Friday, November 23, 2012

Trends

A Failed Experiment, Nicholas D. Kristof, New York Times, Nov 21/12
"Since the 1950s, the top federal income tax rate has fallen from 90 percent or more to 35 percent. Capital gains tax rates have been cut by more than half since the late 1970s. Financial tycoons now often pay a lower tax rate than their secretaries.

"All this has coincided with the decline of some public services and the emergence of staggering levels of inequality (granted, other factors are also at work) such that the top 1 percent of Americans now have greater collective net worth than the entire bottom 90 percent."

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4 comments:

  1. I'm surprised that this post hasn't caught any comments. I had never heard of Kristof before — but thanks a lot, Norm... now I have another reason not to hang the Christmas lights. He's a captivating writer!

    A few quotes from America, that have a message for us here in BC:

    "That’s how things often work in America. Half-a-century of tax cuts focused on the wealthiest Americans leave us with third-rate public services, leading the wealthy to develop inefficient private workarounds.

    It’s manifestly silly (and highly polluting) for every fine home to have a generator. It would make more sense to invest those resources in the electrical grid so that it wouldn’t fail in the first place.

    But our political system is dysfunctional: in addressing income inequality, in confronting climate change and in maintaining national infrastructure.

    ...

    "So time and again, we see the decline of public services accompanied by the rise of private workarounds for the wealthy.

    "Is crime a problem? Well, rather than pay for better policing, move to a gated community with private security guards!

    "Are public schools failing? Well, superb private schools have spaces for a mere $40,000 per child per year.

    "Public libraries closing branches and cutting hours? Well, buy your own books and magazines!

    "Are public parks — even our awesome national parks, dubbed “America’s best idea” and the quintessential “public good” — suffering from budget cuts? Don’t whine. Just buy a weekend home in the country!"

    ReplyDelete
    Replies
    1. Nicholas Kristof and wife Sheryl WuDunn are very accomplished and honoured writers. Unlike most American commentators, Kristof has a wide view of the world. He looks beyond cynical partisan positioning and writes with compassion for humans everywhere.

      Join his 1.3 million followers on Twitter

      @NickKristof

      Delete
  2. 90% tax rate on the wealthy, 60 years ago in the U.S.A.? ('No idea what it was in Canada.)

    That's shocking. No wonder the concept of "billionaire" has only manifest itself in our lifetimes. Before that, the government was apparently taking $900,000 in taxes for every $1 million that a tycoon, singer or movie star reported making. Sports stars didn't make much back then.

    No wonder tax evasion (Al Capone) was such a major crime!

    The big question: how did they slip from 90% to only 35%? That's a heck of a tax shift... and how has the average American benefitted from it? (And how can they nudge the tax rate back the other way?)

    ReplyDelete
    Replies
    1. Capital gains were untaxed in Canada before 1972 so very wealthy people arranged affairs to take modest amounts of earned income and divert it to other forms. Rather little income was taxed at those punitive rates. Nevertheless, there has been a major shift away from taxing high wealth people. For example, RRSP rules do not exist for the benefit of people living on the financial margins. Additionally, the use of offshore tax shelters has increased hugely in the last two decades. It was always done by the wealthiest, now it is done by people of comparatively modest means - the minor millionaires.

      Delete

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