this post was submitted on 24 Sep 2023
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The precedence for not having adequate taxes for high wealth has been devastating for our busineesses. You use to have to be good to make money back then as opposed to simply having large amounts of money allowing to easily grow it. Earning an additional dollar in investment was harder and harder the more your company made which forced it to run efficently or several smaller ones could eat your lunch.
Can you elaborate or reference books or economic terms on this? Genuinely interested, never heard this before.
Honestly the biggest difference with the 90% marginal rate is that the reputation of your company used to be more valuable than cash.
Back then to avoid the top bracket, you'd reinvest into your company and make sure it paid you and your family out for the next hundred years.
Now you don't have to deal with all that. Just sell out or cash out asap, and you don't really need to deal with making sure the company is well run or maintains a reputation.
In fact, a reputation since the 1980s has increasingly just been an untapped source of cash. Buy the company, cut every corner, and it'll take years for the reputation to catch up to how shit the product has become.
This has been the biggest driver of enshittification over the past fifty years.
The current added push to enshittification is venture capital drying up. Consider Uber, a company whose entire business model was to skim money off of drivers who provided all of their own equipment. Once you've scaled enough to dwarf the relatively fixed cost of building the app, nearly everything they bring in should be pure profit. But they ran at a huge loss every year. Why? Because the way to make money in the 2010s wasn't to build a better mousetrap and sell it for profit. The way to make money in the 2010s was to attract venture capital and cash out. The more you could spend, the more attractive you'd look to hedge funds and investors.
Now with relatively easy 6% investments lying around left and right, the desperate search for investment dumps is gone. All these places that were structured for big numbers to get a higher valuation suddenly need to just be profitable off their mousetraps.
Does that make sense?
And if he has any doubt, he can ask any ex-IBMer.
Yes. Fascinating, thank you.
I just found a Matt Stoller article that has a bit different, but compatible, take on the same thing. You can scroll down to the "counterfeit capitalism" heading.
He can’t. It’s all fantasy land.
The myth of the 90% tax rate is just that. A myth.
You have to compare deductions from the time vs the current tax code. It’s harder to deduct now than in the past
https://www.usatoday.com/story/news/factcheck/2022/05/09/fact-check-viral-post-exaggerates-tax-rates-under-eisenhower/9588111002/
That article says the corporate tax was 30% to 52%, AND that the individual income tax got up to 90%. What you call myth is very much true.
And corporate tax is much much lower now than it was then and we have rampant income consolidation to the top earners.
https://en.m.wikipedia.org/wiki/Corporate_tax_in_the_United_States
Yeah we have some of the high corporate taxes in the world. So If your thesis was correct, you’d see this everywhere but you don’t.
Companies are sitting all billions on dollars offshore because of our high taxes.
No the article clearly points out nobody was paying that tax rate. Everyone paid a much lower tax rate. Having it set to 90%, doesn’t matter if nobody pays it.
https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world
Last time I checked, Bill Clinton repealed glass steagall not Reagan. I feel like there is a bigger argument that this action has more impact than all the trickle down economics theory Reagan brought.
much of that was defanged in the 80's and clinton signed it when it was passed by the two majority republican legislatures. Its not like he was a big proponent he just decided not to fight that battle.
I have actually never heard this argument.
The way I understand it is glass steagalls main role was to limit bank investments. I have read that Clinton repealled because it allowed for global markets to start. Then we started getting banks overspeculating and the eventual bubble of 2008. This then prompted the fangless Dodd Frank act to go through but it didnt stop banks from acting as their own insurance anyway when silicon valley thing happened this year.
Thats how I know it. If you have sources otherwise my infant brain would love to know.
The history of glass steaguall is not really an argument including it being limited way before its demise in the 90's. Since its not an appeal to authority here https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legislation#Decline_and_repeal
What you have shows that they found a supposed "loophole" but there is some problems with that. It was basically not applicable to most banks until the repeal of glass steagall. Frank-Dodd even tried to save pieces as a result of the 2008 crisis. Below are sections within glass steagall that were repealled.
Section 16 -
Section 20-
Section 32-
The Gramm-Leach-Bliley Act of 1999 (GLBA) repealed Sections 20 and 32. Sections 16 and 21 remained in effect until Clinton signed the repeal 8 days after GLBA took effect. Since its repeal, these sections have been tried to be reinstated in an attempt to seperate commercial banking from investment banking.
The Dodd-Frank Act had the Volcker rule (§ 619), which was an attempt to reinstate only a part of glass steagall (section 20). This rule essentially limited proprietary trading by banks and their affiliates to stop speculative trading. This is all we have now and apponents to the glass steagall sections also say we should have had something planned as a replacement.. but we didnt. If you think we were toothless back then, you can assume we are 100% toothless now.
Too lazy to link sources.
This would make sense as globilization while going on since ww2 ended accelerated in the 80's. Once the provisions there were eliminated it would effectively allow banks to offshore the activity anyway which made just eliminating it in the 90's to make more sense. Since they were effectively doing it anyway.
My problem is that now we dont have the provisions which allows things like the citadel/robinhood fiasco, FTX crypto speculation or the 2008 crash. Saying that it would had happened because of Reagan is just not true.
but deregulation and anti regulation as a pattern. As a driving force of the right. That came from him. It certainly would not have happened if regulation was considered an important part of capitalism that while it may need to be tweaked sometimes should never be removed and new regulation should follow for new things. The whole way of doing things started under reagan and the attitude to not follow the correct path very much starts there.
That just sounds like you are trying to look for a reason. Do you want to ignore 20 years of politics to steagall repeal or the 20 years since that? Im pretty sure the house has flipped about 4 or 5 times since then.. why havent we given banks stricter rules yet even though the house has been a democratic super majority 7 times since reagan? In fact, i just looked it up and the house was a democratic majority the entire time Reagan was president. It was only up until Clinton in 97 that it switched to a republican super majority..
Anyone with even an ounce of knowledge of how congress works and our history would know that its way easier to block legislation than enact it and republicans are known for blocking essentially everything. A majority is not enough if the oppositions only agenda is to block it, which is what they had despite your use of the term super majority which would be the case if they controlled 2/3rds of congress which was not the case. Its part of the weakness of our system that the republicans exploit liberally (I know. ironic use of adjective there.). The republicans have been in the minority even when they have had congressional majorities and when they have had the house but again that is due to anti democratic aspects of our system of government. So im ignoring nothing but you are not really saying anything either with this last comment.
All i meant by what I said was that congress is the one who makes the legislation. People can blame Reagan all day but he was in a democratic house majority that spanned 10 years after he left. It would be akin to republicans blaming Obama for actions taken by todays congress.
reagans terms redefined the rebuplican agenda from the time before him. Starve the beast, the two santas, supply side exconomics, voodoo economics, laffer curve. This all came out of his administration and set the path forward. There has been little deviation since from the republicans. If anything just doubling down on the worst aspects.
Again, you are turning Reagan into a scarecrow. You are taking away responsibility from all the legislation, all the economists surrounding, all the people who voted... you are assuming the democrats absorbed all of his agenda and applied it to their platform especially when they has a super majority.
You are also assuming that we were just as partisan 40 years ago when that is not the case. We did not have hyper partisan politics until ~9/11 with Bush.
Honestly I think your taking it to literally. No one who says it all started with reagan or you can thank reagan is saying the world is a perfect utopia where only reagan is the problem. He is just the face of his administration and his administration is one of the more prominent drivers of what ails us today. But yes it took other bastards. sure. All of your arguments could be said about hitler. I mean there was a whole lot of members of the nazis party besides him, but all the same hitler is the face and the driver.
I would argue that people genuinely do try to demonize regan and make him own all the issues... similarly to how in the future people are probably going to blame trump for any stupid issue we have. Much like how the right blames obama for shit.
Also, that's a bad comparison. Hitler administration WAS a dictatorship. And anything he said was law. There is a stark difference between how the Reagan administration and all the subsequent administrations did and what hitler did.
but hitler could not have done it by himself and everything that happened had other folks. He was just the main guy. With reagan its the same except more the administration but reagan was the face (baker and meese in particular). And yes they demonize him because as I have said how his administration influenced everything that came after but that does not mean no one else at all was continuing these things. After all hes dead now but his policies live on and that is why you hear about reagan because he started the cluster fuck that has culminated in today and has no indication of stopping.