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Don’t Mess With Taxes had an interesting piece over the weekend on populist rage – you know, angry mobs with pitchforks ready to come after the first Goldman rat who even whispers the word bonus – and some interesting numbers to chew on, specifically when it comes to taxing the rich:
The top income tax rate of 35 percent is the lowest it’s been since 1992. For a good chunk of the 20th century, the wealthiest U.S. taxpayers handed over much more (90-plus percent from 1950 to 1963) to Uncle Sam.
Capital gains rates also are at historic lows. And richer folks tend to take advantage of capital gains (and losses) more often than the general populace since wealthier individuals usually are more active investors.
DMWT’s column was inspired by an NYT piece entitled All This Anger Against the Rich May Be Unhealthy in which the rich bemoan their tricky fate:
For the wealthy, their public image is a secondary concern since so many of them seek to live anonymously.
“They feel mischaracterized,” Mr. LaMothe said. “They know the time and effort they contribute. They fund scholarships and all the things they do routinely, and then to be characterized as not doing their fair share begins to wear on them.”
From the outside, the wealthy seem to be one big money-minting group. But how they came upon their wealth differs greatly. And those who did not make their fortunes in finance seem just as angry as everyone else about what Wall Street has wrought.
NYT’s got a good point. Outrage against Wall Street is one thing but what’s this blanket sentiment of anger towards rich people in general?
A recent Bain and Co. report projects a 8% drop in luxury good purchases (or about $227 billion) for 2009 with a “full” recovery in the luxury sector by 2011. Were it not for “populist outrage” against the wealthy, perhaps we’d see slightly more growth in this area moving forward but the wealthy have – wisely – trimmed down conspicuous purchases, presumably to keep the angry mob off their backs.
Worse, once Geithner and Co. wise up and realize how low tax revenues from the wealthy have been in recent years, it will be like a brand new financial vein to tap with or without much-needed tax reform.
Looks like a pretty convenient time to be broke, eh?
