Eisenhower on why the 90% corporate tax rate caused such robust economic expansion

[Quixote1818]

[AlexSFCA]

1. brilliant. Consice and undeniably persuasive

It is incredible how AOC single handedly commanded the new narrative and discussion in a way I can’t recall any other dems proposed that.

[Hekate]

3. And it's so nice of her to give credit to her historical forebears, too. Genius. nt

[jberryhill]

2. Been saying that for years - same for WAGES which are deductible

My biggest tax deduction is my employees’ wages.

This notion of “we’ll cut taxes so that employers can pay more” is just plain stupid. Employees are paid with tax-free money.

[Kablooie]

4. That's a responsible Republican.

A breed exterminated by Reagan and his successors.

[burrowowl]

5. Yup! "I like Ike"

[TexasTowelie]

6. Eisenhower was correct,

but with the caveat that what applied in the 1950s doesn't ring true today. In the 1950s there were fewer multi-national corporations and fewer countries that were tax havens. There were no other countries that could compete with the US effectively because their economies were still in turmoil after World War II. In addition, technology has also made it easier to transfer money outside of the country.

In the past the US was considered the prime country to make an investment because of the large population, prosperous economy and relative political stability compared to other nations. In the present, the difference between the US and other countries has tightened. Considering who was elected in 2016, the political stability in this country is dubious at best. So if I was a CEO choosing to make an investment, would I choose to park my money in a country with a 90% marginal tax rate or a different country with a 25% marginal tax rate? Since the fiduciary duty of any corporation is to maximize the profits for its shareholders, the choice is apparent to any rational investor.

The solution to the economic problems in this country is not a tax rate that is considerably higher than anywhere else in the world. What worked in the 1940s and 1950s won't work in the modern global economy because of the relative ease in which capital can be transferred around globe to take advantage of other considerations such as the cost of labor, the availability of resources, and getting the product to the largest number of consumers which now includes countries such as China and India.

Please note that I do believe that both individuals and corporations should pay a fair share and a progressive share of taxes, but I can also see that setting too high of a tax rate can easily backfire. I also favor a tax on stock trades to encourage long term investments over day-trading.

[Cetacea]

7. I'd be ok with 70 percent, pre-Reagan. n/t

[TexasTowelie]

9. There were a lot more tax deductions that lowered the effective rate then.

Unless new tax loopholes were implemented, a marginal rate that high would put the U.S. somewhere between 50% to 100% higher than the countries that would be considered as our global competitors which actually means that we are non-competitive. It would punish the corporations that are based within this country while encouraging the multi-nationals to invest elsewhere where the rewards are greater for the amount of risk ventured.

I'd lean more towards a maximum rate of 50% with increased deductions for R&D, educational training for employees, and investment in assets that are fixed within this country.

[Cetacea]

12. Good plan

And 50 percent would be far more likely to gain support. Thanks

[uponit7771]

17. Then tax the crap they sell to the US at a higher rate, right now the ETR of corporations and ...

... investors are criminal.

There should be a reasonable progressive share of taxes paid by everyone.

[Midnight Writer]

14. "Art Of The Deal". Shoot for 70 and negotiate. It's a starting point, a conversation catalyst.

"We" are talking about it, they are talking about it. And folk are starting to think about it, as a concept.

I agree with a tax on stock trades. Would surely decrease volatility and improve confidence in the markets.

[Crabby Appleton]

8. Here's a link to historic corporate tax rates

I'm not seeing a 90% tax rate there, the tax tables starting on page 4.

https://www.irs.gov/pub/irs-soi/02corate.pdf

[TexasTowelie]

11. You're correct,

the OP is conflating personal income tax rates with corporate tax rates.

[eallen]

21. Which makes me wonder if the quote is bogus

[moondust]

10. I've always suspected

Reagan's cabal stole those ideas for his trickle-down "Voodoo Reaganomics": cut taxes on the rich and they will then have even more of their earnings to spend on expanding to "new locations, new hires, new equipment, product R&D," etc., and all that spending will thus trickle down and end up helping everybody! Wow!

In some cases maybe. But others used the extra money from Republican tax cuts to feed their greed and further enrich themselves and their shareholders. They shut down locations and moved their jobs offshore, handed out executive bonuses so a few insiders could buy yachts and vacation homes, doubled down on stock buybacks, etc. Wealth trickled up, not down. After the tax cuts Uncle Sam had less to invest in the commons: education, infrastructure, health care, environment, etc. Deficits and the national debt exploded. Bill Clinton cleaned up the Reagan and Bush messes until he started producing surpluses, but a few years later Republicans again blew it all away with more tax cuts and wars and eventually the Great Recession. By the way, whatever happened to that pallet of billions in cash that disappeared in Iraq?

"Voodoo Reaganomics" was the beginning of today's massive concentration of wealth and inequality IMO.

[alwaysinasnit]

13. K&R Thanks for posting.

[YOHABLO]

15. The only decent Republican President, other than Lincoln of course.

[YOHABLO]

16. He also warned us of the ''Military Industrial Complex'' eating our nation alive.

[BSdetect]

18. One other problem with a business expanding...

You have to find really talented people and that is not easy.

Many companies today have highly paid but barely competent people who are retained due to shortages of better performing others.

All sorts of problems arise with expansion.

I like to ask capitalists "How many people can become billionaires"?

[NewJeffCT]

20. He also appointed Earl Warren to the Supreme Court

a recess appointment a few weeks before the 1956 election, and was later confirmed after inauguration.

[wryter2000]

19. He was my president when I was a little kid

I wish we could have him back.