January 9, 2019

AOC Suggests Raising Top Marginal Tax Rate

We're officially on Insta! Did I throw on a blazer at 5 am for all you lovely people? You bet I did!

On Sunday, Rep. Alexandria Ocasio-Cortez (D-NY) suggested raising the top marginal income tax rate to 70 percent for high earners.
CBS News

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From the Left

The left is excited to be discussing policy ideas, and argues that a higher tax rate for top earners is backed by historical precedent and economic research.

“Politics nerds talk about something called the Overton Window, it's the theory that only a limited number of policy ideas can be discussed at a time. It's a spectrum, and only that which fits within the spectrum can make it into the national conversation. It seems that Ocasio-Cortez is getting her ideas on the spectrum

"We live in a country where 63% of citizens think that our economy is stilted unfairly toward the rich and special interest groups… As more and more Americans feel the deck is stacked against them, they're going to start listening to these ideas.”
Business Insider

“I mean, who thinks [this] makes sense? Only ignorant people like … um, Peter Diamond, Nobel laureate in economics and arguably the world’s leading expert on public finance… And it’s a policy nobody has ever implemented, aside from … the United States, for 35 years after World War II — including the most successful period of economic growth in our history… AOC, far from showing her craziness, is fully in line with serious economic research.”
New York Times

“The top rate was 91% from 1946 to 1963 (the Truman, Eisenhower and Kennedy years), applied to incomes of $400,000 or more. That income in 1956 would be the equivalent of $3.8 million today. Somehow the rich kept working, and the republic did not fall. Indeed, those years included periods of unexampled prosperity and the growth of a strong middle class in the United States.”
Los Angeles Times

“Many critics attempt to confuse people over what Ocasio-Cortez said. Just to be clear: she said that when people earn $10m, the 10 millionth dollar and above should be taxed at a high rate. So unless you earn $10m, she’s not talking about ‘your’ income

“The more intelligent criticism of Ocasio-Cortez is a pragmatic one. The National Review argument is that high tax rates simply can’t raise the kinds of revenue that would be necessary to fund a ‘Green New Deal’. This is, in part, because the rich would circumvent the tax through loopholes and moving money overseas. But this, in itself, is not an argument for not levying the tax: it’s an argument for closing loopholes and finding ways to effectively restrict the international movement of capital.”
The Guardian

“It’s hard to imagine any new tax revenues being maximally effective without a more serious commitment to tax enforcement. The IRS estimated in 2016 that America lost $458 billion every year from tax evasion… Investing in the IRS wouldn’t end tax evasion entirely, but would probably bring in significant funds. Similarly, global tax havens cost [Americans] $150 billion a year in tax avoidance.”
Vice

“One can raise a variety of technocratic quibbles with Ocasio-Cortez’s plan (raising taxes on capital gains might be a more effective way of soaking the super-rich; a confiscatory top marginal rate might prove impotent absent a global war on tax havens). But it would not be extreme in its redistributive implications, relative to our country’s past tax practices, or to other nations’ current ones… Ocasio-Cortez’s 70 percent top tax rate is a moderate, evidence-based policy.”
New York Magazine

From the Right

The right opposes the plan, arguing that it would harm the economy while failing to earn nearly as much revenue as projected.

From the Right

The right opposes the plan, arguing that it would harm the economy while failing to earn nearly as much revenue as projected.

“The rich in the U.S… already pay an outsized portion of income taxes compared to their earnings. In 2016, the top 1 percent of income earners—those who earned about $500,000—earned 20 percent of all U.S. income while paying 37 percent of all federal income taxes. The top 10 percent earned 46 percent of all income and paid almost 70 percent of all federal income taxes…

“[Moreover] there’s a reason both Republican and Democratic presidents and Congresses have seen fit to cut taxes repeatedly… In the 1920s, tax rates were cut from 71 percent to 24 percent, and the economy grew by a massive 59 percent… President John F. Kennedy lowered the top rate in the 1960s, and President Ronald Reagan lowered it again in the 1980s. Both of these tax cuts were followed by two of the longest economic expansions in our history.”
Heritage Foundation

Furthermore, “in reality, very little money would be raised by the proposal… Save for a few actors and professional athletes, the bulk of income at this level is from capital gains or business income… Without a complete overhaul to the taxation of capital gains, wealthy investors would move to limit their capital gains realizations to avoid this absurdly high rate…the only beneficiaries [would be] high-priced accountants and attorneys.”
Washington Examiner

“If it were really possible to fatten government spending annually by as much as $650 billion (to use 2016 tax data) without killing the golden goose, we have to believe U.S. politicians would be doing so already…  all evidence suggests that the richest taxpayers are the most diligent about mobilizing lobbyists and politicians to finagle the tax code on their behalf… The net result isn’t more revenue. It’s more efficiency-inhibiting economic distortions.”
Wall Street Journal

When rates were higher, “tax exclusions and high income thresholds shielded nearly everyone from these tax rates — to the degree that the richest 1 percent of earners paid lower effective income-tax rates in the [1960s] than today. In 1960, only eight taxpayers paid the 91 percent rate. Overall, today’s 8.2 percent of GDP in federal income-tax revenues exceeds that of the 1950s (7.2 percent), 1960s (7.6 percent), and 1970s (7.9 percent). Those earlier decades were not a tax-the-rich utopia…

Not a single country in the OECD has a 70 percent tax bracket. Indeed, America’s top combined income- and payroll-tax rate already exceeds that of England, Germany, and Norway, and is only 7 points below that of France. Europe finances its generous welfare states through steep value-added taxes that hit the entire population.”
National Review

“There is a reason that other nations in the Anglosphere do not have anything close to [a 70%] tax — even as they spend in a way that would appeal to Ocasio-Cortez — and that is that such taxes do not really do much good… Unlike the United States, those nations do have much higher taxes — on their middle classes

“Democratic aspirants point excitedly at the health-care systems and family-leave policies of Britain or Canada, while promising not to raise taxes on anyone making $250,000 or less per year. This is an impossible, unsustainable combination.”
National Review

Others posit that “the reason Kim is developing missiles that can strike Seattle or LA is that 28,000 U.S. troops are in South Korea… If we cannot persuade Pyongyang to give up its nuclear weapons in return for a lifting of sanctions, perhaps we should pull U.S. forces off the peninsula and let China deal with the possible acquisition of their own nuclear weapons by Japan, South Korea, and Taiwan…

“After an exhausting two weeks [between North Korea, Iran, Venezuela, and others], one is tempted to ask: How many quarrels, clashes and conflicts can even a superpower manage at one time? And is it not the time for the United States, preoccupied with so many crises, to begin asking, ‘Why is this our problem?’”
Pat Buchanan, Townhall

Counterpoint: “after the War of 1812, President Madison… enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked. Tariffs [also] financed Mr. Lincoln’s War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer ‘has no right or claim to equality with our own… He pays no taxes. He performs no civil duties’… [A tariff’s] purpose is not just to raise revenue but to make a nation economically independent of others, and to bring its citizens to rely upon each other rather than foreign entities.”
Patrick J. Buchanan, The American Conservative

A libertarian's take

“The scoop reflects poorly on Trump, who willfully misled the public for a decade in hopes of fraudulently representing himself as a man with a Midas touch. But he could not have succeeded without the assistance of many Americans, some mercenary, others over-credulous, who helped to spread the deceit and deception, generating countless newspaper articles, magazine stories, and TV segments that misinformed the public about the publicity hound’s record in business. New evidence of his staggering losses in that decade therefore provides an apt occasion to reflect on the media’s complicity in Trump’s brazen deceit and deception… Let [this] be a lesson for today’s tabloids, gossip columnists, over-credulous or mercenary journalists, and reality-television producers.”
Conor Friedersdorf, The Atlantic

On the bright side...

Toronto is getting a free unlimited nacho cheese dispenser next week.
Narcity Media

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