11/19/2012

Krugman: U.S. Needs Tax Rate of 91%

Posted by Brian

Imagine growing up with the dream of being successful.  You study hard, go to college or a trade school.  You start at the bottom, doing the menial things that new workers do - washing dishes, sweeping the factory floor, cashiering at a fast-food joint, etc.  You work hard, and are promoted to positions of greater authority and pay.  You earn a solid middle-class (a marxist concept) income. Eventually you decide you don't want to work for somebody else, take some money that you've saved, along with a small-business loan, and open your own business.  You work long hours to ensure that your business is successful. And it is, beyond your wildest dreams.  But in spite of all of your hard work, you are really not moving up the income ladder. Despite putting in sixty to seventy hours a week, and sometimes more, your take home pay barely exceeds what you were making when you worked a regular 40 hour week. Your gross pay is much higher, but all the money you make after a predetermined level which some bureaucrat or politician has determined is "too much", you take home only 9 cents for every dollar you earn. You're getting nowhere.  You decide that the hours versus the pay are not a good exchange, decide to close the business and abandon the dreams that you once had.  It's just not worth it.  You re-enter the work force as an employee. You are no long the employer.
This is what the pointy-headed Marxists like Paul Krugman see as "fair and equitable".  He's correct in his assumption that the rich will not be as wealthy as they once were.  But the flip side of that coin is that the people who aspire to becoming wealthy will come to realize that the sacrifice is not worth the effort. Nor are the back-breaking, marriage destroying hours they put in, without seeing any real change in their situation.
The result is that the poor , despite what they are told about the "evil" rich, will continue to be poor.  No longer are there the winners and the losers.  Everybody becomes losers under Paul Krugman's dream of a "fair" society.
Paul Krugman and his Keynesian economics should be rejected on their face.  His brand of economic stimulus is equality of misery, as opportunity is taken away for all. Krugman subscribes to the MArxist axiom, "From each according to his abilities, to each according to his needs". But who determines the individual need?  For Krugman and his ilk, it is "enlightened" people like him. He, and other privileged members of some elite illuminati, while feigning compassion for those they calls less fortunate, in reality, have nothing but disdain and contempt for those who they see as beneath them.
I find it interesting that Paul Krugman would use Twinkies to draw attention to his piece. Paul Krugman would lower himself to buy, let alone eat a Twinkie.

The Twinkie Manifesto
By PAUL KRUGMAN Published: November 18, 2012 546  

The Twinkie, it turns out, was introduced way back in 1930. In our memories, however, the iconic snack will forever be identified with the 1950s, when Hostess popularized the brand by sponsoring “The Howdy Doody Show.” And the demise of Hostess has unleashed a wave of baby boomer nostalgia for a seemingly more innocent time.

Needless to say, it wasn’t really innocent. But the ’50s — the Twinkie Era — do offer lessons that remain relevant in the 21st century. Above all, the success of the postwar American economy demonstrates that, contrary to today’s conservative orthodoxy, you can have prosperity without demeaning workers and coddling the rich.

Consider the question of tax rates on the wealthy. The modern American right, and much of the alleged center, is obsessed with the notion that low tax rates at the top are essential to growth. Remember that Erskine Bowles and Alan Simpson, charged with producing a plan to curb deficits, nonetheless somehow ended up listing “lower tax rates” as a “guiding principle.”

Yet in the 1950s incomes in the top bracket faced a marginal tax rate of 91, that’s right, 91 percent, while taxes on corporate profits were twice as large, relative to national income, as in recent years. The best estimates suggest that circa 1960 the top 0.01 percent of Americans paid an effective federal tax rate of more than 70 percent, twice what they pay today.
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