> The numbers I was looking at before were referring to the overall tax rate, which included both income tax and corporate taxes.
Including corporate taxes in the overall rate doesn't make a lot of sense to do. Corporate taxes are on a different entity and who really pays them depends on the nature of the business.
For example, there are a lot of businesses that are simply capital intensive. You need to make a large investment in order to operate. Nobody is going to invest in them unless the returns can beat alternative investments like bonds, but that will be the after tax returns in both cases. Bond interest and dividends are both taxed, but corporate income tax is an additional tax, so with higher corporate taxes every company in that industry would have to generate higher profits to attract investors. So higher corporate taxes drive mergers/dissolutions, the market consolidates to give incumbents more market power and the tax mostly ends up getting paid by customers or employees rather than investors.
Conversely, if the market is already consolidated, it might mostly get paid by investors. But it also acts as a force to keep the market consolidated for the same reasons, which is not super great.
The point being, you can't just assume corporate taxes are always paid by the rich or the owners of the company.
> Given that drop in the overall tax rate (along with rising income inequality and increasing debt spending), it seems clear to me that the income tax rate was not raised enough to compensate for that loss but that's a separate discussion.
Income inequality has very little to do with tax rates -- it's often measured on the basis of pre-tax income, and has increased significantly even using that metric, largely as a result of market consolidation and regulatory capture. Incumbents that capture government regulators and exclude competitors become megacorps and then their executives and owners extract disproportionate income. Taxes rates have little to do with it.
The increased deficit spending is because the government is spending more money. Federal receipts as a percent of GDP are around the same, federal spending as a percent of GDP has gone up.
> government bureaucrats were not getting rich off of the higher tax rates either
But there weren't higher tax rates -- and the real measure of what there is to get rich off of would be government receipts, if not expenditures. Receipts are flat as a percent of GDP, but up quite a lot in real dollars and real dollars per capita as a result of growth in population and real GDP per capita. Spending is up even on top of that because of deficit spending. So the time they'd be getting rich isn't back then, it's right now.
Which they are. Of course, "they" are Lockheed and healthcare companies and members of Congress, but there's little doubt that it's happening.
> The point being, you can't just assume corporate taxes are always paid by the rich or the owners of the company.
I was just pulling the numbers off of the source you gave. I'm not sure what methodology they used to compute those numbers.
> Income inequality has very little to do with tax rates
Sorry, I meant wealth inequality. I agree with you that the wealth/income inequality we're seeing is mostly driven by the actual incomes of the rich vastly outpacing the middle/lower classes - what I meant is that a higher progressive tax rate should be deployed in order to help correct that problem.
> The increased deficit spending is because the government is spending more money
Yes, I'm aware. Again what I meant is that if we're going to continue to spend at the levels we are, and wealth inequality continues to grow at the rate it has, then it makes sense to increase the tax rate on the highest brackets.
> But there weren't higher tax rates --
There were though - according to your source.
> So the time they'd be getting rich isn't back then, it's right now
No argument there - but again my point is that they aren't getting rich from increased government taxes, they are getting rich by lobbying/regulatory capture.
> I was just pulling the numbers off of the source you gave. I'm not sure what methodology they used to compute those numbers.
It's Piketty/Saez/Zucman. They did a lot of work to compile the data but they have a particular conclusion they're trying to support, so the data is probably accurate but they're organizing it in a way that supports their position.
> I agree with you that the wealth/income inequality we're seeing is mostly driven by the actual incomes of the rich vastly outpacing the middle/lower classes - what I meant is that a higher progressive tax rate should be deployed in order to help correct that problem.
I don't think that really fixes it because it isn't the underlying cause. The problem here is market consolidation, e.g. Facebook is too big. So Zuckerberg has "billions of dollars" but in fact the vast majority of that money is in shares of that one company and what he really has is control over an enormous and disproportionately powerful corporation. Which is a problem, but taxes don't solve it, because the corporation is still just as big even if nobody has a controlling interest. Wall St would still put someone in charge of it and that person would still have massively disproportionate influence.
Whereas if you do something about the market consolidation then individual corporations don't come to be that size and their owners/executives don't come to have that much influence or money. So higher tax rates neither solve the problem nor are necessary if you do solve it.
> Again what I meant is that if we're going to continue to spend at the levels we are, and wealth inequality continues to grow at the rate it has, then it makes sense to increase the tax rate on the highest brackets.
The current level of spending is pretty useless. Indeed, it's actually one of the causes of the problem -- a lot of the money is going to the megacorps. It's probably better to stop giving it to them to begin with.
> There were though - according to your source.
On corporations, not rich people.
> No argument there - but again my point is that they aren't getting rich from increased government taxes, they are getting rich by lobbying/regulatory capture.
The thing they're lobbying for is the tax dollars. Lockheed and healthcare companies are getting rich from tax money. And the same for Congress, though the mechanism there is less direct. They allocate tax dollars to corporations that then funnel a portion of it back to the legislators in various ways.
Including corporate taxes in the overall rate doesn't make a lot of sense to do. Corporate taxes are on a different entity and who really pays them depends on the nature of the business.
For example, there are a lot of businesses that are simply capital intensive. You need to make a large investment in order to operate. Nobody is going to invest in them unless the returns can beat alternative investments like bonds, but that will be the after tax returns in both cases. Bond interest and dividends are both taxed, but corporate income tax is an additional tax, so with higher corporate taxes every company in that industry would have to generate higher profits to attract investors. So higher corporate taxes drive mergers/dissolutions, the market consolidates to give incumbents more market power and the tax mostly ends up getting paid by customers or employees rather than investors.
Conversely, if the market is already consolidated, it might mostly get paid by investors. But it also acts as a force to keep the market consolidated for the same reasons, which is not super great.
The point being, you can't just assume corporate taxes are always paid by the rich or the owners of the company.
> Given that drop in the overall tax rate (along with rising income inequality and increasing debt spending), it seems clear to me that the income tax rate was not raised enough to compensate for that loss but that's a separate discussion.
Income inequality has very little to do with tax rates -- it's often measured on the basis of pre-tax income, and has increased significantly even using that metric, largely as a result of market consolidation and regulatory capture. Incumbents that capture government regulators and exclude competitors become megacorps and then their executives and owners extract disproportionate income. Taxes rates have little to do with it.
The increased deficit spending is because the government is spending more money. Federal receipts as a percent of GDP are around the same, federal spending as a percent of GDP has gone up.
> government bureaucrats were not getting rich off of the higher tax rates either
But there weren't higher tax rates -- and the real measure of what there is to get rich off of would be government receipts, if not expenditures. Receipts are flat as a percent of GDP, but up quite a lot in real dollars and real dollars per capita as a result of growth in population and real GDP per capita. Spending is up even on top of that because of deficit spending. So the time they'd be getting rich isn't back then, it's right now.
Which they are. Of course, "they" are Lockheed and healthcare companies and members of Congress, but there's little doubt that it's happening.