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US Historical Income Tax Rates

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Re: US Historical Income Tax Rates

#91

Post by lbrito »

floren wrote: post #13
frabjoused wrote: post #12

In 1944 the Federal income tax rate was as high as 94% for those making more than $200,000.

Posters will now stumble over each other to assure you that tax evasion was so widespread that actually the effective tax rate was lower than Reagan's wildest dreams.

This.

Brains here clearly in overdrive trying to elicit all the vaguely possible excuses and attenuations, everything but confronting the hard fact staring them in the face on a G-damn spreadsheet.

Folks, it doesn't get more straightforward than a spreadsheet. Income tax in the US was higher in the mid-1900s than it is today in Europe.

Re: US Historical Income Tax Rates

#92

Post by oh_sigh »

giantg2 wrote: post #88
oh_sigh wrote: post #84

Earlier quoted context omitted.

Not really, because I have no idea the extent of ignorance I'm dealing with. A simple question would be - how does the loan ever get paid off? A simple point would be that not paying taxes on loans is not some crazy loophole that only the rich have access to. Literally anyone who has ever taken out a mortgage for a house or a loan for a car has taken advantage of this - I'd guess at least 80% of adults in America hav…

How about a link then? It seems like you're trolling or otherwise violating the spirit of HN. I mean calling us all ignorant and uninformed, telling us that we're all wrong, then not explaining how we're wrong. In fact, your second comment conflicts with your prior one (claiming that Bezos can't borrow against stock to avoid taxes, then claiming that's exactly what people do).

Here you go, enjoy: https://www.irs.gov/privacy-disclosure/tax-code-regulations-...

Who is "us all" I'm calling wrong? Are you part of a group of tax ignorant fellows with HarryHirsch? Is it a group of people who get their understanding of tax code from r/antiwork?

Delaying taxes is not the same as avoiding or evading them.

Re: US Historical Income Tax Rates

#94

Post by dane-pgp »

dane-pgp wrote: post #77
credit_guy wrote: post #39

Earlier quoted context omitted.

All right, then I'll ask the other question. What do you consider "fair"? You don't say it, and the GP doesn't, but the implicit assertion is that the rich don't pay their "fair share", presumably because in some mythological past they used to pay 94%. What is then "fair"? 94% ? Do you have a formula? At least a principle. If I make $100 MM (I don't), should I pay 50%, 60%, 70%? I mean, even if I pay 99%, I still ret…

> Do you have a formula. At least a principle. I have a formula and a principle. Anyone earning $100 MM or above should pay the same effective percentage as the median taxpayer... relative to their wealth . The median US household has a net worth of $120k and pays about $10k in taxes each year. That equates to an 8% wealth tax. If a billionaire has $1 MM in income one year, they could pay $2 MM in tax and not even no…

I'm not sure why my comment is so objectionable, when all I did was offer a formula and principle as per the parent comment's request. I suspect that people with more than $100 MM in wealth have better things to do with their time than downvote suggestions on HN that they should pay more tax, so, in the absence of any more substantive criticism, I'll assume the objectors were people who consider themselves temporarily embarrassed millionaires.

http://www.temporarilyembarrassedmillionaires.org/

Re: US Historical Income Tax Rates

#95

Post by diggernet »

6gvONxR4sf7o wrote: post #16

I'd love to see these state-wise as well. Looking at the highest ever federal rate and adding my current california rate would put the total marginal rate at 103%. It's actually kind of amusing to think about what a marginal rate over 100% would lead to. If the top bracket is $1M+ and you earn $100M, and that last $99M is taxed at 102%, then you owe roughly $101M of your $100M earned, leaving you negative for the yea…

Then in future years, make sure to avoid the problem by furloughing all your workers as soon as you hit $1M. Sure, that means both you and your workers only work 1/100 of the year, but what's the point in working longer than that if it earns you nothing?

Yeah, you could also pay your workers a lot more and take less yourself. But in that case you'd spend the whole year working to make what you could make in 1/100 of the year. So again, what's the point?

So I suspect a >100% (or even >90%) marginal tax rate would have a lot of very negative side effects. (Keep in mind that back when the top rate was officially >90%, there were so many loopholes that nobody actually paid that. Closing the loopholes and drastically lowering the top rate was actually revenue-neutral.)

Re: US Historical Income Tax Rates

#96

Post by 6gvONxR4sf7o »

diggernet wrote: post #95
6gvONxR4sf7o wrote: post #16

I'd love to see these state-wise as well. Looking at the highest ever federal rate and adding my current california rate would put the total marginal rate at 103%. It's actually kind of amusing to think about what a marginal rate over 100% would lead to. If the top bracket is $1M+ and you earn $100M, and that last $99M is taxed at 102%, then you owe roughly $101M of your $100M earned, leaving you negative for the yea…

Then in future years, make sure to avoid the problem by furloughing all your workers as soon as you hit $1M. Sure, that means both you and your workers only work 1/100 of the year, but what's the point in working longer than that if it earns you nothing? Yeah, you could also pay your workers a lot more and take less yourself. But in that case you'd spend the whole year working to make what you could make in 1/100 of…

> furloughing all your workers as soon as you hit $1M

You'd likely have a hard time getting them to come back the next year. Who is going to take a job that pays a normal daily wage but only employs you for three days? And can you really ramp the org back up up in three days? Maybe you'd be better off working for a few days then handing the job off to someone else for the rest of the year. Even then, good luck convincing the board that you're doing anything worthwhile coming in 3 days per year.

I think the equilibrium for this would be fascinating.

Re: US Historical Income Tax Rates

#97

Post by credit_guy »

dane-pgp wrote: post #94
dane-pgp wrote: post #77

Earlier quoted context omitted.

> Do you have a formula. At least a principle. I have a formula and a principle. Anyone earning $100 MM or above should pay the same effective percentage as the median taxpayer... relative to their wealth . The median US household has a net worth of $120k and pays about $10k in taxes each year. That equates to an 8% wealth tax. If a billionaire has $1 MM in income one year, they could pay $2 MM in tax and not even no…

I'm not sure why my comment is so objectionable, when all I did was offer a formula and principle as per the parent comment's request. I suspect that people with more than $100 MM in wealth have better things to do with their time than downvote suggestions on HN that they should pay more tax, so, in the absence of any more substantive criticism, I'll assume the objectors were people who consider themselves temporaril…

I did not downvote you (on HN you can't downvote someone who answers your comment).

I think you proposed a reasonable option, but a bit imprecise. It's not clear if you advocate for a wealth-based tax, or some type of crossover tax, like a max between an income-based tax and a wealth-based tax. In any case, a lot of people (and especially a lot of startup oriented people, like readers of the HN forum) are against taxes on unrealized gains, which is what your proposal would end up to be.

As for the temporarily embarassed millionaire. I have a different reason to oppose taxing the wealthy. In my native country there's a saying that roughly translates "it's easy to prescribe 10 whiplashes to someone else's buttocks".

I personally find profoundly immoral to wish a category of people to suffer, when you know that you are not in that category. Now, you may say that the rich people don't "suffer" when they pay more taxes, but I don't know that. I believe in the benefit of doubt. As far as I'm concerned, if someone is rich, they deserve to enjoy the fruits of their labor, not to a lesser extent than me. I personally know lots, really lots of people who work much harder than me, and make more money than me. They have chosen to forgo or postpone gratification in life, and I chose not to. I can clamor for them to now forgo their reward, but I simply find that immoral.

Re: US Historical Income Tax Rates

#98

Post by dane-pgp »

credit_guy wrote: post #97
dane-pgp wrote: post #94

Earlier quoted context omitted.

I'm not sure why my comment is so objectionable, when all I did was offer a formula and principle as per the parent comment's request. I suspect that people with more than $100 MM in wealth have better things to do with their time than downvote suggestions on HN that they should pay more tax, so, in the absence of any more substantive criticism, I'll assume the objectors were people who consider themselves temporaril…

I did not downvote you (on HN you can't downvote someone who answers your comment). I think you proposed a reasonable option, but a bit imprecise. It's not clear if you advocate for a wealth-based tax, or some type of crossover tax, like a max between an income-based tax and a wealth-based tax. In any case, a lot of people (and especially a lot of startup oriented people, like readers of the HN forum) are against tax…

You make some excellent points, thank you.

> like a max between an income-based tax and a wealth-based tax.

I'm not sure if you mean "mix" or "max" but I think my answer might be yes to both. :) What I'm proposing is that the rich continue to pay an income tax like everyone else, but above a certain wealth threshold they need to be assessed for paying a wealth tax. Any amount they pay in income tax can be counted towards their wealth tax, so they don't get double-taxed and don't have to worry about paying more than the median citizen (proportionally).

> I believe in the benefit of doubt.

The best philosophical approach to this that I've found is Rawls's "veil of ignorance"[0] thought experiment. While it is difficult to completely rule out the possibility of bias when asking someone to come up with a policy that has harsher effects on people who aren't like them, I feel confident that I would be willing to trade my current place for the place of a billionaire living in the sort of society I'm proposing.

> As far as I'm concerned, if someone is rich, they deserve to enjoy the fruits of their labor, not to a lesser extent than me.

What if the rich person became rich by inheriting money, or winning the lottery, or being lucky in some other way (e.g. finding oil on their property, or being born with the looks of a supermodel, or being the first to patent an obvious idea)? Societies do try to address these issues with different policy measures, but all I am asking is that the rich "suffer" the same amount as everyone else (i.e. as the median person in their society).

Paying a given dollar amount in tax obviously feels much hard if you have close to that amount in assets, compared to if you have so much money that it's literally uncountable and you wouldn't notice if that given amount were taken from you. So I think it is the poor that we should be giving the benefit of the doubt to when they say that the current system is unfair to them.

> I personally know lots, really lots of people who work much harder than me, and make more money than me.

And I know people who work much harder than me, and make less money than me, because the market doesn't value their work in the same way as it values mine. Sadly I see more people trying to protect the status quo for idle billionaires than trying to change the system so that the hard-working poor are rewarded according to their intrinsic worth as human beings, rather than how little the rich can get away with paying them for the value extracted from them.

[0] https://en.wikipedia.org/wiki/Original_position

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