"My wife, my children, and the nation of Romania."

YouTube comments should, of course, be ignored at all times. But the few comments for this video are works of incandescent genius compared with the usual collection.

One commenter, however, says "90,000 taxed out of 100,000. That wasn't a joke. One of the things that drove Reagan into the Republican party."

That commenter probably said that because he (or she) does not understand income tax brackets.

Income tax brackets seem to be one of those concepts that just slither out of people's mental grasp, like daylight saving time and aeroplanes on conveyor belts.

Another leading indicator of this misunderstanding is when someone expresses the opinion that making more money, so that you move into a higher tax bracket, means you'll have less money to take home than you would if you'd stuck with your lower income.

The simplest kind of progressive tax does indeed work this way, and imposing such a tax on income would indeed be crazy unless there were about a million tax brackets for incomes between $1 and $1,000,000. If the tax on income to $5000 is 20% but it shifts to 40% when you make $5000.01, you'll lose a lot of money if you get a raise from $5000 to $5100.

What actually happens, though, is that each bracket's tax rate only applies for the money you earn within that bracket.

So if you make $10,000 a year, and the country where you live has a $0-to-$5000 20% tax bracket and a $5000.01-to-$10,000 40% tax bracket, you'll pay a total of $3000 in tax.

The above sketch is from 1961, when the Internal Revenue Code of 1954 was still in force in the USA; it ran from '54 to '63. At that time, the top US tax rate was 91%.

But that only applied to the portion of your income above $200,000 a year. $200,000 in 1961 dollars would be worth an easy 1.4 million bucks today, and was worth even more in comparison to the average wage.

Which isn't to say that 90%-plus isn't a pretty hilarious top tax rate, but it's not as if some hardworking surgeon making $100,000 was taking home less money than a lazy plumber on fifteen grand.

In fact, the take-home pay of a person making $100,000 in 1961 in the USA, with no deductions, was $32,680. They would pay $67,320, not $90,000, in tax.

A 67.32% total tax rate still isn't anything to sneeze at. But it ain't 90%, either.

24 Responses to “"My wife, my children, and the nation of Romania."”

  1. swalve Says:

    Good post!

    This is one of my grandfather's stock anti-commie rants. (US based) But he worked in England and Ireland in the 80's, and makes the same claim- he had guys working for him who'd refuse overtime and promotions because it would reduce their incomes.

    Do you know of ANY modern economy that had this sort of negative-progressive taxation?

  2. Daniel Rutter Says:

    I can't swear to you that no country in history has ever done it, since complete incompetents have ended up in charge of various nations after revolutions, the collapse of Communism, et cetera. In the modern era, the current incarnation of Robert Mugabe's regime has put in place a number of laws that're pretty much as stupid as the simplest form of progressive taxation. They have, for instance, set price limits on various basic goods that make it impossible to produce those goods for anything near the fixed sale price, and thus made all grocery stores illegal.

    But this sort of taxation is stupidity on the level of providing your army with hay as fuel for their vehicles. So I strongly doubt any remotely competent government has ever attempted to enact it. I doubt even more strongly that any government has ever successfully enacted it.

  3. Itsacon Says:

    Wow. I just learned more about taxation from you than I did during three years of economics classes in high school... Amazing.

  4. DBT Says:

    OMFGWTFBBQ!!! (Learned that one here too).
    I haven't got as far as the tax thing yet ... but OMG the aeroplane debate is unbelievable! I gave up reading after 30 min of flawed arguments when I realised I wasn't even half way through the comments.

    In the end (or at least as far as I got before the tears prevented me reading further), it wasn't even about physics. It's explained by the wisdom of Deep Thought (Douglass Adams) - to paraphrase - People who don't get the answer most likely never understood the question.

  5. DBT Says:

    Also: It's much easier to resort to pointless condemnation and name calling than to successfully influence another's beliefs.

    Sorry, but I am now too emotionally exhausted to read the tax stuff. Maybe later ...

  6. Alan Says:

    In the non-commissioned ranks, promotion toe the rank of Sergeant requires joing the "sergeants mess", mess fees, dining outfit, etc. The outlay actually means a net reduction in pay- for the first year.

  7. robzy Says:

    Things like this should really be common knowledge, perhaps it should even be incorporated into high school maths curriculums.

    Rob.

  8. Itsacon Says:

    On the plane-on-conveyor belt:
    Amazing how many people should be disqualified from the human race for stubborn-ness.

    I'll be using this example from now on to explain it:
    If you stand on a treadmill wearing roller skates while holding on to a rope you will remain stationary. Start pulling on the rope and you move. Pulling = engine thrust, and thus air will pass over the wings and produce lift. Its pretty simple.

  9. erikpurne Says:

    Regarding the whole "airplane on a conveyor belt" thing, I've heard this question asked before and I think you've got it wrong.
    The issue as I understood it was whether a stationary airplane on a conveyor belt moving at the normal take-off speed of the airplane could take off, which of course it couldn't because the wings aren't moving with respect to the surrounding air. This way, it comes down to people not understanding the way a plane produces lift and thinking take-off speed is some magic number at which take-off occurs, sort of like 88 mph for a DeLorean. People thinking this way may well believe that a plane in the above situation will, in fact, take off since it is, in a way, moving at the necessary speed. So: people who understand how a plane flies say "no", people who don't say "yes".
    In your example, you seem to assume that once the stationary plane is on a conveyor moving at the takeoff speed, it then starts its engines and starts to accelerate, in which case the plane begins to build speed with respect to the ground and the surrounding air and will eventually have enough to take off (at which point its speed relative to the conveyor will be 2x the takeoff speed.) In this case, the people who undestand will say "yes", and the people who don't will also say "yes", so where's the disagreement? Why the "myth"?

  10. Itsacon Says:

    Apparently, some people can't grasp the fact that the plane will be moving at all, and think it can't overcome the speed of the conveyor belt. The difference between airspeed and groundspeed, so to speak.

    A good new myth for them to test would be if the DeLorean on a conveyor belt, each going 88 mph (and thus remaining stationary) would hit the time circuits. In other words, is a DeLorean triggered by groundspeed or airspeed?

  11. erikpurne Says:

    Huh. I guess you may be right, but then it would just come down to whether the power lost to friction in the bearings and between the tires and the "ground" is or isn't enough to cancel out the thrust of the engines, which seems a little obscure.
    On another note: for a bit of amusement, ask people why the moon goes through its phases (i.e. why part of it is dark sometimes.) It's amazing. Easily 2/3 or 3/4 of the people you ask will scoff as though it were something every third-grader knows and proceed to tell you it's the Earth's shadow. Then, when you ask them how a sphere can cast a crescent-shaped shadow, they will rub their chin and say "Hmmm..." I think you'll be surprised to see the who some of the suckers are on this one. You'll also be surprised, in at least a few cases, at the difficulty of explaining how it actually works. Despite its simplicity. Despite having colored one half of a ping-pong ball black and rotated it to illustrate. Despite having turned off all the lights except one, around which you then move a tennis ball.
    On second thought, only do this if you have patience in ample reserve and/or can avoid using phrases like "WHAT THE F*!K IS IT YOU THAT YOU'RE NOT GETTING ABOUT THIS?!" even under extreme provocation. Don't say I didn't warn you.

  12. pompomtom Says:

    So, what's the dafter: implementing this ultra-progressive income tax, or reading youtube comments?

    (or is it all a trick question, and the answer is "writing youtube comments"?)

  13. arteitle Says:

    erik: the realization that one is supposed to come to in pondering this thought experiment is that unlike a car, which is propelled by its wheels against the road and can be held back by the treadmill, an airplane is propelled by its propellers or jets against the air and won't be held back by the treadmill (within reason; the power lost to friction would be minimal, unless the treadmill were running at ludicrously high speed). Until one comes to that realization, they mistakenly believe that the plane's airspeed will remain zero while it ramps up its throttle, and that those who say the plane will take off must be picturing a plane rising vertically off the ground just because its engines are running.

  14. DBT Says:

    [sigh ... I SO didn't want to get drawn into this ...]
    Guys, The ANSWER to the aeroplane thing is ENTIRELY dependant on the QUESTION ASKED. All (OK, Most) of the people in the debate put forward plausable arguments as to why their theory was correct. However some people added conditions that were NOT part of the scope of the experiment conducted by the Mythbusters. Never mind what the original myth in fact was. An experiment is not a proper experiment if the parameters are not defined prior to testing the hypothesis. (Unless you need to win an argument with your Marketing Department, in which case there are no rules. But that's business, not science). If the original Myth was in fact mis-interpreted, then that was the failure. Otherwise, no laws of physics were harmed in the filming of this experiment.

  15. Popup Says:

    There was a time when in Sweden you could, under some conditions, have a marginal tax of 102%, which kinda is what you're asking for.

    It happened to a famous author of children's books, e.g. Pippi Longstocking) who was outraged and wrote a highly publicised story about it. The finance minister tried to get snarky, and in the end it resulted in the fall of the social democratic government for the first time in 40 years.

  16. ambler Says:

    If a stationary plane takes off in an airfield and there's no one to see it lift... can it really fall?

  17. Daniel Rutter Says:

    Personally, I agree with those who say the phenomenon that really needs to be investigated is whether a helicopter can take off if you put it on an enormous turntable.

  18. Odeen Says:

    African or European helicopter?

  19. sockatume Says:

    Having evaluated pretty much all of the possible interpretations, I think the plane's going to take off the conveyor belt except in two scenarios:

    You specifically design the plane's wheels so that the resistance to rotation (i.e. grip to the tarmac + friction in bearings) is on the order of the thrust from the engines at all treadmill speeds. In this instance either the plane doesn't begin moving at all because there's too much drag on the wheels, the wheels get worn flat from being dragged across the tarmac and it takes off anyway, or the wheels wear through and the plane crashes.

    If you idealise the treadmill so that it accelerates to exactly match the plane speed as measured by the rotational speed of the plane's wheels, but do not also stipulate that it and the plane are indestructible, then the plane and/or treadmill will be destroyed instantly the moment the plane achieves nonzero speed:

    (treadmill speed) = (wheel speed) = (treadmill speed) + (plane speed)

    Where (plane speed) > 0, (wheel speed) > (treadmill speed), treadmill accelerates to infinity.

    In all of the other (i.e. reasonable) interpretations, there's nothing to stop the plane taking off. However it's more fun to come up with unreasonable interpretations.

  20. sockatume Says:

    (The treadmill accelerates instantaneously, or at least on a timescale far shorter than that required for the plane to take off, I should add.)

  21. sockatume Says:

    Oh, of course there's also the version where the plane is being kept stationary relative to the airmass around it, while the treadmill moves under it at takeoff speed, but the version of the question I read specifically stipulated that the plane was using its engines and the treadmill surface was moving with exactly the opposite velocity to the plane.

  22. Daniel Rutter Says:

    In the real world, aircraft wheel friction is slight enough that it's left as a constant for runway length calculations, for all rolling speeds of a given aircraft.

    So whether a given plane is minimally loaded and taking off at sea level (and can thus take off at a low speed) or stuffed to the gunwales with passengers, fuel and cargo and taking off from a Himalayan airfield (and thus needs to be rolling so fast that its tyres are approaching their rotational speed limit), wheel friction is given the same low value.

    This is fair enough, since wheel friction is very small at taxiing speed and increases directly with speed, but air resistance increases with the square of a vehicle's speed. So the faster you go, the less important wheel friction is, as long as no bearings have seized and no tyres have blown.

  23. jaws_au Says:

    Actually the comment about African or European helicopters is quite true... though more American or Russian helicopters. American helicopters rotate anti-clockwise (looking from above), Russians the other way. Europeans are split, even within the same company :)

    The ultimate helicopter on a turntable question though would involve one of the Russian twin-rotor designs... I've no idea if the lift of just one rotor would be enough to get it off the ground, despite the turntable.

  24. swalve Says:

    The mythbusters airplane thing depends on the following: airspeed versus ground speed.


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