes, all…

  66. aislander says:

    So…beerBoy: If pension payouts come from invested monies, why are those payouts being counted as a CURRENT expense to the car companies?

  67. I have an idea,why not Tax the Rich people,at the rate of 99.9%of their wealth and income and maybe that would incourage them to take their wealth to a more friendly country!That way everyone could pay more taxes to make up for the lowered income the Govt.would be stuck with.Oh by the way,when was the last time you became aware of how many jobs were being created by the poor people and if so,what were the wages?

  68. Islander, during Fords last negotiations with the Auto Unions, it came out that 80% of what Ford pays out in medical expenses is for NON UNION managers and executives.

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