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Then why are tax cuts used to stimulate the economy
Posted on: January 26, 2019 at 11:09:10 CT
ScottsdaleTiger MU
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The US has had an income tax for about a century.
Progressive rates of the magnitude suggested by Warren, AOC, etc. were in place during WWII, a period during which the nation was fighting for its continued existence.
Income tax cuts of one kind or another are a standard tool used by both parties to stimulate the economy. I.e. JFK's proposal of the Investment Tax Credit, depreciation rate changes, etc.
The underlying issue is the impact on taxpayer's motivation to work and produce, i.e. if 70% of the next dollar goes to Income Tax, why work that extra hour or day or month.
The actual marginal tax rate is higher than 70% because the income is also subject to state taxes, in excess of 10% in high tax states and may also be subject to the medicare tax if we're dealing with earned income.
Economic growth will be more critical in the future because AI will perform a large number of jobs currently performed by humans.
Essentially, think of the economy as a race horse and imposing taxes on it as the same as adding weight to the race horse in a handicap race to reduce its performance.
The proponents of high marginal tax rates either don't understand or don't care what effect they have on the economy.
Progressive rates of the magnitude suggested by Warren, AOC, etc. were in place during WWII, a period during which the nation was fighting for its continued existence.
Income tax cuts of one kind or another are a standard tool used by both parties to stimulate the economy. I.e. JFK's proposal of the Investment Tax Credit, depreciation rate changes, etc.
The underlying issue is the impact on taxpayer's motivation to work and produce, i.e. if 70% of the next dollar goes to Income Tax, why work that extra hour or day or month.
The actual marginal tax rate is higher than 70% because the income is also subject to state taxes, in excess of 10% in high tax states and may also be subject to the medicare tax if we're dealing with earned income.
Economic growth will be more critical in the future because AI will perform a large number of jobs currently performed by humans.
Essentially, think of the economy as a race horse and imposing taxes on it as the same as adding weight to the race horse in a handicap race to reduce its performance.
The proponents of high marginal tax rates either don't understand or don't care what effect they have on the economy.
Please explain why this message is being reported.
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Then why are tax cuts used to stimulate the economy - ScottsdaleTiger MU - 1/26 11:09:10
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