Hey Al, if you have to give 70 percent of each additional dollar you earn to the government, would you be inclined to work for those extra dollars?
I didn’t think so. Neither would millions of other folks.
That’s economics. Not politics.
Such is what I wrote as a comment to Al Hunt’s article. I received a reply to my comment saying that the top tax rate was 90% under Eisenhower and 70% throughout the 50s and 60s. I replied, “Do you actually believe that people actually worked for dollars that were taxed at 90 percent? No one in their right mind would do so. So they found all kinds of schemes to avoid that tax. Pre-Reagan tax reform, the tax code was filled with lots of loopholes that enabled them to escape a 90 percent tax rate. Either that, or they simply didn’t work for the additional dollars taxed at that rate. Hence the stagnation of the ’70s.
At least that commenter tried to use some logic and maturity in his comment. Another comment I got was more typical of leftists, i.e. just bombast, and devoid of facts. It read, “Your problem is that you blindly believe whatever you read on the WSJ editorial board. Like Murdochs other enterprises, it is a mindless and corrupt GOP marionette doll.”
So I replied to him (or her), “So you don’t think that we’re headed for a 70 percent marginal tax rate? OK, then prove it. Or, for you, wouldn’t a 70 percent tax rate on the rich be desirable? I’d be ecstatic at that prospect, if I were a rich-loathing leftie. Meantime, even for middle-class folks, the effective marginal tax rate is already near 50 percent. And it’s the marginal tax rate (i.e. the amount you’re taxed on each additional dollar you earn) that affects work incentives. Getting taxed so much that it’s not even worth it to work is a terrible thing indeed – even if it happens to the rich.”