2016 Democratic presidential candidate, Sen. Bernie Sanders told CNBC's John Harwood this week that he could back a 90 percent top marginal tax rate for the richest among us:
Harwood brought up that some have likened efforts to combat income inequality to Nazi Germany. Sanders noted sarcastically, “When radical, socialist Dwight D. Eisenhower was president, I think the highest marginal tax rate was something like 90 percent.”
Harwood followed up by asking, “When you think about something like 90 percent, you don’t think that’s obviously too high?” to which Sanders replied, “No.”
He continued, “What I think is obscene…when you have the top one-tenth of one percent owning almost as much as the bottom 90.”
And as the article noted, Sanders is correct;
Sanders is right that the top marginal tax rate, that paid by the wealthiest Americans, was around 90 percent under Eisenhower — it was actually 92 percent in the 1950s. Today, the top marginal tax rate is 39.6 percent, although the richest 1 percent end up paying less than that on average and the average rate actually fell for many years.
But that’s not likely the case. Last year, economists found that the point at which the top tax rate is high enough to maximize government revenues but not so high that it discourages the rich from trying to earn more is quite high: about 95 percent for the 1 percent. History bears that out. Economists have pointed out that post-war American growth has been higher during periods with much higher top marginal tax rates and lower when tax rates were substantially lower. When the top rate was more than 90 percent in the 50s, economic growth averaged more than 4 percent a year. But recently when the top rate has been closer to 35 percent, growth has been less than 2 percent a year on average.
The point of higher tax rates isn’t just to penalize the rich, of course. They would need to serve a policy function. For Sanders, that’s combatting income inequality. “If you have seen a massive transfer of wealth from the middle class to the top tenth of one percent, you’ve got to transfer that back,” he told Harwood.
A 90 percent top tax rate could achieve that goal. The same economists who found that the rich can swallow a 95 percent rate also found that a 90 percent tax rate for the 1 percent could significantly reduce the Gini index, a measure of income inequality. It would also help lower wealth inequality. Meanwhile, everyone’s wellbeing would improve, rich and poor alike.
Don't tell that to the Ayn Rand worshiping yappers over at Faux "news" though. On this Saturday's Bulls & Bears, the topic of Sanders' proposal had nearly every one of their heads exploding, with cries about those "job creators" taking their ball and moving to another country if their taxes go up.
Regular and former wrestler John Layfield fearmongered that it's going to a make us just like France and we're going to have rich people move out of the country, as we saw Gérard Depardieu and a few others do.
Gary B. Smith wanted the viewers to believe that Sanders proposal would tax all of people's income at 90 percent, rather than just a portion of their income. And right wing rag Townhall columnist Ashley Pratte claimed that the entire United States' economy was going to collapse, with an assist by host Brenda Buttner, who was also happy to pretend that the 90 percent tax is going to be applied to someone's entire income as well.
BUTTNER: Okay, if we just look at the basics Ashley, and the government takes nine out of ten dollars that you earned out of your pocket so it can spend it, what does that do to the economy?
PRATTE: It cripples it. We're going to see jobs lost as a result. We're going to see our nation's richest people leaving, the ones who are supplying a lot of these jobs by putting their companies here in the United States.
And I think that's something that, you know, Bernie doesn't recognize here. And honestly, bye bye Bernie instead of bye bye wealthy people, because we need them to keep our economy going, and right now we can't afford to lose any more jobs. We have one of the highest unemployment rates, even though the President wouldn't tell us that, because he's not accounting for all those people are no longer getting into those lines any more because they've just given up hope. And is that an economy we really want to kick back into recession?
I mean, these numbers are just startling. Do we really want to say now that those that are investing at a time like this, it's not going to compel them to take any risks. We're going to see jobs lost. We're going to see capital down.
I mean, it's a terrible, terrible idea and I just think it's absolutely crazy, but we're at a point right now where the President has come out and called for these minimum wage, arbitrary hikes to fifteen dollars, and let's tax the rich because they should be villainized, just like Mitt Romney was villainized.
Jehmu Greene, their lone outnumbered fake "liberal" was the only voice of reason, reminding them about those tax rates during Eisenhower's time in office, with Jonas Max Ferris coming in a close second by reminding them that some rich people will do things like hire more people rather than pay that money to the government in taxes. Par for the course, it fell on deaf ears.
It wouldn't be a Saturday on Fox if they weren't either bashing those living in poverty and labor unions, or taking up for the rich as they were doing here. If you think they're bad now, wait until Sanders starts picking up some traction in the polls. The waling and screeching over at Fox is going to be unbearable.