. The rich pay less taxes as a share of their income than they did in the 1970s, and they control much more of the nation's wealth.

As someone who lived in the 70's, I say this intuitively doesn't feel right.
The standard of living has gone up across the board since the 70's. Look at the size and type of houses that have been built in the last 15 years.

At what point does a rate become too much?

60%
70%
80%
90%
98%

Is there a point? Is it a matter of fairness, even if the rate can be demonstrated to stifle economic growth? Is growth more important than 'fairness'?

kaybeel, it might not feel right, but feelings are not facts. The redistribution of wealth upward - lower income folks earn less (after inflation) than they did 10 years ago) - is a fact.

Ezra, don't forget that that tax rates are incremental. The highest rates are only paid on the portion above certain income levels, so effective rates are lower than nominal rates. The rich also pay lawyers and tax accountants and investment managers to find the places for their money that are subject to the least tax. Lower income folks can't afford those 'helpers', and they have almost no things to be sheltered (except home mortgages) - and we've seen how that works out).

A helpful question is 'who can afford to pay more taxes?'

el viagra: even if the rate can be demonstrated to stifle economic growth?

Where's the demonstration?

Trickle down is a fantasy. Earlier post WWII periods with much higher rates did not stiffle anything - although they may have been unwise from a perception basis.

Where's your beef?

"In 1979, the top one percent brought home 9.3 percent of the national income … In 2005, they brought home 18.1 percent of the national income …"
--Ezra, citing FactCheck.org

"As someone who lived in the 70's, I say this intuitively doesn't feel right." --Kaybeel

Kaybeel, is there some flaw in the data or the argument you'd like to point out or are we all going from intuition here?

To respond to your points, the standard of living can go up even while the rich control more of the wealth, if prices on some items are going down. Go back far enough and only the rich owned a television; now, everyone has one! But the rich still control more of the wealth.

I also don't know if "the size and type of houses that have been built in the last 15 years" really fits your argument, given how clear it's become in the last few months that those houses were often being built for buyers who couldn't afford them. People bought McMansions because they wanted to look and feel rich, not because they were rich.

I always type ration instead of ratio, too. It's really annoying. My fingers just want to type the n whenver I type tio.

As you make more money, you can bear to pay a higher rate.

While this is true it ignores the purpose of an effective tax system. An effective tax system should maximize total welfare. It is also true that a dollar given to the poor increases welfare more than a dollar given to the rich, but this reasoning assumes a simple redistribution of a fixed amount of wealth.
So instead of focusing on the morality of taxation focus on the economics of taxation. How much would increasing the top marginal rates, in 2008, harm the economy? I would imagine if you could convince Americans that median incomes could rise with a more progressive taxation system winning elections should be easy for a progressive.

Of course the real problem and the reason why Huey Long populism fails is because maximizing total welfare is a lot different than increasing median income. America does have the highest median income of any country (bar any tax havens) in the world. I don't understand how a party can win without maximizing median income but Europe seemed able to. Perhaps progressives real need to form a third party and introduce a more representative form of government. Otherwise anyone who threatens the median income hegemony is doomed to failure.

The richest people often make their money from capital gains/dividends/stock options/etc. so they only pay 15% tax on such incomes. They also have lawyers and accountants to hide their money from the IRS.

Warren Buffet has an effective tax rate of 18%, and, on average, the richest 1% of Americans have an effective tax rate of 23%.

Anyone arguing about whether or not 28% is fair is already lying to you. The rich don't actually pay 28% (much less 35% or whatever). Lets speak truthfully about what they do pay before we argue if its fair or not.

And lets remember that in the 50's the rate for the rich was 90%. In the 70's and 80's, it was about 70%, and even under Reagan, it was 50%.

There is no reason to speculate what would happen if the rate on the rich was higher. All that has happened since we drastically cut those rates is the disappearance of the middle class, the growth in income inequality, and of course, the explosion of the national debt.

Kaybeel, is there some flaw in the data or the argument you'd like to point out or are we all going from intuition here?

I clearly said intuition. Clearly statistics can show us a lot, but never the whole picture.

To respond to your points, the standard of living can go up even while the rich control more of the wealth, if prices on some items are going down. Go back far enough and only the rich owned a television; now, everyone has one! But the rich still control more of the wealth.

If everybody's standard of living is going up, does it matter if the rich control more of the wealth?

Kaybeel:

Yes, it does matter if "everybody's standard of living is going up, does it matter if the rich control more of the wealth?." For one, it means that people who are doing the work aren't getting a fair reward for their labor (especially when you consider rising productivity). For another, when everyone's standard is inching up only, it renders people really vulnerable to sudden income shocks - a sudden goose in gasoline prices or an unexpected hospital bill - that can suddenly reverse things. Hence, the fact that median income for working families has dropped $2,000 in the last eight years.

For one, it means that people who are doing the work aren't getting a fair reward for their labor (especially when you consider rising productivity).

No it doesn't. It depends on how people made their wealth and what they do with it, as well as what the people at the bottom end are doing to be productive.
Are some of the people at the top generating more wealth, by employing people in higher-paying jobs than they otherwise may have?
What about the owners of google, who are worth a googleillion, who employ people at high wages?
How do we define the people who are doing "the work" when it comes to talent-heavy careers like professional athletes, authors, actors, etc?
How are you defining people who are doing "the work"? Which work?

Not owners of Google, obviously. Founders of Google.

"Clearly statistics can show us a lot, but never the whole picture."

No indeed. The whole picture comes from taking what you already believe, and then continuing to believe that regardless of what any evidence shows you.

Find your own statistics or stop wasting our time.

If everybody's standard of living is going up, does it matter if the rich control more of the wealth?

I gave the peasants fresh straw for their hovels! Everyone's standard of living has gone up, I don't see what the fuss is about.

Gekko - Keep in mind that the highest federal marginal rates of income taxation - effective post-WWII until the 1970s, were over 80%. Now, don't forget that a very small number of people were subject to these taxes and a rather small amount of revenue was collected by it - rather it's an application of Rawlesian equality. In terms of economic growth, the standard models do not call for it to have a substantial impact because:
i) little revenue is affected by it
ii) investment decisions are affected by capital gains tax rates, not income tax rates.

The point is that the effect of marginal income tax rates on economic growth is not simply a question of how high you go.

kaybeel, are you a retard? Did you really fucking use the example of HOUSES to illustrate increasing standards of living? Use TV, use the internet, OK. Houses?

we built the houses because we were in a massive and crazy housing bubble. Then the bubble popped. Did you not exist for the past three years?

p.s. income/wealth inequality is highly correlated with (and, i would argue, causes) any number of macroeconomic problems. the current recession is one such example.

No indeed. The whole picture comes from taking what you already believe, and then continuing to believe that regardless of what any evidence shows you.

Oh, I was beginning to think the whole picture comes from a selection of charts and graphs.

I gave the peasants fresh straw for their hovels! Everyone's standard of living has gone up, I don't see what the fuss is about.

Yes.
Americans are peasants living in hovels and are lucky to get straw. Excellent point.

It sounds like one person here is being intentionally obtuse. If you can't back your rhetorical assertions and mental gymnastics with actual data, as Ezra and others have provided, then what you are saying has no value.

So, when 1 person can prove that actual incomes vs. inflation have decreased by during this decade by XX amount of dollars whilst this nation has acted upon certain known economic principles, and you respond with "I have this feeling...", you LOSE.

Yes.
Americans are peasants living in hovels and are lucky to get straw. Excellent point.

That was, obviously, hyperbole. The point is that you have put yourself in the position of pretending that a 5% raise is just as good as a 10% raise. After all, you're earning more money either way, right?

I am with El V. Since we don't know where we are on the Laffer Curve why not set the top rate at 50% and keep going up by 5% per year for the next 10 years. Hopefully we will find t* at some point.

Debates on tax rates tend to be misleading unless the debate includes the structure of deduction, exemptions, credits, and etc.

Those who try to make this simple risk coming to the wrong decision.

Can/should marginal rates go up? Yes. Must we "reform" taxes carefully. Yes again.

Higher tax rates cause taxpayers to approach transactions differently. Go to high, the results will be bad.

And those who think changing tax rates will quickly solve inequality are missing many other factors.

Ezra,

Please take a look at Cornell economist Robert Frank's idea for a steeply progressive consumption tax.