Democrats’ Opening Bid? 70% Tax Rates

January 14, 2019 By E.J. Smith - Your Survival Guy

By Andrii Yalanskyi @ Shutterstock.com

Speaker of the House Nancy Pelosi hasn’t even warmed up her gavel, but already the newest, and youngest member of her party’s Congressional caucus, Alexandria Ocasio-Cortez, has suggested a 70% tax rate on earnings over $10 million.

That’s probably not the issue Pelosi thought she would have to explain right away to voters. John Harwood reports in CNBC:

The top tax rate stood above 90 percent throughout the 1950s. But through deductions and tax avoidance, “taxes on the rich were not that much higher” then, the conservative Tax Foundation noted in a 2017 article.

The top rate remained 70 percent as late as 1981, the first year of Ronald Reagan’s presidency. The most affluent 1 percent paid a far lower average rate of 30.5 percent, however, according to a Tax Policy Center analysis. By 1989, when Reagan left office, the top rate had been slashed to 28 percent but their average rate dropped only slightly to 27.9 percent.

After three decades with top rates below 40 percent, a big hike from today’s 37 percent poses risks politically and perhaps economically. Self-described socialist Sen. Bernie Sanders stopped at a 54.2 percent for incomes above $10 million in his 2016 presidential campaign proposal; Democratic nominee Hillary Clinton proposed 43.6 percent for those earning above $5 million.

Raising taxes on the wealthy has been tried. It has never worked out very well. In fact, revenues rose after President Trump’s tax cuts.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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