The precedence for not having adequate taxes for high wealth has been devastating for our busineesses. You use to have to be good to make money back then as opposed to simply having large amounts of money allowing to easily grow it. Earning an additional dollar in investment was harder and harder the more your company made which forced it to run efficently or several smaller ones could eat your lunch.
Honestly the biggest difference with the 90% marginal rate is that the reputation of your company used to be more valuable than cash.
Back then to avoid the top bracket, you’d reinvest into your company and make sure it paid you and your family out for the next hundred years.
Now you don’t have to deal with all that. Just sell out or cash out asap, and you don’t really need to deal with making sure the company is well run or maintains a reputation.
In fact, a reputation since the 1980s has increasingly just been an untapped source of cash. Buy the company, cut every corner, and it’ll take years for the reputation to catch up to how shit the product has become.
This has been the biggest driver of enshittification over the past fifty years.
The current added push to enshittification is venture capital drying up. Consider Uber, a company whose entire business model was to skim money off of drivers who provided all of their own equipment. Once you’ve scaled enough to dwarf the relatively fixed cost of building the app, nearly everything they bring in should be pure profit. But they ran at a huge loss every year. Why? Because the way to make money in the 2010s wasn’t to build a better mousetrap and sell it for profit. The way to make money in the 2010s was to attract venture capital and cash out. The more you could spend, the more attractive you’d look to hedge funds and investors.
Now with relatively easy 6% investments lying around left and right, the desperate search for investment dumps is gone. All these places that were structured for big numbers to get a higher valuation suddenly need to just be profitable off their mousetraps.
I just found a Matt Stoller article that has a bit different, but compatible, take on the same thing. You can scroll down to the “counterfeit capitalism” heading.
That article says the corporate tax was 30% to 52%, AND that the individual income tax got up to 90%. What you call myth is very much true.
And corporate tax is much much lower now than it was then and we have rampant income consolidation to the top earners.
Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% following the passage of the Tax Cuts and Jobs Act of 2017.
Yeah we have some of the high corporate taxes in the world. So If your thesis was correct, you’d see this everywhere but you don’t.
Companies are sitting all billions on dollars offshore because of our high taxes.
No the article clearly points out nobody was paying that tax rate. Everyone paid a much lower tax rate. Having it set to 90%, doesn’t matter if nobody pays it.
The precedence for not having adequate taxes for high wealth has been devastating for our busineesses. You use to have to be good to make money back then as opposed to simply having large amounts of money allowing to easily grow it. Earning an additional dollar in investment was harder and harder the more your company made which forced it to run efficently or several smaller ones could eat your lunch.
Can you elaborate or reference books or economic terms on this? Genuinely interested, never heard this before.
Honestly the biggest difference with the 90% marginal rate is that the reputation of your company used to be more valuable than cash.
Back then to avoid the top bracket, you’d reinvest into your company and make sure it paid you and your family out for the next hundred years.
Now you don’t have to deal with all that. Just sell out or cash out asap, and you don’t really need to deal with making sure the company is well run or maintains a reputation.
In fact, a reputation since the 1980s has increasingly just been an untapped source of cash. Buy the company, cut every corner, and it’ll take years for the reputation to catch up to how shit the product has become.
This has been the biggest driver of enshittification over the past fifty years.
The current added push to enshittification is venture capital drying up. Consider Uber, a company whose entire business model was to skim money off of drivers who provided all of their own equipment. Once you’ve scaled enough to dwarf the relatively fixed cost of building the app, nearly everything they bring in should be pure profit. But they ran at a huge loss every year. Why? Because the way to make money in the 2010s wasn’t to build a better mousetrap and sell it for profit. The way to make money in the 2010s was to attract venture capital and cash out. The more you could spend, the more attractive you’d look to hedge funds and investors.
Now with relatively easy 6% investments lying around left and right, the desperate search for investment dumps is gone. All these places that were structured for big numbers to get a higher valuation suddenly need to just be profitable off their mousetraps.
Does that make sense?
And if he has any doubt, he can ask any ex-IBMer.
Yes. Fascinating, thank you.
I just found a Matt Stoller article that has a bit different, but compatible, take on the same thing. You can scroll down to the “counterfeit capitalism” heading.
He can’t. It’s all fantasy land.
The myth of the 90% tax rate is just that. A myth.
You have to compare deductions from the time vs the current tax code. It’s harder to deduct now than in the past
https://www.usatoday.com/story/news/factcheck/2022/05/09/fact-check-viral-post-exaggerates-tax-rates-under-eisenhower/9588111002/
That article says the corporate tax was 30% to 52%, AND that the individual income tax got up to 90%. What you call myth is very much true.
And corporate tax is much much lower now than it was then and we have rampant income consolidation to the top earners.
https://en.m.wikipedia.org/wiki/Corporate_tax_in_the_United_States
Yeah we have some of the high corporate taxes in the world. So If your thesis was correct, you’d see this everywhere but you don’t.
Companies are sitting all billions on dollars offshore because of our high taxes.
No the article clearly points out nobody was paying that tax rate. Everyone paid a much lower tax rate. Having it set to 90%, doesn’t matter if nobody pays it.
https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world