Stossel: Tax Myths — Transcript

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1. 0:00People are going to have to start
2. 0:01paying their fair share in taxes.
3. 0:02Their “fair share?”
4. 0:04Are you paying your fair share?
5. 0:06What would that be?
6. 0:08Do you have a specific on the tax rate?
7. 0:09You know, you look at our tax rates back in the ‘60s
8. 0:13STOSSEL: On 60 minutes,
9. 0:14the darling of the progressive movement,
10. 0:16didn’t appear to have a specific rate in mind
11. 0:19but then she said…
12. 0:21Ocasio-Cortez: Sometimes you see tax rates
13. 0:22as high as 60 or 70%.
14. 0:25STOSSEL: Suddenly that became the progressive plan.
15. 0:27I can support folks at the top paying their fair share.
16. 0:3170 percent, 80 percent, we’ve had it as high as 90 percent
17. 0:35STOSSEL: 90% was the top tax rate when I was a kid
18. 0:39and now democrats say,
19. 0:40“if we just raise rates on the wealthy,
20. 0:42government will have plenty of money
21. 0:45to pay for all their wonderful programs.”
22. 0:48[sound of money counting]
23. 0:49But it’s a myth.
24. 0:50What progressives don’t say is that:
25. 0:53No one actually paid anywhere close to those rates.
26. 0:55No one?
27. 0:56No one.
28. 0:57Economic historian Phillip Magness says
29. 0:58it’s not surprising that progressives don’t know that
30. 1:0290% tax rates didn’t bring in lots of money.
31. 1:05You know, who has the time and the interest
32. 1:06to sit around and dig through that line by line?
33. 1:09You.
34. 1:10Me. I'm apparently the guy.
35. 1:12He's researched old tax codes for over a decade.
36. 1:15You must be a really boring guy.
37. 1:17I can be.
38. 1:19[Sound of plane engine ]
39. 1:20During World War II, America’s 90% tax bracket
40. 1:24didn’t bring in that much more money
41. 1:26because rich people found loopholes.
42. 1:29And then, because the high rates discouraged work
43. 1:31President Kennedy backed a bill that
44. 1:33lowered the top rate to 70%.
45. 1:36President Kennedy: The billions of dollars
46. 1:37this bill would place in the hands of the consumer
47. 1:39and our businessmen
48. 1:42will have both immediate and permanent benefits
49. 1:44to our economy.
50. 1:46[applause]
51. 1:48STOSSEL: But it turned out that the 70% rate
52. 1:50wasn’t very real either.
53. 1:52No one paid 70%, let alone 90%?
54. 1:55Right.
55. 1:56What did they pay?
56. 1:57A millionaire on average would pay 41%
57. 2:00Because when taxes are high, rich people find loopholes.
58. 2:04There’s all these deductions and exemptions
59. 2:06and carve outs that are intentionally baked
60. 2:08into the tax code.
61. 2:10Newspapers ran ads:
62. 2:11"Cruise for free!"
63. 2:13$2499 value.
64. 2:16Basically take a vacation around the Caribbean,
65. 2:19but while you're onboard the ship you attend say,
66. 2:21an investing seminar or a real estate seminar
67. 2:24then write off the trip.
68. 2:26The whole trip?
69. 2:27The whole trip.
70. 2:27Deductions became so complex
71. 2:29that rich people,
72. 2:30instead of inventing, say a precursor to the iPhone,
73. 2:33hired accountants to study the tax code.
74. 2:36Who can afford the best accountants?
75. 2:38It's always the wealthy.
76. 2:40STOSSEL: Today the top tax rate is 37%.
77. 2:43The top rate started dropping again after
78. 2:45Ronald Reagan said 70% was outrageous:
79. 2:49President Reagan: Our tax system
80. 2:50could only be described as un-American.
81. 2:52And the democrats actually agree with him.
82. 2:54Reagan goes to the table and says, "Let's make a deal."
83. 2:57We can cut the rates down to something
84. 2:58closer in approximation to what we have today
85. 3:01and in exchange we'll consolidate the tax code.
86. 3:05Vacation deductions and other exemptions were killed,
87. 3:08leading to a slightly simpler tax code
88. 3:11and surprise, the lower rates brought in
89. 3:14just as much money.
90. 3:16Turns out that tax revenue as a
91. 3:18percentage of the economy
92. 3:19stays about the same
93. 3:21no matter what the top tax rate is.
94. 3:23When rates are high, rich people sometimes work less.
95. 3:27It’s just economics.
96. 3:29People don’t work to pay taxes.
97. 3:31Economist Art Laffer told president Reagan
98. 3:33rich people will evade high taxes.
99. 3:36They’ll change where they earn their income.
100. 3:38They’ll change how they earn their income.
101. 3:40They’ll change how much they earn,
102. 3:42when they receive the income.
103. 3:43They’ll change all of those things to minimize taxes.
104. 3:46They will leave the United States.
105. 3:48And this not-yet-president pointed out that
106. 3:50if taxes go up, rich people may move away.
107. 3:53You haven’t left.
108. 3:54I haven’t left yet.
109. 3:56Are you going to leave?
110. 3:58Big story if I leave, I guess.
111. 3:59If I leave New York that’s a big story.
112. 4:00Look, the rich people are going to leave.
113. 4:02And other people are going to leave.
114. 4:03You're going to end up with lots of people
115. 4:05that don’t produce.
116. 4:06And then,
117. 4:07that’s the spiral that’s the end.
118. 4:09That's what's happened and
119. 4:11there's some European examples.
120. 4:13So France attempted a massive tax
121. 4:15on its wealthiest earners.
122. 4:17What they found is the business people
123. 4:20left in a mass exodus from the country.
124. 4:23But progressives are selective when they look at history
125. 4:26Under republican president, republican administration,
126. 4:29Dwight Eisenhower we had 90% marginal tax rates.
127. 4:32The government will collect more and do good things.
128. 4:35Well, that's the claim.
129. 4:36But you're asking for an economic disaster.
130. 4:39So I ask the question,
131. 4:40do we leave it in the private sector
132. 4:42where the market decides?
133. 4:43Or do we subject it to corrupt politicians?
134. 4:45I say, let the market decide.
135. 4:47Of course, when the market decides,
136. 4:50some people get really rich.
137. 4:52STOSSEL: And then progressives say:
138. 4:54Sen. Sanders: The rich get richer and the poor get poorer.
139. 4:57But it’s not true.
140. 4:59The poor don’t get poorer.
141. 5:01That’s another economic myth.
142. 5:03We will cover that, in an upcoming video.