Debunking Paul Krugman's Beloved 91 Percent Tax Myth

NewsBusters.org ^ | November 20, 2012 | Dustin Siggins

[A_perfect_lady]

What does he mean by “marginal tax rate”?

[Harmless Teddy Bear]

If the government really wanted to increase revenue they would have a flat tax of 10%.

No deductions. Your 1040 could be filled out in two minutes.

What did you earn? Now move the decimal two places to the left and that is your tax.

No other taxes. No FICA. No Medicare. Just one simple tax.

Revenue would go through the roof and we probably would be able to grow ourselves out of this hole.

They will never do it because the reason for taxes is not to gain revenue for the government, it is to control your actions.

[FreedomPoster]

>>I believe Krugman knows this and is just simply a chronic liar with an agenda.

*DING!* *DING!* *DING!*

We have a winner!

If he doesn’t know about the deductions and how the game was played (and often still is), he’s incurably stupid for a Nobel-prize-winning “economist”.

Pick one, I don’t see any other choices.

[Popman]

Whenever I post at libtards websites that have a Krugman article.... I refer to him as “ keyboard jockey “

Man... It ruffles their feathers...

[Ditto]

Today, if the Fed Gov took 91%, the top bracket would have an effective tax rate above 100%.

First, the state and local taxes come off the top of the income line, and then the federal taxes kick in on the difference. So, no, it would not take it past 100%.

But the bigger point is that back in the 50s, no one paid a 91% tax rate. That was always a myth. There were so many loopholes and deductions allowed back then that if someone was at the very top, their effective tax rate was probably very similar to what they would pay today on a equivalent income.

The biggest difference between then and today is that the bottom income tax rates have gone to below zero. Today, many actually pay nothing yet get generous refunds for what they didn't pay. That is thanks to the old 'negative income tax' idea that surfaced in the late 60s and Nixon implemented in the early 70s. It was considered an incentive to work back then. Today, its an incentive to keep working at McDonalds.

It took a lot of people out of the game... they get without giving... and it has changed the dynamics profoundly. It's the Santa Claus government. It's not what can I give? It's what can I get?

[Pearls Before Swine]

Excellent points. Thanks for adding.

[Ditto]

Not to mention there used to be even more tax shelters and deductions. The 86 tax law really pruned those.

Pruned? It cut the hell out of it. That is why so many Country Clubs went out of business. You could not write the yearly dues and fees off as customer entertainment expense anymore. Same thing with company cars or other perks for executives. They have to be reported now as 'imputed income.' Hell, I had to pay imputed income on a life insurance policy the company paid for me! Figure that. I never saw a penny of it and had to pay tax on it anyway.

There was a lot that changed back in 86 --- most for the better, I might add, but Krugman has his head up his butt if he thinks it was a better world back then tax wise.

Throw those same kind of rates in today without the same deducts and exemptions, and this economy would shut down damn near immediately.

Hell, I remember writing off interest on my car loans and credit cards on my meager tax return. After '86, you could not do that anymore. Does Krugman want to allow that again or does he want to 'punish the middle class?'

[1010RD]

Krugman is despicable and representation without taxation is criminal.

[silverleaf]

http://almostclassical.blogspot.com/2011/03/90-tax-rate-myth.html

[silverleaf]

Krugman must have not read “Hauser’s Law”!

Published in the NYT no less

http://online.wsj.com/article/SB10001424052748703514904575602943209741952.html

[silverleaf]

representation with taxation is no picnic in the park, either

[Cronos]

I like the fact that the article points out that Krugman’s argument ignores how America’s unparalleled economic dominance across the world more than made up for absurdly high tax rates -- in 1945 until 1960 the US was the ONLY player. Europe (West, Central and East) was utterly devastated and / or destroyed. Russia was devastated. India and China were mired in deep poverty (up to 80%) as was the rest of the world bar south america which lurched from dictator to dictator

The US had immense opportunity then.

[Baynative]

The Nobel Peace Prize has less prestige than winning an election for 8th grade class Vice President.

[Baynative]

I think Krugman should release his tax records.

[uncommonsense]

And let’s not forget the purchasing power of the dollar has eroded such that 2 incomes now doesn’t equal 1 income just after WWII. So taking 91% at the $1+ million bracket left a lot of money the the family bank account.

[SunkenCiv]

Thanks Kaslin.

[Krugman's] essay is a classic example of how to use a few correct facts to make a completely illogical argument.

He's a demagogue.