The case for higher taxes on the wealthy

[1939]

105. I don't have a paper, but here goes

1. The paper cited argues out of both side of its mouth before saying the the optimal tax rate on high income earners is 42% to 76% which isn't very precise. The paper also notes that they can't calculate the effect of changes in economic behavior on government income in response to higher tax rates. The paper also calculates that capital income should be taxed at a low rate before just dismissing it out of hand with no justification.

2. I would like the "players" and the "hedge fund execs" to stop getting around taxes. I would submit that having cap gains of less than a year taxed at 125% of the individual tax rate on ordinary income would hurt the players enough to get them out of the business (or at least reduce their effect). By the same turn. i would tax cap gains from 1-2 years at normal tax rates. I would then have a sliding scale to where cap gains phase out to zero after 12-15 years as an encouragement to long term investment in our economy and so that a businessman who has built a small business from scratch doesn't get hammered when he retires and sells the business. Over the long term, capital gains are to a large degree an "inflation tax" where you are paying taxes on inflation of assets rather than growth of assets.

3. I would tax dividends at ordinary tax rates, but I would permit corporations to deduct dividends paid from their corporate profits to eliminate double taxation of the dividends. As an alternative, interest and dividend payers could be taxed at 30% on all interest and dividends paid with the dividends and interest passing to the recipient as a "tax free" transfer with no requirement for all of the annoying 1099 at tax time.