Thomas Piketty explains how Elizabeth Warren's wealth tax is American as apple pie

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…arguing (with data to support his position)…

Data? That’s all you libruls care about is your precious data! How’s that going to make America great again? You gonna build a wall out of data? Pwned!




the right and conservatives love the idea of setting society back in time to the “good old days” (notably where women and minorities didn’t have rights or even a voice) so someone is really missing out on the simple marketing trick of just rolling back taxes to the “good old days” of the 1920s

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Just be aware of the Mellon dip in the 20’s.

Of course it also pairs well with what happened around income equality in those times:


They are almost inverse curves.


That top federal tax rate chart looks much different than the chart that shows the effective tax rate of the top 1% during the same time period.

The reason is that the top marginal tax rate in the 50s barely applied to anybody. Only about 10,000 tax payers qualified (so only a small fraction of the top 1%) and only the amounts they earned above that level hit that marginal rate.

You can’t just look at the top rate, you have to know what percentage of tax payers fall into that category as well.


And the plan to implement a 70% tax rate on $10M earners is the same. To get into the top 1% income you need to make around $300k, not $10M. Only about about a twentieth of a percent of Americans earn $1M or more, and that’s the top bracket the IRS reports on. It may be that only 10k or 20k Americans would be paying that top tax rate, just like in the 50s. The effective tax rate for the top 1% wouldn’t go up that much.


You are absolutely correct. It is one of the common fallacies when dealing with discussing tax rates. And that is an awesome graph of seeing what upper income Americans actually end up paying overall versus what the top rates are.

What I was going for more was pointing out the correlation between adoption of Supply-side Economics or its precursor in the 1920’s and a spike in wealth disparity. The graph of the top tax rate makes it easier to see where tax reform policies that were meant to stimulate the economy by reducing taxes happen and how a increase in the wealth gap quickly follows.

In my opinion given the relatively few who pay the top rate, like you pointed out, makes it safer for politicians to mess with top tax rates without making too many waves. But given how much wealth is beginning to concentrate at the highest levels it also means more and more revenue if being lost when cuts like those are made.

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They could call it the professional athlete tax.

There are currently 134 NBA players earning over that amount for example. Steph Curry would be taxed an extra $10MM+ per year.

There are 115 MLB players above that level.

LeBron James is saving up to try to buy an NBA team. Would you really want to keep him down and never let him crack that ceiling?

Most business people make their money outside of ordinary income. It seems more equitable to tax inheritances or capital gains.

Yet it is Howard Shultz who is thinking of running for president to avoid having the tax implemented, not LeBron James.

The regular defenders of the rich simultaneously argue that taxing them is unfair and that it won’t work anyway. You provided a chart that shows that top 1% paid higher taxes in the 1950s, more than 5 percentage points higher. The idea that they won’t pay higher taxes if taxes are higher is silly.

I’m in favour of an inheritance tax as well. I actually like Warren’s wealth tax even better.

I don’t have some special sympathy for NBA players over people who run businesses. I genuinely think society would be a better place if literally no one was making $10M a year. I’d favour tax schemes that were substantially more than the 70% to $10M+.


Last month I sat in on a multi day conference at a big 4 accounting firm and listened to all the ways that they are trying to help their clients handle their tax compliance. It is absolutely mind boggling how complex it is. The main cause of the complexity is that almost everything is international at this point. 33% of Fortune 500 companies have a subsidiary in Luxembourg for instance. They all have mixes of domestic and foreign investors as well as investors like family offices, States, municipalities, and foreign countries. And most countries are competing with each other for business and for wealthy people.

There are structures like these that the IRS is trying to properly analyze and enforce.

Yes? Because we should not be making tax policy based on what LeBron James wants, but rather what’s best for the populace. But that’s not really the discussion here. Considering what LeBron James has accomplished in his career, I don’t think anything like a change in the tax code is going to keep him from accomplishing something he wants to accomplish.


And those companies and people who own them are lobbying the government to prevent taxes from going up, not sitting back and saying, “Ha, let them raise taxes, doesn’t make any difference to me.”

Either their all stupid as hell (I admit this is possible) or they eventually have to pay some amount of taxes, and higher taxes will mean paying more.

Criminal enterprises go to just as complex lengths to pay taxes. There are advantages to doing so.


Does it make sense that someone would take home substantially less if they earned $20MM in year 1 and $0 in year 2 compared to another person who earned $10MM in year 1 and $10MM in year 2?

Yes again. I sympathize with the scenario, not so much with the idea of those kind of massive income levels (I wish!), but with boom-and-bust income cycles. I’ve experienced it, where I had abnormally high income one year then almost zero the next thanks to the financial crisis. However, that’s the fundamental nature of progressive marginal taxation.

Bear in mind that the difference between the taxation levels of your $20M/$0 and $10M/$10M scenarios isn’t very much in a marginal tax rate system. I could see someone who isn’t very savvy creating big problems for themselves with the first of the two scenarios if they overspend in year one and have to sell off assets to support maintenance/costs of other assets in year 2. Still, no one is going to cry for someone who leverages themselves to the hilt while making $20M in one year then pays the piper the following year.

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These are a lot of questions about the fairness of taxing people who, no matter how we tax them, will have homes, clothes, food, ipads, schools for their kids, clean water, etc., when America has a staggering number of people with no homes, inadequate clothes, food insecurity, schools open only 4 days a week so teachers can take on a second job to make ends meet, parasites from dirty water, etc.
During the shut down there were lots of news stories about how people with government jobs apparently can’t miss one paycheck without financial ruin. Thinking about how a person living paycheck to paycheck might be affected by having their income compressed into a shorter period of time seems like a reasonable thing to do.

But a person averaging $10M a year?

Let’s say we have 40% tax up to 10M and 70% above 10M. In one scenario the person has an average takehome income of $6M a year in the other it’s only $4.5M a year. Whatever will they do?!? We’re arguing about whether it’s really fair to Marie Antoinette to take an extra 17% of her cake and give it to the hungry.


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