Tax rates over 50% - Confiscation or Justified

[Geoffrey Howe]

It's ok to cross over the Laffer curve a bit where that can correct power imbalances and promote a healthy sort of social cohesion.

How does crossing the Laffer curve do that?

Less economic inequality is conducive to social cohesion. Crossing the laffer curve w.r.t, say,  income tax means a government might get marginally less tax revenue in one year, but the loss in revenue can sometimes be worth society being more at ease with itself.

How does it reduce inequality if you're not actually gathering the revenue?

By making the "overtaxed" high earners poorer than they otherwise would be. My argument is that the rich getting poorer and thus having less power relative to everyone else can be a (limited) social good in itself.

"You'll fall on the wrong side of the Laffer curve!" is a trap too many wonkish socdems fall into. Their presumption is that income taxes etc. can only be justified (rather than "confiscation") so long as they provide more revenue. I disagree.

How will they be poorer if they're not paying the tax?

Essentially, the Laffer curve means that past a certain level in taxes, total revenue decreases even as taxes rise. They are paying the higher percentage of tax, but from a pie that is smaller to begin with because higher taxation of an activity results in less of the activity happening to begin with.

For instance, a 70% income tax bracket would discourage certain employers from paying out salaries that extend into that bracket (they would know most of the money in that bracket would not go their employees).

One of the main reasons there is less revenue is because of tax avoidance at those levels, meaning inequality wouldn’t be reduced as much. If the pie is smaller there is going to be less redistribution. Finally, it’s important to bear in mind that the (e.g.) 70% is only the marginal rate.

[YE]

Depends really but going over 70% is likely not maximizing tax revenues which is the goal of progressive taxation.

[Chips]

Neither.

[Schiff for Senate]

Confiscation. Maybe 40% is close to reasonable but taking away half someone's income is just bonkers.

[CEO Mindset]

depends on the type of taxes... if it's land value taxes/other taxes on economic rents then its fine

but there is no level that is acceptable for income/sales/property taxes... taxes that exist to create recordkeeping requirements and paper trails are inherently bad

[Antonio the Sixth]

MARGINAL income tax rates above 50% (and really up to 99%) are perfectly justified and in fact necessary to a healthy society. Only a troglodyte would have a serious moral opposition to them.

[Vosem]

They would justify a violent uprising against the government levying them, yes.

[progressive85]

Weren't the tax rates for the very rich over 50% in the 1950s?  Wasn't the 1950's a decade of unprecedented middle class growth in purchasing power and strong overall economic stability for the nation?

[Statilius the Epicurean]

What is the relevance of 50%? I don't understand. And why is the dichotomy "confiscation or justified" when confiscation is frequently justified?

[RINO Tom]

Weren't the tax rates for the very rich over 50% in the 1950s?  Wasn't the 1950's a decade of unprecedented middle class growth in purchasing power and strong overall economic stability for the nation?

While the marginal rate was higher, the effective tax rate those people paid - the actual money leaving their wallets - really wasn’t.

[Santander]

MARGINAL income tax rates above 50% (and really up to 99%) are perfectly justified and in fact necessary to a healthy society. Only a troglodyte would have a serious moral opposition to them.

lol, I see a lot of healthy societies with top marginal tax rates well below 50%. Only a troglodyte would claim they are necessary when there is no evidence saying so. (also, 99% marginal tax rates... seriously lol)

There is a reason so many countries set their top marginal tax rate just under 50% - the idea of the government taking than half of someone's incremental earnings is offensive to most people, for good reason. (mind you, most of these countries have VAT and other taxes that could result in effective taxation being higher than 50% for some people) And in a "healthy society", the tax base is very broad. You fund the welfare state by taxing everyone, not by punishing the rich.

[KoopaDaQuick 🇵🇸]

It's justified confiscation.

[progressive85]

Weren't the tax rates for the very rich over 50% in the 1950s?  Wasn't the 1950's a decade of unprecedented middle class growth in purchasing power and strong overall economic stability for the nation?

While the marginal rate was higher, the effective tax rate those people paid - the actual money leaving their wallets - really wasn’t.

Oh okay.  Thanks for that... I imagine even then there was a lot of ways to spend less than what you could really afford to give to public funds.

Isn't it true that there are more millionaires and billionaires now too than back then?

[CEO Mindset]

there's more millionaires/billionaires now then back then because regulation started exploding in the 1970s, never stopping

the us has so much of both millionaires/billionaires due to how over-regulated and unequal the economy is