need help refuting leftist claims about 1950s tax rates

self

[mainestategop]

Im preparing to write an article about Liberal myths and lies concerning Bush Reagan and Obama and I keep coming back to this claim that liberals have been making on youtube and several other places that in the 1950s taxes on the wealthy were at an all time high and our economy was flurishing. Any old timers from that bygone era care to comment? Has anyone heard this?

[Pontiac]

Diner’s Club was the first universal credit card and used by higher income people that traveled frequently and probably was the most held credit card up in to the late sixties.

Strictly speaking it was not a credit card because the balance on the card was due on receipt of the bill.

Visa and American Express did not show up until 1958, Master Card in 1966. So through most of the 50’s they had a monopoly and momentum carried them through most of the 60’s.

[lowbridge]

bump

[rabidralph]

Yes, American business was a juggernaut of ingenuity, an eager workforce and few regulations to hamper growth. Not to mention our manufacturing was leaving a war-devastated Europe and Asia in the dust because our infrastructure was intact, so people bought American. At the time, no amount of high tax could overcome our output. Now, things are very different and we have a smaller margin for error and fewer markets to conquer, IMHO.

[rabidralph]

We succeeded in spite of the high taxes.

[edcoil]

Credit cards were invented in 1950. It all started when Frank X. McNamara and two of his friends went out to supper.

My parents had CC during that time however had money - I am guessing mas use of credit cards were as you described.

[edcoil]

Also in the 50’s we had won WWI, WWI, Korea, and had no debt. The last balanced budget was signed by Johnson in 1965.

We had put men on the moon and, government was 1/3 the size and scope it is today. BUT, what did not exist in 1965 that has cost the huge increase in government.

The top two would be:

Welfare there was no free housing, food, medical, education, virtually nothing came from Federal government.

Kennedy’s immigration bill opening the country to vastly poor uneducated masses and living off the state.

[edcoil]

Credit cards actually go back to the Knights Templar. Limited to trade merchants and travelers.

Also keep in mind until America was founded, there was no concept of a “middle class”. You either would be born into landownership or were a slave or surf to landowners.

[Yardstick]

The marginal rate was higher but it affected far fewer people. That’s because it started at something like $300,000 which is the equivalent of like $3 million today. So it only affected the truly rich. And they knew how to move their money around to avoid it anyway.

Ask the liberals you’re arguing with whether they’d be okay with having the highest bracket start at $3 million.

[CynicalBear]

>> I’ve always said that if people today had to revert to the standard of living of the 1950’s there would be weeping & wailing & gnashing of teeth.<<
LOL Most of them would simply die off. We had to grow much of our own food, butcher our own animals and cook out own meals. There are a lot of people today who wouldn’t know how to cook enough to stay alive. Especially in the winter. Can you imagine them having to put up anything to have through the winter?

[TASMANIANRED]

There were more tax brackets and many more things were deductable...like credit card interest.

[YankeeReb]

Nobody, but nobody, ever paid 90% (or whatever) in income taxes.

I'm not sure but I seem to remember someone telling me that back then most people didn't pay any income tax at all since the lowest rate didn't kick in until around $10K. Back then if you made $10K it was something. I think of the scene in the movie It's a Wonderful Life where George Bailey is offered a job making $20K/year and he's in shock.

If the tax rate is 90% but nobody makes enough to pay it, it's not doing any economic damage. The problem comes as inflation kicks everyone's wages up but those tax brackets don't move with it. This is why inflation is such a stealth tax.

[YankeeReb]

Also in the Obama Care bill was a new tax on rental income.

Is this true??? One more reason why I despise Hussain!!!. I just purchased a property back in 2007 with the intent of moving into it. As we all know housing and the economy tanked shortly after so I was out of work. Since I couldn't sell w/o a major loss and I was lucky enough to be able to rent it out, I've been able to hold onto it. Now you tell me that Hussain has screwed that idea!?! I tell you, I can't wait to see the kenyan wearing an orange jump suit and ankle bracelet picking up trash by the side of the road.

[Pontiac]

Is this true???

So I have read.

If I can’t sell I will have to raise the rent to copensate.

Perhaps you can do the same.

[Democrat_media]

I agree. That is what needs to be done.

[gundog]

Hemingway still paid through the nose. In his last weeks he was having delusions(?) about the Feds coming to get him.

[rhytonen]

The point is that the COUNTRY had the best economy in history, the 50’s being known by historians and economists as the golden age, the Middle Class was BORN, and even at 92% TMR, the rich did FINE. The TMR was in the 90’s from 1952-1963, mainly Eisenhower. FDR’s previous TMR was 94% at one time.

Those are easily verified facts which you should research to satisfy yourself.

Oh - and since BC/BS (employer supplied) was a NONPROFIT, it paid 100% of all claims from dollar one - there was no such thing as a copay.

Old timer here - born in 1945. When I was a kid our 4-family house was worth $10K (suburban eastern MA) my father made about $20K as a state highway tree surgeon (and he retired with a good pension & HC,) family of 4 groceries for the week (a station wagon full of bags) was about $25, a loaf of bread was (I think) 15-25cents, and I think a new car cost between $1-2K. Gas was 25 cents a gallon. Sorry, it’s not easy to remember that far back, but that’s pretty accurate for age around 10-12 (1955 or so.)

And the cars were nice looking, all steel, easy to work on, and lasted a lifetime.

BTW-our house and all the neighbors’ houses were huge. And we wanted for nothing. All bills were paid on time, and no loans were taken out.

[RangerM]

Almost nobody paid that 92% rate due to the tax deductions available at the time. And the total amount of taxes collected by the government has remained relatively stable (~19-20%) regardless of the tax rates over history. Google "Hausers Law" if you don't believe me.



Notice how flat that brown line is? That's the level of revenue, and it hasn't changed much even as the rates have.

In the '50s, the country was still producing goods for the rest of the world than hadn't caught up yet from the ravages of WWII.

There are still non-profit health insurance companies today.

http://www.nonprofithealthcare.org/

Healthcare costs have risen as technology has provided more advanced treatments. If you want to limit yourself to '50s era healthcare, your costs would be minimal, and your premiums low.

You had a nice house, food, and cheap fuel, along with a life expectancy 10-15 years less than today.

Today we have $4.00 gasoline, (expectations of) McMansions, I-Phones, High speed internet access, Cable TV (plasma or LCD, of course), vacations that often involve Airplanes/Ships, and so many other baubles (that didn't exist in your youth).

Times have changed. Some for good, and some for bad.

[rhytonen]

I did.
here’s what I found.
Hauser’s”law” is as preposterous a misrepresentation as the infamous “Laffer Curve.” Conservatives have been trying to prove the “trickle down” and (tax cuts and subsidies will “stimulate”)”job creators” myths for far too long now, and in the face of logic and historic fact to the contrary in both cases.

Economists have been “laffing” at both pseudoeconomic theories since the Right Wing “Think Tanks” and conservative administration advisors *coughpropagandamills* released them in Right Wing publications like Murdoch’s wsj.

“...this is beyond awful. It confuses what may be a desire of the American people not to be taxed beyond 19.5% of GDP, under a variety of tax systems, with an unfounded claim that the American people could not be taxed at a higher rate (on GDP) than 19.5%.

Specifically, it ignores the base-broadening that has accompanied much of the reduction in the top marginal tax rate. It ignores the increasing contribution to revenues played by the payroll tax, which has nothing to do with the top marginal tax rate. It is not robust against the standard Laffer curve critique—it will eventually not hold up for a sufficiently low top marginal tax rate. And the list could be extended. These shortcomings are obvious to anyone who takes just a moment to consider the claim, and yet the Wall Street Journal publishes it. They have no one to blame but themselves for the low regard in which they are being held. “

http://www.angrybearblog.com/2010/11/hausers-law-is-extremely-misleading.html

http://seekingalpha.com/article/78256-lying-with-charts-wsj-edition

http://capitalgainsandgames.com/blog/andrew-samwick/329/beyond-awful-wall-street-journal

http://elidourado.com/blog/debunking-hausers-law/

I believe if you KEEP soaking the rich, eventually they will run out of ways to cheat the tax laws - or even better, JUST LEAVE ALTOGETHER and make room for businessmen who are honest and responsible. In fact, given the mess they’ve made of the American quality of life, we need to claw back as much as humanly possible by OUTLAWING and POLICING those tax havens. This GROSS inequality will eventually cause the noted behavior in other Banana Republics - violent revolt and lawless chaos.

[RangerM]

I'm not certain exactly how your examples exactly "debunked" anything, considering there wasn't (as far as I can tell) a definitive relationship that could be established that corrects for economic trends. Sure, there have been times of greater and lesser revenues (as a percentage of GDP), but the percentage has hovered around 20%. Sure, you can raise tax rates today, and gain revenues tomorrow, until the economy adjusts to the new paradigm, and revenues decline the day after.

Heres some more figures for you to chew on.

Income taxes are only a portion of the taxes Americans pay to the Federal government. Americans pay income, payroll, excise, and corporate taxes to the Federal government.

According to the CBO (in 2007)..

The TOTAL effective Federal individual tax rate (all personal taxes including payroll/excise/corporate) is as follows....

Lowest Quintle 4.0%
Second Quintile 10.6%
Third Quintile 14.3% (This is where the median would be)
Fourth Quintile 17.4%
Fifth (Highest) Quintile 25.1%

Average for all quintles is 20.4%.



Here's something that many people aren't aware of......

Most people are aware that income taxes are paid by those in the top half of all households, but also believe the proportion of taxes paid by all quintiles evens out once you include payroll (and other) taxes.

This is not true.

According to the CBO (in 2007) the percentage of all federal taxes paid including income/payroll/corporate/excise taxes is as follows:

Lowest Quintle 0.8%
Second Quintile 4.4%
Third Quintile 9.2%
Fourth Quintile 16.5%
Fifth (Highest) Quintile 68.9%

Top 10% 55.0%
Top 5% 44.3%
Top 1% 28.1%

See that? That means the top 40% of all households in America pay 85.4% of all Federal taxes (NOT just income taxes). The Top 10% pays more than half.



How about Social insurance (a.k.a. payroll) taxes? (see same link above)

Lowest Quintle 4.8%
Second Quintile 10.8%
Third Quintile 16.6%
Fourth Quintile 24.7%
Fifth (Highest) Quintile 42.9%

Interesting don't you think that the Top 40% pay 2/3 of all payroll taxes?

So the next time you hear somebody say the "rich don't pay their fair share", you can let them in on the secret.

[mo]

Top 10% 55.0%
Top 5% 44.3%
Top 1% 28.1%

You have just identified why we now are an Oligarchy.

“Progressive” taxation...illustrated here...by you...is the ONLY means by which the very rich-who can buy anything they want otherwise-can buy a government. And We the People have sold it to them...and then wonder what happened to the Constitution.