Many on the left are advocating steeply progressive tax rates on the wealthy. Most notoriously, the irrepressible AOC called for a 70 percent rate.
One of the downsides of having lived a number of decades is remembering all the things which were tried in the past, tried and failed. I suffer that downside.
I remember, for instance, when the income tax rate on really big incomes was much higher. My most vivid memory of that era was all of the uneconomic uses to which capital was put in order to “dodge” taxes.
Having lived in rural areas most of my long life, I saw the glossy “farms” or “ranches” that produced little and cost much. They were normally owned by a surgeon or a big-deal attorney, but run by a hired “manager” who might be the former owner. Their true purpose was sheltering real earned income by engaging in “economic activity” which ran a paper loss while piling up value.
Putting that aside for awhile, lets think about the entire “industry” of tax consultant CPAs who created complex strategies for concealing profits. Who could afford such talent? You guessed it ... the wealthy.
In those days there were said to be talented people who worked a few months a year and then loafed the balance. They were quoted as saying “If I work more I only give the money to the government.”
Those who advocate higher rates claim greater government revenue is their goal. Higher rates are not how you produce higher government revenue, actually lower rates which encourage economic activity produce more total government revenue. The Laffer curve shows this.
