Korean Job Discussion Forums

[ontheway]

The top Federal marginal tax rate was actually 70% and not 95%. An individual would have to add on his state and local marginal income tax rates (if any) to determine his combined marginal tax rate. In some states (South Dakota comes to mind) it was theoretically possible to exceed 100% at the time, but there is no evidence that anyone actually paid over 100%, since anyone in that situation would use a little tax planning to legally avoid this problem, by moving their legal residence to another state, for example.

(This is why, for example, many people, like the Bushes, have a vacation home in Maine, but do not "live" there, although they might "vacation" there more than six months per year.)

Marginal tax rates do not mean much standing alone. What were the effective tax rates? Was all economic activity subject to such high taxation? The answer is NO.

Even today, corporations are able to shield an individual from some income taxes by keeping the money growing inside the business and not paying it out in salary and dividends. This is an example of one thing out of thousands that would allow an economy to keep growing in a high tax era.

The problem is this:

The negative impact of the taxes and regulations affects the poor and middle classes the most. This is where people are prevented from beginning their careers, saving their hard earned dollars, investing in whatever assets they feel will bring about the best return. It is the poor, lower classes and middle classes that cannot get ahead. They are the victims. And investment by these people in the areas they choose is what will make the difference.

There is no reason that a free market economy cannot grow at a sustained annual rate, without recessions, of 10%, 15%, 20% and more.

[jkelly80]

[ontheway]

[jkelly80]

Laffer curve is wrong. The USSR had a 100% tax rate and still had growth. Ergo, he's wrong. Keep on with your fundamentalism though.

[Kuros]

[quote="jkelly80"]

[ontheway]

[jkelly80]

[bucheon bum]

[mises]

I don't know, maybe related, but Mckinsey & Company estimate Sweden's unemployment rate to be slightly over 15%. More than three times the current recessionary unemployment rate in the United States. Sweden is also a one party state, or has been until the very recent election of a different party (that changed nothing). I wouldn't hold it up as a model of much. I don't know much about the rest of Scandinavia less Finland's notoriously perfect education system. Anyways, the lessons of small, totally homogeneous (until very recent) states in Northern Europe can't be extracted to America. The lessons of messy, diverse and edgy America relate to Iceland just as well.

[bucheon bum]

We're talking economic growth are we not? Versus taxation? That's where the conversation digressed. Regardless, I am very skeptical of 15% unemployment in Sweden.

According to the OECD, Sweden's unemployment is MUCH lower than 15%:

OECD Observer, Sweden

OECD Economic Survey of Sweden 2007

Sweden GDP Growth Since 1951

According to the CIA, unemployment=5.6%

edit: typo

[bucheon bum]

I should also note the Denmark has become the model for the labor market, and finding a good balance between regulation, or the lack thereof.

And it is ranked the #1 business environment in the world

That being said, Denmark is no shangri-la

Full employment, positive growth (3.5% last year), but a potential brain drain to flee high taxes (63% income tax, yikes).

[mises]

Sweden has long been known for being a loose with their labour data as the US is with CPI data.

Norberg, the Swedish economist, explains the differences from 2005:

http://www.johannorberg.net/?page=displayblog&month=11&year=2005#1386

And a link to a Swedish paper that estimates unemployment to be 20-25%.
http://www.dn.se/DNet/jsp/polopoly.jsp?d=1042&a=393396&previousRenderType=6

Comparing that directly with the United States is made difficult due to the American prison population.

M&C publish their employment estimates every year. They apply the same methods to each of the nations. Sweden every year has a significantly higher unemployment rate than most every other developed country.


Statistics are created using variables. What they announce to the world is only as good as their methodology. Just like CPI in the US.

[mises]

Here we have a very recent example of taxes-growth-receipts.

http://online.wsj.com/article/SB121625150189660215.html?mod=googlenews_wsj

[bucheon bum]

There is a difference though in corporate taxes vs. income tax. You jack up the highest tax bracket tax rate on people, it won't hurt business so much. Obviously you lose talent, as the article about Denmark shows.

And yes, unemployment is like CPI, it can be altered. US unemployment is quite a bit higher than what the official stats say; many have just stopped looking for work and are no longer listed as unemployed.

BTW, where can one find the M&C data?

[bucheon bum]

In regards to your links, one is in Swedish so I really can't determine how they came up with 20-25% . You honestly think 1/4 of swedes are unemployed? That doesn't seem far fetched to you? The other makes a good argument, but as I noted in the post above, the US has its own calculations for unemployment. Perhaps the US system is what is the most common? I don't know.