The economy seems to do well when the tax rate for top incomes is higher.

[rucky]

But I'd like to be able to explain why it works that way.

Anybody know? Is it because they use that extra income to influence government in their favor, and that influence is usually short-sighted and tends to be at the expense of the rest of us?

But they're still rich, and the laws allow them to spend their money that way. Without a tax break, they'll still spend their money that way. So it's possible that the relationship between upper-bracket taxation and the economy is spurious. What's really driving this economy into the hole is the influence that money is able to buy.

All these battles we're fighting seem to be heads of the Hydra, and what really needs to be controlled - the big battle we should be spending all of our energy to fight - is preventing money from influencing policy. It forces representatives to fight with zeal against the people's interest, then it's used to keep those politicians in positions of power election after election.

We've seem to come to accept that this is the way things run, but the practice is indefensible and unethical, if not downright criminal. Tax policy alone won't control this. We need transparency, accountability & then follow-through with justice.

[RKP5637]

1. Exactly!!! n/t

[EOTE]

2. It's pretty simple

The wealthy have almost no marginal utility of the dollar. In other words, any additional money they may receive has almost no effect on how much money they spend, and economies are obviously stimulated by spending. When tax rates are high on the rich, that usually means that there's more money for social programs and other government spending. That additional government spending typically leads to additional spending by the middle and lower classes which in turn stimulate the economy.

[Cosmocat]

4. More than that ...

More so now than ever, wealth has increasingly been "distributed" in fewer hands at the top of the economic ladder ...

As noted, this more and more pulls actual capital out of the REAL economy ...

The lower tax rates, along with the 2003 dividend tax cuts has "incentivized" the rich to keep their money in speculative markets, which with their resources they have more safety in doing so than the average Joe ...

I think even that little extra bump to 39% (and a bump back up on the dividends) forces them to consider putting it into actual business expenses as tax write offs ...

The fact is, since these cuts have been in place the economy has been the weakest for a 10 year period it has been since the great depression ... It affirmatively disproves every last bit of nonsense about tax cuts creating jobs and stimulating the economy that the talking heads babble dutifully for the republicans ...

BUT, the uber wealthy are cleaning up, so it will continue ...

I have made a complete 100 percent turn on this ... I thought we had a chance to get these properly tweaked and get back on track, but with both the "liberal media" and our politicians so far in the tank, the whole tone of the country ASTOUNDINGLY is moving in an even more radical right manner - just mind boggling ...

We are not going to see a D president with the kind of margins in the house and senate we had the last two and four years in our lives most likley, and somehow, on this KEY issue, we have lost this battle ...

VERY, VERY discouraging ...

[jtown1123]

12. Do the wealthy save the money or invest it? I agree with your assessment

I just wish I knew the reason why they don't spend. I guess they don't need it?

[Statistical]

14. It becomes harder and harder to spend.

Here is an example.

Say you make $50,000 a year. Now pretend your boss doubles your salary ($100K) you can think of a lot of other things you would spend money on right. Yeah maybe you will save/invest some, maybe you pay down some debt but you likely have a lot of things/ideas to spend money on.

Now say your salary doubles again from $100K to $200K. Sure there are thing you can spend but likely less. Now imagine it is bumped to $400K from $200K not many thing you need/want at this point. Now imagine it bumps again to $800K then $1.6 mil, then $3.2 mil, then $6.4 mil.

At each doubling there is less and less things to put money towards so you (like most people) will start to save more and more.

Given someone making $20K 10% more money they will likely spend all of it. Give someone making $200K 10% more they will save a large portion. Give someone making $20 million 10% more almost none of it will be spent.

[ejpoeta]

3. i tend to think that the rich find ways to not pay taxes. so if their taxes are higher, then

they invest more in their companies, giving bonuses maybe... donations... they find ways to not have to pay those taxes. currently they don't have to do that since they can just pocket the money and do whatever they want with it. including contributing to campaigns to make sure they get to keep more of their money and thus garnering favor with the representatives. they also can send the money off shore and overseas along with all the jobs. there is nothing stopping them.

[rucky]

5. Good point.

maybe that explains the correlation.

Tax policy is constructed to incentivise certain economic behaviors - carrots & sticks. All of the carrots we're handing out encourage nothing very helpful to anybody but Wall Street.

[Hannah Bell]

6. maybe because wall street is making tax policy.

[FreakinDJ]

7. DING DING DING - We have a Winner Folks

It was true in the 1920s and is true today

[Spider Jerusalem]

8. False correlation?

The top rate for incomes was higher in the late '40's, '50's and early '60's because of paying for WWII, the space program, the Cold War, etc; it was higher in the 90's paying off the fiscal hole created by Reagan's further military spending. But also: at the end of WWII the US was the only major manufacturing country on the planet whose industries had not been decimated by bombing, etc, and American industry was in a commanding position for 20 years after the war that it enjoyed until Germany and Japan started to catch up. The economy of the '90's was a bubble based on the rapid development of consumer-grade technologies in new market sectors, not too unlike what happened in the 1920's (albeit with less-catastrophic results when the bubble burst).

[FreakinDJ]

10. I've heard those same standard RATpubliCON talking points before

The 40s 50s and 60s also had the Highest Paid, Highest % Union Work Force in History

And that is PURE BULL SHIT the top rate incomes paid for any thing. They had the means of their corporations to avoid taxation then just as they do now. Saleries were kept low to avoid taxes and perks such as Corporate supplied car and driver, Corporate supplied Yacht, Summer Home, children's education, ect, ect, ... were the norm

Additionally after WWII all the assembly lines, ship yards, and factories built and paid for by the the Department of Defense were sold to those same Corporations for a "Fraction of a Penny on the Dollar"

[Spider Jerusalem]

11. So 'we had to pay for Reagan's irresponsible spending' is a GOP talking point?

Since when?

[rucky]

9. kick

[applegrove]

13. When the tax rate on the rich is higher the middle class has the power

and the economy is better for them. It helps the poor. When the rich wield the power...they warp everything towards their needs and fortune fades on the poor and the middle class.