Trickle down vs progressive tax rates
I was talking to a friend the other day about a local business that invested in buildings on its property years ago. The business owner was a major investor in a company and made millions in dividends each year. My friend mentioned that the owner built the buildings because otherwise he would have paid more taxes.
This got me thinking. During the 50s, marginal tax rates were as high as 90% for the Uber rich. There was an incentive to spend the money on investments that would lower the Uber rich's income below the cut-off so they did not have to be taxed at 90%. It was either invest, or pay Uncle Sam. High marginal rates were actually an incentive to invest.
Fast forward to today, where marginal tax rates have be cut to almost nothing. There is no incentive for the Uber rich to invest. In fact, I read somewhere that the multiplier for a tax cut for the Uber rich is .38, while the multiplier for a dollar spent on food stamps is 1.61.
Just a thought.