Warren Buffett’s Op-Ed in the New York Times this weekend offers some important historical facts and context on how incredibly low average tax rates are for the wealthiest Americans today. Policy rates are low even if the country was experiencing the best of economic times, but is especially indefensible given the past 12 years of mammoth military commitments and corporate bail-outs while average families have lost 40% of their net worth. Unfortunately, paying more to rebuild fiscal health over the next few years is a necessary investment for future strength. The good news is that the country has the resources in its population to do so. It would be a lot darker if this were not the case.
“Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.
Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground.”
The whole article is worth a look, see: A Minimum Tax for the Wealthy.
Here is more of this discussion from The Daily Ticker.