More taxes would be a much easier pill to swallow if the people advocating for said taxes at least paid lip service to increasing government efficiency. Some do, but most don't. At best you can get them to acknowledge that suburban police departments don't need MRAPs. There's a lot of fat (mostly related to institutional risk/responsibility avoidance IMO) that could be trimmed and that money could be put into things that actually improve quality of life for people.
No one that this proposal would affect would have any trouble escaping if the government became so poorly run that it started to cause serious problems.
You recognize that this is aimed at higher marginal taxes on those who are already making very large amounts of money, right?
How is that relevant? I would give up 83% of my wealth if all other wealthy would and it would solve inequality. If it is only me that needs to give up 83%, then not only is it not fair, it also does not solve societal inequality.
I'm not sure how confident wealthy individuals might be that giving up 83% of their wealth would solve inequality.
I'm not sure how many wealthy people care about inequality.
I used to work with a multi-millionaire who thought everybody that was poor just didn't work as hard as him / wasn't as smart as him. He thought everybody should work 2 jobs and go to school in order to better themselves.
Of course. Not that I agree with that idea, but no one should give up the wealth that they built up without sufficient guarantees (and the guarantees need to be enormous) that everyone else will and that it will be used for the greater good.
For example, in Western Europe after WWII such taxes could be raised effectively. Right now, governments have more of a trust issue to effectively make policy like the above. But being impractical does not imply it is a bad idea as of itself.
I don't know how much wealth you have but you could probably find 2-3 people in your circle of friends who if you gave 83% of your wealth to it would seriously improve their lives.
Why not do it? Why does everyone else have to do something first?
You can't make widespread culturual, social change on an individual basis like that. It's like asking people why they don't just cut the government checks if they think taxes should be higher- even if I cut the government a check for everything I had it would increase their coffers by ~0.0000001%. It's not significant on that level.
I'm not asking everyone else to do it first. I'm asking everyone to do it together.
Wrong, you are making yourself feel good by telling yourself the problem is too great to handle. You feel like you're a good empathetic person except you don't do anything.
Actually doing something takes effort, and is hard, and is risky.
A useful analogy I once heard: suppose I want the government to build a dam somewhere. It would be totally pointless to go to the riverbank and start piling up rocks myself.
lol what? Literally like all of human development is because somebody didn't want to sit around and wait for the government to solve their problems. This is such a crazy sentiment. It's literally the silly conservative talking point that liberals want the government to solve their problems.
Then what do you do when you realize you’re not the smartest, or best athlete, or good looking? There will always be inequality to some degree or another.
I am neither the smartest, best athlete or best looking by multiple degrees of magnitude. Why I should be the richest by multiple order magnitudes is a complete miracle to me.
Yes, there will always be inequality. Yes, that is a good thing. But that is no excuse to the current level of wealth disparity.
There isn’t “extreme” inequality, there is higher inequality though. Btw, if you were to lookup the root cause for this you’d find the government and the fed printing money that pushes up equities.
Inequality in all its forms is not bad per se. Economic inequality is bad because (1) on a moral level, it is grotesque that some people have so much while others struggle immensely (and we can do something about it - money can be transferred, looks cannot), and (2) money amplifies the political voice of those who have it, undermining the concept of democracy - especially when they use that voice to direct benefits of the political system to themselves, at the further expense of the have-nots. Socialism for the rich and capitalism for everyone else, as the saying goes.
Plus, the sheer magnitude of inequality is immense in the area of wealth. It follows an exponential distribution; those other things you mentioned follow a normal distribution.
I never really understand this perspective. it's not like there's some magic cutoff where finally an organization has enough money to do something good. unless there's some significant economy of scale or transaction costs at play, the 83% of your wealth funds just as much "good" whether or not other people pay. why are you only willing to pay if it solves a huge problem in one fell swoop?
You mean economy of scale or transaction costs such as the government being able to negotiate drug prices when everyone is on Medicare (or some other version of nationalized healthcare) so that drug companies can't raise insulin and epipen prices 10,000% with no improvements to the drugs?
That’s plainly incorrect. 83% of my lifetime wealth might pay for 0.1% of a suspension bridge, but 0.1% of a bridge by itself does not carry 0.1% the cars that a completed bridge carries. The incomplete bridge carries no cars.
we don't only need large discrete items. 83% of a software engineers lifetime earnings could feed/house a lot of people for a short time or at least a few indefinitely. it could pay off many student loans. it could buy thousands of books for a library.
There are huge economies of scale for these things too, and more importantly, there needs to be structure and people who know how to implement social programs getting paid to do so.
You would live in a city where everyone was doing well. Everything you make is as conditional on the world around you as it is yourself. If both thrive you might finally, actually, not just symbolically but truly thrive.
I don't think garbage truck workers would throw in the towel and stop working because income taxes or wealth taxes went up. They're working because they need to eat.
If ohaideredevs is in such a place that he's able to stop working and not have to worry about being able to pay for housing, food, clothes, insurance, and all the other necessities of daily life, then that's great for him, but I guarantee you absolutely that the vast majority of the people in America would neither stop trying to make money, nor stop trying to make more money, just because some taxes went up. More money—even if a higher percentage of it would go to the government—just makes too much of a difference in the day-to-day life of most people for those kinds of concerns to be anywhere near strong enough to make it look unappealing.
So if someone who already has so much money that they don't need to work another day in their life stops trying to make money...or even if it's someone who makes so much that making more wouldn't reduce their stress in daily life no longer trying to increase their income...I don't think that's a net loss to us in any meaningful way.
You act like everyone is capable of doing everything. If ohaideredevs is a world class computer scientist, it would be devastating. The economic contribution of someone who can enrich our knowledge of data science or algorithms is thousands of times higher than blue collar labor. And you cannot just ask a worker in sanitation to start developing new deep learning techniques after you lose someone who can.
Once you get into top 1% territory, any scheme you have to make more money is likely to just be fleecing any workers or consumer public that you have under your thumb. This is a feature rather than a bug.
I would work less. A lot less. I'm at 7 days a week working, I would cut back to 5 days or fewer. Why would I continue to push hard for money that will just go to the government?
Doing less productive things with my time because I am essentially forced to through the tax code should be considered heavy handed government interference in my life.
If you make more than $500k, you're already sending 37% back to the Feds. If you're in a high-tax state you're probably sending significantly more. Increasing the top tax rate is just a difference in degree.
>Unless you're already making that much, how does a higher marginal tax rate on income over $500k affect you at all?
We're on the ycombinator website, presumably the concept of stock options is not foreign to those here. Taking less salary for years with the potential for an IPO is a lot less lucrative when your payout goes down by 50% due to taxes.
> Taking less salary for years with the potential for an IPO is a lot less lucrative when your payout goes down by 50% due to taxes.
Since we're talking about an increase in the top marginal income tax rates, sacrificing regular income for a chance of a big capital gains payout would actually be more, not less attractive, unless this was pared with treating capital gains as normal income—and even then, would probably remain more attractive if also coupled to provisions allowing spreading income spikes (whether due to one-time capital events or otherwise) out via advance and/or deferred recognition options, which is probably necessary for basic fairness if capital gains are treated as regular income—and actually that helps with fairness for some regular income patterns as well.
The top marginal tax rate is already 37% and kicks in at $510,300 for a single person. So if your payout is a million, say, then what happens is that your "less salary" (let's pretend you've slaved away for a pittance of, say, $200k) is taxed normally, and then the first $300 or so of your imagined payout is also taxed normally, but the last bit, the amount over $510,300, is taxed at an additional 13% over what happens today.
So if by "a lot less lucrative" you meant "13% less lucrative," then okay.
E.g. if it hurts the economy, like by slowing economic growth and lowering demand for labor. It would tend to transfer investment decisions from successful business people who like to grow their business to politicians who like to redistribute.
The linked article does a poor job of convincing skeptics, it only looked at nominal rates, not effective rates, and additionally confused the issue by looking at the first derivative of the top marginal rate. Finally, it didn’t even fix the marginal rate to an exchange-rate fixed income ceiling across countries.
Sloppy methodology with a conclusion in search of evidence.
because people don't vote purely for self interest. Maybe you are aspirational and want to earn that much some day. Maybe you believe it best for government to be less a part of daily life than more. Maybe you think higher rates will cause successful people to look for lower rate countries to take their talents. Or maybe, you think it is morally wrong for people to vote to grab money lawfully earned from others just because they can.
If we're just talking aspirations, if (1-taxes) halves, then I'll just aspire to earn double. Earning 1M a year is almost exactly as plausible as earning 2M a year for the vast majority of people.
One argument in the original article is that an awful lot of that >$500k income is just non-productive rents levied on the lower income brackets anyway, so discouraging wasteful rentier behavior is a net positive (as it reduces inequality) without reducing productivity at all, since rents by definition aren't productive, they just siphon money into top earners' pockets rather than growing the economy at all.
Decreasing rent-seeking in top earners will leave more money on the table for everyone else.
Why’s that? I’d happily take 17% of a billion over the ~50% of what I make now, average tech salary. I feel like tax rates are irrelevant to my ambitions.
In the past a lot of people have claimed they’d be demotivated about raising taxes, but it’s never stopped someone from being richer. More is still more, even if the government takes a greater share.
It would incentivize the purchase of pre-tax goods and services. Once you hit the top rate, anything your personal LLC could purchase (on your behalf) would be effectively subsidized. For example, the hiring of full-time personal assistants would become much more economically attractive.
You're really telling me that because you can't become a bazillionaire, you'll have no motivation to make money? You can structure a progressive tax such that the 83% rate only kicks in for income above $10M. Maybe you pay 60% from $1M-$10M. I think that's fair; it leaves plenty of money in your pocket to live a comfortable life well above the means of most people.
Furthermore, your ability to make millions is only possible because of the services provided by government (education, infrastructure, security, financial regulation).
Plenty of people are motivated by much smaller numbers. The average take-home of the top 1% is between $400k and $700k. We're talking about a bigger tax on the 0.1% (>$1M/yr), and a huge tax on the 0.01% (>8M/yr). Again, those brackets are only able to achieve outsized returns because they have educated workers and a stable legal/regulatory system. Because they achieve outsized benefit, they should pay a proportionally higher share.
If those amounts are enough to incentivize 99.99% of the country, and you're still making more than they are, I'm sure you'll survive. If not, someone else will take your place.
> It would work on killing any motivation I might have to make money.
That's probably not true of most of the people dedicated enough to making money that they'd be subject to it in the first place, but to the extent it is, that's probably not a social problem; the rich maximizing their own income isn't always socially optimal.
> Our research on eighteen OECD countries shows that, between 1975 and 2008, there was indeed a strong correlation between reductions in top tax rates and increases in top 1 percent pre-tax income shares... higher top tax rates may discourage work effort... the incentives for [executive] rent-seeking are much stronger when top tax rates are low
> there has been no correlation between cuts in top tax rates and average annual real GDP-per-capita growth
Piketty wants to reduce inequality without damaging the economy, not specifically boost tax revenue from the rich. His claim is that raising top tax rates does discourage people from obtaining extremely high pre-tax incomes, but doesn't shrink the economy. There are several possible reasons for that, but the basic question Piketty cares about is whether you would stop being productive. Someone who trades off salary for a shorter commute, or spends less time angling for a raise, or even hides their money from taxes more effectively, is not necessarily producing less value.
If you lost your motivation to seek more than $500,000/year (remember, this is about the top bracket), but continued to do equally GDP-boosting work elsewhere, that counts as success for this system.
The real question is what was the effective rate? Did any significant portion of those who were in those brackets actually pay those rates, or was it mostly theoretical on paper rates?
how do you then explain the period from 1925 (post war reductions) to 1940 where the top tax rate was increased to finance government during the great depression?
yeah that's still a 100% increase in the number of cases where federal funding is necessary given what the parent poster claimed. also now that we've expanded the pool to include emergencies, all we need to do is coach any argument into emergency classification (national debt, global warming, economic imbalances) for it to justify increased taxation.
This is a distortion of history. No one paid these rates. The Tax Reform Act of 1986 eliminated, reduced, or modified the deductions the people that would've paid these rates were previously allowed. Additionally, the wealthiest individuals typically do not receive much wage income relative to their capital gains.
There are reasonable arguments to be made about increasing or decreasing taxes, or adding new types taxes or removing other ones, but this meme of "our posted tax brackets used to be higher, and everything was fine, therefore we need that again" is simply untrue.
Your original statement was a response to no one, too. Not sure why you're upset when he did the same. I think it's arguably even fairer of him, because due to your lack of explanation for why you made your comment, he was left to surmise what the purpose could have been.
I now believe that the only effective way to end the excesses of inequality is for effective tax on assets, land being the most obvious but all assets should be up for taxation.
And as strict as asset taxation should be, so should income taxation be reduced.
So, let me get this straight: I'm supposed to spend half my life getting educated so I can go out and make good money only to then have it confiscated? How about no.
I didn't even start making anything until age 30, actually 31, because I graduated with my PhD then it was a massive recession and I basically sat around in my underwear for almost a year watching the world burn down on CNBC (2003). I got on my feet in 2004, but it wasn't until 2005 that I made anything decent as far as income.
Fast forward to 2019, I'm in the 7 figure net worth range and on target for retirement.
WTF and I supposed to do? I'm now considered "rich" after having lived most of my life as a poor sucker without two pennies to rub together. I'm totally serious. I grew up very blue collar, lower middle class, and busted my ass to get where I am.
I will never make $500K a year, not ever.
Fuck your taxes.
ETA: Not sure why you're downvoting me. Do some of you not live in any sort of reality about how difficult it is to make money in the US?
Maybe because he doesn't want to see people who are like him but with better luck (i.e. those who don't graduate into a recession) not get economically shot in the kneecaps. Just because he didn't take full advantage of it (because luck) doesn't mean he wants to see the path closed to everyone else.
1) "Better luck" doesn't begin to describe making $500k/year. That's just extraordinarily wealthy and well into the top 1% in the US. It is even well into the top 10% in Manhattan and San Francisco.
2.) The last recession was over a decade ago.
3.) If 57% marginal rate is "shot in the kneecaps" in someone's mind, then there is a real problem of perspective.
4.) Decreasing wealth inequality levels the playing field for people not born into extraordinary wealth (see William Singer)
it's 57% _on the amount made over 500K/1M/whatever_ to boot, so you're really talking about nominal taxation effects until you're like 4x whatever the income limit is on this mythical "new top bracket"
I guess it sucks being 'a poor sucker'. Social security can make that suck a lot less. Taxes can pay for that.
It won't help you anymore, but I don't want to live in a world where everyone cares just about themselves.
You're argument is literally, fuck you I got mine. It's not very effective or constructive and that doesn't even get into the obvious contradiction of poor and lower middle class.
charitably there is an angle to this that has some validity -- increases to the top tax rate should probably be paired with wealth recapture through inheritance taxation to ensure that you don't just build a gigantic firewall for existing millionaires who already made their money.
7 figures is a lot, but it's not really uncommon. Credit Suisse estimates there are 17 million millionaires in the US. I think you may be under-estimating how wealthy the people around you are. I know I used to think it was unbelievable that people could earn well into the six figures as individual contributors, until I found out how much some of my friends were earning.
holding a million dollars is way different than earning a million dollars in a given year. the number of people who earn 500K/1M in a given calendar year is a much, much smaller subset.
Oh definitely, my general comment is mostly that there are a lot of wealthy people everywhere in the US who don't seem wealthy. In the media, there's a lot of focus on how the average American is in debt or can't save, but those all make is seem like it's exceptional to be able to save or earn 6 figures when it's not.
It's aimed at wealthy people. People who have so much money that they write the rules against not only you and the rest of the 99% of suckers in the world, but also for the rich, who make up 1.5% of the world. The rich laugh at us suckers, but actual wealthy people -- the .5% -- squash them like bugs when they try to skirt the rules as well.
See Bernie Madoff, the college cheating folks, etc. Rich people are just as screwed when they try to beat the wealthy.
They're the reason you can't make money and that you've been programmed to think you're the target of this.
Oh and those taxes you complain about? You likely went to public schools built on eminent domain land and drove on publicly funded roads or used public transit. Taxes pay for that. All of it. If we taxed actual wealthy people -- those with connections and inherited wealth -- these conversations would be way easier and you probably wouldn't have had to work so hard to enjoy those privileges or freak out at articles like this.
Unlike any other organisation of its size, government is never held liable for efficiency, nobody ever questions government for "return on investment", even though it's the largest one all of us make.
What this article is suggesting is largely suicidal, taking cash from a far more efficient business community government by "laws" of competition, evolution of markets etc, the impact here would be catastrophic at best, I really don't think you can debate this in the space of one article.
My number one would be move all government money on blockchain, and make that public, then see if it's really so smart to "give them more", through any means.
Inequality has always been a constant throughout human history, and it's far better now than in the middle ages, where we are all entitled to education, healthcare, and have extremely fast access to information.
I'm not suggesting there isn't a problem, but you haven't found a solution. "Tax the rich" is something everyone can scream off the top of their lungs, until it comes to bite them hard the next day when their pay must be cut to keep the company they work for profitable.
Step 1 would be removing the biggest inefficiency of capital allocation in most of these "high growth" western economies, measure and publicise return on investment of public funds, and proceed to realise raising tax "just like that" is a very very bad idea.
Yeah you really got the point here, it was the technology to use, not the transparency and traceability.. you're completely right, it's worth 0% of my time arguing over the internet. Thank you ever so kindly for reminding me of that.
You're missing the point completely, it's not about depriving citizens of fundamental services.
- How do you know care home providers don't bribe their way through contracts?
- How do you know they are not an oligopoly that sets the price under the table, and the government pays 1.5 - 2x contributions for someone to be in a care facility versus what you would pay yourself for an elderly relative going to the exact same facility?
Specific counter examples are not fruitful, people who don't have the means don't understand the economics and don't understand money, that's why they are complaining about the inequality, and they can downvote me here all they want, I truly hope it relieves their frustration even slightly.
If you've ever worked with government directly, you're expected to understand it's one of the most rigged and corrupt institutions by very far. Yes, it exists to perform universally beneficial functions, does it really do that? Hello no, in most cases it spends 2 - 3x the money it really needs to for the same service. I'm not suggesting it should cut off the elderly, just cut the waste in providing those services.
Ironically, this attitude causes much of the problem. All that red tape isn’t just decorative. It’s a reaction to tons of concern (and concern-trolling) over government waste.
“How do you know that a contract is above-board?”, you ask. You know this because some committee put together an absurdly detailed Request for Proposals, complete with requirements, evaluation metrics, milestones and circles and arrows on the back of each one. Throw in some politically-imposed requirements (can only travel on US Airlines, lest we “waste” money on the British) too for good measure. The winner’s proposal gets turned into a Statement of Work that specifies what’s to be done, when, where, and how. The whole mess gets audited and inspected and archived so it can be reviewed later by more auditors, Congress, and concerned citizens like you.
Hiring is equally bonkers. Managers (mostly) can’t flip through the submitted resumes and pick out someone that seems clever and driven (“What if it’s their cousin?!?”) Instead, there are long questionnaires and fixed experience requirements. The manager can only pick from the top 3(?) candidates and the salary is barely negotiable.
It is a huge pain. It’s slow, it’s expensive, and it’s not always responsive. The complicated process is exclusionary (Raytheon has rooms of staff that know these rules chapter and verse; you don’t). Right now, it feels like the system spends $100 to be sure it saves $1. We would be better off if we relaxed these controls a bit and trusted individuals a bit more (backed up with audits, obviously, lest anyone get ideas), but....here we are.
I get your point that government is wasteful and corrupt in many ways. I'm not convinced that your proposed solution is coherent or workable.
I'm all for increased transparency but you seem to be additionally advocating a target-based, profit-driven approach. This sort of approach has to my knowledge failed pretty badly in the health, education and prison sectors in the UK. What happens is that as soon as you come up with a way to measure "return on investment" or "level of service", contractors will figure out a way to game those measures whilst providing poorer and poorer actual service.
'Unlike any other organisation of its size, government is never held liable for efficiency, nobody ever questions government for "return on investment", even though it's the largest one all of us make.'
Seriously? Every time there's an election the right-wing parties promise they're going to balance the books or pay for taxes by cutting the fat from all those inefficient government services. It's their mantra, and they fail to do so every time they get elected.
It's a great refrain, yet after living through 40 years of successive privatisations, public-private partnerships and so on, it has repeatedly failed to deliver the promised better efficiency. Maybe one or two succeeded.
Profits and higher exec pay, certainly. Consolidated and bought up by someone else's state utility, as profit centre, yep. Removed from being a political football where the parties on the right of centre consistently under-fund something to "prove" it needs the freedom of private enterprise, again, certainly. Just about every effort to "bring the benefits of the market" to the NHS have made it less efficient, or added layers of additional expense.
Governments, of course, often did encourage, and achieve, sometimes remarkable efficiency. Until it became simply dogma to change it, for change's sake. Few services or arms of government got a blank cheque, except periodically the military. Not surprisingly there's considerable inefficiencies around military spending.
It's funny though, it usually turns out to be the privatisation, the socialisation of a private industry's pollution, accident or other abuses after deregulation that wrecks figures. Like, say, a private sector prison performing so poorly it has to be snatched back into state control, banking bailout, or the public private partnerships which prove disastrous for government return on investment. These are the ones castigated in assorted committees, who are constantly questioning efficiency and return on investment.
> It's a great refrain, yet after living through 40 years of successive privatisations, public-private partnerships and so on, it has repeatedly failed to deliver the promised better efficiency. Maybe one or two succeeded.
The rejoinder here is generally that nationalization also has a terrible track record. Even in domains where some governments have performed efficiently and well from the beginning, governments which take over from private owners often do quite poorly.
Of course, that doesn't mean I'm in favor of privatization. It's entirely possible for both transitions to be primarily harmful, and indeed it's fairly likely if both are championed by people who see a personal benefit. There's a bit in Hitchhiker's Guide where a driver thinks the rain is so heavy his wipers aren't helping. When he turns them off, things do get worse, but when he turns them back on they don't get any better. I've heard multiple Brits cite this to explain the way nationalization and privatization of rail has worked: nationalization brought waste and unreliability, privatization brought gouging and line closures, but each left the harms of the other intact.
Dogma on left of centre is as damaging as on the right as it tends to produce more change for change's sake, just to a different destination. Same goes for so many private sector takeovers and buyouts. In each instance it rarely delivers.
> rail ... each left the harms of the other intact
Pretty much true. The biggest issue during the nationalised period was funding. Few post-war state enterprises got to reinvest profit, so investment became a political choice, which led to the ageing rolling stock and unreliability. Waste - not so much, though I'm sure plenty existed. Pre-war approach to public enterprise seemed to work much better - a town or city owned a corporation, that could keep and reinvest its profits, and the city was more like shareholder. I'm not sure why this approach ceased to be - possibly the ever increasing centralisation from both right and left.
The way rail was broken up was utterly bizarre and ridiculous - it was never going to work broken up in such an unnatural way. Yet, if Corbyn had his way and re-nationalised, it might work, briefly - at great expense and disruption - for his first term. First Tory government would bring back under-funding, and off we go again. Nope, never gonna work.
Better stronger QoS regulation than that, though a rethink of the various disjointed bits is looking unavoidable. If only privatisation had gone back to the big 4... or created a medium 8 or something.
> it tends to produce more change for change's sake, just to a different destination. Same goes for so many private sector takeovers and buyouts. In each instance it rarely delivers.
Nicely put. I do think it's possible that nationalization and even privatization can produce improvements, but they're obviously not deployed on the strength of detailed, domain-specific evidence. Mostly, someone just gets control of a troubled system falls back on doctrinaire arguments that their preferred solution always works, never mind questions like "does the government have any experience here" or "will this immediately become a private monopoly".
More cynically, your description of rail points to the other side of the game. If you've got a working instance of the approach you don't like, pile on challenges (regulation and unprofitable obligations on one side, funding cuts on the other) until it breaks, then declare the need for your preferred solution. And not coincidentally, the long-term outcome is almost always these batty public-private partnerships or private-consultant-run government programs that are profitable for someone but work horribly.
I should learn more about the national-era history of British rail, it's always sounded like the biggest 'flaw' was simply being vulnerable to Tory funding cuts. The privatization approach was truly absurd - at this point I suppose the best hope available is emulating something like not-a-real-market private utilities?
Trying to stay away from the party political, I think the experience is that telephony may have been suitable for privatisation - people are happy switching providers, and do so all the time. Water, Post Office and electricity not so much. Thirty odd years later and regulators still haven't figured out how to get people to switch in any appreciable numbers. Maybe those really are natural monopolies, regardless of party dogma - and were often those pre-war city corporations.
> until it breaks, then declare the need for your preferred solution
Equally cynically, that does seem to be the way government and regulation works lately. Just look at the Post Office privatisation - take things away from them year on year from counter services, savings, licence renewals to city mail, so it's no wonder they're declining and "need" privatising. Then they wonder why the electorate doesn't trust politicians. Or BBC licencing deals... The stench of where that's heading is getting overpowering.
They may have got plans wrong many times earlier, but it appears former generations were far more genuinely concerned with actually trying to make the country better - whether one-nation Tory or Labour, or administrations elsewhere. I'm sure there's some age-related rose tinting, but I don't think anywhere near all. Where did that ethos go? :)
> the best hope available is emulating something like not-a-real-market private utilities
Private with stronger service obligations - like to permit other companies to run charters, freight or express on the tracks. Hopefully make them more like a real company - where they own the track, buildings and trains. Needing at least three companies involved to reschedule or add a new service is in the interests of no one at all. Yet that starts to look like going back to LMS, LNER, GWR and SR. That almost admits it was organised better in the 1920s. Not sure that's politically possible. :)
I thought most really wealthy people don't earn "income" in the first place? Don't they generally pay capital gains tax, or no tax by just borrowing money against their assets rather than selling them?
I think you're being downvoted because capital gains are split between long and short term gains, and short term gains are already taxed like income.
The division exists to encourage longer term investment, and it's probably a good policy. I didn't downvote you, because I think that general point that the spread between long and short term rates is too regressive at higher income brackets.
I think it's distorting what Piketty has always stated in his own study...you really should spend some quality google search time and get the study and invest some time in reading it and the critics rebuttals
Wait, this was written by Piketty. That doesn't mean it's not misrepresenting his data, researchers do that all the time in popular forums, but I'd be really interested to hear what specific difference you're pointing to.
(I did notice that his theory 2, tax avoidance, wasn't actually examined, and that he argues for a lack of GDP harm but doesn't actually show here that lowered top income produces lower equality.)
What it says on the tin and what people actually pay may be two different things. As a hypothetical if the rate is 100% it may be that no one would make anything in excess of where that rate kicks in.
I doubt very much that no one will be compensated in excess of the rate though. People will just have to go to the trouble of making sure the compensation isn't affected by the rate. In effect you're paying people to make an income inequality statistic look better.
Remind me again of that time when simply and directly trying to attack very complex sociopolitical problems has worked?
In fact, trying to directly "solve" complex systems like these with lots of variables, as if they were just "problems", never works (regardless of area).
So while this may be a good idea or it may be a bad idea, it's definitely not going to "work" on its own.
(and i get how hard it is to sell people on the idea that no, you will not just do a thing and have it solve all the problems, instead you are only trying to get the system moving in the right direction, and then adaptively try to do things that keep it where you want it. But that's at least got a chance)
also remind me how paying more in taxes is supposed to help do anything but concentrate wealth in government?
Ok so you reduced the amount the richest hold privately, but the government is filled with some of the richest people around already. This does not sound like a good plan.
The caption on Figure 2 in this article claims that there's zero correlation between top bracket tax cuts and GPD growth. My eyes must be playing tricks on me because I see a possible correlation. I think this might be a good example of conclusions in search of evidence. There must be other ways to break down the economic data to prove or disprove the hypothesis in an unbiased way, if anyone cared to do so.
I noticed the study cleverly avoided hard questions like “absolute levels of income” which the USA largely dominates and instead focused on “rates of growth” which favor poorer countries such as those in the EU. Where’s the EU’s Apple, Amazon, Google, Netflix, or Microsoft? All they can do is slap “fines” (backdoor taxes) on our most successful companies but they seem utterly unable to build their own. Never mind it looks at the USA shortly after a business cycle nadir, how would this study look during our long boom cycle?
Picketty kind of reminds me of Yuval Noah Harari in that they both have stunning insight and perspective on the past, but get quite bland once the present comes up.
For YNH, his key points in history really changed my perspective, on people history and progress. I'm totally sold on the central thesis: human progress is fundamentally the ability too cooperate in increasingly large groups, and the quality of that cooperation. The whole thing is mediated by our arsenal of collective fictions.
But when we get to the present, what we have is fairly generic. He's certainly an intelligent commenter, but the historical thesis doesn't seem to play into his current affairs opinions at all, or his futurism.
Picketty is similar (but a lot less readable). He makes a pretty compelling empirical case for his thesis, growing inequality is a long term trend during capital accumulatui periods. Wealth disparities are mitigated by big capital destruction events like big wars. There's a theoretical case but it's simple and the evidence is in the data, not the theory (r<g). Convincing.
What does this mean for the present? Apparently, something approximating the current French tax system.
Income tax isn't new. We've had higher and lower high marginal rates than suggested in this article. The problems within those system are the problems.
oh, we had tax rates like this, and it worked realy realy bad.
It was very hard for startup and small companies the earn enough equity, it was taxed away. Without equity it was hard to get outside capital, so the can't grow.
At this time Austria had a big state-owned industry, but this sector run into hard troubles.
In the 1980s the tax was cut, at state-owned industry won efficiency after privatization. Suddenly a strong medium sized industry could grow. In the 1990s the work productivity grow about 10% per year.
By the way for democracy it is necessary that there a no big tax payers. Big tax payers get big political influence. Huge political influence results in protection by laws, and this protections are usually as unfair as hard to detect. And it is nearly impossible to get rid of them.
The far better strategy is a wide spread tax and social fairness by social transfers. High profits has to be fight by concurrency and hard executed anti trust laws.
Leaving aside the moral arguments, would this actually work to reduce inequality?
Piketty makes a case that GDP wouldn't suffer with a much higher top marginal rate, but doesn't demonstrate (here) that it would significantly alter wealth inequality. There are a number of ways that might not follow: capital flight or tax avoidance, untaxed fringe benefits saving money, general regressive flows like "having stock" wiping out the change.
Scheidel (The Great Leveler) has argued, I think pretty persuasively, that mundane domestic policy doesn't undo inequality. It can constrain it, and sometimes diminish it briefly before wealth catches up to the changes, but major reversals seem limited to economic crisis, if not actual war or collapse. Diminishing top-end incomes might slow the worsening of inequality, but Piketty's own thesis (r>g) suggests that it won't do anything to actually arrest the trend.
You bring up possible implications of altering the system, but there's really no way to know without experiments. And with a system as unique as the 2019 United States, we cannot reliably look to other countries or other eras to give us natural experiments.
Certainly the inability to run a test or set a control is a constant problem for macroeconomics, but I don't think that deprives us of all information.
Piketty, at least, is content to compare the relationship between top marginal tax rate, pre-tax income share, and GDP in Germany, Denmark, the UK, and the USA since the 1970s. He finds that higher top marginal tax rate correlates to (and precedes) decreased top pre-tax incomes, and doesn't correlate with GDP. Inequality numbers might be distorted by other changes, but it would be interesting to at least see the naive comparison between top marginal tax rate and change in wealth inequality for those same countries.
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[ 3.7 ms ] story [ 179 ms ] threadYou recognize that this is aimed at higher marginal taxes on those who are already making very large amounts of money, right?
I'm not sure how many wealthy people care about inequality.
I used to work with a multi-millionaire who thought everybody that was poor just didn't work as hard as him / wasn't as smart as him. He thought everybody should work 2 jobs and go to school in order to better themselves.
Why not do it? Why does everyone else have to do something first?
I'm not asking everyone else to do it first. I'm asking everyone to do it together.
You'd actually see the difference you're making, instead of feeling helpless about massive issues.
Actually doing something takes effort, and is hard, and is risky.
Yes, there will always be inequality. Yes, that is a good thing. But that is no excuse to the current level of wealth disparity.
Plus, the sheer magnitude of inequality is immense in the area of wealth. It follows an exponential distribution; those other things you mentioned follow a normal distribution.
This is an underrated point; capitalism with billionaires is crony capitalism.
If ohaideredevs is in such a place that he's able to stop working and not have to worry about being able to pay for housing, food, clothes, insurance, and all the other necessities of daily life, then that's great for him, but I guarantee you absolutely that the vast majority of the people in America would neither stop trying to make money, nor stop trying to make more money, just because some taxes went up. More money—even if a higher percentage of it would go to the government—just makes too much of a difference in the day-to-day life of most people for those kinds of concerns to be anywhere near strong enough to make it look unappealing.
So if someone who already has so much money that they don't need to work another day in their life stops trying to make money...or even if it's someone who makes so much that making more wouldn't reduce their stress in daily life no longer trying to increase their income...I don't think that's a net loss to us in any meaningful way.
Unless you're already making that much, how does a higher marginal tax rate on income over $500k affect you at all?
Okay. So what?
We're on the ycombinator website, presumably the concept of stock options is not foreign to those here. Taking less salary for years with the potential for an IPO is a lot less lucrative when your payout goes down by 50% due to taxes.
Since we're talking about an increase in the top marginal income tax rates, sacrificing regular income for a chance of a big capital gains payout would actually be more, not less attractive, unless this was pared with treating capital gains as normal income—and even then, would probably remain more attractive if also coupled to provisions allowing spreading income spikes (whether due to one-time capital events or otherwise) out via advance and/or deferred recognition options, which is probably necessary for basic fairness if capital gains are treated as regular income—and actually that helps with fairness for some regular income patterns as well.
So if by "a lot less lucrative" you meant "13% less lucrative," then okay.
Sloppy methodology with a conclusion in search of evidence.
Raising taxes on those already making that much makes it more likely, not less likely, that you will be able to do so.
So, if you want to make that much some day, then it would affect you when you do.
Further - raising rates on high income earners makes it more likely for others to make more? That seems dubious.
Decreasing rent-seeking in top earners will leave more money on the table for everyone else.
People love things, power, sex and connection. Most of the things that lead to those things are exchanged directly or indirectly for money.
You’ll almost certainly always find a personal narrative as to why you want money.
In the past a lot of people have claimed they’d be demotivated about raising taxes, but it’s never stopped someone from being richer. More is still more, even if the government takes a greater share.
That you could finally relax and spend time doing things of value to you instead of acquiring wealth?
Sounds good to me.
Furthermore, your ability to make millions is only possible because of the services provided by government (education, infrastructure, security, financial regulation).
Plenty of people are motivated by much smaller numbers. The average take-home of the top 1% is between $400k and $700k. We're talking about a bigger tax on the 0.1% (>$1M/yr), and a huge tax on the 0.01% (>8M/yr). Again, those brackets are only able to achieve outsized returns because they have educated workers and a stable legal/regulatory system. Because they achieve outsized benefit, they should pay a proportionally higher share.
If those amounts are enough to incentivize 99.99% of the country, and you're still making more than they are, I'm sure you'll survive. If not, someone else will take your place.
That's probably not true of most of the people dedicated enough to making money that they'd be subject to it in the first place, but to the extent it is, that's probably not a social problem; the rich maximizing their own income isn't always socially optimal.
> Our research on eighteen OECD countries shows that, between 1975 and 2008, there was indeed a strong correlation between reductions in top tax rates and increases in top 1 percent pre-tax income shares... higher top tax rates may discourage work effort... the incentives for [executive] rent-seeking are much stronger when top tax rates are low
> there has been no correlation between cuts in top tax rates and average annual real GDP-per-capita growth
Piketty wants to reduce inequality without damaging the economy, not specifically boost tax revenue from the rich. His claim is that raising top tax rates does discourage people from obtaining extremely high pre-tax incomes, but doesn't shrink the economy. There are several possible reasons for that, but the basic question Piketty cares about is whether you would stop being productive. Someone who trades off salary for a shorter commute, or spends less time angling for a raise, or even hides their money from taxes more effectively, is not necessarily producing less value.
If you lost your motivation to seek more than $500,000/year (remember, this is about the top bracket), but continued to do equally GDP-boosting work elsewhere, that counts as success for this system.
https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
They are in fact unheard of outside of that?
What am i missing?
There are reasonable arguments to be made about increasing or decreasing taxes, or adding new types taxes or removing other ones, but this meme of "our posted tax brackets used to be higher, and everything was fine, therefore we need that again" is simply untrue.
I said nothing of the sort. If you have an argument with someone else, go have the argument with them; don't put words in my mouth.
And since it is apparently OK with you to make up stuff that other people never said, I take serious issue with your immoral pro-puppy-murder stance.
Income = social mobility, and is directly related to "money you earn" and cannot effectively be inherited (you're dead, you are no longer earning).
Assets = wealth, and is directly related to "money previously earned" and can be inherited essentially forever ( https://anarchimedia.com/2019/01/15/rich-families-in-florenc... https://www.theguardian.com/money/2019/apr/17/who-owns-engla... )
I now believe that the only effective way to end the excesses of inequality is for effective tax on assets, land being the most obvious but all assets should be up for taxation.
And as strict as asset taxation should be, so should income taxation be reduced.
In the US, an asset tax is probably unconstitutional.
What makes you think there's anything unconstitutional about it whatsoever?
Apparently there are actually decent arguments that it would be constitutional after all: https://itep.org/the-u-s-needs-a-federal-wealth-tax/#constit...
The history of the Federal government's ability to tax is pretty tangled though. http://nymag.com/intelligencer/2019/02/constitutional-concer...
I didn't even start making anything until age 30, actually 31, because I graduated with my PhD then it was a massive recession and I basically sat around in my underwear for almost a year watching the world burn down on CNBC (2003). I got on my feet in 2004, but it wasn't until 2005 that I made anything decent as far as income.
Fast forward to 2019, I'm in the 7 figure net worth range and on target for retirement.
WTF and I supposed to do? I'm now considered "rich" after having lived most of my life as a poor sucker without two pennies to rub together. I'm totally serious. I grew up very blue collar, lower middle class, and busted my ass to get where I am.
I will never make $500K a year, not ever.
Fuck your taxes.
ETA: Not sure why you're downvoting me. Do some of you not live in any sort of reality about how difficult it is to make money in the US?
Why are you complaining about something that won't affect you then?
1) "Better luck" doesn't begin to describe making $500k/year. That's just extraordinarily wealthy and well into the top 1% in the US. It is even well into the top 10% in Manhattan and San Francisco.
2.) The last recession was over a decade ago.
3.) If 57% marginal rate is "shot in the kneecaps" in someone's mind, then there is a real problem of perspective.
4.) Decreasing wealth inequality levels the playing field for people not born into extraordinary wealth (see William Singer)
but i 100% agree with you :D
It's aimed at wealthy people. People who have so much money that they write the rules against not only you and the rest of the 99% of suckers in the world, but also for the rich, who make up 1.5% of the world. The rich laugh at us suckers, but actual wealthy people -- the .5% -- squash them like bugs when they try to skirt the rules as well.
See Bernie Madoff, the college cheating folks, etc. Rich people are just as screwed when they try to beat the wealthy.
They're the reason you can't make money and that you've been programmed to think you're the target of this.
Oh and those taxes you complain about? You likely went to public schools built on eminent domain land and drove on publicly funded roads or used public transit. Taxes pay for that. All of it. If we taxed actual wealthy people -- those with connections and inherited wealth -- these conversations would be way easier and you probably wouldn't have had to work so hard to enjoy those privileges or freak out at articles like this.
What this article is suggesting is largely suicidal, taking cash from a far more efficient business community government by "laws" of competition, evolution of markets etc, the impact here would be catastrophic at best, I really don't think you can debate this in the space of one article.
My number one would be move all government money on blockchain, and make that public, then see if it's really so smart to "give them more", through any means.
Inequality has always been a constant throughout human history, and it's far better now than in the middle ages, where we are all entitled to education, healthcare, and have extremely fast access to information.
I'm not suggesting there isn't a problem, but you haven't found a solution. "Tax the rich" is something everyone can scream off the top of their lungs, until it comes to bite them hard the next day when their pay must be cut to keep the company they work for profitable.
Step 1 would be removing the biggest inefficiency of capital allocation in most of these "high growth" western economies, measure and publicise return on investment of public funds, and proceed to realise raising tax "just like that" is a very very bad idea.
- How do you know care home providers don't bribe their way through contracts? - How do you know they are not an oligopoly that sets the price under the table, and the government pays 1.5 - 2x contributions for someone to be in a care facility versus what you would pay yourself for an elderly relative going to the exact same facility?
Specific counter examples are not fruitful, people who don't have the means don't understand the economics and don't understand money, that's why they are complaining about the inequality, and they can downvote me here all they want, I truly hope it relieves their frustration even slightly.
If you've ever worked with government directly, you're expected to understand it's one of the most rigged and corrupt institutions by very far. Yes, it exists to perform universally beneficial functions, does it really do that? Hello no, in most cases it spends 2 - 3x the money it really needs to for the same service. I'm not suggesting it should cut off the elderly, just cut the waste in providing those services.
“How do you know that a contract is above-board?”, you ask. You know this because some committee put together an absurdly detailed Request for Proposals, complete with requirements, evaluation metrics, milestones and circles and arrows on the back of each one. Throw in some politically-imposed requirements (can only travel on US Airlines, lest we “waste” money on the British) too for good measure. The winner’s proposal gets turned into a Statement of Work that specifies what’s to be done, when, where, and how. The whole mess gets audited and inspected and archived so it can be reviewed later by more auditors, Congress, and concerned citizens like you.
Hiring is equally bonkers. Managers (mostly) can’t flip through the submitted resumes and pick out someone that seems clever and driven (“What if it’s their cousin?!?”) Instead, there are long questionnaires and fixed experience requirements. The manager can only pick from the top 3(?) candidates and the salary is barely negotiable.
It is a huge pain. It’s slow, it’s expensive, and it’s not always responsive. The complicated process is exclusionary (Raytheon has rooms of staff that know these rules chapter and verse; you don’t). Right now, it feels like the system spends $100 to be sure it saves $1. We would be better off if we relaxed these controls a bit and trusted individuals a bit more (backed up with audits, obviously, lest anyone get ideas), but....here we are.
I'm all for increased transparency but you seem to be additionally advocating a target-based, profit-driven approach. This sort of approach has to my knowledge failed pretty badly in the health, education and prison sectors in the UK. What happens is that as soon as you come up with a way to measure "return on investment" or "level of service", contractors will figure out a way to game those measures whilst providing poorer and poorer actual service.
Seriously? Every time there's an election the right-wing parties promise they're going to balance the books or pay for taxes by cutting the fat from all those inefficient government services. It's their mantra, and they fail to do so every time they get elected.
Profits and higher exec pay, certainly. Consolidated and bought up by someone else's state utility, as profit centre, yep. Removed from being a political football where the parties on the right of centre consistently under-fund something to "prove" it needs the freedom of private enterprise, again, certainly. Just about every effort to "bring the benefits of the market" to the NHS have made it less efficient, or added layers of additional expense.
Governments, of course, often did encourage, and achieve, sometimes remarkable efficiency. Until it became simply dogma to change it, for change's sake. Few services or arms of government got a blank cheque, except periodically the military. Not surprisingly there's considerable inefficiencies around military spending.
It's funny though, it usually turns out to be the privatisation, the socialisation of a private industry's pollution, accident or other abuses after deregulation that wrecks figures. Like, say, a private sector prison performing so poorly it has to be snatched back into state control, banking bailout, or the public private partnerships which prove disastrous for government return on investment. These are the ones castigated in assorted committees, who are constantly questioning efficiency and return on investment.
The rejoinder here is generally that nationalization also has a terrible track record. Even in domains where some governments have performed efficiently and well from the beginning, governments which take over from private owners often do quite poorly.
Of course, that doesn't mean I'm in favor of privatization. It's entirely possible for both transitions to be primarily harmful, and indeed it's fairly likely if both are championed by people who see a personal benefit. There's a bit in Hitchhiker's Guide where a driver thinks the rain is so heavy his wipers aren't helping. When he turns them off, things do get worse, but when he turns them back on they don't get any better. I've heard multiple Brits cite this to explain the way nationalization and privatization of rail has worked: nationalization brought waste and unreliability, privatization brought gouging and line closures, but each left the harms of the other intact.
Dogma on left of centre is as damaging as on the right as it tends to produce more change for change's sake, just to a different destination. Same goes for so many private sector takeovers and buyouts. In each instance it rarely delivers.
> rail ... each left the harms of the other intact
Pretty much true. The biggest issue during the nationalised period was funding. Few post-war state enterprises got to reinvest profit, so investment became a political choice, which led to the ageing rolling stock and unreliability. Waste - not so much, though I'm sure plenty existed. Pre-war approach to public enterprise seemed to work much better - a town or city owned a corporation, that could keep and reinvest its profits, and the city was more like shareholder. I'm not sure why this approach ceased to be - possibly the ever increasing centralisation from both right and left.
The way rail was broken up was utterly bizarre and ridiculous - it was never going to work broken up in such an unnatural way. Yet, if Corbyn had his way and re-nationalised, it might work, briefly - at great expense and disruption - for his first term. First Tory government would bring back under-funding, and off we go again. Nope, never gonna work.
Better stronger QoS regulation than that, though a rethink of the various disjointed bits is looking unavoidable. If only privatisation had gone back to the big 4... or created a medium 8 or something.
Nicely put. I do think it's possible that nationalization and even privatization can produce improvements, but they're obviously not deployed on the strength of detailed, domain-specific evidence. Mostly, someone just gets control of a troubled system falls back on doctrinaire arguments that their preferred solution always works, never mind questions like "does the government have any experience here" or "will this immediately become a private monopoly".
More cynically, your description of rail points to the other side of the game. If you've got a working instance of the approach you don't like, pile on challenges (regulation and unprofitable obligations on one side, funding cuts on the other) until it breaks, then declare the need for your preferred solution. And not coincidentally, the long-term outcome is almost always these batty public-private partnerships or private-consultant-run government programs that are profitable for someone but work horribly.
I should learn more about the national-era history of British rail, it's always sounded like the biggest 'flaw' was simply being vulnerable to Tory funding cuts. The privatization approach was truly absurd - at this point I suppose the best hope available is emulating something like not-a-real-market private utilities?
> until it breaks, then declare the need for your preferred solution
Equally cynically, that does seem to be the way government and regulation works lately. Just look at the Post Office privatisation - take things away from them year on year from counter services, savings, licence renewals to city mail, so it's no wonder they're declining and "need" privatising. Then they wonder why the electorate doesn't trust politicians. Or BBC licencing deals... The stench of where that's heading is getting overpowering.
They may have got plans wrong many times earlier, but it appears former generations were far more genuinely concerned with actually trying to make the country better - whether one-nation Tory or Labour, or administrations elsewhere. I'm sure there's some age-related rose tinting, but I don't think anywhere near all. Where did that ethos go? :)
> the best hope available is emulating something like not-a-real-market private utilities
Private with stronger service obligations - like to permit other companies to run charters, freight or express on the tracks. Hopefully make them more like a real company - where they own the track, buildings and trains. Needing at least three companies involved to reschedule or add a new service is in the interests of no one at all. Yet that starts to look like going back to LMS, LNER, GWR and SR. That almost admits it was organised better in the 1920s. Not sure that's politically possible. :)
edit: Downvotes instead of rebuttals. Nice.
The division exists to encourage longer term investment, and it's probably a good policy. I didn't downvote you, because I think that general point that the spread between long and short term rates is too regressive at higher income brackets.
(I did notice that his theory 2, tax avoidance, wasn't actually examined, and that he argues for a lack of GDP harm but doesn't actually show here that lowered top income produces lower equality.)
I'm certain that at least half of the comments right now are from people reflexively spouting off without having read it.
I doubt very much that no one will be compensated in excess of the rate though. People will just have to go to the trouble of making sure the compensation isn't affected by the rate. In effect you're paying people to make an income inequality statistic look better.
In fact, trying to directly "solve" complex systems like these with lots of variables, as if they were just "problems", never works (regardless of area).
So while this may be a good idea or it may be a bad idea, it's definitely not going to "work" on its own.
(and i get how hard it is to sell people on the idea that no, you will not just do a thing and have it solve all the problems, instead you are only trying to get the system moving in the right direction, and then adaptively try to do things that keep it where you want it. But that's at least got a chance)
Ok so you reduced the amount the richest hold privately, but the government is filled with some of the richest people around already. This does not sound like a good plan.
The caption on Figure 2 in this article claims that there's zero correlation between top bracket tax cuts and GPD growth. My eyes must be playing tricks on me because I see a possible correlation. I think this might be a good example of conclusions in search of evidence. There must be other ways to break down the economic data to prove or disprove the hypothesis in an unbiased way, if anyone cared to do so.
For YNH, his key points in history really changed my perspective, on people history and progress. I'm totally sold on the central thesis: human progress is fundamentally the ability too cooperate in increasingly large groups, and the quality of that cooperation. The whole thing is mediated by our arsenal of collective fictions.
But when we get to the present, what we have is fairly generic. He's certainly an intelligent commenter, but the historical thesis doesn't seem to play into his current affairs opinions at all, or his futurism.
Picketty is similar (but a lot less readable). He makes a pretty compelling empirical case for his thesis, growing inequality is a long term trend during capital accumulatui periods. Wealth disparities are mitigated by big capital destruction events like big wars. There's a theoretical case but it's simple and the evidence is in the data, not the theory (r<g). Convincing.
What does this mean for the present? Apparently, something approximating the current French tax system.
Income tax isn't new. We've had higher and lower high marginal rates than suggested in this article. The problems within those system are the problems.
Maybe im being harsh.
It was very hard for startup and small companies the earn enough equity, it was taxed away. Without equity it was hard to get outside capital, so the can't grow.
At this time Austria had a big state-owned industry, but this sector run into hard troubles.
In the 1980s the tax was cut, at state-owned industry won efficiency after privatization. Suddenly a strong medium sized industry could grow. In the 1990s the work productivity grow about 10% per year.
By the way for democracy it is necessary that there a no big tax payers. Big tax payers get big political influence. Huge political influence results in protection by laws, and this protections are usually as unfair as hard to detect. And it is nearly impossible to get rid of them.
The far better strategy is a wide spread tax and social fairness by social transfers. High profits has to be fight by concurrency and hard executed anti trust laws.
Piketty makes a case that GDP wouldn't suffer with a much higher top marginal rate, but doesn't demonstrate (here) that it would significantly alter wealth inequality. There are a number of ways that might not follow: capital flight or tax avoidance, untaxed fringe benefits saving money, general regressive flows like "having stock" wiping out the change.
Scheidel (The Great Leveler) has argued, I think pretty persuasively, that mundane domestic policy doesn't undo inequality. It can constrain it, and sometimes diminish it briefly before wealth catches up to the changes, but major reversals seem limited to economic crisis, if not actual war or collapse. Diminishing top-end incomes might slow the worsening of inequality, but Piketty's own thesis (r>g) suggests that it won't do anything to actually arrest the trend.
Piketty, at least, is content to compare the relationship between top marginal tax rate, pre-tax income share, and GDP in Germany, Denmark, the UK, and the USA since the 1970s. He finds that higher top marginal tax rate correlates to (and precedes) decreased top pre-tax incomes, and doesn't correlate with GDP. Inequality numbers might be distorted by other changes, but it would be interesting to at least see the naive comparison between top marginal tax rate and change in wealth inequality for those same countries.