I’ll put this as mildly and inoffensively as possible.
Paul Krugman is an absolute and unequivocally monumental moron. He is without compare.
I hope that wasn’t too subtle to show my true feelings on the subject.
Krugs today calls for the return of double corporate taxation and a top individual rate of 91%:
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.
Nor were high taxes the only burden wealthy businessmen had to bear. They also faced a labor force with a degree of bargaining power hard to imagine today. In 1955 roughly a third of American workers were union members. In the biggest companies, management and labor bargained as equals, so much so that it was common to talk about corporations serving an array of “stakeholders” as opposed to merely serving stockholders.
And how exactly did that work out?
In the 40 years between 1950 and 1990, the US federal government balanced the budget or ran a surplus of exactly:
Yes, for five years out of 40, Krugs’ vaunted rate equalized the budget a grand total of 12.5% of the time.
What stopped this miracle of economics from generating massive governmental returns?
The same as today – government spending. More accurately, government spending and growth that out paced income. My grandfather told me this truism:
The velocity at which money can be spent is far greater than at which it can be earned.
We have already noted where Thomas Sowell wrote that nobody in their right mind pays a 91% rate:
We have seen this movie and it premièred in 1921 – the “rich” won’t stop working but their capital will:
Ninety years ago — in 1921 — federal income tax policies reached an absurdity that many people today seem to want to repeat. Those who believe in high taxes on “the rich” got their way. The tax rate on people in the top income bracket was 73 percent in 1921. On the other hand, the rich also got their way: They didn’t actually pay those taxes.
The number of people with taxable incomes of $300,000 a year and up — equivalent to far more than a million dollars in today’s money — declined from more than a thousand people in 1916 to less than three hundred in 1921. Were the rich all going broke?
It might look that way. More than four-fifths of the total taxable income earned by people making $300,000 a year and up vanished into thin air. So did the tax revenues that the government hoped to collect with high tax rates on the top incomes.
What happened was no mystery to Secretary of the Treasury Andrew Mellon. He pointed out that vast amounts of money that might have been invested in the economy were instead being invested in tax-exempt securities, such as municipal bonds.
But you know who will pay?
The middle and lower classes who pay the price increases that are necessitated to cover corporate taxes and the increased in interest rated driven through government borrowing and the hidden inflation of a devalued currency.
They get hit, not the “rich”.
If the Nobel people cared about brand value, they would take the prizes away from Obama and Krugman immediatley. These two are seriously bringing the prestige of the Nobel organization to its knees.