Class Struggle In The USA
Noam Scheiber has a hard hitting article on the front page of www.nytimes.com “2016 Candidates and Wealthy Are Aligned on Inequality”
The content should be familiar to AngryBear readers. A majority of Americans are alarmed by high and increasing inequality and support government action to reduce inequality. However, none of the important 2016 candidates has expressed any willingness to raise taxes on the rich. The Republicans want to cut them and Clinton (and a spokesperson) dodge the question.
Rich individuals (who are willing to be interviewed) also express concern about inequality but generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly state his guess (and everyone’s) that candidates are eager to please the rich, because they spend much of their time begging the rich for contributions.
No suprise to anyone who has been paying attention except for the fact that it is on the front page of www.nytimes.com and the article is printed in the business section not the opinion section. Do click the link — it is brief, to the point, solid, alarming and a must read.
I clicked one of the links and found weaker evidence than I expected for Scheiber’s view (which of course I share
“By contrast, more than half of Americans and three-quarters of Democrats believe the “government should redistribute wealth by heavy taxes on the rich,” according to a Gallup poll of about 1,000 adults in April 2013.”
It is a small majority 52% favor and 47% oppose. This 52 % is noticeably smaller than the solid majoriities who have been telling Gallup that high income individuals pay less than their fair share of taxes (click and search for gallup on the page).
I guess this isn’t really surprising — the word “heavy” is heavy maaaan and “redistribute” evokes the dreaded welfare (and conservatives have devoted gigantic effort to giving it pejorative connotations). The 52% majority is remarkable given the phrasing of the question. But it isn’t enough to win elections, since it is 52% of adults which corresponds to well under 52% of actual voters.
My reading is that it is important for egalitarians to stress the tax cuts for the non rich and that higher taxes on the rich are, unfortunately, necessary if we are to have lower taxes on the non rich without huge budget deficits. This is exactly Obama’s approach.
Get rid of tax breaks that only the wealthy can take advantage of and perhaps everyone will pay their fair share. The same goes for corporations.
Of course another way to reduce inequality is to raise wages. Buried way down around paragraph 9 I found this gem: “Forty percent of the wealthy, versus 78 percent of the public, said the government should make the minimum wage “high enough so that no family with a full-time worker falls below the official poverty line.”
I’m fine with raising people’s taxes by increasing their wages. A story I heard on NPR recently indicated that a single person needs to make about $17-19 an hour to cover most basic necessities nowadays (the story went on to say that most people in that situation are working 2 or more jobs to get enough income, a “solution” that creates more problems with health/stress etc.). A full time worker supporting kids needs more than $20.
You double the minimum wage and strengthen people’s rights to organize union representation. Tax revenues go up (including SS contributions btw) and we add significant growth to the economy with the increased purchasing power of workers. People can go back to working 40-50 hours a week and cut back on moonlighting which creates new job opportunities for the younger folks decimated by this so called recovery.
Win Win Win Win. And the poor overburdened millionaires don’t have to have their poor tax fee fees hurt.
Great post, except: “higher taxes on the rich are, unfortunately, necessary.” Why is this unfortunate?
Good job.
I need an explanation: How does increasing the tax rates on the “rich” (however defined) make me more equal to them?
How about if we get rid of the “re” and call it what it is “distribution”. The current foundational rules embedded in tax law, intellectual property law, corporate construction law, and other elements of our legal and regulatory system result in distributions that favor those with capital or in a position to seek rents.
This isn’t a situation that calls for a Robin Hood who takes from the rich and gives to the poor. It is more a question of how elites have rigged the system to work primarily for them. Democrats cede the rhetoric to the Right when they allow the discussion to be about redistribution. Even talk of inequality without reference to the basic legal constructs that are rigged to create slanted outcomes tend to accepted premises that are in and of themselves false.
The issue shouldn’t be rejiggering things after the the initial distribution but creating a system with basic rules that level the opportunity playing field.
Thank You Mark Jamison!
An elegant, informed writer who says it better than I can.
But here is how I would say it:
Addressing “inequality” by “tax the rich” is the wrong answer and a political loser.
Address inequality by re criminalizing the criminal practices of the criminal rich. Address inequality by creating well paying jobs… with government jobs if necessary (and there is necessary work to be done by the government), with government protection for unions, with government policies that make it less profitable to off shore…
etc. the direction to take is to make the economy more fair…. actually more “free” though you’ll never get the free enterprise fundamentalists to admit that’s what it is. You WILL get the honest rich on your side. They don’t like being robbed any more than you do.
But you will not, in America, get even poor people to vote to “take from the rich to give to the poor.” It has something to do with the “story” Americans have been telling themselves since 1776. A story heard round the world.
That said, there is nothing wrong with raising taxes on the rich… to pay for the government THEY need as well as you. But don’t raise taxes to give the money to the poor. They won’t do it, and even the poor don’t want it… except as a last resort, which we hope we are not at yet.
Noam Scheiber was co author of a book, The Real Deal, which was a collection of lies and stupidities about Social Security.
I would not trust anything he says even if, especially if, I agreed with him.
ERROR
Noam Scheiber is NOT an anuthor of The Real Deal.
I was thinking of Sylvester Schreiber.
apologies.
Coberly, you are dead-on. Right now, taxation is the least issue. Listen to Jared Bernstein and Dean Baker: the problem is incomes and demand, and the first and best answer for creating demand for workers and higher wages to compete for those workers is full employment. Minimum wage will help at the margins to push incomes up, and it’s the easiest initial legislative sell, but the public will support policies — mainly big-big infrastructure modernization in a country that has neglected its infrastructure for a generation — that signal a firm commitment to full employment.
It’s laying right there for the Democrats to pick it up. Will they? Having policies that are traditional Democratic policies will not do the job. For believability — for convincing voters they actually have a handle on what has been wrong and how to fix it — they need to have a story for why we have seem unable to generate enough jobs for over a decade. The neglect of infrastructure — the unfilled millions of jobs that should have gone to keeping it up to date and up to major-country standards — should be a big part of that story. Trade and manufacturing, to be sure, is the other big element that will connect with voters. Many Democrats (including you know who) are severely compromised on trade, but they need to find a way to come own on the right side with the voters.
urban
i’d love to see it. but there are two problems.
the first is the religion called neo liberalism (Reaganism)
the second is that all the politicians are in Wall Street’s pocket.
I think there is solid support in poll after poll for higher taxes on the rich. If the giving to the non rich is of the form of cutting taxes on the non-rich, then there is strong support for that as well.
Aha I am now going to reply to comments which haven’t appeared (except in my e-mail). then I will approve them so they appear.
@ Jane Increasing taxes on the rich are reducing taxes on the non-rich reduces the inequality of after tax incomes . I wasn’t saying anything interesting or subtle, just doing arithmetic.
@Kas Thomas The “unfortunately” was a proposal for not entirely sincere messaging, rhetoric, convincing Robin Hoodophobes. But I mean the rich get some (tiny) marginal enjoyment from income so there is a (tiny) social cost to taxing them.
Robert
i wish you’d give some thought to the other comments on this post.
if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you are simply proposing theft. if you were proposing raising taxes on the rich to provide reasonable welfare to those who need it you would be asking the rich to contribute to the strength of their own country and ultimately their own wealth.
i hope you can see the difference.
it is especially irritating to me because many of the “non rich” who want their taxes cut make more than twice as much as i do. what we are looking at here is simple old fashioned greed… just as stupid and ugly among the “non rich” as it is among the rich.
“the poor” in this country do not pay a significant amount of taxes (Social Security and Medicare are not “taxes,” merely an efficient way for us to pay for our own direct needs…. as long as you call them taxes you play into the hands of the Petersons who want to “cut taxes” and leave the poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety and fear-driven greed trying to provide against desperate poverty in old age absent any reliable security for their savings.)
class war, a view from the other side:
imagine a world with about 200 million workers (and no rich) each making about a dollar a day, just enough to buy bad food and miserable shelter.
then someone comes along with a device that will allow them to make two dollars a day and work only eight hours instead of sixteen. he can sell that device for about a dollar and it will last one year. he pays his workers (including himself) two dollars a day and they can each make two of the devices per day. so one half million workers can turn out about 1 million devices per day or about 200 million per year ( 200 days per year, allowing time off for holidays and weekends).
at one dollar per device, this is 200 million dollars, divided by one half million workers is 400 dollars per year (two dollars per day).
the devices sell well, so the inventor-entrepreneur raises the price to two dollars per device, paying himself the “profit” of 200 million dollars per year.
now we have gone from a world with workers making a dollar a day to a world with workers making two dollars a day plus one rich person making one million dollars a day.
inequality to be sure. reason for class war? who is being hurt?
The workers are being harmed because they are not receiving the full benefit of their labor as it relates to the actual worth of their labor as set by the market based on the selling price of the device.
However, the other issue is the power shift the inequality produces. Chances are those 1/2 million workers are not going to all vote one way or pool their money to offset the political economic power the “inventor” has if the workers actually have some extra cash to invest in exercising political power.
Economic royalty was the phrase and one of the reason for the honest to goodness progressive tax tables.
Becker
i wish the Bears could stand up to my passionate disagreement.
I agree with you about the danger of excess wealth. I think that politically the workers would have to be very careful what the owner did with that million dollars a day. But that is not the same as saying that they should tax the owner to give his money to them to make everyone equal.
Nor can I take seriously the “actual worth” of their labor. It is certainly as legitimate to say their “actual worth” was the one dollar a day they were making before the owner showed them how to make the “device.” The actual worth of “the device” is the twenty thousand million dollars it adds to the labor-wages of the workers who buy the device…. or maybe that plus the 200 million the inventor keeps as “profit” and no doubt spends into the country buying things the workers now have time to make with the eight hours they are saving every day.
There are issues here, but they aren’t addressed with cliches about “actual worth” especially when you continue with “as set by the market” : the market set the worth of their work at two dollars a day.
There is a lot to be said about the dangers of excess wealth as well as the dangers of excess poverty. But pretending that those dangers are addressed by demanding “equality” is philosophically and politically empty.
i’d like to state her, in case anyone understands it, that i would say exactly the same to the owner if in fact the “country” did tax him a large percent of his profits to pay for things that improved the conditions of workers not otherwise addressed by “the market.” that is, there is NO accounting in heaven for the “worth” of his work or the fairness of the tax.
but the resolution is a political question and a moral one… and the moral question is on both sides.
i have no doubt that in real life there are many “rich” who get that way by predatory acts against the poor. that is a very different problem not addressed by simple demands for “equality.”
and you won’t win any elections in America by demanding “equality.” Every worker knows other workers who aren’t worth what they are paid. They could as easily be persuaded… if their attention spans could be confined to the argument… that the “owner” is already performing an act of charity by doubling the standard of living, including that of the many people who… no doubt through no fault of their own… don’t work.
hard for me to stop here, because i can hear the argument coming accusing me to be a shill for the rich. i think i am quite the opposite. i’d like to see “the poor” have a better case for a better way of improving their condition.
I’m going to try to reply to “Coberly
March 31, 2015 10:52 am
Robert
i wish you’d give some thought to the other comments on this post. etc.
First I do not think a change in the tax code is theft. I have read Locke’s argument that there are natural property rights, but I have never read anyone suggest there is a natural right to a particular top tax bracket.
second, I don’t think it is fruitful for us to argue here about whether the payroll tax is a tax. I certainly did not propose cutting only the income tax nor cutting it only to zero. I am willing to let you use the word tax however you please, but don’t insist that I meant only the income tax,because that is what you mean.
More generally, I was discussing political strategy. I do not think that tax cuts for the lower 99% of US households are the best use of spare money (obtained say by raising taxes). Personally the US fiscal issue I care most about is foreign aid which I think should be increased more than tenfold. But I have noticed poll after poll in which a majority supports cutting foreign aid.
I think one comment to which I am trying to reply, you don’t discuss any polling data. I think a discussing of what one should advocate has to take political realities into account.
I don’t think this is a satisfactory reply to the comment which strongly requested a reply (let alone later comments). I am sure you will find it entirely unconvincing. But I tried.
Robert
thanks for trying.
i was also mostly discussing political strategy. And something I like to call mental hygiene, though it angers my friends. Don’t take it personally.
there are misunderstandings between you and me. the following are meant to clear those up if possible. some, of course, are not misunderstandings perhaps as much as differences of opinion:
a change in the tax code is not theft. but a change in the tax code “in order to” “take from the rich to give to the non-rich” is in the hearts of those calling for it, and in the minds of those expecting to be “taken from,” theft. the distinction lies in the motivation. please note a distinction between “the not rich” and “the poor.”
a case can be made for taxing the rich to provide decent essentials for the poor. But someone who is “not poor” but “not rich” demanding that “the rich” pay so they don’t have to pay strikes me as someone who is just making the same claims as the evil rich who don’t want to be taxed to pay for the poor. only the rich claim it is somehow counter productive to pay for the poor. the “not rich” are admitting the poor need help but they want someone else to do it. not “all of us” helping the poor, but “someone else besides me” helping the poor.so my conscience doesn’t cost me anything.
it is not fruitful for us to argue about whether the payroll tax is a tax. i only wish to direct people’s attention to the ways in which it is not like a tax: you get your own money back, directly, with interest. you are not paying for “the government”. you are paying for your own retirement. it is a tax in the sense that the government collects the money from you whether you want to participate in their insurance and savings plan or not. it is stupid to argue about words. the point is to be aware of what it does. but calling it a “tax” is politically self defeating when you are trying to defend what it does from the people who want to destroy it.
i don’t know what you mean that i think you meant only the income tax.
i don’t share your concern for foreign aid. perhaps i don’t know enough. in any case, if you think foreign aid needs a tax raise to pay for it, say so. don’t call for a tax raise on the rich to pay for a tax cut on the not-rich. the rich might be persuaded to have their taxes raised if they think a boost in foreign aid is in their patriotic interest. they will not be persuaded to have their taxes raised in order to cut yours.
i don’t discuss polling data mostly because i think polls will tell you how effective your propaganda has been. they don’t tell you anything essential about the rightness of a course of action. i will cite polls when they point out that people seem willing to have their own payroll tax raised to keep their Social Security intact… because that is a piece of information that is surprising, and if taken advantage of would end the so called Social Security crisis. it’s also a result not created by any propaganda that i have seen.
there is nothing surprising about a poll that says “tax the other guy.” (and by the way, I have nothing against “progressive taxation.” except when some professor starts calling SS a “regressive tax regressive tax awk awk” ignoring that it is a highly progressive program and i guess being clueless as to the inability to separate the thing into a “front” and a “back” and claiming that the front is regressive and should be torn away from the living body of the progressive entity to preserve their semantic stupidity.
so… this is not a satisfactory reply either. just another attempt to convey an idea or two that people persist in not seeing. defects of clarity and tone are mine.
Robert
the “other commenters” i referred to were making the point that inequality could be more effectively addressed by fiscal policy… more jobs at higher wages… than by tax transfers.
one might expect that fiscal policies designed to accomplish this would require some taxes. one would hope that any needed tax raise could be presented to the people as a patriotic cost for making the country stronger and richer. most of the higher taxes would fall on “the rich” because that’s where the money is.
but that’s a very different thing than telling the rich to pay more taxes so you can pay less.
by the way, when i call something “stupid” i am (usually) talking about the idea not the person.
i have held many stupid ideas in my life. and been grateful to have it pointed out to me.
@ coberly (reply to “thanks for trying”)
There are no defects of tone or clarity. The tone is excellent and you are very clear. I guess one point where are should reply is the “only the income tax” thought, which was based on your arguing that the payroll tax isn’t properly considered a tax. That caused me to be confused about what you thought about what I wrote. Now I understand.
I agree polls don’t tell us what policy is good. To assume that, one would have to assume that we (the US public) already know what is the best policy and just don’t know what we know. But again and always, I am trying to find an effective political strategy. Finding out whose propaganda has been successful is key to finding an effective political strategy.
I think one problem is that I am a bit ashamed about trying to use rhetoric, find effective slogans or advise on optimal propaganda. This causes me to signal that I am writing frankly to Angry Bear readers by using words which are terrible rhetoric. I am very sure that anyone trying to reduce inequality and help the poor by convincine the US public should avoid the phrases “class struggle” and “soak the rich”. I don’t think even an open appeal to the greed members of the middle class is good strategy (totally aside from how it is vile). Note the key word “open”. I think an almost open appeal to that greed under the heading of progressivity or fairness or closing loopholes and expanding the standard deduction is good strategy.
On political strategy, I think it is useful to focus on how elections have been won in the past. I note that Clinton and Obama both campaigned with proposals to raise taxes on high incomes and cut taxes on the middle class (Obama also delivered). I think the data strongly support my belief that this is an effective political strategy. More generally, I think it is important to distinguish policy and politics. To not equate the assertion that a statement is true and the assertion that it would be good strategy for a politician to make that statement. I find this liberating, because I am not a politician. I feel free to write what I believe, because almost no one (except for you) cares what I think.
Anyway, thanks for the tone and clarity.
Robert
thanks for kind reply. usually my comments just make things worse. it is, i believe, always dangerous to take someone else’s words as meaning what you (that is “I”) think they mean. but what choice do we have, except to reply and hope for further clarification, instead, what we usually get is defensiveness and a digging in of egos. you have avoided that here, and i am grateful. and hopeful.
we are not so far apart.
i don’t know…. that raising taxes on the rich and cutting them on the middle class “works.” it might win an election from time to time, but the policies if not the politics seem to me to remain the same. probably i am ignorant of what changes are actually occurring, actually possible in the short run.
i have been burned rather badly (in my opinion) by those I thought were defending Social Security who seem to have settled on a political, and policy, of soaking the rich. that would not be so bad in terms of my feelings… they are entitled to whatever politics they believe is best… but in the process they have suppressed what they know is a fact: the actual cost of fixing SS is pennies per week per worker, and SS was designed to be not welfare… and they have managed to convince themselves that i am a rude person and tell each other how rude i am while they are rude ways that take my breath away…
there is no help for this. it’s just the way people are. but i do believe, first, that there is an easy, cheap, and honest way to “fix” Social Security (let the workers pay for it as they always have). and that appeals to class war are self defeating. i could be wrong about the last. i am not wrong about Social Security.
sorry to run on.
‘My reading is that it is important for egalitarians to stress the tax cuts for the non rich and that higher taxes on the rich are, unfortunately, necessary if we are to have lower taxes on the non rich without huge budget deficits.’
America already has a more progressive tax code than much of Western Europe. In addition, a huge swath of Americans have a low (single digit) or negative tax rate. Would a much higher tax rate be effective? If you were rich or thinking of investing or incorporating in America to become rich, why would you continue? Why wouldn’t you either re-domicile your business (as is happening with greater frequency) or give up your citizenship (which is happening with greater frequency)? How does having less capital in America, less wealthy, less large corporations, and less income inequality as a result help America? Capital intensive countries tend to have the highest wages. Punitive taxation sends capital elsewhere where it is better treated, no?
In my opinion, a simple low flat tax rate that applies to all Americans equally, with a high deductible, is the most just approach. first $15K is tax free and everything after, regardless of source is taxed at a simple rate of 15%. They have something similar here in Hong Kong and it seems to work nicely though not perfectly to be fair. What do people think? Unfair?
K
kai
i am replying in case no one else does. i wouldn’t want you to feel ignored. but i don’t think your analysis appreciates the complications.
i personally am not much interested in the “poor capitalist will flee the country if you tax him too much.” in fact i’d say good riddance, and by the way watch out for that tarriff when you try to sell your stuff here.
and you might have noticed that i am not an equalitarian. what i am against is criminal business models, degrading poverty, and concentrations of wealth that are a danger to the republic (note i did not say the democracy.)
as far as taxes go, i don’t care much how they are levied, they all come down to a tax on what is produced/consumed one way or the other. the poor are in the worst position with respect to shifting their tax burden on to others. the rich do it as a matter of course. it would be simpler just to tax the rich… there are fewer of them, and they know what is at stake, and they can afford accountants. the rest of us would pay our “taxes” in the form of higher prices for what we buy.
and frankly i am sick of words like “punitive taxation.” i don’t much like the “tax the other guy” middle class, but i really hate the “us poor rich, everyone is soo mean to us.”
coberly:
Hmmmm
– “by the way watch out for that tariff.” The time is rapidly approaching when the threat will be hollow.
– “criminal business models,” What is a criminal business model? Your definition.
– “as far as taxes go, i don’t care much how they are levied” You would tax the rich? What is rich to you? Why not just revert back to 2001?
– “fewer of them,” 3% of all tax payers.
coberly,
Thanks for your well-reasoned response.
You state, ‘i personally am not much interested in the “poor capitalist will flee the country if you tax him too much.” in fact i’d say good riddance, and by the way watch out for that tarriff when you try to sell your stuff here.’
(a) What happens after thy leave? Sure you can get one-time ‘exit tax’ but you lose all the intellectual capital (think of Bill Gates, Warren Buffet, or Steve Jobs leaving and taking their intellectual property and human capital with them). These guys are great jobs creators…it will not only be the ‘bad capitalists’ that leave but also many of the ‘job creating’ good ones.
(b) I am less worried about existing job creating capitalists in America; what about the future ones? The ones that either flee overseas and make their wealth there or are already overseas and then have a plethora of places they can invest but why bother investing in the US if all they are going to do is call me a predator and then seize my assets and or penalise me for investing there? Right? It is the future investment that gets impacted not current wealth per se.
You also make a great point, ‘he poor are in the worst position with respect to shifting their tax burden on to others. the rich do it as a matter of course. it would be simpler just to tax the rich… there are fewer of them, and they know what is at stake, and they can afford accountants. the rest of us would pay our “taxes” in the form of higher prices for what we buy.’
Investment capital will go where it is best treated and to attract investment capital a market must provide a competitive return (profit margin or return on investment). Those companies and investment that stay will do so because they are able to maintain that margin….and they will do so by either reducing wages or increasing prices. Where they can do neither, their will exit the market.
That is why, according to research, a bulk of the corporate taxation falls on workers and consumers as a pass-on effect. The optimum corporate tax is 0. This will be the case as taxation increases on the owners of businesses and capital….workers, the middle class, and the poor pay it. The margins stay competitive for the owners of capital since capital is highly mobile and fungible.Workers and the poor less so.
But thanks again for the tone and content of your response. I often get attacked personally for my views instead of people focusing on the issue. I appreciate the respite.
K
kai
yes, but you missed the point.
i am sick of the whining about taxes. it takes so much money to run the country (including the kind of pernicious poverty that will turn the US into sub-saharan africa. and then who will buy their products.
i can’t do much about the poor whining about taxes. they are just people with limited understanding, except for their own pressing needs. the rich know what the taxes are needed for, they are just stupid about paying them. of course they would pass the taxes through to their customers. the customers would still buy what they need/want at the new price. leaving everyone pretty much where they are today financially. but the rich would be forced to be grownup about “paying” the taxes, and maybe the politics of “don’t tax me tax the other guy” would go away.
as for the sainted bill gates. there are plenty of other people in this country as smart as he is and would be happy to sell us computer operating systems and pay the taxes on their billion dollars a year profits.
nothing breaks my heart more than a whining millionaire.
run
thanks for the questions. but i think you may be missing the point as well.
the “rich” would PAY the tax, but of course they would pass the cost on to their customers. we would all end up about the same financially. so i guess “the rich” could be “corporations” or just “businesses” or anyone with enough money to hire an accountant or tax lawyer. the point is not to “soak the rich” but just to collect the tax where it is easiest (the accounting) and where presumably the people paying would have more understanding of why a country needs to collect taxes.
a criminal business model would be Wells Fargo … make fraudulent loans with the intention of charging hidden fees until the customer has to default, then sell his property to your friends like Mr Peterson.
or the Great Bank Robbery that led us to the Great Recession. I am sure you can think of others. Payday loans?
i don’t see where 2001 accomplishes the same purpose. or where 3% of anybody changes the point.
Coberly,
Actually, I think you missed the point.
It is the poor that whine about taxes, not the rich. They whine about how they deserve other people’s money because, well, that person has more. The rich don’t need to whine; they have other options. In response to unfair taxation they simply pick up their game and move elsewhere (which then causes the poor to whine about how the rich have moved all the jobs overseas) or they leave and take their money elsewhere (which then causes the poor to whine about how these people are unAmerican for not sticking around and being preyed on by a growing class of takers). As stated above, capital is highly mobile and fungible and America is not the only game in town…in fact it is not even one of the better games in town….there are a lot of other countries, with better rule of law, stronger property rights, better respect for the wealthy, and lower taxes. No need to whine when you can buy a first class ticket out.
You state, ‘it takes so much money to run the country (including the kind of pernicious poverty that will turn the US into sub-saharan africa. and then who will buy their products.”
It does not take that much to run a highly effective government with strutting rule of law and protection of property rights. That is all the rich need and there is no shortage of countries providing these rights for a cheaper price (tax).
You may not know this because you have never been to Africa….but Africa’s problems are not due to an over abundance of rich capitalists exploiting them through creating too many jobs at low prices, it is due to the lack of capitalist institutions: rule of law, private property rights, etc. In fact wherever you have a lot of capitalists, and attendant capital, you get higher wages. More capital = higher wages. Labor becomes scarce relative to capital in such a scenario. If anything, if you are a poor country you will want to create the conditions where private property and capital accumulation is protected by rule of law. Get that right and all else follows. We saw this in China, where the adoption of more capitalism pulled more people out of worse than ‘Sahara-like’ poverty than anytime in history. In fact, Wal-Mart has done more to pull people out of absolute poverty than UNICEF, the World Bank, Gates Foundation, and OXFAM combined. They deserve a Nobel Prize for the result.
You then go on to make the confusing point that the rich will force their workers and the poor who buy their products to pay the taxes but at least this makes them grown ups.
I am not sure that follows. More importantly, you are assuming the products being bought are being sold by the rich who have their factories in America. Since they compete globally and taxes affect their competitiveness, they will simply move everything overseas, pay lower taxes so they can continue to be competitive in the global markets and then just sell what needs to be sold in the US. The States will now tax them on domestically sold goods and services through a consumption sales tax but the re-domiciled rich man will be laughing all the way to the bank in some other country where he is not subject to America’s punitive tax code. How is that better for America? You want to answer the question? How is American capital and capitalists and jobs going overseas better for America in your scenario?
You then state this, ‘as for the sainted bill gates. there are plenty of other people in this country as smart as he is and would be happy to sell us computer operating systems and pay the taxes on their billion dollars a year profits.’
Oh yeah…name them? Which major computer manufacturer or phone manufacturer is doing that? If Bill Gates leaves or Apple leaves fully or even Google, how would someone step into fill the void? And more importantly why would they?
Is France better off because they have no Microsoft, Google, Apple, Facebook? More importantly why don’t they have them? Why are more of their young working in the UK than working in France? Why are more start-ups by the French starting overseas than domestically?
These are important questions that need to be answered BEFORE you start demanding that people pay more of what they have earned while a whole swath of America’s pays nothing.
K
kai,
let’s put it this way: you missed MY point. and that’s what counts.
learn to hold still and think and the truth will trickle down to you.
Sure I got YOUR point,…it just didn’t address MY points as put forth in MY original post. And it still doesn’t.
More importantly, you have failed to defend YOUR point against even a rudimentary challenge.
K
kai
rudimentary is right.
i have read your “points” about sixteen hundred times in the last year alone. made by the ayn rand faithful. it is wearisome.
and i have learned there is no point in trying to talk to true believers.
Coberly,
Your surrender is accepted.
Feel free to come back when you can actually defend your position.
K
gee Kai, what a clever retort. i haven’t heard anything like it since i was in the fourth grade.
wrap your head around this and see if it helps.
imagine a first rater like yourself who hires 1000 workers and pays them a hundred dollars each to make a product he sells for 200,000 dollars.
the workers each pay a 15% tax to the government. the boss pays a 30% tax to the governmet.
final tally… workers keep 85 dollars after tax (total 85000 for all workers). pay 15 dollars each to government. total 15000 to gov.
boss keeps 70000 dollars after tax. pays 30000 to government. government total is 45000.
now the coberly plan “tax only the boss” is implemented.
workers are paid 85 dollars each. keep 85 dollars after zero tax. total to gov is 0 dollars.
boss nets 115000 dollars, pays a tax of 39%. boss keep 70000 dollars after tax. government collects 45000 in taxes.
can you see that nothing has changed except the workers don’t have to bother their silly little heads with taxes?
or the boss could keep paying the workers 100 dollars apiece but charge his customers a total of 215000 dollars for the product. workers still pay no tax. boss pays 39% on his net of 115000. government collects 45000. customers pay an extra 7% for the product… but since they paid no taxes, they end up with as much money after buying the product as they had when they were paying taxes. you’ll have to work out the arithmetic yourself, assuming that all companies are paying the whole tax which they pass on to their customers. there will be no disadvantage to any company since they are all paying the coberly tax. unless of course they off shore. in which case we hit them with a tarriff when they try to sell the product here.
there are reasons why this might not work, but the whole point of the exercise was to illustrate a point which, in spite of your claim, you did not get.
give my best to john galt.
Coberly,
Welcome back and thanks for further clarifying your position.
I appreciate effort you put into this mental exercise and on its face it appears not unreasonable.
A few points…
(a) Though the boss pays the tax physically, the workers are actually still footing the bill for the tax. You have simply transferred from whom it is collected. So that is a net wash economically. Whether the worker gets 100 and pays 15 to government or the boss pays 85 to the worker and 15 to the government…the overall direct cost of labor per hour worked to the employer is the same. I am not sure what the point of that would be other than to simplify collection. So economically speaking, there will be no impact to the cost structure of the goods being produced and your plan is not significantly different than the previous plan.
(b) Passing on the cost to the consumer is a bit more problematic since competitors (mostly global) might not move their price point to accommodate the Coberly Plan, hence it would put the company that raises its prices at a competitive disadvantage, right?
John is doing well, he is here with me in Hong Kong.
K
yes, kai, my point was that taxing only the boss could be done in a way that made no difference to anyone’s bottom line.
as for the international problem, that could be addressed in a number of ways. quite possibly “trade agreements” that did not force a race to the impoverishment of workers and the destruction of the environment.
but that is something that takes government, and john wouldn’t like that.
you should note however that as the government take remains the same, and the employers take remains the same and the workers are at a first glance better off, there should not be a differential advantage to foreign companies just because of the new way of taxing.
both great britain and the united states imposed “protective tarriffs” during their build up to world dominance. free trade only looks good to those on top.
The coberly plan is similar to my idea of taxing only businesses.
Businesses already collect worker taxes, and send the money to the government. Unless the worker has “significant” non-business sources of income, the tax collection is already done. The worker should not have to file anything. It has already been done.
jerry
sure would save me a passel of aggravation.
i should have shut up with kai a few lines sooner… just after i finally made the point about where you collect the tax makes no difference
but i let myself be led into further comments which get me into the old, old pointless argument about government vs freeperprise.
which i now excuse myself from.
Coberly,
Then you have made your point. But taking from business the same amount you would have taken from labor while reducing the businesses’ wage that it would pay labor by an equal amount is really not addressing my point above which that taxing owners of capital more, ceteris paribus, would only hasten the retreat from America as a place to invest and create jobs. Is that not the case?
Regarding your point on international competition, tariffs protect one industry at the expense of others while passing on the cost to the poor consumer. More importantly, it makes those industries inefficient and uncompetitive outside the States on their own, while at the same time inviting retaliatory tariffs on other industries.
Take steel for example. We put tariffs on foreign steel at one point (and maybe still do) and the result was that the cost of steel that went into American cars and products cost more than our competitors in other nations. We simply helped hollow out our car industry while protecting steel. Meanwhile, the poor woman working two jobs to support her family now has to pay more for her refrigerator and washing machine, and car. Likewise, not liking their steel being discriminated against, many manufacturers of steel globally start applying tariffs against American durables, say cars, washing machines, and refrigerators.
So lets tally up the damage: Steel workers better off for a while but now their industry is inefficient and uncompetitive and unsustainable. Steel factory owners also win but again with the same drag on their competitiveness. Then car makers, washing machine makers, and the poor all lose.
Not sure that I want to take the side of a big burley overpaid steel worker to the mother of two that works two jobs in order to support his bloated and subsidised lifestyle…
And then Maytag and Ford have to move their production overseas, not in order to pay their workers less, but simply to get access to cheaper steel. And jobs start going.
How is that good for America?
K
kai
some people are born idiots, and some people choose to be idiots, and some people have idiocy thrust upon them.
of course you can make more money or sell cheaper if you don’t have to pay any taxes. but the first paradox is that after you reach a level of prosperity you find there are things more important than more money. and the second paradox is that you can make more money (as well as protect yourself from those who worship more money) by finding a way to intelligently cooperate with your neighbors. this is called government, and it needs to collect taxes to work.
it is true that there will be those who can sell an inferior product, or pay lower wages, or destroy their own country in order to make more money by selling cheaper, but the gradual enlightenment of man has shown that this is the road to hell.
i think that we can, as we have before, protect ourselves from this if we do not have idiocy thrust upon us. i can’t tell if hong kong provides an environment where it is possible to see these things, but from what i have seen, hong kong is not a place i would want to live. and to the extent the rest of the world chooses to resemble hong kong everything that makes life worth living will die.
it is entirely possible of course that the population realities of hong kong and china in general leave you no choice, but recognize that hong kong lives by parasitizing the real world.
coberly,
Idiot?
You have generally been a fair and open commenter and I have appreciated debating this issue with you. But you are now starting to border on being rude. Please check that. It detracts from many of the good points you are making. Thanks in advance.
You state, ‘of course you can make more money or sell cheaper if you don’t have to pay any taxes. but the first paradox is that after you reach a level of prosperity you find there are things more important than more money.’
What is more important? I am pretty sure that lower taxes will lead to that too. More economic activity, more labor mobility, higher wages. Corporate taxes tend to be borne by the consumer and the worker, not the owners of businesses or capital. Hence a tax cut to the corporation is a wage increase to the worker and lower price to the consumer. Corporations tend to pass through taxes (and tax cuts) to the worker and consumer.
Likewise cutting capitals gains taxes and dividend taxes and taxes on investment just serves to attract more investors, innovators, and jobs creators. How is that not a win for the worker?
You continue, ‘and the second paradox is that you can make more money (as well as protect yourself from those who worship more money) by finding a way to intelligently cooperate with your neighbours. this is called government, and it needs to collect taxes to work.’
You mean, ‘you and your majority friends do not like what the minority is doing, say their sexual practices (gay), religious affiliation (jew), or their ways of making a living (capitalist) and so you use the power of government to strip them of their, freedom, income and property to a point you are satisfied. Wow, …….how very 1930’s of you. That is probably one of the saddest things i have read this morning. Why do you hate the minorities so much that you want to employ government force to make them bend to your will, taking their stuff if they don’t. I hope you feel the same way when one day you neighbours band together to force you to do or be something you do not like or put you in jail or seize your assets for not complying with their wishes.
You and your neighbours are using force (through a majority) to prey on your other neighbours. Let me ask you, as I asked above, why should those being preyed on by the majority stay? Was Germany better off when the majority will of the 1930’s and ‘taxing’ of the Jews to their property, freedom, and lives cause a flood of emigres to Western Europe and the States? Why wouldn’t the majority using force to—unfairly and unjustly I might add—seize the capital of jobs creating capitalists somehow result in more capitalists wanting to stay or come to America? How does this create more jobs? The use of force to take today, only prevents people from wanting to come to the States in the future. The ‘majority might = right’ argument is not a good one.
You continue, ‘it is true that there will be those who can sell an inferior product, or pay lower wages, or destroy their own country in order to make more money by selling cheaper, but the gradual enlightenment of man has shown that this is the road to hell.’
Give me an example of where this is happening. I have lived in China for nearly 25 years (Taiwan, mainland China, Hong Kong) as well as Korea and Japan. I witnessed the rise of Korea and Taiwan from the sellers of cheap join to economic first-world power houses. Japan went through it and China is going through it. They sell undercut on price and sell themselves to prosperity. Asia is a case study in how selling cheaper is GOOD FOR YOU and a RACE TO THE TOP! The key for them, and America, is MORE economic activity and capital, not less. It is why the median salary for Korea, Japan, Hong Kong, Taiwan and Singapore are all on par or GREATER than the US.
So you do not like Hong Kong. What is it you do not like? Their sub 3% unemployment rate, 1.7% if you include part-time jobs? Or is it their higher median salary (PPP), lower crime rates, higher economic freedom and economic growth, stronger property rights, or stronger rule of law? Or the fact that there are 2.5 times more millionaires per capita tan the US? Is it the low 15% flat income tax that both corporations and people pay or the lack of capital gains taxes yet despite that Hong Kong collects more tax as a percentage of GDP than the US does? Is it the quality school system, ranking among the highest in the world, or poverty levels that are on par with the USA despite no welfare to speak of and a huge body of immigrants sneaking in? Is it the world class infrastructure since the subway system, airports, tunnels, and bridges are all privatised, with payments to the government every year? They are profit centres to the people not cost centres and you do not like that? This year, the government collected too much tax to run its government, as it usually does, and they just announced a ~US$3,000 (HK$20,000) rebate to all resident tax payers (including me). Is must be the low crime rate? Sounds awful.
When I want to see what the third world looks like, I fly back to the States and walk around California. Assuming I do not get mugged or overrun with beggars, I find the economic stagnation and decay very illuminating and a cautionary tale as to what happens when you adopt socialist-statist policies.
You state, ‘it is entirely possible of course that the population realities of hong kong and china in general leave you no choice, but recognize that hong kong lives by parasitizing the real world.’
What? How? We don’t even manufacture anything. We are almost a 99% service economy. To what parasitising are you referring? The fact that people of wealth and high human capital want to move here and create jobs because the environment for doing so is so good? Yeah…sadly…I can see how someone who does not believe in freedom, the right to choose, and property rights could feel that way.
K
kai
like i said at the top of the hour, it’s a waste of time to argue with a true believer.. i guess i am a naturally rude person.
the los angeles you describe is the result of the worship of money, exactly what i would like to avoid. exactly what your worship of money leads to.
government can be a very evil thing. but working together and paying taxes is the only way we have to fight all the other evils, and the only way to fight the current evil is to not let the worshippers of money thrust idiocy upon us.
see line one.
Coberly,
Like I said, thank your for your surrender; you are always welcome back when you can defend your position instead of relying on the blind faith and specious reasoning that is symptomatic of a true believer.
Maybe you are naturally rude, but it doesn’t have to be that way. Embrace change, sometimes it does you good.
LA is the result of bad governmental policies. The unemployment, beggars, run down economy, etc are not due to the chasing of money by capitalists, but rather policies that have driven the capitalists out.
Ha…sure some government is required. But if you want to make it effective, limit it and make the funding of it fair, that is either a flat tax rate or a lump sum tax rate that everyone pays equally. I make $100, I pay $10; you make $1000 and you pay $100. We are treated equally by our government. Neither one of us gets preferential treatment while the other gets penalized. That is equality under the law.
And again, your fear of the worshippers of money is unfounded. How do they hurt you? They go out, they earn more than you, they live their lives. What about them is so bad that you want enslave them or take their property through majority rule.
But I guess a true believer like your self does not need reason and moral grounding when it comes to your greedy will to take from others what they will not give you willingly.
K
hmmmm
kai
if you were able to read carefully you would have noticed that i did not call you an idiot.
but what if i had? how does my calling you an idiot hurt you?
the devil, i am told, is very polite. as are politicians, bankers, lawyers and other thieves.
since i am here again in spite of my intentions, let me repeat, your fourth grade put downs only make you sound like an idiot. and it is still a waste of time to try to talk to a true believer.
i choose not to have idiocy thrust upon me.
Coberly,
Thank you for pointing that out. I went back and reread the statement. You are right; you did not call me an idiot. Please accept my apology on that front. You have been a fairly reasonable debate partner.
The rest of your comment sounds like the words of a true believer. All I am asking is that you defend your position with fact, logic and reason. You have been unable to do so and in the absence of a compelling defense of your position you are now simply deflecting by claiming my argument is not valid since I am a true believer (of fact, logic and reason).
Look, no need for all the high drama if you cannot defend your specious reasoning….just slink away.
As stated before, your surrender is noted and accepted.
Come back when your beliefs involve more than blind faith and can be defended with more than what you have presented so far.
K
Thank You greatly Kai and Coberly for you most enlightening debate. I can only wish more in Washington would know of and were aware of your many fine points. I do tend to agree with Kai in summary. I would like to see Washington take a much more serious look at the Honk Kong Economic model. K shows us that the progressive tax will only have short term benefits because it will not attract new capital-investors. Same with tariffs to balance trade. We need to look much closer at going Lean through out American society to make and do cheaper, better, faster everything we do in this country to attract new capital investment. I like the Hong Kong model but even that can be improved and could be retro fitted for the US economy to work much better and more efficiently…
william ryan
i think it may be impossible to change minds. and may not make any difference at this level.
i think hong kong has a very different situation than the United States and it’s “model” would not work. Nor do I believe that “attracting investment” is the purpose of life.
What’s wrong with the American economy is one or both of two things: (1)we have run out of “needs” and resources to fill imaginary needs at the same time. we don’t seem to have a clue how to adopt an economic policy that recognizes this. (2) we have an economic policy that rewards fraud as a business model.
without knowing much about Hong Kong, what I think I know makes me not want to live there or in any place like it. such as, perhaps, Los Angeles and New York.
Not that I want to live in Texas either. It is entirely possible that what I see that I don’t like is the inevitable result of forces beyond our control… population and technological change… even the worship of money may be inevitable given the realities of power, domination, and fear of domination.
William
Look around you. The federal government and most states have a progressive tax system and there is new capital investment All the time.
jerry
except when the big banks get tangled up in their own frauds and then get afraid to lend money to anyone.
coberly,
True, but that has little, if anything, to do with taxation.
Thanks again Coberly for your and K’s very thoughtful insight. You guys really made me think hard today and I do see your points about perverted capitalism being a big problem in US. I still do like the progressive tax structure and balanced trade agenda better. I realize as you say that we cannot compare US to Hong Kong just on size and scale alone. Without all the obfuscation going Lean by building cultures that makes people want to take ownership and sharing learning and growing together is a big part of the solution… Ford once said “you cannot learn in school what the world is going to do next”. Also never argue with an idiot. They will bring you down to their level then beat you with experience. The only cure for organized greed is organized labor. It’s because no matter what they do nothing get done about it. With all this manure around there must be a pony somewhere! “A typical voice of American politics is the avoidance of saying anything real on real issues”. FDR. Rich people pay rich people to tell middle class people to blame poor people…Earth doesn’t matter, people don’t matter, even economy doesn’t matter . The only thing that matters is R.W. nut bar total ownership of everything. I’m sorry I put profits ahead of people, greed above need and the rule of gold above God’s golden rules. I try to stay away from negative people who have a problem for every solution…We need capitalism that is based on justice and greater corporate responsibility. I do not speak nor do I comprehend assholian. “If you don’t change direction , you may end up where you are headed”.Lao-Tzu. “The true strength of our nation comes not from our arm or wealth but from our ideas”. Obama.. Last one. “If the soul is left to darkness, sins will be committed. The guilty one is not the one who commits the sins, but the one who caused the darkness”. Victor Hugo.
jerry
not so sure about that. for one thing, you lose more money to intererest rates than you do to tax rates. for another, as the bankers seem to own the country, your tax rates may be determined by their priorities.
Ryan
i am a great believer in “building culture”, but when the culture vultures talk about culture they mean starving the people to teach them “discipline.”
fwiw “progressive” taxation is the only kind of taxation that can work. but when it turns into simple “tax the rich” as a solution for everything, it will, at best, provoke opposition from the rich who are stronger than the poor.
just to be clear, calling Social Security a “regressive tax” seems to be a kind of idiocy that affects only college professors and their best students. these people would destroy Social Security because it is in their near sighted eyes “not progressive.” the fact is that it is highly progressive, but it gets that result by not being a “tax on the rich.” this is too hard for some people to understand.
interestingly, the avowed enemies of Social Security have taken to calling it a “regressive tax.” that way they think they can get “the poor” to think it’s bad for them.
Flat taxes are the only fair taxes: either VAT (or other consumption taxes), a flat income tax, or a lump sum amount. More importantly it is more effective than progressive taxation and it is morally aligned with the founding principles of this country, which includes equality under the law.
Progressive taxes treat some Americans better than others and then runs counter to a fair society in which all are equal.
The best way to affect such a tax on income would be to go with a high deductible, say US$10,000 per person (or some other amount) in a family, and then a straight flat tax on anything over that. By means of the deduction it would intrinsically make nominal payments progressive while having the added benefit of treating all Americans the equally. At 20% flat tax it would like this:
If I am a family of 4 making 40K, I pay 0. If I am a family of 4 making 100K, I pay 12,000. If I am a family of 4 making 140K, I pay 20K, etc.Progressive nominal payments, flat tax that is easy to administer (and comply) and hard to game.
K
kai
i proposed something similar to a college professor i know beating about “pseudo laws.” he insisted only a flat tax was a real law because it teated everyone equally.
so i proposed a 30% (if i remember) “flat tax” on all. fair. treats everyone equally. and a 30,000 dollar check from the government for every taxpayer. fair. treats everyone equally.
but the net result is the same as a progressive tax, so why play games with yourself?
When you take into consideration all local, state, and federal taxes that we pay, for all practical purposes, we already have a flat tax.
While I appreciate you discussions on and as to why we have this class struggle raging in the US , It appears to me that we can argue these points all day long until the “pitch forks are coming” as Nick Hanouer Says and the new American civil war starts with the gov. police state but that is not the point. The class struggle RCA is really from our huge-enormous trade deficits especially with China. Do you not remember Ross Perot warning us about the huge sucking sound of job loss that would follow NAFTA? Well he was absolutely right so the issue to me is not just about who is or is not paying taxes even though we know that many corporations have exported and hid huge profits to avoid paying. Why do we allow this to exist-happen? Why did we allow corporations to export all our jobs with any price -tax to pay for doing so. I feel Apple ,Boing and many others owes the country-American people big time taxes-reparations still today for killing our economy. What you say?
Ryan
in some sense there has always been “class struggle.” though i think the term is overused. poor people would always like to be richer and often feel that the system is unfair against them. i think they are mostly right. on the other hand the “rich” don’t like the idea of giving what they have to “the undeserving poor” and they have a point.
though in my own opinion the rich control the government (always have) and do create unfair obstacles to the poor (and the poor often, but not always, are poor because they simply can’t do anything “economically” worth enough.
i don’t think taxes in America are a big part of the problem. I do think “trade agreements” are…. very bad limitations on what the people can do to protect themselves from “the rich.” But we had offshoring long before the trade agreements, caused, in part, i am told, by the “strong dollar” that everyone thought was such a good idea.
i.e. it rapidly gets too complicated for me to “understand” so I just have to react to the palpable injustices i see. sadly, i can’t seem to get anyone to agree with me to create an effective resistance to injustices. everyone hops on board one simple solution train or another. “tax the rich” “free trade” “more education”… etc.
unless you see rapid progress in making something better, i’d concentrate on making your own life better… either better job, or just a better life given the money you “can” make.
Coberly,
Your proposal of a flat 30% plus 30K is nearly the same concept as my 20% plus 10K. The difference is merely the quantum of what you are able to keep from what you have made. It does treat all people equally, though 30% would be too high. Even today, the average aggregate effective rate about 11%-12% of aggregate personal income,20% would be more than plenty to run government (minus the deductions), less if you think that everyone would get good chunk of their income tax free.
But yea, your proposal is better than what we have now, that is for sure.
K
Jerry,
19.1% to 33.3% looks progress to me. Plus you would have to look share of corporate income tax and other excise taxes borne by the various quintiles. The CBO attempts this and the result is even a higher degree of progressively. In fact the US has the most progressive tax system in the OECD. Primary because we do NOT rely on as much consumption/VAT taxes, which tend to be ‘regressive’ in some people’s opinions.
http://www.cbo.gov/sites/default/files/cbofiles/attachments/effective_rates_0.pdf
But flat tax with eduction would be the first way to treat everyone at the state level too.
K
William,
US share of global trade is not too dissimilar to what it was in the 1980’s, I think around 21% vs 24/25% in the mid 1980’s. We make more and trade more in real terms than we did in the 1980’s. Though the terms of trade have shifted against the US, there are a lot of factors going into that calculous, energy, labor laws, corporate tax rates, US political policy, etc that make our trade more difficult. The fact that most major US corporations compete globally means that there is no way to protect ourselves from this uncomfortable fact. We either have to adapt or shut down. For many US companies, the only way to compete is to either relocate businesses in part or as a whole. You will see more and more companies redomicile as the US becomes increasingly toxic to investors (rich people) and corporations and the jobs they create. If it was’t China it wold be somewhere else (as it was in the past,…Japan, Taiwan, Korea, etc).
The most efficient corporate tax is 0%. Tax once and tax at the capital gains level and the lower the better. If you want jobs that is… If you want less jobs and more companies to flee the States, well than just keep doing what is being done. I am sure that China loves it.
I believe Apple should relocate to Singapore. As many funds and companies are. Then you would not ave to bemoan how they OWE you anything. How would you like that?
K
kai
sorry. but my “proposal” was meant as a pointed joke against the professor who believed that the “real” laws, as opposed to “pseudo laws” applied to everyone equally. and yes he was thinking of a flat tax.
to which i can only remind you that “the law, in its majestic equality prohibits both the rich and the poor from sleeping under bridges.”
You may have been making a joke but my point still stands: your proposal would be bother better and more equal to taxpayers than the current system.
What majestic equality exists in the current system. How is it preventing people from sleeping under bridges. I see as much poor today as in the late 60’s when the War on Poverty (really the War on Prosperity) made poverty a systemic problem by institutionalising it.
There is all the difference in the world between treating people equally and trying to make them equal. The latter requires different right and privileges for different people or classes of people. I prefer the former.
K
kai
as a matter of fact i disagree with the current “equality” fad… at least insofar as it implies taking from the rich and giving to the poor directly.
i don’t believe people are “equal” in terms of their economic potential. i do beleive they are equal in terms of being due the respect of human beings.
i also believe your simple view of “equality” is a closet way of guarantee that the rich can prey upon the poor without interruption.
humans made their first big step in evolution when they learned to cooperate with each other against the big predators.
it is mildly progressive up to about $75,000 per year where the rate hits 30%. But from there up to $1.542 million the rate only increases to 33.3%.
I call that very flat!
Jerry
see if you can find in Statistical Abstracts the actual “effective” income tax rate. I think you’ll find it is reasonably progressive.
Then I wouldn’t get too hung up on words or even ideas. Progressive is probably necessary, but people get carried away with it and start demanding everything be “progressive.” The question you should be asking is “is your tax a reasonable price for the services you get… and “is it unreasonably burdensome? i think that for both rich and poor in this country the anser to the first is yes and to the second is no.
i assume there are people in this country who are truly poor. as far as i know they don’t pay taxes. for the rest of us… including me… it amounts to more or less mindless whining about “taxes” and “the other guy should pay more.”
don’t mean to sound offensive here. i’d be glad to see the rich pay more, until they stop whining about “the deficit.” i think the “middle” should pay a bit more (progressively) just so they can look the rich in the face when they ask them to pay more. and even the all but destitute poor could afford to pay an extra percent or two for their own pensions… if for no other reason than to keep the poor overburdened rich from cutting them.
“i assume there are people in this country who are truly poor. as far as i know they don’t pay taxes.”
Read my reference and you will see that the “poor” indeed pay taxes, just not much income tax because they don’t have much income. You are fixated on income when we should be considering all forms of taxation.
Jerry
i don’t know about fixated, but income tax is what comes to mind. the payroll tax is not a tax. as for property tax and sales tax and whatever taxes you have in mind, i still say you are asking the wrong question. the question should be “do i get my money’s worth?” the answer is yes. and “is it an unreasonable burden?” the answer is no. taxes are just a way to pay for the stuff we need that we can’t reasonably buy as individuals.
the rich pay more than an “even share” as they should, but not as much more as they complain about. the poor are richer in this country than even the rich were/are in countries without taxes.
i think i would not bother about this, because complaining about taxes is “always with us.” but if you could stop being fixated about “taxes” and “inequality” and concentrate on the criminal abuse of wealth both in turns of fraud and “hard dealing” against the poor (as well as the other rich) and in terms of the abuse of power in re “the rich own the government” i think we might make some progress toward making the world a better place for all but the predators.
but as long as they can divide us into two camps whining about “unfair” taxes, i think they will have no problem doing what they do best: stealing.
Coberly,
You state, ‘i do believe they are equal in terms of being due the respect of human beings.’
Due respect by whom? You know the difference between negative rights and positive rights, right? There are certain rights that I am born with, that are inalienable and not contingent upon others conferring them on me. Nor is it their obligation to provide them to me, Liberty and Life come to mind. An extension of liberty and life is property. Your right to respect, though, if it is someone’s obligation to provide it (against their will) becomes someone else’s tyranny. Just as other people’s so-called right to free phones, free college, free food, free housing, free money. No of which is free and is someone else’s obligation to provide. There is a word for forcing someone to work against their will to provide for the direct welfare of others: Slavery.
I am not a big fan of coercion, theft, and slavery to provide people with the the respect they cannot earn themselves.
You then continue, ‘I also believe your simple view of “equality” is a closet way of guarantee that the rich can prey upon the poor without interruption.’
To what predation are you referring, The rich by and large become rich by servicing the needs and wants of others. Before free-market capitalism, the only way to get rich was to take it through looting, war, etc. After free-market capitalism the best way to become rich is to earn it and the best way to do that is to RESPECT your customers and their wishes. Want more respect? Limit the cronies in the government via smaller government and let free-market capitalism solve the respect problem.
You conclude, ‘humans made their first big step in evolution when they learned to cooperate with each other against the big predators.’
They also made their biggest step in evil by learning how to ban together to prey on minorities. You are advocating that predation.
K
Jerry,
At both the federal and the state level, the tax system is fairly progressive and MORE so than in Europe. So celebrate,. A 33.3% average to effective rate is already a good chunk of tax. The rich have to work 4 months a year for the state. Just how much slavery do you want to subject them to? 6 months? 9 month? At what point is it enough slavery for you?
K
Coberly,
The answers are ‘no’ and ‘yes’. which is why people are hiding their income, refusing to pay taxes or moving. And this is not just the rich, this is the middle class.
As with all qualitative answers, you need to answer the questions via comparison to the alternatives. The real questions are:
“do i get my money’s worth relative to other countries with stronger rule of law and better property rights. The answer is no. There are no shortage of countries that are better in both respects that charge a less rapacious tax. The UK comes to mind. I could redomicile in the US and all my income earned overseas would be tax free. Or I could relocate to Hong Kong (which has stronger economic freedom (hence less financial repression), property rights, and rule of law than the US by those that measure such things) and pay a low flat tax, no capital gains taxes, and no taxes on income earned overseas. Corporate tax is the same as income tax, taxed at a flat 15%. There is no reason to game the system and Hong Kong collects more income tax as a percentage of GDP than does the US. Also no sales taxes and starting a business here takes about 3 days if you are lazy. No wonder the number of millionaires here is 3 times that of the US. Singapore is even better.
‘Is is an unreasonable burden?’ Anything as unfair as the US system is. If you are the minority who has money, why would you stick around for the majority to prey on you. You won’t…you will move your money overseas so people can’t just arbitrarily seize it to placate their need for ‘respect’
K
Oh Kai, cut the crap. Paying taxes Is nothing like slavery. My oh my, how did we ever survive with a top tax rate of around 90%, nearly 3 times the current rate? Some people would even say that the economy then was pretty great and the middle class was doing terrific. So stop the deflection and redirection. I think you just like to see how many words you can write. Sorry, but history is not on your side.
i dunno jerry
nothing moves me quite so much as seeing a line of bankers shuffling into work in the morning singing
o pressed so hard they could not stand
let my people go
Jerry:
You state, ‘Paying taxes Is nothing like slavery.’
Sure it is, if that taxation is used to directly benefits someone else’s welfare at your expense. You work (against your will) so they can eat. There is no moral difference. Your force me directly to put food on your table or you instruct the government to take food from my table for your table. The only difference is the mechanism slavery
We might all agree that some degree of collective responsibility to the safe operations of our communities and market places is reasonable. But such responsibility should be limited in scope and scale lest they expand to a form of indentured servitude. Our founders understood that; which is why the Constitution is primarily a limit on government’s rights not people’s rights.
You continue, ‘My oh my, how did we ever survive with a top tax rate of around 90%, nearly 3 times the current rate?’
By no one paying those taxes. Which is why taxation as a percentage of GDP was about what it is today, 17%-19%, despite the higher face rent broader application across all classes of Americans. Thanks for inadvertently bring to attention that the Laffer Curve (and Hausers’s Law) holds and that higher taxes result in less tax efficacy over time. I guess that is why the first president to understand just how ruinous high taxes were was JFK. The first great American supply-sider. Reagan had to copy him in the 80’s. In both cases the cuts worked better than the Keynesian nonsense used today.
http://www.wsj.com/articles/SB10001424052748703514904575602943209741952
http://en.wikipedia.org/wiki/Hauser's_law
http://scottgrannis.blogspot.hk/2011/02/federal-budget-trends-more-and-more.html
Instead of looking at marginal tax rates, look at average tax rates:
http://www.nber.org/papers/w15369.pdf
People adapt to changes in taxation and that impacts what you can collect. Like I said, Kennedy understood this:
“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”–John F. Kennedy~ Nov. 20, 1962
And,
“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”–John F. Kennedy~ Jan. 24, 1963
You continue, ‘Some people would even say that the economy then was pretty great and the middle class was doing terrific.’
Who would say that? The over 30% of Americans that lived in poverty in the 1950s? Or was it the women and Blacks that were relegated to second class citizens? You must be speaking for only white males I take it.
The middle class today is bigger and in better shape than it was in the 1950’s. Even more important is that the lower income and poor families are better off also.
http://eml.berkeley.edu/~saez/kopczuk-saez-songQJE09SSA.pdf
‘Mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s. Long-term mobility among all workers has increased since the 1950s but has slightly declined among men. The decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women is the driving force behind the increase in long-term mobility among all workers.’
Saez is no conservative and works very closely with Piketty.
You conclude, ‘So stop the deflection and redirection. I think you just like to see how many words you can write. Sorry, but history is not on your side.’
Not only is history on my side; the facts are also on my side. You can’t explain them away with your usla deflection and misdirection.
K
Coberly,
As discussed previously, they don’t have to sing since their actions speak louder than words with all the tax evasion, redomiciling, tax inverting, etc. Actions speak louder than words. They are minimizing their exposure to the predation they face. And rightly so..
But if a line of banks singing (or lack thereof) brings warmth to you heart, then a line welfare recipients lining up for free phones, lobster, and pot, all the while singing about all the exploiting that is happening to them, must really provide you with a high degree of satisfaction.
K
Jerry:
You state, ‘Paying taxes Is nothing like slavery.’
Sure it is, if that taxation is used to directly benefit someone else’s welfare at your expense. You work (against your will) so they can eat. There is no moral difference. Your force me to directly to put food on your table or you instruct the government to take food from my table for your table. The only difference is the mechanism of slavery
You continue, ‘My oh my, how did we ever survive with a top tax rate of around 90%, nearly 3 times the current rate?’
By no one paying those taxes. Which is why taxation as a percentage of GDP back then was about what it is today, 17%-19%, despite the higher face rent broader application across all classes of Americans. Thanks for inadvertently bring to attention that the Laffer Curve (and Hausers’s Law) holds and that higher taxes result in less tax efficacy over time.
http://www.wsj.com/articles/SB10001424052748703514904575602943209741952
People adapt to changes in taxation and that impacts what you can collect. Kennedy (the first real supply-sider) understood this:
“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”–John F. Kennedy~ Nov. 20, 1962
And,
“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”–John F. Kennedy~ Jan. 24, 1963
You continue, ‘Some people would even say that the economy then was pretty great and the middle class was doing terrific.’
Who would say that? The over 30% of Americans that lived in poverty in the 1950s? Or was it the women and Blacks that were relegated to second class citizens? You must be speaking for only white males I take it.
Not only is history on my side; the facts are also on my side. You can’t explain them away with your usual deflection and misdirection.
K
Well, I must admit. Kai, you have an interesting take on slavery, although I don’t recall hearing about any slaves complaining about having food taken from their table. Usually they were not supplied with enough. Let’s not forget who are the slaves and who are the owners.
Do you call having to conform to the minimum wage, government regulations and laws as slavery too? Gee, I didn’t realize that the Constitution was a slavery justification document. Do I have to break the law to prove that I am not a slave?
Of course, hardly anyone paid the 90% tax rate. They took advantage of many loopholes. They reinvested company profits in the company, employees, and new ventures which were tax deductible, rather than taking the money out of the company as income. They still made plenty of money and everyone else benefited too. There was strong economic growth, wages grew at a steady pace, and there was a strong middle class. That all started to come crashing down when Reagan came into power.
I am not even sure why you bring up the Laffer Curve. Of course it shows a maximum somewhere between 0% and 100% tax rate. It has to. The end points are firmly attached at 0 revenue. The important point is where the maximum occurs. Studies of economic growth over the last 80 or so years show that it occurs around a maximum federal income tax rate of 60%.
Yes, Kennedy did advocate cutting taxes. The top tax rate was cut all the way down to 70%, not too far from the optimum Laffer Curve maximum. He also increased the minimum wage, increased SS benefits, expanded unemployment benefits, and increased highway construction, all of which benefit economic growth.
The high rate of poverty in the 50’s was not due to taxation policy. White males did do better. They still do. We do not have equality. What’s your point?
Since you brought up Kennedy, perhaps we should follow his example.
Jerry,
Slaves didn’t complain that the food produced from their labor was taken from them (through force) and put on other people’s tables therefore taking stuff from other people is not really theft or slavery (if they are forced to provide it by working for other people’s welfare) but something rather splendid instead. With strong logic like that I can’t wait to get to the rest of your response.
You fairly ask, ‘Do you call having to conform to the minimum wage, government regulations and laws as slavery too?’
Min wage? I would call it theft or coercion; both state-directed. I cannot walk up to you and take from you what you are unwilling to give me. That would be theft (and a violation of my rights). But if I get my government to do it somehow that is morally superior? No! It is still theft and coercion, but only the mechanism on which it is inflicted in me is. The worst part about min wage laws is that they deprive the poor the right to sell their labor at whatever price they want. It protects incumbent workers from competition (from the poor). It is a hate policy against the poor.
Regulations? It would depend on the regulation (or rule or practice etc). If the regulation applies to all equally and treats all equally, then it would be a regulation that at least is fair. Capitalism is founded on rules and laws that apply to all. Most government regulation favors one group of Americans over others. It violates the basic principle of Equality.
You state, ‘Of course, hardly anyone paid the 90% tax rate…..’
Or, more likely, they just didn’t invest to begin with when it was 90%. The fact that GDP continued to increase and productivity continued to increase despite the number of tax cuts over several decades goes to show that a 90% tax rate was not driving that investment in company’s employees, and new ventures.
You state, ‘There was strong economic growth, wages grew at a steady pace, and there was a strong middle class.’
Yeah…funny how that is when all other global competitors have their economies in ruin or are behind the iron curtain.
You state, ‘That all started to come crashing down when Reagan came into power.’
Private union membership started declining 1958 and perhaps you don’t remember the 1970’s so not sure where you are getting your information. Try reading.
Also would not surprise me that we saw a decline in some sectors starting in the 1980;s countries that had previously been a mess, Japan and Germany, etc started competing with the US and countries that had been behind the curtain also started competing with the US, China and Russia. On one side you have great engineering and processes competing with American manufacturing and on the other side you have cheap labor. Sounds something that might impact our economy adversely. And this is Reagan’s fault? What specifically did Reagan do that has resulted in such a sorry state we are in today?
Thanks for pointing out how Kennedy advocated tax cuts (It was Johnson who implemented them) and that no one paid the 90% tax rate in those halcyon days you aspire. We are better off today than we were in the 1950’s.
K
“We are better off today than we were in the 1950’s.”
In some respects, you are absolutely correct. Technological advances give us things we could not even imagine in the ’50’s. But we’ve lost advantages also. One person could support a family. One person was home to raise a family. Parents could look forward to children having a better life than they do. Education was affordable.
“Things” are better now. “Life”, I’m not so sure. I would not want to be 20 again…now! 20 again in the 50’s? Sure!
Jerry,
You state, ‘One person could support a family.’
You mean one white male could support a family? Not really. Even with women out of the market and Blacks limited in the jobs they could get, or perhaps because of those reasons, poverty was high in the 1950’s. Inequality was worse. Economic Mobility was worse. Standard of Living was worse. Perhaps it was universal male conscription and rise of the warfare state to which you feel was a great deal for the youth of the day.
You need to stop watching ‘Leave it to Beaver’ to get your economic history facts.
You continue, ‘Parents could look forward to children having a better life than they do.’
This is actually a valid point. Before the State became the surrogate father for single mothers and their children, the family unit was much stronger. Much of the decline that you see in household income is the result of that changing demographic as are much of the changes in crime and ability of young adults to mature and get jobs. So your point is that you want to force the poor to marry and stay married?
You continue, ‘Education was affordable.’
Still is depending on where you want to go. Want affordable education, get government out of it and let universities start competing for students who can pay on their own instead of subsidizing it with taxes on the poor who do not go to college. Competition drives prices down, not subsidies.
I would love to be 20 today. When I was 20 I moved to China (from North Dakota via Arizona)..and now I am in Hong Kong. 3% unemployment rate, low tax rate, huge opportunities everywhere I look, top rated infrastructure, more millionaires than the US, higher median salaries, etc. We have problems here as all countries do, but opportunity is not one of them. Much better than the reservation I grew up on in North Dakota.
The only thing stopping the US from being a land of opportunity are government policies that penalize people for creating opportunity. Want less investment in industry and less job creation? Simple, tax people who create it unfairly…and then marvel as they move that investment and jobs elsewhere.
K
Still waiting for you to explain how Reagan is reponsible for all the imaginary, and poorly defined, ills that you claim started with him.
Reagan? I’m surprised you don’t know about him. It is called history. I suggest you look it up. I am not your teacher.
Jerry,
As with most of your unsupported talking points and specious claims, I knew that all I would have to do was ask you to support your vacuous nonsense and you would fold or try to deflect. And I this case you didn’t disappoint.
Feel free respond at some point in the future once you have educated yourself.
K
I think I shall now do what our government has done in Vietnam, Iraq, and Afghanistan. I declare myself victor and leave. You may be the terrorist and continue to take potshots.
Jerry,
You use a lot of unnecessary words to proffer your surrender.
I accept!
😉
K