we used to tax the sh*t out of the wealthy and I remember what that was like

[aubiefifty 18,259]

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Saturday rewind: we used to tax the s*** out of the wealthy

and I remember what that was like

Apr 29

note: the following piece was originally published on December 6, 2022, when our little substack community was much smaller than it is today. readership here is about ten times what it was back in December, so I’m reposting this today in order to put it in front of that larger audience. have a great Saturday, everyone. — jeff t.

Sam Pizzigati has a great piece up at inequality.org:

Once upon a time, the United States seriously taxed the nation’s rich. You remember that time? Probably not. To have a personal memory of that tax-the-rich era, you now have to be well into your seventies.

I was born in 1957, when the top tax rate was 90%. I have no memory of that, of course, but I do remember what things were like in the 1960s, when the top margin was 70%, which brings me to the point I want to make.

Jeff Tiedrich @itsJeffTiedrich

hi kids! it's me, your favorite sexagenarian here to tell you that when I was a kid we taxed the s*** out of the wealthy and not only did we have money to build bridges and schools and moon rockets, rich people still had plenty of money left over to spend on rich people bull****

4:28 PM ∙ Nov 25, 2022

45,141Likes9,745Retweets

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most Americans alive today don’t know what it’s like to live in a country where the rich pay their fair share of taxes. I do. construction projects were everywhere. everything was brand new. the grade school I attended was brand new. my middle school was brand new. Route 80 came through town, cutting an hour off the 60-mile drive to New York City. communication satellites. moon rockets. the earliest iterations of what would become the internet. all paid for with tax dollars paid by our country’s wealthiest.

beginning with Reagan, 50 years of wingnut propaganda have convinced two generations of Americans that government that does ****-all to help its citizens is normal.

let me assure you, it’s not normal. every other wealthy country looks at us and wonders why we’re so ******* nuts.

wealth doesn’t voluntarily trickle down. wealth has had 50 years to trickle down, and it hasn’t yet and it isn’t going to magically start any time soon.

here’s what I find most troublesome: my generation will die off in a couple of decades and if things don’t change, there will be no one alive who remembers the possibilities of a fully-funded government.

an America with crumbling infrastructure and uncaring government will be the permanent norm.

I’m just a loudmouth on the internet. I don’t have a solution to this. but I hope to **** that someone somewhere does

everyone is entitled to my own opinion is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

[icanthearyou 4,468]

Few really paid those rates.  Those rates encouraged investment, reinvestment, RnD, even higher wages. 

Today's contrast is,,, passive income pays the lowest rate,,, with no employment taxes.

We need to return to a system that forces the capital class to have a social conscience and, forces the capital class to reinvest in our country.  Or, we can continue to allow them to buy the government.  I would rather see them invest or pay taxes rather than simply buy politicians, generals and, judges.

 

[aubiefifty 18,259]

i would be happy if we could just do away with greed. that would solve a lot. and this is everyone to me in politics because you can be an idiot and do nothing but talk about space lasers and leave a millionaire.

[Auburn85 436]

People like Warren Buffet make their money off of capital gains rather than income from employment.

 

We technically still have an Alternative Minimum Tax.

 

When the AMT was passed by congress, the top income tax rate was much higher than it is today.

 

Also, decades ago our country didn't have to compete with as may countries for jobs.

 

After World War 2, a lot of countries were left in rubble.  Now, those countries aren't in rubble, plus China has been added to the mix.

 

Most everyone today pays a lower income tax rate than they would have 40-50 years ago.

 

The problem is the purchasing power of wages. Several decades ago when we had a decent middle class, the tax rates were higher.

 

Numerically, the minimum wage is higher today, but the purchasing power isn't great. If you only go as far back as to the Clinton years, I would argue the minimum wage under Bill Clinton had better purchasing power than today.

About 10-15 years ago, an argument was made that if we simply go back to the Clinton era tax rates, it would help because it also someone how implied to recreating conditions of healthy, robust economic growth.

I believe that argument was/is somewhat disingenuous. You can't put the genie back in the bottle and recreate those conditions. Under Clinton, NAFTA wasn't as old. The internet was in its infancy. The popularity of cell phones, much yet smart phones, had yet to fully take off.

 

It's a different economy now. I don't have an answer as to what could solve our problems economically.

 

I mentioned here more than once that the COLAs given to Social Seucrity beneficiaries are great. However, the way Social Security benefits are taxed are designed to increase the number of people paying taxes on Social Security. Social Security tax brackets haven't been adjusted for 30-40 years.

 

Quote

 

If you’re single and this total is less than $25,000, or if you're filing jointly and it's less than $32,000, none of your Social Security is federally taxed.  

If it’s between $25,000 and $34,000 for single filers or $32,000 and $44,00 for joint filers, up to half your Social Security is taxed. These thresholds have remained the same since taxes on Social Security benefits were introduced in 1984. 

 

Quote

If Social Security income thresholds were indexed to inflation, Johnson estimates the first thresholds of $25,000 for individuals and $32,000 for joint filers would be $73,000 and $93,200, respectively. At those levels, a lot fewer Social Security beneficiaries would probably owe tax on their benefits, she said. 

https://www.usatoday.com/story/money/taxes/2023/03/16/unadjusted-inflation-taxes-social-security-hurting-seniors/11465773002/

 

That doesn't even factor in the increase of Medicare premiums over that same time period. And also because Medicare isn't the end all be all, that's why there's the doughnut hole and the creation of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. I'm not knocking Medicare. It is much needed. However, the trend seems to be that Medicare and Social Security recipients are losing more than making up any ground. Heck, it's hard to even be at a point where one can maintain what they have without falling behind. These programs are not entitlements. The recipients paid into these programs.

 

 

 

 

 

 

 

 

[icanthearyou 4,468]

40 minutes ago, aubiefifty said:

i would be happy if we could just do away with greed. that would solve a lot.

You cannot do away with greed but,,, you can and, you should, regulate it.  If not, you create a class with the ability to destroy democracy, capitalism.  You create a class that will do away with the idea of "promote the general welfare" and, replace that idea with promoting nothing but their own interests.

[icanthearyou 4,468]

10 minutes ago, Auburn85 said:

Most everyone today pays a lower income tax rate than they would have 40-50 years ago.

No, not true.  We collect nearly the same percentage of the GNP.  We have shifted the tax burden away from the extremely wealthy.  Not to mention the shift towards other taxes.

13 minutes ago, Auburn85 said:

The problem is the purchasing power of wages. Several decades ago when we had a decent middle class, the tax rates were higher.

Inflation can be triggered by money supply but, over time, inflation is the inevitable, hidden tax for the "don't tax and spend" policies.  In this case, it is a double win for the capital class.  It has little effect upon them as they enjoy more profit by virtue of owning the means of production.  Plus, the shift in relative wealth increase their economic and political power.  It allows the capital class to influence any institution.

16 minutes ago, Auburn85 said:

Numerically, the minimum wage is higher today, but the purchasing power isn't great. If you only go as far back as to the Clinton years, I would argue the minimum wage under Bill Clinton had better purchasing power than today.

Actually, the problem is related to wage growth no longer being tied to the growth in productivity.  Had the two not decouples in the 70's, the minimum wage would be somewhere between 22 to 28 dollars per hour.

 

33 minutes ago, Auburn85 said:

It's a different economy now. I don't have an answer as to what could solve our problems economically.

The fundamentals of economics are the same.  The difference today is the relative values of labor and capital.

 

I think you need to go back further in history.  Extreme inequality is never good for democracy and capitalism.  We should have learned this lesson from the late 19th, early 20th century.  The post WWII economy was defined by opportunity, relative equality.  It's greatest attribute was that it was BROAD, shared prosperity.  When an economy grows primarily vertically, not horizontally, that growth cannot be sustained and, that society will experience turbulence, eventually, political, social, economic decay.

We need to stop pretending that the only people who matter are the people with the most money.  We are first a society.  Societies have social concerns.  Those concerns have gone unattended for the past five decades as we have moved to focusing the power of capital.  I encourage you to read the Lewis Powell memo.  It truly represents a hallmark moment in this nations history.  It is a call to shift, unbalance power in this country.  In short, it is an alarm to the capital class.  It's premise is this: If you continue to allow all of this democracy, equal rights and, shared prosperity, you will relinquish your ability to be the ruling class.

[Auburn85 436]

25 minutes ago, icanthearyou said:

 I encourage you to read the Lewis Powell memo.  It truly represents a hallmark moment in this nations history.  It is a call to shift, unbalance power in this country.  In short, it is an alarm to the capital class.  It's premise is this: If you continue to allow all of this democracy, equal rights and, shared prosperity, you will relinquish your ability to be the ruling class.

Published only 8 days after Nixon took us off the gold standard.

[aubiefifty 18,259]

3 hours ago, Auburn85 said:

Published only 8 days after Nixon took us off the gold standard.

i thought raygun did that? i know doodley about economics. i know the rich are getting filthy rich without paying a living wage to a lot of folks. some lady on reddit said to earn a wage one can live on is 35 dollars an hour. i know it is up there. we have become selfish in this country. i have also read on reddit that this is a main reason the newer generation and others have no interest in working. they say the system is gamed and i agree. what is minimum wage now? is it still sevenfifty? and you can bet your behind there are those that will only pay that. and look at the last time minimum wage was raised. what good is helping corps with tax dollars and tax breaks when their policies mostly crush the little people. it is sad and it is gamed all the time. eggs went up to nine bucks an hour because the rgg folks claimed they were losing their behinds. well somewhere they made a ton of profit by fudging the numbers somehow.

googled.................

Despite the higher prices, the total number of eggs it sold edged up 1%, so its overall revenue rose 109% to $997.5 million. That doubling of revenue was nothing compared to its profits, however. Net income soared to $323.2 million from only $39.5 million a year ago.Mar 29, 2023.  now tell me the fix is not in. i believe in my heart one day this country and the poor will explode like what happened in france. trust me when i say eggs were notthe only guys who made record profits. look at gas and oil. and they are pricing college way too high for many to be able to afford. i believe the system is gamed. yight now if you are not a rocket scientist you better get a damn good trade to make it.