Let’s Ask Rick Santelli

This is either CNBC or warring Syrian factions:

Here’s the Peter Schiff op-ed he mentions:

Democratic Party leaders, President Obama in particular, are forever telling the country that wealthy Americans are taxed at too low a rate and pay too little in taxes. The need to correct this seeming injustice is framed not simply in terms of fairness. Higher tax rates on the wealthy, we’re told, would help balance the budget, allow for more “investment” in America’s future and foster better economic growth for all. In support of this claim, like-minded liberal pundits point out that in the 1950s, when America’s economic might was at its zenith, the rich faced tax rates as high as 91%.

True enough, the top marginal income-tax rate in the 1950s was much higher than today’s top rate of 35%—but the share of income paid by the wealthiest Americans has essentially remained flat since then.

In 1958, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%.

The tax code of the 1950s allowed upper-income Americans to take exemptions and deductions that are unheard of today. Tax shelters were widespread, and not just for the superrich. The working wealthy—including doctors, lawyers, business owners and executives—were versed in the art of creating losses to lower their tax exposure.

Those 1950s gambits lowered tax liabilities but dissuaded individuals from engaging in the more beneficial activities of increasing their incomes and expanding their businesses. As a result, they were a net drag on the economy. When Ronald Reagan finally lowered rates in the 1980s, he did so in exchange for scrapping uneconomical deductions. When business owners stopped trying to figure out how to lose money, the economy boomed.

It is a testament to the shallow nature of the national economic conversation that higher tax rates can be justified by reference to a fantasy—a 91% marginal rate that hardly any top earners paid.

In reality, tax policies that diminish the incentives and capacities of innovators, business owners and investors will not spur economic improvement. Such policies will, however, satisfy the instincts of those who want to “stick it to the rich.” Never mind that the rich have already been stuck fairly well.

“The shallow nature of national economic conversation”—as led by the president.

PS: Rush did some back-of-the-envelope calculations:

The unemployment rate for government workers plunged from an already low 4.2% in October. The unemployment rate now for government workers is 3.2%. In fact, federal, state, and local governments add 35,000 employees to their payrolls. Well, guess who’s paying for them? You are. Government hiring swelled in October and in November, and now 3.8% unemployment, federal, state, local governments added 35,000 employees to their payrolls in November. In fact, all told, governments have managed to add five — this is a stunning number. Now, keep in mind, we have lost 540,000 people from the labor force. Since July, all government — state, local, federal — have added 544,000 people to their payrolls.

Half a million Americans have left the private sector job market, thus the private sector job market universe has shrunk, and that’s why the unemployment number goes down. So 544,000 people hired at the government level in all states, cities, local governments, what have you, and the exclamation point is, 73% of the new civilian jobs created in the US over the last five months are in government. Seventy-three percent of new jobs created in the last five months are in government. This is according to the regime’s own numbers, the Bureau of Labor Statistics.

So it’s clear to see exactly what’s happening. The transformation in the country that’s taking place. Money and people are being taken out of the private sector and transferred to the public sector, to the government.

If you take away the government workers, and then take away the gift-wrappers, UPS clerks, and other seasonal help who will be laid off in three weeks, did anyone get hired last month?

1 Comment »

  1. Buck O'Fama said,

    December 7, 2012 @ 6:13 pm

    The Tax Reform Act of 1986 closed a lot of those loopholes. All sorts of stuff used to be deductable – credit card interest, second homes, all kinds of “passive loss” tax shelters. I doubt anyone but the DUMBEST rich person ever paid out much of their income at the 91% marginal rate. Hollywood became fantastically wealthy with a 91% tax rate – they did it by “losing” money on all their freaking movies. The 91% rate was a Potemkin Village, a gag rate.

    Obama may know this and even if he can’t count, somebody on this staff can. Even John Kerry knows how easy it is to dodge taxes by just docking one’s yacht in another state. They must know that this is all BS and is not gonna close the defecit for a month, let alone a year. So I gotta believe this is all rabble rousing – Obama’s version of the Two Minutes of Hate. Keep the pot boiling and people mad at the GOP while he plays golf. Most people are stupid enough to buy it, I guess.

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