I think this election is a toss-up and would not be surprised if something similar to 1994 occurred but in the opposite direction.
I have no feel at all as to how this election is going to go.
Do you remember the top income tax rate before Mr. Reagan's tax cuts? If not, take a guess. If you do, do you feel the tax rate should have remained as it was prior to the tax cuts?
Around 75%...and I wouldn't hazard a guess as to where that marginal rate kicked in or how it might have been indexed and relates to current year dollars....What was the effective tax rate for people in that tax bracket?
The easy answer is 75% is too high...no one is going to beat me up over that answer. The context of tax rate adjustments is usually a revenue neutral model. Along with that 75% is too high, then someone else's effective tax rate is too low. Who was it that we wanted to pay more taxes? 2/3 of the economy is consumer spending.
I look at things differently then I did in the 80's [I would hope that I've learned something in 20 years]. There are different ways you can define "fair". One tax model would be to consider government spending to be a services industry and divide government spending by the number of people in the country to compute your tax bill. No relation at all to income. You get a service, you pay for the service. Such a model says that a family of four, regardless of income, pays the same tax bill as any family of four. Seems fair. A family of four pays twice as much as a family of two. I'll never get anyone to agree that's fair, but I think it is. But it isn't even practical, so toss that one out.
Another model of "fair" considers income, taxes and wealth. What I'd like to have is the ol' "rising tide lifts all boats" model. Like it or not, the tax system has and will be used as a tool to manage the economy. With consumer spending 2/3 of the economy, I think that consumer spending the biggest driver for a healthy economy. It swamps investment, interest rates, etc. as a component for a healthy economy. In spite of the declining market, there's still a lot of money out there, interest rates are incredibly low and investment is virtually ground to a halt.
Consequently, I'd like the tax burden to be shifted to allow for consumer spending and make sure that investment and hard work is a motivator.
In the most current budget, the national [or nominal] tax rate is ~9.5%. I think that's a reasonable number, not small but not burdensome. I'm sure some will disagree.
I'll pause there for now. This is a good stop point to see where we agree/disagree.
jttmab |
