Increase their tax burden to 2/3rds and they will have a hard time justifying taking that pay. If corporate taxes on profits increased, these firms would be looking for more domestic deductions, to avoid the taxes. In fact, it’s low taxes that reward the executives for selling off factories, looting pensions and the like. As we state in the paper, the rich are Shrugging now, under low taxes, though under high tax rates they didn’t.

You really don’t get it. We can have the rich squander their uncontested earnings on golden shower curtains and trash bins, or we can force the companies to spend that money in a more directed and productive manner. Fewer Mercedes and perhaps more delivery vans.

don’t forget the impact of the Bush tax cuts and the medicare part D expansion that he passed but didn’t try to fund.

Your remark presupposes that the effective tax rate changes under higher tax rates, history suggests that’s not true. Under the Ike and Kennedy tax rates which ranged from 94-70%, the effective tax rate never changed much from 20%, even today that figure is remarkably similar (17.5%) So, we’re left with the question, what happened to that money? Well, the simple answer is that money fled into deductible avenues–again those are Employee Benefits, Expansion, New Equipment, R&D, Advertising–all deductible business expenses. Considering Corporations are sitting on $2 trillion in profits, taxing those profits is exactly what’s needed to encourage them to engage that money into the economy.

That would be an improvement over anything they’ve done since. I took this argument, that higher taxes drive investment and expands GDP to about MBA students from Harvard, Wharton, Kellogg, Stanford and Columbia and they couldn’t refute it. Why can’t the democrats, why can’t some one, EVEN ONE economist make my argument?

by E. R. Bills and Scott Conner,

It’s hard not to cringe when people talk about the 90% income tax rate on wealthy folks under President Eisenhower. Or the 75% income tax rate on the well-off under President Nixon. They seem outrageous and unfair, almost un-American. But the economies under both these Republican leaders (and especially Ike) were vibrant and prosperous. The United States was winning, and higher taxes on the wealthy played a big part.

I know the very mention of taxing “job creators” cuts conservative flesh and victims will scurry to flat-screens for the salve of countermanding Fox News talking points, but hear me out. We’re being had and this is no time to gather up our toyed-with stances on this issue and run home.

Eisenhower and Nixon weren’t taxing the rich to punish them; they were taxing them to build the economy. And wealthy folks who were highly taxed still got handsomely rewarded.

“How?” you ask, hardly masking your incredulity (if not outright contempt).

Deductions.
When the wealthy and well-off in this country were taxed at such exorbitant rates under Eisenhower and Nixon, they didn’t pay exorbitant taxes. They utilized every deduction and write-off in the book. Like any other red-blooded American entrepreneur, they wrote off everything possible and rewarded themselves and their companies every way they could. They bought new equipment and increased their business’s assets. They paid for company vacations, yachts, vehicles, etc. They gave out extra employee bonuses. These expenditures were all tax deductible investments that essentially constituted back-door rewards. Higher taxes didn’t punish the wealthy because they didn’t pay them.

Higher taxes led to greater deductions. Greater deductions led to increased investment and commercial expansion. Increased investment and expansion created higher GDP.

This is not rocket science. Where our overall economy is concerned, higher taxes create greater investment and lower taxes achieve exactly the opposite.

Lower taxes reduce deductions. Decreased deductions stifle spending and subdue investment. Lower taxes enable wealthy folks to sock away their profits instead of investing them in the economy. Put simply, the most effective way to shrink the middle class is to allow the wealthy to hoard the profits they’ve garnered largely from the backs of the middle class.

Higher taxes will never force the Tea Party’s capitalist “Atlases” to shrug—they’re already being allowed to shrug by lower taxes. And the ridiculous Grover Norquist anti-tax chastity pledge is simply an iatrogenic measure that further endangers an already reeling patient. It keeps investment and spending low and misery high.

I am not wealthy, so this isn’t going to be a Joe the Plumber mischaracterization. I am involved in a small business. If we have a good year and it looks like we’ll have to pay more taxes, we simply buy a new company truck or computer or some other useful piece of equipment or inventory. The company I work for still pays taxes, but also pays itself. The write-off is our reward and it puts money back into the economy. The better we do, the better the economy does. Every good businessman (or woman) knows this.

If we’re truly in this together, trying to get this country back on its feet and move it forward, aren’t higher tax-spurred deductions a good thing?

They worked for Ike, and he had WWII to pay for.

The anti-tax mantra is anti-progress in terms of the problems we face. The burgeoning deficit will not be reduced by lower taxes. The middle class will not be restored by lower taxes.

It’s time to look to the Greatest Generation for solutions. President Eisenhower’s higher taxes forced the wealthy to spend instead of hoard. Higher taxes today would do the same, and the wealthy would still be wealthy.