State Of The Union

[steelish]

You seem to support the idea that tax cuts generate wealth for governments yet you can't support the idea that governments spending money to drive the economy generate wealth for governments. Interesting. Seeing as you don't advocate deficit spending in a recession I'll just be happy you don't have a career in politics. ALSO PROVIDE A SOURCE FOR YOUR ARGUMENT.

Andrew Mellon — he was the Timothy Geithner without the TurboTax scandal — did a study in 1921 on why the wealthier classes had paid less and less in taxes as the government raised the rates on them over and over again. Mellon found that higher taxes actually drove the money underground.

Let's put it in today's context. Oprah Winfrey has a mansion in Montecito, California but because California has one of the highest progressive tax rates on people making over $1 million a year, she actually monitors the number of days she stays there, in order to avoid being considered a "full-time resident" and thus avoid paying the full punishment in taxes.

Here's another example: In 1969, Ireland introduced a tax-exempt status for artists. When they decided, in 2006, to put a cap on that tax break — 250,000 euros — Bono, another one of these celebrities who champion progressive politicians, promptly moved U2's business operations to the Netherlands.

That's how the money goes "underground," just like Mellon found in the 1920s; the uber-rich look to save money any way they can. And as long as it's legal, I don't blame them. But it drives me nuts when I see people like Oprah campaigning for the guy who wants more taxes and then she doesn't want to pay the taxes.

In the 1920s, Mellon found that "the rich" tended to invest abroad rather than build new factories and mills in the United States and pay the 73 percent tax on the income from those investments. That's right, 73 percent.

It didn't start that way, though. When progressive Woodrow Wilson introduced the "progressive income tax" in 1913, the 16th Amendment had to be passed because income taxes were unconstitutional. How did these reformers manage to get it passed? They said taxes would be extremely low. Many would pay no taxes at all.

The richest of the rich only paid seven percent, while the average American paid one percent. Of course, it didn't last. By the end of Wilson's term the lowest bracket bumped up to four percent and the highest at 73 percent.

President Harding decided to listen to Mellon. And from 1921 to 1926, Congress worked to reduce the top tax rates. Eventually they got to top rates down to 25 percent. The result: Tax revenues from the wealthiest taxpayers tripled. The national debt dropped from $24 billion to $18 billion.

President Calvin Coolidge assumed the presidency in 1923 after Harding suddenly died and continued with the smaller government, lower tax strategy. He talked about not building up the weak by pulling down the strong; not being in a hurry to legislate and cutting the size of government. Coolidge and Harding decreased the real per capita federal expenditures from $170 per year in 1920 to $70 in 1924.

These policies, along with fostering the mentality of self-reliance (the opposite of what progressives had been preaching the previous 20 years and the opposite of what they preach now, by saying "too big to fail" or you can't make it without government safety nets) was followed by what was arguably one of the most prosperous eight years this country has ever seen. You've probably heard of a little term called "The Roaring Twenties," right? The progressive history books have done their best to hide the fact that a lot of it had to do with Mellon's tax policies, including the tax cuts for the wealthy.

Progressives don't want you to know this. They'll say the tax cuts and small government caused the Great Depression. No, I'm going to go out on a limb here and use common sense: The same things that caused the problems of today were the root of the problem in 1929: greed; the Federal Reserve; government making every single mistake. The president before the crash was a Republican, but a progressive Republican. But, that's for another show.

Let me get back to what happened when they cut taxes in 1921:

Automobile production was up 191 percent for the decade and while the elites bemoaned those wealthy fat cats and their automobiles, their appetite for driving created jobs. The demand for auto-related products skyrocketed: metal; lumber; steel; cotton; leather; paint; rubber; glass and of course, gasoline. Companies had to be created to meet the demand. This is real job creation. People had to be hired. Roads were being built. State highway construction spending increased tenfold between 1918 and 1930; did they fire all the cops and teachers?

In 1920 there were only 5,800 passengers who had flown on a plane. By 1930 it was 70 times that amount.

RCA brought us the radio and along with it, advertising. Now you could hear Babe Ruth hitting home runs all anywhere in the country.

Thomas Edison brought us movies in the 1880s, but in the 1920s the true modern-era motion picture arrived with Cecil B. Demille and "The Ten Commandments."

A whistling Mickey Mouse was introduced to America by Walt Disney in 1928; the first cartoon with synchronized sound.

Conveniences like telephones became less exclusive and more commonplace in the '20s. More Americans had irons, vacuums, washing machines and refrigerators. And all of these new products meant there was a demand for something else: energy. America needed huge power plants.

Does all of this innovation and growth seem to anyone else, like lasting job creation? Assuming the Fed and the government don't come in and screw everything up. And unlike the temporary jobs or the low-paying census jobs our government creates, per capita income had increased 37 percent from 1921 and 1929. People saved and invested like never before, gaining access to things for the first time such as life insurance.

It was America's coming-out party. And all of this success, all of the innovation, all of the prosperity without punishing the rich, without big government, absolutely baffled progressives. Especially the fact that everyone benefited; from the bottom up.

Evidence? Leon Trotsky, a Marxist revolutionary in the Soviet Union with Lenin, later lived in New York City in 1917. He fought all his life for Marxism to help the working class. Here's what he said about New York: "We rented an apartment in a workers district... and that apartment, at $18 a month, was equipped with all sorts of conveniences that we Europeans were quite unused to: Electric lights, gas cooking range, bath, telephone, automatic service elevator, and even a chute for the garbage."

The source? A Patriot's History of the United States by Michael Allen and Larry Schweikhart

[SadisticNature]

Andrew Mellon — he was the Timothy Geithner without the TurboTax scandal — did a study in 1921 on why the wealthier classes had paid less and less in taxes as the government raised the rates on them over and over again. Mellon found that higher taxes actually drove the money underground.

Let's put it in today's context. Oprah Winfrey has a mansion in Montecito, California but because California has one of the highest progressive tax rates on people making over $1 million a year, she actually monitors the number of days she stays there, in order to avoid being considered a "full-time resident" and thus avoid paying the full punishment in taxes.

Here's another example: In 1969, Ireland introduced a tax-exempt status for artists. When they decided, in 2006, to put a cap on that tax break — 250,000 euros — Bono, another one of these celebrities who champion progressive politicians, promptly moved U2's business operations to the Netherlands.

That's how the money goes "underground," just like Mellon found in the 1920s; the uber-rich look to save money any way they can. And as long as it's legal, I don't blame them. But it drives me nuts when I see people like Oprah campaigning for the guy who wants more taxes and then she doesn't want to pay the taxes.

In the 1920s, Mellon found that "the rich" tended to invest abroad rather than build new factories and mills in the United States and pay the 73 percent tax on the income from those investments. That's right, 73 percent.

It didn't start that way, though. When progressive Woodrow Wilson introduced the "progressive income tax" in 1913, the 16th Amendment had to be passed because income taxes were unconstitutional. How did these reformers manage to get it passed? They said taxes would be extremely low. Many would pay no taxes at all.

The richest of the rich only paid seven percent, while the average American paid one percent. Of course, it didn't last. By the end of Wilson's term the lowest bracket bumped up to four percent and the highest at 73 percent.

President Harding decided to listen to Mellon. And from 1921 to 1926, Congress worked to reduce the top tax rates. Eventually they got to top rates down to 25 percent. The result: Tax revenues from the wealthiest taxpayers tripled. The national debt dropped from $24 billion to $18 billion.

President Calvin Coolidge assumed the presidency in 1923 after Harding suddenly died and continued with the smaller government, lower tax strategy. He talked about not building up the weak by pulling down the strong; not being in a hurry to legislate and cutting the size of government. Coolidge and Harding decreased the real per capita federal expenditures from $170 per year in 1920 to $70 in 1924.

These policies, along with fostering the mentality of self-reliance (the opposite of what progressives had been preaching the previous 20 years and the opposite of what they preach now, by saying "too big to fail" or you can't make it without government safety nets) was followed by what was arguably one of the most prosperous eight years this country has ever seen. You've probably heard of a little term called "The Roaring Twenties," right? The progressive history books have done their best to hide the fact that a lot of it had to do with Mellon's tax policies, including the tax cuts for the wealthy.

Progressives don't want you to know this. They'll say the tax cuts and small government caused the Great Depression. No, I'm going to go out on a limb here and use common sense: The same things that caused the problems of today were the root of the problem in 1929: greed; the Federal Reserve; government making every single mistake. The president before the crash was a Republican, but a progressive Republican. But, that's for another show.

Let me get back to what happened when they cut taxes in 1921:

Automobile production was up 191 percent for the decade and while the elites bemoaned those wealthy fat cats and their automobiles, their appetite for driving created jobs. The demand for auto-related products skyrocketed: metal; lumber; steel; cotton; leather; paint; rubber; glass and of course, gasoline. Companies had to be created to meet the demand. This is real job creation. People had to be hired. Roads were being built. State highway construction spending increased tenfold between 1918 and 1930; did they fire all the cops and teachers?

In 1920 there were only 5,800 passengers who had flown on a plane. By 1930 it was 70 times that amount.

RCA brought us the radio and along with it, advertising. Now you could hear Babe Ruth hitting home runs all anywhere in the country.

Thomas Edison brought us movies in the 1880s, but in the 1920s the true modern-era motion picture arrived with Cecil B. Demille and "The Ten Commandments."

A whistling Mickey Mouse was introduced to America by Walt Disney in 1928; the first cartoon with synchronized sound.

Conveniences like telephones became less exclusive and more commonplace in the '20s. More Americans had irons, vacuums, washing machines and refrigerators. And all of these new products meant there was a demand for something else: energy. America needed huge power plants.

Does all of this innovation and growth seem to anyone else, like lasting job creation? Assuming the Fed and the government don't come in and screw everything up. And unlike the temporary jobs or the low-paying census jobs our government creates, per capita income had increased 37 percent from 1921 and 1929. People saved and invested like never before, gaining access to things for the first time such as life insurance.

It was America's coming-out party. And all of this success, all of the innovation, all of the prosperity without punishing the rich, without big government, absolutely baffled progressives. Especially the fact that everyone benefited; from the bottom up.

Evidence? Leon Trotsky, a Marxist revolutionary in the Soviet Union with Lenin, later lived in New York City in 1917. He fought all his life for Marxism to help the working class. Here's what he said about New York: "We rented an apartment in a workers district... and that apartment, at $18 a month, was equipped with all sorts of conveniences that we Europeans were quite unused to: Electric lights, gas cooking range, bath, telephone, automatic service elevator, and even a chute for the garbage."

The source? A Patriot's History of the United States by Michael Allen and Larry Schweikhart

This argument is an interesting take, however it isn't really supported by the data. The roaring 20's had the following tax rates on the top brackets:

1920: 73%
1921: 73%
1922: 56%
1923: 56%
1924: 46%
1925-1928:26%
1929: 24%
1930-31: 25%

So the tax rates were lowest during the crash of 1929 and the first part of the recession, while prosperity ensued in the early 1920's despite a 73% and a 56% tax rate.

As for the comment "all of the prosperity without big government, without punishing the rich baffling progressives", this reads like a party line. Progressives don't set out to punish the rich, they see government as a provider of services, and set out to adequately provide and pay for those services. This requires the raising of revenues (through various forms of taxation).

Furthermore, the entire postwar prosperity period 1946-1973 was defined by some of the highest income taxes in US history. If those tax levels were actually causing people to avoid investing the GDP growth seen over this period would not be occurring.

While various economic indicators show the Reagan administration did well in the short term, this was at the cost of a dramatic debt increase. US Debt as a percentage of GDP declined under all presidents after 1950 before Reagan. Under Reagan (and all presidents since) it has increased as a percentage of GDP. To put this in perspective, when Reagan came into power the US national debt was $930 Billion and was $2.6 trillion at the end of 1988. In addition, the national deficit was staggering.

You seem to be phrasing the debate as an argument between communism and capitalism, when in fact it is an argument between different types of capitalism. I argue for a capitalist system that more closely resembles the post-war boom policies of the government, while you argue for a capitalist system like that of the Reagan and post-Reagan period.

The system I've argued for worked for a significant period in the past century. It saw the growing of the economy and a shrinking of the national debt relative to GDP. This means that each president was leaving his successor a more prosperous America that placed less of a burden on future generations.

Your system is individually rewarding, but as the past 30 years has shown its a disaster for the country. The economy has grown slower than the national debt and each president since (Republican or Democrat) left his successor with a greater burden for future generations. The tax rates were so low in fact that they got raised during a Republican presidency (Bush I) in order to pay for proposed programs.

I think communism is a terrible system that is incredibly oppressive and doesn't work. The extreme political left is a disaster. Similarly various nationalist systems showed that the extreme political right is a disaster.

The question is not which tax rate on the top bracket is best: 0% or 100%.

But rather, what selection of services and taxes provides the best economic and social outcomes for the country.

The Mellon study sounds interesting do you have a link to it?

While there is an abundance of anecdotal evidence for money going underground due to high taxes. The fact is much of it does not. For every U2 or Oprah there are tons of people like Bill Gates that actually pay their taxes, and place much of their investments in the country. Furthermore, there is a lot of business in the country that is fixed. It is difficult to provide a local service in the US from a business operated and taxed in the Netherlands for instance. What would be nice is if instead of providing anecdotes for your claim you could provide figures from studies showing:

(i) total investment by Americans in the US economy.
(ii) total investment by Americans in other economies.

and possibly also
(iii) total worldwide investment.
(iv) total investment in the American economy.

Without these figures we end up in a situation where one side points to one anecdote (the people getting fed up and leaving or working around the system), while the other side claims that those people are few and far between, and in many cases the effects on investment are negligible.

[DuncanONeil]

This argument is an interesting take, however it isn't really supported by the data. The roaring 20's had the following tax rates on the top brackets:

1920: 73%
1921: 73%
1922: 56%
1923: 56%
1924: 46%
1925-1928:26%
1929: 24%
1930-31: 25%

I believe that is exactly what the young lady said!!
"And from 1921 to 1926, Congress worked to reduce the top tax rates. Eventually they got to top rates down to 25 percent."

[DuncanONeil]

As for the comment "all of the prosperity without big government, without punishing the rich baffling progressives", this reads like a party line. Progressives don't set out to punish the rich, they see government as a provider of services, and set out to adequately provide and pay for those services. This requires the raising of revenues (through various forms of taxation).

Must disagree! The whole point of a "progressive" tax is to punish the "rich". Progressives do not see Government as a "provider of services". They see Government as a provider. The entire intent of the "Progressive" movement is shown by;
"1. To change other people by having them adopt the Progressive vision of middle class
behavior and thought...this particularly applied to issues of recreation and leisure, the
status of the family, sexual orientation and behavior. Progressives sought to revive a
sense of Victorian family and social values early in the twentieth-century

2. To end class conflict between the "have's"(the privileged class) and "the have less," (or
have not)

3. To effect a measure of control over big business

4. To segregate society into groups, based on occupation (labor, management,etc) race,
sex (laws protecting women insured secondary status in employment), and immigration
status. Segregation of the races was seen by Progressives as a method of stabilizing
race relations.
Four Main Goals of the Progressive Movement are-
1.Protecting Social Welfare.
2.Fostering Efficiencey.
3.Moral Improvement.
4.Economic Reform.
(Answers.com)
Progressives differed in their assessment of the problems and how to resolve them, they generally shared in common the view that government at every level must be actively involved in these reforms. The existing constitutional system was outdated and must be made into a dynamic, evolving instrument of social change, aided by scientific knowledge and the development of administrative bureaucracy. Presidential leadership would provide the unity of direction--the vision--needed for true progressive government. "All that progressives ask or desire," wrote Woodrow Wilson, "is permission--in an era when development, evolution, is a scientific word--to interpret the Constitution according to the Darwinian principle; all they ask is recognition of the fact that a nation is a living thing and not a machine." The Progressive Revolution in Politics and Political Science, (shows that Progressivism (seeks to) transform American politics. What was that transformation? It was a total rejection in theory, and a partial rejection in practice, of the principles and policies on which America had been founded and on the basis of which the Civil War had been fought and won only a few years earlier. When I speak of Progressivism, I mean the movement that rose to prominence between about 1880 and 1920.
(The Progressive Movement and the Transformation of American Politics by Thomas G. West and William A. Schambra)"

Furthermore, the entire postwar prosperity period 1946-1973 was defined by some of the highest income taxes in US history. If those tax levels were actually causing people to avoid investing the GDP growth seen over this period would not be occurring.

While various economic indicators show the Reagan administration did well in the short term, this was at the cost of a dramatic debt increase. US Debt as a percentage of GDP declined under all presidents after 1950 before Reagan. Under Reagan (and all presidents since) it has increased as a percentage of GDP. To put this in perspective, when Reagan came into power the US national debt was $930 Billion and was $2.6 trillion at the end of 1988. In addition, the national deficit was staggering.

Its not staggering now? With projections to continue to grow! The numbers you cite are largely correct. Yet the deficit in 1989, though a large number was somewhat of an insignificant increase. The 1980 deficit was 2.65% of GDP and 1989 was 2.78%. The GDP grew from some five trillion to just over seven trillion

You seem to be phrasing the debate as an argument between communism and capitalism, when in fact it is an argument between different types of capitalism. I argue for a capitalist system that more closely resembles the post-war boom policies of the government, while you argue for a capitalist system like that of the Reagan and post-Reagan period.

Your argument seems to more closely approximate the "Progressive" system of Wilson. This would not be good for the country as indicated above.

The system I've argued for worked for a significant period in the past century. It saw the growing of the economy and a shrinking of the national debt relative to GDP. This means that each president was leaving his successor a more prosperous America that placed less of a burden on future generations.

You are going to have to define "significant period". In looking at the debt data for the last century the national debt grew in 46 of the years. And the longest run of the debt reducing has never exceeded four years

Your system is individually rewarding, but as the past 30 years has shown its a disaster for the country. The economy has grown slower than the national debt and each president since (Republican or Democrat) left his successor with a greater burden for future generations. The tax rates were so low in fact that they got raised during a Republican presidency (Bush I) in order to pay for proposed programs.

Yet in that same period of time the number of people in the "middle class" and the group above that has increased, as well as the level of income! Covering exactly 30 years from today is difficult but 30 years from 2008 is 1978. Per capita income was $6,455 (1978 $), or $19,556 (2008) $). Per capita in 2008 $26,964. Using IRS data the people in the top 10% of earners increased by five million from 1986 to 2006. Those in the top 25% group minus the top 10% grew by three million. Miniumum income for the 10% started at $48,656 and grew to $108,904. The top 25% (minus the top 10%) minimum income rose from $32,242 to $64,702. So not only did the income rise but the number of people in each group also rose, significantly!

I think communism is a terrible system that is incredibly oppressive and doesn't work. The extreme political left is a disaster. Similarly various nationalist systems showed that the extreme political right is a disaster.

The question is not which tax rate on the top bracket is best: 0% or 100%.


But rather, what selection of services and taxes provides the best economic and social outcomes for the country.

That is a direct plank from the "Progressive" agenda. Only Government can make the social "boo-boos" better.
I believe it was the message that generated your response about hidden monies. There exist a tax strategy that has been shown capable of returning all of that "hidden" money to the banks inside the country. As well as bringing back the companies that are now offshore as well. Not only that but will influence foreign companies to locate their operations here. It also will increase the tax base, by favoring no one!

The Mellon study sounds interesting do you have a link to it?

While there is an abundance of anecdotal evidence for money going underground due to high taxes. The fact is much of it does not. For every U2 or Oprah there are tons of people like Bill Gates that actually pay their taxes, and place much of their investments in the country. Furthermore, there is a lot of business in the country that is fixed. It is difficult to provide a local service in the US from a business operated and taxed in the Netherlands for instance. What would be nice is if instead of providing anecdotes for your claim you could provide figures from studies showing:

(i) total investment by Americans in the US economy.
(ii) total investment by Americans in other economies.

and possibly also
(iii) total worldwide investment.
(iv) total investment in the American economy.

Without these figures we end up in a situation where one side points to one anecdote (the people getting fed up and leaving or working around the system), while the other side claims that those people are few and far between, and in many cases the effects on investment are negligible.

Getting hard figures for this kind of data is next to impossible but there are those that try to figure it out!
"Data on the value of wealth held offshore is hard to come by since neither governments nor the international financial institutions seems either able or willing to research the global picture.
The Bank for International Settlements (BIS)1, an institution controlled by banks, records bank deposits by country. According to their estimates, in June 2004 offshore bank deposits totaled US$2.7 trillion offshore out of $14.4
trillion total bank deposits. This means that approximately one-fifth of all deposits are held offshore2. However, this figure relates solely to cash. It
excludes all other financial assets such as stocks, shares and bonds, and the value of tangible assets such as real estate, gold and even yachts held
offshore as well as shares in private companies. These assets are typically controlled through offshore companies, foundations and trusts, the latter not even being registered let alone required to furnish annual statements of account. The value of these assets is therefore unknown and harder to determine.
In 1998, Merrill Lynch / Cap Gemini’s ‘World Wealth Report’ estimated that one third of the wealth of the world’s high net-worth individuals (HNWIs as banks refer to them) is held offshore. According to their most recent wealth report, the value of assets held by HNWIs with liquid financial assets of $1 million or more was $27.2 trillion in 2002/3, of which $8.5 trillion (31%) was held offshore. This figure is increasing by approximately $600 billion annually, which brings the current figure to about $9.7 trillion."
There is more but in summary;
Summary
Our research suggests that:
Ø approximately US$11.5 trillion of assets are held offshore by high net-worth individuals;
Ø the annual income that these assets might earn amounts to US$860 billion annually;
Ø the tax not paid as a result of these funds being held offshore might exceed US$255 billion each year.
http://www.taxjustice.net/cms/upload...f_Offshore.pdf

[SadisticNature]

Must disagree! The whole point of a "progressive" tax is to punish the "rich". Progressives do not see Government as a "provider of services". They see Government as a provider. The entire intent of the "Progressive" movement is shown by;
"1. To change other people by having them adopt the Progressive vision of middle class
behavior and thought...this particularly applied to issues of recreation and leisure, the
status of the family, sexual orientation and behavior. Progressives sought to revive a
sense of Victorian family and social values early in the twentieth-century

2. To end class conflict between the "have's"(the privileged class) and "the have less," (or
have not)

3. To effect a measure of control over big business

4. To segregate society into groups, based on occupation (labor, management,etc) race,
sex (laws protecting women insured secondary status in employment), and immigration
status. Segregation of the races was seen by Progressives as a method of stabilizing
race relations.
Four Main Goals of the Progressive Movement are-
1.Protecting Social Welfare.
2.Fostering Efficiencey.
3.Moral Improvement.
4.Economic Reform.
(Answers.com)
Progressives differed in their assessment of the problems and how to resolve them, they generally shared in common the view that government at every level must be actively involved in these reforms. The existing constitutional system was outdated and must be made into a dynamic, evolving instrument of social change, aided by scientific knowledge and the development of administrative bureaucracy. Presidential leadership would provide the unity of direction--the vision--needed for true progressive government. "All that progressives ask or desire," wrote Woodrow Wilson, "is permission--in an era when development, evolution, is a scientific word--to interpret the Constitution according to the Darwinian principle; all they ask is recognition of the fact that a nation is a living thing and not a machine." The Progressive Revolution in Politics and Political Science, (shows that Progressivism (seeks to) transform American politics. What was that transformation? It was a total rejection in theory, and a partial rejection in practice, of the principles and policies on which America had been founded and on the basis of which the Civil War had been fought and won only a few years earlier. When I speak of Progressivism, I mean the movement that rose to prominence between about 1880 and 1920.
(The Progressive Movement and the Transformation of American Politics by Thomas G. West and William A. Schambra)"

Furthermore, the entire postwar prosperity period 1946-1973 was defined by some of the highest income taxes in US history. If those tax levels were actually causing people to avoid investing the GDP growth seen over this period would not be occurring.


Its not staggering now? With projections to continue to grow! The numbers you cite are largely correct. Yet the deficit in 1989, though a large number was somewhat of an insignificant increase. The 1980 deficit was 2.65% of GDP and 1989 was 2.78%. The GDP grew from some five trillion to just over seven trillion


Your argument seems to more closely approximate the "Progressive" system of Wilson. This would not be good for the country as indicated above.


You are going to have to define "significant period". In looking at the debt data for the last century the national debt grew in 46 of the years. And the longest run of the debt reducing has never exceeded four years


Yet in that same period of time the number of people in the "middle class" and the group above that has increased, as well as the level of income! Covering exactly 30 years from today is difficult but 30 years from 2008 is 1978. Per capita income was $6,455 (1978 $), or $19,556 (2008) $). Per capita in 2008 $26,964. Using IRS data the people in the top 10% of earners increased by five million from 1986 to 2006. Those in the top 25% group minus the top 10% grew by three million. Miniumum income for the 10% started at $48,656 and grew to $108,904. The top 25% (minus the top 10%) minimum income rose from $32,242 to $64,702. So not only did the income rise but the number of people in each group also rose, significantly!


That is a direct plank from the "Progressive" agenda. Only Government can make the social "boo-boos" better.
I believe it was the message that generated your response about hidden monies. There exist a tax strategy that has been shown capable of returning all of that "hidden" money to the banks inside the country. As well as bringing back the companies that are now offshore as well. Not only that but will influence foreign companies to locate their operations here. It also will increase the tax base, by favoring no one!

The Mellon study sounds interesting do you have a link to it?


Getting hard figures for this kind of data is next to impossible but there are those that try to figure it out!
"Data on the value of wealth held offshore is hard to come by since neither governments nor the international financial institutions seems either able or willing to research the global picture.
The Bank for International Settlements (BIS)1, an institution controlled by banks, records bank deposits by country. According to their estimates, in June 2004 offshore bank deposits totaled US$2.7 trillion offshore out of $14.4
trillion total bank deposits. This means that approximately one-fifth of all deposits are held offshore2. However, this figure relates solely to cash. It
excludes all other financial assets such as stocks, shares and bonds, and the value of tangible assets such as real estate, gold and even yachts held
offshore as well as shares in private companies. These assets are typically controlled through offshore companies, foundations and trusts, the latter not even being registered let alone required to furnish annual statements of account. The value of these assets is therefore unknown and harder to determine.
In 1998, Merrill Lynch / Cap Gemini’s ‘World Wealth Report’ estimated that one third of the wealth of the world’s high net-worth individuals (HNWIs as banks refer to them) is held offshore. According to their most recent wealth report, the value of assets held by HNWIs with liquid financial assets of $1 million or more was $27.2 trillion in 2002/3, of which $8.5 trillion (31%) was held offshore. This figure is increasing by approximately $600 billion annually, which brings the current figure to about $9.7 trillion."
There is more but in summary;
Summary
Our research suggests that:
Ø approximately US$11.5 trillion of assets are held offshore by high net-worth individuals;
Ø the annual income that these assets might earn amounts to US$860 billion annually;
Ø the tax not paid as a result of these funds being held offshore might exceed US$255 billion each year.
http://www.taxjustice.net/cms/upload...f_Offshore.pdf

Despite our prior discussion.

Your revert to "PROGRESSIVES" as meaning people from the Woodrow Wilson administration when in context it should be clear that was not the meaning being used.

As for your actual accusation, if taxes exist to punish people they wouldn't exist at all. Taxes exist because the government has expenses and taxes give them the revenues to pay for those expenses. No government has ever advocated for taxes as a punitive measure, and I'd be very interested to see a direct account of such.

Point 2 is a well established strategy for reducing the impact of crime in society that has had great success in many European countries and in Canada.

Your statistics actually don't prove much at all. In particular, saying that the number of Americans in the top 25% of US incomes grew by 3 million is the exact same thing as saying that the US population grew by 12 million and doesn't measure anything meaningful about class disparity. Similarly, your salary figures are meaningless because they aren't adjusted for inflation.

The standard comparison is to put the money into currency at a fixed time (for example 1970 US Dollars) and describe the salaries in terms of that. Since this practice is taught in 1st year business calculus and is known by every serious economist whomever is generating the numbers is either intentionally creating misleading data, or is uneducated. The same applies to the salary figures for various strata.

Regarding your offshore data, the study is inherently bad because no attempt is made to classify which assets can actually be internalized. A sizable percentage of offshore assets in this day and age relate to American Owned offshore businesses and some of them are from countries which have no tax agreement with the US and thus by law are taxed in the country in which the money is earned (local to the asset).

In 1998 the figure was 33% in 2002 it was 31%, yet your source argues it is increasing rapidly, this claim seems questionable at best.

Note that offshore asset income is capital gains. Capital gains are taxed at a lower rate than 29.65%, which suggests that the $255 billion figure in the report is wrong. It is also disingenuous to list recreational assets as part of the problem as taxes are based on INCOME not ASSETS.

Lastly, no changes to tax law are going to make me able to have shares of a Japanese company listed on Nikkei as an asset in the United States.

[steelish]

The Mellon study sounds interesting do you have a link to it?

Because Wikipedia has been used by others...here

[SadisticNature]

Because Wikipedia has been used by others...here

This has some of his history but what I was curious about was the actual study you quoted earlier.

[steelish]

This has some of his history but what I was curious about was the actual study you quoted earlier.

His plan was explained in that Wiki article...

The Mellon plan
Mellon came into office with a goal of reducing the huge federal debt from World War I. To do this, he needed to increase the federal revenue and cut spending. He believed that if the tax rates were too high, then the people would try to avoid paying them. He observed that as tax rates had increased during the first part of the 20th century, investors moved to avoid the highest rates—by choosing tax-free municipal bonds, for instance.

As Mellon wrote in 1924:
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.

If the rates were set more reasonably, taxpayers would have less incentive to avoid paying. His controversial theory was that by lowering the tax rates across the board, he could increase the overall tax revenue.

Andrew Mellon's plan had four main points:

Cut the top income tax rate from 73 to 24 percent
Cut taxes on low incomes from 4 to 1/2 percent
Reduce the Federal Estate tax
Efficiency in government

Mellon believed that the income tax should remain progressive, but with lower rates than those enacted during World War I. He thought that the top income earners would only willingly pay their taxes if rates were 25% or lower. Mellon proposed tax rate cuts, which Congress enacted in the Revenue Acts of 1921, 1924, and 1926. The top marginal tax rate was cut from 73% to 58% in 1922, 50% in 1923, 46% in 1924, 25% in 1925, and 24% in 1929. Rates in lower brackets were also cut substantially, relieving burdens on the middle-class, working-class, and poor households.

By 1926 65% of the income tax revenue came from incomes $300,000 and higher, when five years prior, less than 20% did. During this same period, the overall tax burden on those that earned less than $10,000 dropped from $155 million to $32.5 million.

Mellon also championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business

The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs. Surely we can afford to make a distinction between the people whose only capital is their mettle and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.

Mellon's policy reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, but then the Depression caused it to rise again. By 1935, Franklin Roosevelt had gone back to high tax rates and wiped out Andrew Mellon's initiatives. The top tax rate went to 80% by 1935 and the federal government increased excise taxes in an attempt to make up for the lost revenue.

[SadisticNature]

His plan was explained in that Wiki article...

The Mellon plan
Mellon came into office with a goal of reducing the huge federal debt from World War I. To do this, he needed to increase the federal revenue and cut spending. He believed that if the tax rates were too high, then the people would try to avoid paying them. He observed that as tax rates had increased during the first part of the 20th century, investors moved to avoid the highest rates—by choosing tax-free municipal bonds, for instance.

As Mellon wrote in 1924:
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.

If the rates were set more reasonably, taxpayers would have less incentive to avoid paying. His controversial theory was that by lowering the tax rates across the board, he could increase the overall tax revenue.

Andrew Mellon's plan had four main points:

Cut the top income tax rate from 73 to 24 percent
Cut taxes on low incomes from 4 to 1/2 percent
Reduce the Federal Estate tax
Efficiency in government

Mellon believed that the income tax should remain progressive, but with lower rates than those enacted during World War I. He thought that the top income earners would only willingly pay their taxes if rates were 25% or lower. Mellon proposed tax rate cuts, which Congress enacted in the Revenue Acts of 1921, 1924, and 1926. The top marginal tax rate was cut from 73% to 58% in 1922, 50% in 1923, 46% in 1924, 25% in 1925, and 24% in 1929. Rates in lower brackets were also cut substantially, relieving burdens on the middle-class, working-class, and poor households.

By 1926 65% of the income tax revenue came from incomes $300,000 and higher, when five years prior, less than 20% did. During this same period, the overall tax burden on those that earned less than $10,000 dropped from $155 million to $32.5 million.

Mellon also championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business

The fairness of taxing more lightly income from wages, salaries or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it; in the other, the source of income continues; the income may be disposed of during a man’s life and it descends to his heirs. Surely we can afford to make a distinction between the people whose only capital is their mettle and physical energy and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earnings capacity is at an end.

Mellon's policy reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, but then the Depression caused it to rise again. By 1935, Franklin Roosevelt had gone back to high tax rates and wiped out Andrew Mellon's initiatives. The top tax rate went to 80% by 1935 and the federal government increased excise taxes in an attempt to make up for the lost revenue.

I've seen all of that, but earlier when talking about Mellon you mentioned a study he did, and its that that I wanted to see.