How America's Marginal Tax System Actually Works

Freshman Congresswoman Alexandria Ocasio-Cortez has proposed a 70 percent income tax on the super-rich. But how it would apply to our marginal tax system? Cheddar explains.

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[MrConverse]

You explain how tax brackets work then say, “Do you think a 70% tax increase for the super-rich will work?” It’s not a 70% tax **increase**.

[IkBenDigio]

I thought videos from Cheddar would be a little more researched. There was indeed a 91% tax rate but the average rate paid was around 42% 10-20% higher as currently is. Thanks to deductions and such it got even so bad that the 0, 1% sometimes paid little to no taxes at all. And if you have ever met any rich person at all you know they are not the one's going to pay that 91% rate or even a 70%.
Let's try to get rid of wasteful deductions and increase the tax base like the 1969 tax bill did which helped spring economic growth back up in times of recession.
Because i am getting a little sick of people saying but look we had a 91% tax rate back

[IkBenDigio]

Also is this tax bill for all income or just income tax? Because Warren buffet makes 1 dollar in income and billions in capital gains...

[gtaeverrr]

I think the government should explore ways to spend tax revenue more efficiently before increasing taxes.

[shizik]

One issue that rarely clarified is that, wealth of ultra wealthy doesn't come from salary, it comes from capital gains on their stocks and other assets. Changing the marginal rate on income will hardly make a difference or achieve the intended effect.

[darkblackson]

The US government is so trustworthy and honorable that I think we should all be taxed at 99%. They’ll definitely do what’s in our best interest. They always do.

[dostthouevenlogicbrethren]

Now do understand that as an LLC, ALL of my income comes from the form of business revenue, as it is a FTE, or Flow Through Entity. Meaning, all business revenue is deemed as personal income. Any and all personal income that I take home at the end of the day comes from what remains after I pay expenses, which means my income ALL gets taxed at the highest tax bracket that I am in. Should your business generate more than $10, 000, 000 in income (not hard to do even as a small business), then yes, ALL of your personal income will be taxed at 70%. This is how and why there are tax deductions, which AOC also wants to do away with. This is also why, as you introduce higher and higher tax brackets, you need more and more tax deductions and exemptions in order to prevent such ridiculously heavy tax burdens from completely destroying the economy...which means more wealthy people writing off tax exemptions and thus contributing LESS.


While AOC loves to tote a time when the US had a marginal tax rate as high as 91%, she fails to realize that it came with an 11, 000 page tax code! Two pages explained the definitions of income, and the brackets, with 10, 998 pages being exemptions and deductions that prevented even the most wealthy from actually paying any such taxes.


There is a reason that despite the tax rates ranging from as high as 91% to less than 30%, the actual percentage of GDP collected as tax revenue always remained around 17%. Focus on means in increase the GDP to collect 17% of a larger pie, instead of passing legislation that punishes business owners because of a lack of understanding of real economics.

[jpfad]

The government should not be allowed to take more than 50 % of your income. Even if You make 10 Million a year.

[catalepsy]

100% tax please! I LOVE TAXES SO MUCH 🙂🙂🙂🙂

[Nicksloan]

Suspicious lack of information on what the increased tax will fund and mention of how other countries currently with a comparable to 70% income tax function.

[bornesmouthbarnsman]

the tax code is really easy to game, especially when you have the money to pay people who know what they're doing. The high proposed tax rate would probably only be paid by a very small group of people.

[joesjoeys]

I always love Ali but I feel like the cheddar videos often leave me hanging. They feel like there should be a more definitive end point than when the video stops and it feels like there should have been another several minutes of info.
Am I the only one ?

[eugenes]

What's important to point out is that even when the tax rate was 91%, the total amount of taxes collected was exactly the same as before. If you're a rich person, you take all the money you have and get it the fuck out of a 91% tax zone, this is basic common sense. Lower taxes means more money kept in the US, working for the US. If you were about to get 90% of your paycheck taken away, do you really think you'd continue working, or doing anything productive other than figuring out how to hide your income? Remember, the rich can afford much better "accountants" than the rest of us. At 90%, what's the difference between a Democracy and Communism?

[WIImotionmasher]

Im amazed that so many americans dont understand how thier CURRENT tax system works. And are criticising a future proposal based on thier idiocy

[elliottmiller]

So we should punish people for working hard, taking risks, and providing to society? No

[mritaci]

raise taxes the super rich will park their cash somewhere else

[markeyboi]

No matter what you say a tax rate over 50% is stupid. (Besides inheritance) people work hard for that money, just because someone became rich doesn't mean more than half their income over X amount should be taxes.

[poweroffriendship.]

*America's Marginal System:* HELLO, I LIKE MONEY!!!

[KA-iqko]

I want to see Alexandra Ocasio Cortez's tax returns. How much taxes are you paying?

[surfie]

In Australia money $0 - $18, 200 is taxed at 0%