Comment by nickpp
2 days ago
That's a common misconception. Although the top tax rates were indeed high, they kicked in at such high income levels and included so many deductions and loopholes that the effective tax rate were much closer to 50%.
And it makes sense, considering human nature and motivation: how much would you work considering the taxation? Me:
0-20%: I work as hard, want to excel and advance; I will take risks and invest in entrepreneurial endeavors
20-40%: I will do my duty, 9-5 then hit the door to spend time with the family; actively seek low-responsibility low risk high stability and lots of benefits government jobs
>40%: f that s, I will take my welfare payments and do various cash jobs without declaring that income; stay in my parents basement playing Xbox, smoking weed and jerking off
Counting consumption and estate taxes, i'm pretty sure you're just above 40%, so i guess you're on benefits?
In the US, unless you or your family own a holding with a lot of companies, the country taxes you between 50 and 40% (well, 30 and 50%, but food stamps are a bit weird so i will exclude them here). If you manage to get rich enough to be able to optimize your taxation, you are only taxed on company profits (so 21% to federal, 27-29% depending on your state) and sometime use taxe (sales taxe doesn't really apply anymore).
I have benefited from VAT-free school furniture most of my life because my uncle owned a company that bought office furniture regularly, and VAT-free sport clothing/tools because of a similar scheme by his wife and her companies.
I assure you you pay more taxes overall than people holding a few companies, and the more you own, the easier it get to avoid VAT and taxes in general (the owner of the Yacht my sister used to cook for was hired by the Yachting company as the captain or something for his vacations: avoided VAT on buying the Yacht, avoid VAT on a personal cook, avoid VAT on food. And if this specific company loose a small amount of money every year, tax write-off baby!).
Zucman wrote The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay. It's an interesting read, and
> i guess you're on benefits?
Actually I've been lucky to practice what I preach all my life. Early in my career I realized that salaried employment is a rip-off: you pay through your nose for an illusion of safety and stability you don't want nor need. So I embraced risk and switched to contracting.
Having leftover income this way, I looked into investing. That's when I realized that being financially prudent, saving and investing was actually punished in the USA, taxwise, while borrowing and spending was encouraged. So I left the USA and returned to Eastern Europe.
Understanding that selling your time is much worse than selling a product drove me to entrepreneurship. Luck threw a little success my way and turned me financially independent.
Now I am semi-retired living from investments and small gigs and spending time with my family. My tax rate (income only, not consumption or VAT) is well under 20% on most of my income. I didn't do any effort to optimize it further, but I could if I must. I actually do not mind paying taxes, but I do respond to incentives and I am not afraid to relocate.
> If you manage to get rich enough to be able to optimize your taxation
Actually I did a little research and you don't need to be rich, you can do that with very little money. But then the gains for a few percent reduction aren't that great anyway so...
> you pay more taxes overall than people holding a few companies
I probably do, but I don't mind it. I think the rich are a net positive to our society because capitalism ensures they contribute to the society orders of magnitude more than they manage to keep. Also I lived under communism pre-1990 in a world without rich and I've seen how bad it is.