Ultra-high tax rates during WWII, when governments used tax to raise the money they needed, may have made sense. Ultra-high tax rates in an unbacked fiat currency world are purely an attempt to punish the ultra-rich (which ends up punishing the upper-middle class as the ultra-rich can afford to either package their income or escape to a lower-tax jurisdiction). In an unbacked fiat currency world, income tax rates are used to heat & cool the economy, not really as a fundraising tool for government works.
So what is your suggestion then, to punish the poor some more? Is there not enough homeless on the streets of San Francisco for you? Are the slums of Bombay too small in scope?
As I said in the comment it would be very difficult or perhaps impossible to achieve and the dangers are high (you don’t want a USSR situation happening). You might even need coordinated effort across multiple governments and there is evidence that this is kind of happening with the move towards a global 15% tax rate on corporate business.
At the end of the day, steps need to be taken to tax capital at the same rate or higher than labour. Until that happens inequality will continue to grow. As the scales have been out of balance for so long I don’t think having capital gains and other taxes at parity with or a couple of percentage points above income tax is really going to cut it. A couple of short, sharp years at 90% and all of it invested into major, physical public infrastructure projects to create jobs and filter the money down. Whatever happens, if we continue allowing wealth to concentrate in fewer and fewer hands we are going to end up with a dangerous situation.
And the problem is that it is being framed as “punishment” in the first place rather than as an opportunity to be the actual hero and save your country and fellow citizens from being thrown to the dogs. Once upon a time men used to follow leaders into battle because they had faith in them as leaders. Would we do the same today? Probably not because they’re not acting like leaders, they’re acting like arseholes who would rather get in pissing contests over the length of their super yacht than invest in making their cities and countries a better place.
It's a very complex topic, which sadly I don't have time to delve deeply into at the moment. My intent with the previous comment was only to point out a fairly large flaw in the "tax the rich" argument as previously implemented, not to suggest that the actual ultra-wealthy shouldn't pay more than they are currently.
In theory there are steps that could be taken to fix the massively broken housing market in most of the Western world. Unfortunately the vested interests and massive financial house of cards built on top of property prices make these steps politically impossible. Therefore, what can't continue forever (unsustainable house prices) will not continue forever, but it will end messily & at some unpredictable future time.
Also, "A couple of short, sharp years at 90% and all of it invested into major, physical public infrastructure projects to create jobs and filter the money down."
I'll go out on a limb & guess you weren't in the UK in the 1970s...
I was born in & lived in the UK, but I was only 7 when the 1970s ended, so my viewpoints are of limited value. From what I could gather from my parents & teachers, income tax rates peaked at 90% (and apparently 98% for "unearned income"), which drove high earners who could escape to move overseas, and made the highly-paid but unable to move, unwilling to work many hours. There was obviously a lot more going on (high inflation, growing unemployment, industrial unrest / industrial decline etc), but the ruling political party at the time of these simultaneous debacles would not be elected again for 18 years, and the fallout from their 1970s policies is still being used to attack them 5 decades later.
The couple of short sharp years at 90%, even if it were politically possible, may not actually generate as much extra revenue as you'd think (leaving aside the fact that this isn't really how governments raise operating funds in an unbacked fiat currency world) - unless you force the ultra-wealthy and high-income earners both to stay in the country and to carry on working hard, while taking away most of what they perceive as the fruits of their labors - how do you think that would go?
BTW I suspect you and I have very different opinions and politics. I find it rare these days to be able to have a civil debate "across the divide", kudos for that.
> The couple of short sharp years at 90%, even if it were politically possible, may not actually generate as much extra revenue as you'd think (leaving aside the fact that this isn't really how governments raise operating funds in an unbacked fiat currency world) - unless you force the ultra-wealthy and high-income earners both to stay in the country and to carry on working hard, while taking away most of what they perceive as the fruits of their labors - how do you think that would go?
I do agree it's not likely to work. I think the war was unique in that it was an existential threat to the rich e.g if you assets are the properties and factories in a country that's being bombed then you have no choice but to do something about it unless you want to lose all your wealth. Now everything is so globalised, even war isn't the existential threat it was. I do think we need to raise taxes on earnings through capital/assets somehow though, at least to parity with income tax.
> BTW I suspect you and I have very different opinions and politics. I find it rare these days to be able to have a civil debate "across the divide", kudos for that.
I used to be left leaning when I was in my teens and early twenties but I've consider myself non-affiliated now. I think that both sides are right and that the approach that should be taken is the one that best suits the situation at hand. I actually think that what this country (UK) could do with at the moment is a cross party government with ministers from multiple parties in ministerial roles to get rid of this nasty divisive streak we've got going on atm and start leveraging the experience and knowledge of everybody for the greater good.
I imagine my original post comes across as quite left wing. I was trying to avoid that by stating that I only saw the high tax rate as a temporary measure but the entire post was quite emotionally laden as well which didn't help. I am quite angry because I think politicians have been leading very poorly over the last decade or so. I feel like they're not only failing to help people maximise their potential, but they're actively sabotaging it with their policies. There are so many lives being wasted as a result.
What do you mean by "escape to a lower-tax jurisdiction"? Isn't it ok that the ultra-rich should be forced to go live in 2nd/3rd world countries if they want to escape tax?
