There are some pro and con arguments at wikipedia, but I wasn't impressed with the pro side; I think the author was anti-.
As for "when," again wikipedia says US income tax has always been progressive since it began in 1913:
In 1913 the tax rate was 1 % on taxable net income above $3,000 ($4,000 for married couples), less deductions and exemptions. It rose to a rate of 7 % on incomes above $500,000.
I'd be interested to read a good history of the debates around the first progressive income tax.
Personally, I favor progressive taxation, but not too much so. Labor and capital both need their due. I am sensitive to the argument that risk and investment should not be punished. On the other hand, neither should labor.
I think there is a fairness argument that those who have or retain wealth, do so only because all the rest of us have created an environment where such wealth is possible. Put more cynically: "There ain't no honest way to earn that much money."
When Reagan first cut taxes, the top marginal rate was 70% (too high) ultimately cut to 28% (probably too low for that time, since the economy struggled and deficits continued).
The top rate was raised back up to 39.6% under Clinton (probably the correct amount for that time, since the economy boomed and the budget balanced).
I'm not saying there is a "correct" top rate; I'm saying it needs to be adjusted considering the economy at the time. Hint: The top marginal rate has ALWAYS been raised to very high levels in wartime - until now.
I understand (too lazy to look up links now) that there is some stimulative effect of cutting the top rate, but it is minor compared to the stimulative effect of lower interest rates. But if the tax cuts produce major long-term debt and deficits, then you have defeated your whole purpose of stimulating the economy.
So when Reagan cut top rates that were too high, that had a short-term beneficial effect on the economy, and also a detrimental effect from the deficits.
But when Bush cut top rates that were NOT too high, that had a detrimental effect on the economy (currently masked by borrowing).
On the other hand, there is no apples-to-apples comparison with historical top tax rates, since much tax-shifting has occurred, and the top rate is no longer a very useful data point. For example, we now have a two-tier tax system - one for wage earners, and one for investors. Also, in modern times much taxation has shifted to local govts and property taxes, which historically were never major factors.
Furthermore, Republican administrations tend to set many policies other than tax rates that make life easier for the rich, and more difficult for working people.
One thing though... A while ago, as a sorta-liberal, I believed on faith that the rich paid less overall tax than the
One thing though... A while ago, as a sorta-liberal, I believed on faith that the rich paid less overall tax than the middle class. Now, after looking at the numbers, I see that the very wealthy are in fact paying at a higher rate, and the overall tax burden is still quite progressive. However, under Bush the tax burden IS shifting away from the rich and toward the middle class, which I believe is causing economic and social damage.
I don't mind giving up some of my paycheck to worthwhile things. I think the tax rate should not be too dramatic until you reach a hundred thousand per yearly income, then its not really goign to hurt you. Obviously the people making that arent going to like it...but tough luck for them.
Ryan Mc., the point you are missing with "tough luck for them," is what is the motivation to accumulate wealth if the government is going to take a sizeable chuck out of it. Taxes don't happen in a vacuum.
what is the motivation to accumulate wealth if the government is going to take a sizeable chuck out of it.
Yeah, that was my reason for not becoming rich - the damn taxes woulda killed me.
Actually, I think Ryan S. made a good point. If we look at the old USSR, there was a horrible lack of motivation to work. We see the difference between the benefits of the selfish profit motive vs the selfish "why the heck should I work so dang hard if I get the same as everyone else" on the farms. The govt. farms produced abysmally. But then people were given 1 acre all their own to grow crops. Well, the huge communal farms just couldn't keep up per acre with what the families would go home and do for themselves in their spare time. They would sell their produce in little outdoor markets and that's where they would make any real money to be made, not in their communal work.
I think human nature will always be the same. So we need to be sure that the "What's in it for me?" motive works WITH the "What's best for the whole?" instead of against it.
I'm trying to be brief. I hope I made sense.
Well, Ryan S. is talking about a flat tax... The funny thing about flat tax proposals I've ever seen is that the tax applies only to wage income... and rich people don't get a whole lot of wage income.
Now, here' s flat tax liberals could get behind:
1. Tax all income at the same rate. Include all wages, investment income, and corporate profits.
2. Eliminate consumer-level taxes like sales tax, and use fees for common services.
3. Eliminate the FICA tax on employers and individuals.
4. Implement universal pensions and health care, paid directly from the Treasury.
5. Every year, figure out how much money the country needs, and set the flat rate to raise that amount of money.
6. Enjoy the screams of terror as Republicans flee from the flat tax, and are forced to admit that all their previous flat-tax bluster was just a stalking-horse to make taxes even more regressive.
And of course, the more money you make, the less entitlements you get. So, you pay more to recieve less.
And of course, the more money you make, the less entitlements you get. So, you pay more to recieve less.
Now see right there is the essential selfishness of conservatism. Because, you see, if you are wealthy and paying a greater share of taxes, you aren't receiving less benefit. Your extra tax dollars go to fund education or job training for some teenager who won't grow up to mug your mom on the street. Your extra tax dollars may keep you from stepping over three more homeless people on your way to work.
Your extra tax dollars go to maintain the system in which you can continue to accrue and enjoy your wealth. Stop funding the system, and your wealth accrual and your enjoyment stop too.
The graduated tax acknowledges the essential unfairness of capitalism. For capitalism to motivate people, it is essential that some must fail. And failure is not always the fault of those who fail. So to keep the system healthy, those who succeed must bear a greater share.
I think selfishness, with limits, certainly has its virtues. Also,
1. I see no evidence that government programs, funded by taxdollars, do any good.
2. Anonynmous, who bears the burden has nothing to do with who sends the government a check.
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