Thursday, December 20, 2012

Peter Schiff on the 91% Tax Rate

The fiscal cliff is now at hand. The President’s decision not to sign anything that does not raise the rates of taxes on the top 2% is definitely debatable. The 1950s are being touted, by Paul Krugman and Warren Buffett, as the country’s most successful period – with 91% top tax rate and still unbelievably fast growing GDP and individual wealth. As their opponent in this argument appears Peter Schiff.

Krugman claims that the top income bracket faced a 91% tax rate during the 50s, corporate profit taxes being twice as large at the same time. Furthermore, he says that years of high taxation after the Second World War brought to the United States an excellent speed of economic development, a good example – the 1947-73 doubling of family income. Warren Buffet has a similar point of view – he claims that during the extreme 91% tax-period he sold securities quite well.

In a Wall Street Journal publication, Peter Schiff confronts these arguments. His answer – the 50s tax rate was ‘symbolic’. In fact, top earners had to experience lower rates, compared to wealthy people nowadays. On The Daily Ticker, Schiff comments further on his argument.

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