21k followers and yet you haven’t taken the time to flesh out the really, really important details? Shame on you.
- 60–70% would be the top MARGINAL tax rate, meaning everything under $10 million would be taxed at a lower rate.
- This tax isn’t on the 1%, it would only affect the 0.005%, or roughly 16,000 tax payers.
Then there is the trope that such a tax will discourage entrepreneurs. Hogwash. I’ve been self-employed in Austria for nearly 25 years. We have a top marginal tax rate of 50%, which is actually lower than many other countries in Europe. Do you think we European companies don’t try to win business because of our high marginal tax rates? Really?
The idea that a company leader would tank some business deal because he/she would get compensated above $10 million due to the income of that deal is just stupid. It is more stupid when you think that businesses are working dozens, hundreds, or even thousands of deals at the same time. So you think the CEO of some company keeps a spread sheet to handicap which deals she/he is going to pursue because if they win a deal the income of that deal will put her/him over the next tax bracket?
Business deals over a few thousand dollars take time to complete (sign) and implement. The income is very often is spread out over time, sometimes years. And you’re competing with other companies for all this business. So following the, “tank the deal if I’ll earn too much from it” theory gets even more comical.
Warren Buffet agrees with me on all of the above, by the way.
Finally, for the sake of argument let’s say this “tank the deal if I’ll earn too much from it” theory is true. I keep a spreadsheet tracking all my company’s potential future business deals. According to my calculations, if I close a particular deal in March of 2019 then according to the payment schedule I’ll have income of $11 million for 2019. Instead of paying 50% tax (for example) on that last million, I’ll pay 70% and only get $300k instead of $500k. Being a “wise” business man I say, “Fuck it! It is not worth getting out of bed for that extra $300k. I’ll tell the company offering the deal that I’m not interested. Oh, and I’ll explain somehow to my own company why I’m tanking the deal we’ve already spent a bunch of time pursuing.” What would happen then? I’ll tell you what. Someone else will get that work. Someone hungrier. Someone who doesn’t care about getting “only” $300k of that last million, or maybe someone who is not one of the 16,000 people of the 320,000,000 Americans who earns over $10 million a year, and is happy to earn that extra income— which will also help lessen income inequality.
All in all the theory that high personal marginal income tax rates in any way affect the day to day calculations of business leaders is simply ridiculous.