Ralph Nader's dad's answer to the problem of power and greed.

[foolsguinea]

@magellan01

Marx, is that you? First, someone’s motivation is not the business of the state. Different people are motivated by different things. Sure. at a base level they have to get food, clothing, etc., but if you can’t manage that in our society you’ve got serious peoblems. Millions have and continue to sneak into this country and prove that to be a fact. And no one is talking about not treating people decently. Nice attempt at a strawman.

A. Money isn’t just about necessities. At a higher level it’s about power. The state has a compelling interest in keeping any private organization less rich & less powerful than itself. Otherwise, the institutions that exist to enforce the law are in a weaker negotiating position than private concerns that want to exploit the land for profit. While this is less obvious in the USA, where the government has a lot of money (which is in large part due to progressive taxes), it’s a serious problem in many smaller countries dealing with multinational corporations. The general principle holds.

B. Wealth does not proceed naturally out of a person’s internal anatomy. It is built not entirely from some internal talent or charisma, but from existing natural resources which largely exist outside of any of us, & then it is distributed in some way. It is not only the government which distributes & redistributes wealth, but the market itself, or more properly, the countless free actors in that market. And the market being what it is, that distribution inevitably, even in a Marxist state, ends up with some unfairness, entirely aside from anything government does.

C. Poverty is not totally irrelevant to this question. The plight of the working poor is a glaring example of the way in which the market is inequitable. You have made an awful lot of noise about how progressive taxes (not just the 100% marginal of Nader’s dad, but all progressive taxes) are supposedly unfair. Apparently, in your lexicon, inequitable = fair, equitable = unfair. Kurt Vonnegut, is that you? In my lexicon, as in that of Marx, Jesus, &–I dunno, Roget–equitable & fair are synonyms.

So, the world is unfair. I’m not naive enough to think I can end unfairness, or that the processes of the market will be completely reimagined along Marxist or Wobbly lines. But we have this wonderful thing called government, which can fight injustice through force & extortion–through what we call the rule of law. The state can make a reasonable discrimination between levels of wealth: those who merely have enough to live on, those who have enough to gain some political power, those who have enough wealth to corrupt the political process locally, & finally those who have enough power to threaten the ability of the state to protect the country. This is necessary to protect the equitable rule of law. To insist that that discrimination on the part of the government should not happen because it’s “unfair,” while the everyday inequity & unfairness of the free market (private individuals acting in their own self-interest with limited information at best & wanton abuse of their neighbors at worst) is “fair”–this is, in my eyes, absurd & obscene.

And the more skillful will do better. As it should be.

Huh. OK, an example:
Richard Branson’s net income/yr is N. Yours is M.
Branson’s net worth is V. Yours is W.
Absent progressive taxation, the ration V/W does not stay equal to N/M, but grows in relation to it.
So shall we infer from this that Branson’s skill & talent is N/M in relation to yours, or V/W? Considering that Branson is by his own admission a dyslexic who is bad at math & the academic side of microeconomics ( Overcoming Dyslexia - May 13, 2002 ), I’m not sure how either is the case. Ooh, maybe he’s a sorceror! :rolleyes:

Another, more to the point:
There are a lot of people in northwest Arkansas who invested early in Wal-Mart due to personal connections with Sam Walton, before anyone knew that Wal-Mart would be so successful. They made enormous amounts of money due to the wild success of Wal-Mart. They made this money through no skill or wisdom of their own, but through the efforts of Sam Walton. They were simply in the right place at the right time; if they had invested in exactly the same way in a company that had a slightly different business plan, or came to the market a little too late; if they had been from another part of the country, or a little younger, they would have missed the chance. Wal-Mart is not publically held (& certainly was not at the beginning). It’s success was far in the future. So the sort of advantage that diligent research can give investors (if they have the leisure to do such research) did not come into play strongly enough to outweigh pure dumb luck. Does that wealth then reflect the skill of the wealthy?

I’d appreciate you not putting words in my mouth. Try to debate honestly, please. Some people are stupid, yes. Some are lazy. Some made poor decisions when they were young. Those things are all true. Some also just had bad luck, are started with having the odds stacked against them. Still, even those born into bad situations can and do do well.

Ah, argument from anecdote. A few people born in bad situations manage to do well. Of course, most don’t. That’s why they’re called bad situations. :Yawn:

Further, I don’t believe in holding someone down because they made poor decisions in their youth.

Please show where I bristled at the government raising taxes. This discussion concerns whether we shold all be taxed at the same rate, not what that rate should be. And again, please refrain from putting words in my mouth. It will actually help the discussion.

At least you’re an honest flat-taxer. You clearly want the tax burden shared “evenly” by all tax brackets. You may have noticed some of your political allies have already figured out that’s a losing position, & try to claim that somehow we can’t tax the superrich 'cos they’re so much more powerful than the poor helpless government. Points to you for honesty. But the tax burden should be distributed not merely by the proportion of income, but by the ability to pay. (Really, that could be my whole post.)

Huh? What axe to grind? And the bad schools would go out of business because a better one opened up down the street.

How about schools that teach that the present government, now funding them with vouchers, is evil, & that the kids who go to public schools are inferior? How about racial separatists?

I spent my teen years in the Religious Right, at church-run schools. Some were OK, but I really have no faith in the capacity of parents in general to make good judgements about what kind of school their children need. And sending your kid to school is not in general like finding a place to buy your socks or to get a massage.

Why are you so adamant about how we get this enviable school system? You seem to be the one with the ideological axe to grind. And, by the way, we do have such a school system—for higher education. While our public school system continues to fail us, particularly in the inner cities—and if you don’t realize that I suggest you start doing some reading—our private colleges and universities are, indeed, the envy of the world.

A. “Our public school system” can barely be said to exist. Local control means no actual national school system. Do you know why the inner city schools fail? Do you know why rural schools underperform? Unequal funding, careless administration, & lack of available funds. Some of this might happen with national administration, but at least there could be more even funding, & somebody calling the shots that wasn’t trying to keep all the money in his kids’ neighborhoods.

B. “I think we should…” is hardly equivalent to “I’m absolutely adamant about…” At this time, I simply believe there is a better way to do it. I’m not under the illusion that I can change the school funding system in the USA. I just thiink it would work better.

C. Our private colleges are in some cases very good. They are also, in a subset of those cases, a bastion of privilege, & serve to create a sort of aristocratic ruling subculture. In any case, you brought up vouchers, which is a primary & secondary education issue, so I wasn’t thinking about post-secondary education primarily when I posted that. But since you brought it up, what we have now with public funding of colleges is a bit like the vouchers some people propose. Then again, what we have with primary & secondary education is free schooling for all, which is nothing to sneeze at. Anyway, I’m OK with vouchers so long as there is serious oversight of who is getting the money.

I’m not advocatiing not taxing Bill Gates, only not taxing him at a higher rate. My example was offered to show that people like Gates make a contribution to society far beyond what they pay in taxes. And we shouldn’t be stripping away any incentives for them to do what they do.

But how about the next Gates? He hasn’t accomplished it yet, has he? And it benefits society greatly if the next Gates in highly incentivized to out Gates Gates.

:Sigh: The next Gates isn’t in that tax bracket yet. Or do you honestly think that Windows would never have existed if Gates hadn’t known that he would make more money than anyone, ever? :dubious: (Hint: He didn’t know in this reality either.)

And in order to achieve those goals they need operating capital. The more you tax them, the less of it they have. What do you think might benefit society more: Microsoft, or Merck, or Genentech, or Ford, or McDonalds paying another $20 million in taxes or them plowing it back into R&D or creating more jobs?

I’m not talking about taxing operating capital. Like any good social democrat, I want that operating capital to go into wages & improvements for the business on a strictly corporate level. I don’t want it to go to the stockholders’ personal luxuries first, nor into disproportionate compensation for upper management. If a company is so badly managed that it pushes its investors & management into a higher tax bracket while the workers get the dregs & R&D falls apart, then the government should penalize that bad management & take the excess funds appropriated by the guys at the top; maybe then the state can use them to clean up the mess that company leaves behind (from environmental damage or in the health care needs of uninsured workers).

Yet when John Kennedy cut the high tax rates of the rich from 90%, the governement took in more money.

So from that you infer what? That if the government didn’t tax us at all, it would have all the money?

Yes, JFK’s tax cuts increased investment & gave the government a short-term windfall. But the point is not how much tax is collected in a given year. Progressive taxes exist as a kind of regulation of the market.

By analogy, traffic lights make travel crosstown take longer. But they aren’t there to keep your car moving more slowly; they’re there to avoid accidents.

The point is what is the fair thing to do. Taking what people have earned away from them is wrong.

And we’re back to “All taxes are robbery.”

And you skipped this:

You and I both try out for a basketball team. We both make it. You are much, much better and are paid $5,000,000 year. I get offered $500,000 per year. A third guy who tried out and didn’t make the team takes a job as an assistant coach at a college for $100,000 per year. Unequal amounts, obviously, yet there’s no reason for the government to treat us differently. Doing so is penalizing one more then another. How is that fair? How is putting a limit on what your talents are able to bring you the morally correct thing?

And just to make matters easier, lets stipulate that we all came from the same neighborhood. PLease answer the questions above, because that is the crux of the matter.

Well, I think I have done, but OK.

Who determines the difference in our pay? Our fairy godmother, who ensures we get exactly what we deserve, or our employer, who is a fallible human being? While the management may think I’m entitled to getting 10x what you get because I’m better at the game, the government is under no obligation to keep that ratio perfect. In fact, considering cost of living & opportunity for investment, I may end up with much more than 10x the profit you do; the ratio is not perfect in any case.

As for why it’s moral to tax progressively: The government, as steward, puts limits on the personal power one can accrue all the time. Wealth is personal power, & must be kept in check.

Let me turn it around. You advocate welfare, enough to get a person back on his feet. How is putting a limit on what your misfortune & lack of talent can bring you the morally correct thing?

[Ravenman]

@magellan01

Any progressive tax is simply government sanctioned theft.

I’ll see your redefinition of the word “theft,” and raise you: I think you’re guilty of “rape,” because a few good electrons have been viciously defiled as a result of this facile argument appearing on the Internet.

@Musicat

Then I’m sure you will have no trouble supplying a cite that says that the (USA) government can tax me solely because I have too much money. Or a law that says that it may confiscate my property without giving a reason.

The Constitution gives Congress the power to tax incomes, of course, but it doesn’t seem to place any restrictions on how the Congress may exercise that power. Congress has enacted marginal tax rates in excess of 90 percent. People with higher incomes are already taxed at higher rates because “they have too much money,” so there’s no doubt that progressive tax schemes are allowable. Has any income tax policy been struck down by the courts as being unconstitutional? I can’t think of any, can you? Is there any reason to think that Congress is not allowed to enact stupidly high tax rates? And, I don’t think anyone has argued that the government can take property without giving a reason, so I’m not sure who that question is aimed at.

So the question appears to be not whether Congress can enact confiscatory tax rates, because that’s been done; but rather, whether Congress should enact such tax rates. I’m a liberal, pro-progressive tax kind of guy, but Mr. Nader is just batty. A 100% tax system would just be dumb, because it removes the profit motive which is so important for a vibrant economy, even if the tax only kicks in at a really high income.

[Kimstu]

@Sam Stone

I’ll go a lot further than this

Actually, you went sideways from this. The subject under discussion was whether a 100% marginal tax rate would actually cut off all income generation above the level at which the rate kicked in, as you claimed. I pointed out that this was just an unsupported assertion on your part, and that I’d need to see more hard evidence in order to believe it.

You responded by changing the subject to the issue of “luxury taxes” applied to particular categories of luxury goods, and attempted to argue from that in a vague and theoretical way that all “wealth taxes” are automatically counterproductive. This doesn’t count as evidence.

Like I said, I’m no supporter of the hypothetical 100% marginal tax rate. And even without having much faith in the pseudo-precision of “Laffer curve” arguments, I’m inclined to believe that indeed there is some kind of approximate “optimally efficient” top tax rate, above which taxation risks generating less revenue rather than more, because it slows down the economy too much. And I’m also strongly inclined to believe that that “optimally efficient” point is significantly lower than 100%.

However, that doesn’t mean that I have to believe any and all unsupported claims that low-tax advocates choose to pull out of their rhetoric holes. If you’re making a specific assertion about a specific tax policy, then be prepared to back it up with data specifically addressing that specific assertion. Don’t just wave around some data concerning some different, tangentially related tax policy and assume that that proves your point.

[FRDE]

Well, the SDMB has done it again, I am staggered (no sarcasm)

I did not realize that the USA had a 90% tax rate prior to 1963

@Foolsguinea, one day you’ll land up employing people, every month you’ll get into a seething rage as you Ok the salaries for the people you employ and value, and also have to Ok a slice for taxation.

Even if you don’t get there, you’ll start asking ‘what do I get for this tax ?’

• as you get older and more cynical, you’ll start getting interested in tax efficient schemes

[Musicat]

@Ravenman

@Musicat

Then I’m sure you will have no trouble supplying a cite that says that the (USA) government can tax me solely because I have too much money. Or a law that says that it may confiscate my property without giving a reason.

The Constitution gives Congress the power to tax incomes, of course, but it doesn’t seem to place any restrictions on how the Congress may exercise that power. Congress has enacted marginal tax rates in excess of 90 percent. People with higher incomes are already taxed at higher rates because “they have too much money,” so there’s no doubt that progressive tax schemes are allowable. Has any income tax policy been struck down by the courts as being unconstitutional? I can’t think of any, can you? Is there any reason to think that Congress is not allowed to enact stupidly high tax rates? And, I don’t think anyone has argued that the government can take property without giving a reason, so I’m not sure who that question is aimed at.

I’m still waiting for that cite that that says the govt can tax me solely because I have too much money. I don’t mean the justification behind it, I mean the stated purpose in the law. Isn’t that what Nader’s Pop is proposing?

Such as, “House Bill X298, to prevent any citizen from earning more than $1 million per year or acquiring more property than $2 million net and removing excess wealth by confiscatory and mandatory taxation…”

RE: eminent domain

If you check the court cases, I believe you’ll find that confiscation without reason has not been upheld. The reasons may be flimsy, but I don’t know of a case where eminent domain confiscation had none.

[Ravenman]

@Musicat

I’m still waiting for that cite that that says the govt can tax me solely because I have too much money. I don’t mean the justification behind it, I mean the stated purpose in the law. Isn’t that what Nader’s Pop is proposing?

If I take your question literally, you seem to think that Congress has to offer an explanation for the reasons behind every tax. It doesn’t. Do you seriously think Congress has to explain why the 25% income tax bracket kicks in at $30,000, and not $28,500, or $32,000? It doesn’t. Sometimes there are explanations, like when Teddy Roosevelt argued for increases in estate taxes in 1906 to prohibit robber-barons from creating a permanent aristocracy, but there’s no requirement for tax policy to have a stated purpose behind it.

But unless you are in the lowest tax bracket, you pay more taxes on additional income simply because you earn too much money each year. That’s what marginal rates are all about: as you make more money, you pay more in taxes.

Furthermore, estate taxes only kick in when a dead guy has too much money. Odds are that you and I will never pay any estate taxes, unless you’re much wealthier than I am, in which case I should stop arguing with you and start making nice so you would take me out to a fancy dinner some day. But seriously, estate taxes are only paid by those who Congress has determined “has too much money.” The Tax Reform Act of 1976 placed a 70% tax on estates worth more than $5 million.

So here we have two examples of taxes which are levied on people who have “too much money.” In one case, it is a sliding scale of increasing taxes based on increasing income, and as I’ve shown before, those marginal income tax rates have come close to 100%. Then we have estate taxes which are levied specifically on people who have “too much money,” and have had very high rates, too. (Again, I think extremely high tax rates are bad policy, but I don’t see anything that prohibits Congress from making bad policy in this way.)

Let me ask you: is there something that makes you believe that Congress cannot tax wealth?

If you check the court cases, I believe you’ll find that confiscation without reason has not been upheld. The reasons may be flimsy, but I don’t know of a case where eminent domain confiscation had none.

Begging your pardon, but I believe you’ve misread what I wrote. Nobody is arguing that eminent domain allows the government to take people’s money. If you think that taxes are prohibited because they deprive you of property without just compensation, I refer you to the Tax Protester’s FAQ. Otherwise, eminent domain doesn’t have anything to do with what we’re talking about here.

[Cheesesteak]

@Kimstu

If you’re making a specific assertion about a specific tax policy, then be prepared to back it up with data specifically addressing that specific assertion. Don’t just wave around some data concerning some different, tangentially related tax policy and assume that that proves your point.

You’re not going to get data on a policy that has never been enacted by any municipality in the world. The best you’re going to get is an extrapolation from policies that actually existed.

The luxury tax policy is one that shows an inherent problem with highly focused taxes, especially taxes that focus on the extremely wealthy. It also shows that you MUST take into account the possible reactions of the targeted folks when evaluating a new tax. It is perfectly reasonable to reference it as a data point to extrapolate from.

I think this Naderite policy really puts the blinders on if it assumes people will not change their financial strategy to shield the vast majority of their wealth from being seized.

[Kimstu]

@Cheesesteak

You’re not going to get data on a policy that has never been enacted by any municipality in the world.

Then I shouldn’t get completely unqualified direct assertions about the consequences of a policy that has never been enacted by any municipality in the world. Just sayin’.

[foolsguinea]

@FRDE

I did not realize that the USA had a 90% tax rate prior to 1963.

Marginal.

@Foolsguinea, one day you’ll land up employing people, every month you’ll get into a seething rage as you Ok the salaries for the people you employ and value, and also have to Ok a slice for taxation.

Even if you don’t get there, you’ll start asking ‘what do I get for this tax ?’

• as you get older and more cynical, you’ll start getting interested in tax efficient schemes

Heh. I actually went in the other direction. I was an idealistic anarcho-libertarian who got disgusted with human nature. My cynicism, ironically, makes me statist.

By the way, I despise payroll taxes. Just so you know.

[Cheesesteak]

@Kimstu

Then I shouldn’t get completely unqualified direct assertions about the consequences of a policy that has never been enacted by any municipality in the world. Just sayin’.

Why shouldn’t you? We are debating the merits of a hypothetical tax structure that is very different than any current tax system. One person asserts THIS, another person asserts THAT, a third person says they’re both full of it. This is the only way a debate on this topic is going to flow.

Some arguments will be more persuasive than others, but none of them will be backed by hard data.

[Little_Nemo]

Even if you don’t get there, you’ll start asking ‘what do I get for this tax ?’

• as you get older and more cynical, you’ll start getting interested in tax efficient schemes

Maybe in the UK. But in America, when you get old enough, social security kicks in and then your only interest is when your next check will arrive. Cynicism rarely survives the transition.

[BwanaBob]

I’m probably way out of my league here but I’m going to chime in anyway.

I look at taxes as “insurance”. Insurance that the country I live in continues to exist and protects whatever I own. The more I have to lose, the more insurance I have to pay.

No different from where a guy pays $500/yr to insure his Ford Focus vs. a guy paying $2000/yr to insure his Porsche.

Perfectly fair. IMHO.

[John_Corrado]

@BwanaBob

No different from where a guy pays $500/yr to insure his Ford Focus vs. a guy paying $2000/yr to insure his Porsche.

Sure, and I’d be amazed if anyone here believed that the tax rate should be simply a straight dollar amount - everyone pays $5000 a year or whatever.

The real question is: if a Porsche is worth 10 times a Ford Focus, should the insurance rating for the Porsche be 10 times that for the Ford, or should it be 20 times that for the Ford?

After all, the Porsche owner can afford it; if he couldn’t, he’d just by a Ford. And buy getting as much money as possible from people who can afford Porsches, you can give more services to the people who buy Fords. Of course, you’re also encouraging people who would buy Porsches to go find different insurance companies to keep their costs down. And if you charge too much, maybe the whole Porsche industry goes out of business when people stop buying them.

And then you get into the whole moral argument - is it right to take a higher percentage of a rich person’s income just because they can afford it more? Is that being fair about distributing burden, or is that little more than legalized stealing?

[BwanaBob]

I think you’re missing my point. It boils down to the more you have to lose, the more you have to pay in insurance/tax. That is a simple enough concept. No way could you justify the Porsche owner having comparable insurance rates to that of the Focus owner.

[John_Corrado]

@BwanaBob

I think you’re missing my point. It boils down to the more you have to lose, the more you have to pay in insurance/tax. That is a simple enough concept. No way could you justify the Porsche owner having comparable insurance rates to that of the Focus owner.

I know that’s your point. But I don’t think there’s anyone in this thread who actually disagrees with you on that point.

[zeno]

I wouldn’t advocate a cap on wealth, but I would definitely limit inheritance to a few million per person. There will never be equality in any society, hence social and economic stratification is unavoidable. But every person should be required to contribute to society, and no one should be afforded a status they have not personally earned. Let me put it this way: a cap on inheritance would prevent the likes of George Bush and Paris Hilton from ever entering out conscienceness. Are you convinced?

[FRDE]

@zeno

I wouldn’t advocate a cap on wealth, but I would definitely limit inheritance to a few million per person. There will never be equality in any society, hence social and economic stratification is unavoidable. But every person should be required to contribute to society, and no one should be afforded a status they have not personally earned. Let me put it this way: a cap on inheritance would prevent the likes of George Bush and Paris Hilton from ever entering out conscienceness. Are you convinced?

Nah, Bush Jr and the star of ‘A Night in Paris’ would have Swiss trust funds anyway.

[Opus1]

@zeno

I wouldn’t advocate a cap on wealth, but I would definitely limit inheritance to a few million per person. There will never be equality in any society, hence social and economic stratification is unavoidable. But every person should be required to contribute to society, and no one should be afforded a status they have not personally earned. Let me put it this way: a cap on inheritance would prevent the likes of George Bush and Paris Hilton from ever entering out conscienceness. Are you convinced?

No, I’m not. Why should anyone be required to contribute to “society,” whatever the hell that is? This brings to mind George Bernard Shaw’s statement that voluntary poverty is as mischievous under socialism as involuntary poverty. To the extent possible, people should be permitted to live however they wish as long as it doesn’t violate the rights of others. If I have no desire to work, what right do other people have to force me to? Of course, for most of us, not working leads to a life of poverty, living on the street as a bum, or if I just work a little, perhaps living like a hippie, having few material possessions, no savings, and sharing a small apartment with several friends. Few would argue that we should send the voluntarily poor to forced labor camps to contribute to society (although that is exactly what is done in communist countries).

But the same logic of freedom applies to the rich as well. If I desire not to work, but am fortunate enough to still be able to live well, either due to an inheritance, a lottery win, or whatever, what business is it of yours?

And what to do with this wealth we confiscate from the rich? Presumably it is given to others. What have they done to earn it?

And your last sentence is down right wrong: Bush and Hilton both have living parents. Bush’s prominence has come largely from his father’s political connections, not his wealth. Unless you simply wish to confiscate the wealth (including non-material wealth like status and social connections) of the rich, your plan does nothing to stop the prominence of the GW Bushes and Paris Hiltons of the world. Of course, this is entirely anecdotal anyway. Rockefeller’s children were great philanthropists, so the argument cuts both ways.

There are, of course, other arguments in favor of an estate tax–even a confiscatorily large one. I have not addressed them here. But your arguments–that people should be forced to contribute to society and that no one should ever have wealth they didn’t earn–are illogical.