Pop quiz, hotshots: what was the top marginal tax rate under Eisenhower? Kennedy? Nixon? Find the answers and then ponder what you think people mean when they talk about the "good ole' days."
By Hamilton Nolan
April 18, 2014 | Gawker
It's great to be rich. It's extra double great to be super rich. And not just because you have all that extra money—because being super rich actually lets you pay lower taxes.
As Floyd Norris points out today, our wonderful and democratic tax system, in which investment income is taxed at a far lower rate than regular income, means that the super mega ultra rich—who almost always derive a larger portion of their income from investments than any other group—actually end up paying a lower overall tax rate than the merely normal rich, who derive a higher portion of their income from salaries. (The same goes for the non-rich, but more so!) Specifically, "The superrich ($10 million+ income) paid 20.4 percent of their income in federal income taxes in 2011, while the very rich ($500K-$10 million) paid 24.5 percent."
That is dumb as hell.
Even leaving aside any issues of basic economic justice or fairness, here is a bit of worthwhile context: the latest research shows that although the wealth of America has risen by $25 trillion since the depths of the recession, that wealth is not helping us as much as it should, because it's not being churned back into the economy as much as we would expect. From Bloomberg:
His calculations show that since the recession ended in 2009, households have spent 1.7 cents of every extra $1 earned in wealth. That's less than half the 3.8-cent average implied by data between 1952 and 2009.
One reason for the adjustment may be that those enjoying gains in wealth are already rich, so have less propensity to increase spending incrementally.
Hmm if only we could somehow rectify this vexing situation oh yes TAX THE RICH MORE AND THE PROBLEM IS SOLVED.