Would the Western World have been better off without Raeganomics?

Nov 2014
335
ph
#1
Would the world have been better off without the Reaganomics of the 80s, even at the cost of higher inflation? It seems that Reaganomics traded one problem, high single digit nflation and higher unemployment, for another problem of increasing inequality, would a lower level of income inequality due to Reagan free market economics have been a good tradeoff for chronic 10 percent inflation and 6 to 10ish percent unemployment?
 
Nov 2010
7,513
Cornwall
#2
I'm not an expert on economics. But basically that is one end of the scale. Pumping money into encouraging the well off sector to create employment and dragging everybody else up to in economy. The other end is taxing anyone who looks like they will make any money, giving it to 'the poor' (equality) and therefore removing any incentive for anyone to create money and employment, going into an ever-downward economic spiral.

I suspect the fair path is somewhere in between, which is what most democracies end up doing.
 

GogLais

Ad Honorem
Sep 2013
5,046
Wirral
#5
In the 50s and 60s, the top rate of income tax in the UK was 90%. I believe some Scandinavian countries had a top tax rate of over 100% in the 70s and 80s.
It seems to be a rule of life that if anything needs to be corrected then it’s almost always over-corrected. We’ve gone from that situation to one where the gap between CEOs and their workforces has vastly increased without a counteracting rise in taxation. Much is made in the U.K. of that fact that the top 1% pay a relatively high proportion of income tax as though we should be grateful but that’s simply indicates how wide the pay gap is.
 

Futurist

Ad Honoris
May 2014
16,700
SoCal
#6
In the 50s and 60s, the top rate of income tax in the UK was 90%. I believe some Scandinavian countries had a top tax rate of over 100% in the 70s and 80s.
How can you have a tax rate of over 100%?

I'm not an expert on economics. But basically that is one end of the scale. Pumping money into encouraging the well off sector to create employment and dragging everybody else up to in economy. The other end is taxing anyone who looks like they will make any money, giving it to 'the poor' (equality) and therefore removing any incentive for anyone to create money and employment, going into an ever-downward economic spiral.

I suspect the fair path is somewhere in between, which is what most democracies end up doing.
Yep.
 
Likes: Edratman

tomar

Ad Honoris
Jan 2011
13,112
#7
In the 50s and 60s, the top rate of income tax in the UK was 90%. I believe some Scandinavian countries had a top tax rate of over 100% in the 70s and 80s.

But the question is: were such rates ever paid ? ... Its one thing to have theoritical rules, its another to actually apply them... Hollande in France tried to apply a 75% tax rate over 1 million euros income in 2012 or thereabouts, it simply failed and was given up on....

Its not like there were no very rich people in the 50s and 60s... and its not like they were rushing to the nearest tax office to deposit 90% of their earnings

Taxes on the Rich Were Not Much Higher in the 1950s - Tax Foundation

There is a common misconception that high-income Americans are not paying much in taxes compared to what they used to. Proponents of this view often point to the 1950s, when the top federal income tax rate was 91 percent for most of the decade.[1] However, despite these high marginal rates, the top 1 percent of taxpayers in the 1950s only paid about 42 percent of their income in taxes. As a result, the tax burden on high-income households today is only slightly lower than what these households faced in the 1950s

How could it be that the tax code of the 1950s had a top marginal tax rate of 91 percent, but resulted in an effective tax rate of only 42 percent on the wealthiest taxpayers? In fact, the situation is even stranger. The 42.0 percent tax rate on the top 1 percent takes into account all taxes levied by federal, state, and local governments, including: income, payroll, corporate, excise, property, and estate taxes. When we look at income taxes specifically, the top 1 percent of taxpayers paid an average effective rate of only 16.9 percent in income taxes during the 1950s.

  • Finally, it is very likely that the existence of a 91 percent bracket led to significant tax avoidance and lower reported income. There are many studies that show that, as marginal tax rates rise, income reported by taxpayers goes down. As a result, the existence of the 91 percent bracket did not necessarily lead to significantly higher revenue collections from the top 1 percent.
 
Likes: Futurist

tomar

Ad Honoris
Jan 2011
13,112
#8
It seems to be a rule of life that if anything needs to be corrected then it’s almost always over-corrected. We’ve gone from that situation to one where the gap between CEOs and their workforces has vastly increased without a counteracting rise in taxation. Much is made in the U.K. of that fact that the top 1% pay a relatively high proportion of income tax as though we should be grateful but that’s simply indicates how wide the pay gap is.
Well I suppose the implied assumption is that they generate wealth for the country

Conversely if you hang them all, its not like this money would magically reallocate itself to the workers.... its possible the wealth creation (or a significant part of it) would simply disappear, and thus the country would end up would a lower GDP and the workers would not be better off

It seems that even nominally communist China has no problem with multi billionnaires....and if i am correct its highest tax rate is 45%
 
Likes: Futurist
Nov 2010
7,513
Cornwall
#10
I thought UK Supertax in the 60s/Beatles time/Monopoly etc was 19s 6d in the pound. Or 97.5 pence in new money, 97.5%. That's why everyone f****d off abroad. Much like when France tried something similar in high tax quite recently.

In both cases tax revenues fell but it keeps socialism happy

??
 
Likes: Futurist