Yeah, good point. I was being a little sloppy with my terminology. Of course, government revenue comes from other sources, such a property taxes, estate taxes, excise taxes, tariffs, and corporate taxes. But the rich pay a more-than-proportional share of those as well, with the possible exception of corporate taxes and tariffs. Those get passed along to the economy as a whole, or affect wages of employees.
Well they probably pay more property tax. They have a lot of huge houses to pay on. They also pay a lot smaller part of their income in sales tax and gasoline tax. They also benefit from tax loopholes . They have investments that shield their money and the can hide it abroad, Swiss accounts, Caimans. for instance. Then they have tax shelters which are a huge scam.
A false statement is no less false for the repetition. Again, FactCheck (and other cites already given and quoted) documents that your statement is bullshit.
But hey if you keep saying a false statement often enough some idiot will believe you, or maybe you’ll believe yourself. Assuming those statements are not the same thing.
Anyway this thread was about what is “fair”. And all the BS that this thread has brought out aside I think that we can find some agreement between us on this much: it is not “fair” that the wealthiest three Americans pay a smaller share of their total income to taxes than does the middle third. Can we agree at least that far?
Except you never get as much in tax as you think, because of disincentive effects and tax avoidance. You’d probably have to double their taxes. But yes, by doing that you could probably raise as much in income tax as all the money collected by those making less.
But what problem is that solving, exactly? is the ‘problem’ to get rid of income taxes for people making between $40,000 and $100,000? Because the people who make less than that don’t pay income tax already - only 2.7% of income taxes are collected from people making $30,000 per year or less.
So yeah, by doubling the taxes on the rich you could probably eliminate the taxes entirely for the not-quite-rich to the top half of the middle class. Why in hell would you do that? What does that solve? How is that ‘fair’?
Your idea clearly isn’t to raise revenue, because all we’ve done is shift the tax burden - we’ve raised no new money. If you want to raise a trillion dollars, you’re going to have to double the rich’s taxes again. But you won’t be able to raise enough. They just don’t have that much money.
So what do you think would happen? You’ll jack up marginal rates in your zeal to confiscate the wealth from people who committed the grave crime of earning it, then you’ll find you are still deep in debt. So, you’ll add a VAT tax. Which is a regressive tax aimed squarely at the people you started this whole thing to try to help. Now you’ve got an inefficient economy where vast sums are collected from the people, then divvied back out to the people, in roughly the same proportions, except with the government sitting in the middle playing controller of the whole show.
You can argue for a bigger government with more agencies and more tools for helping people. That’s fine. Just be realistic about how you’re going to pay for it. You’re not going to get it from the rich. To raise any more money in this environment, you’re going to have to institute a VAT. Probably about 16% just to get back to fiscal balance. But be under no illusions that this is a regressive tax, and for good reason - if you need to raise serious sums of money, you have to go at the entire population for it.
But if you’re taxing the middle class to pay for programs that give money back to the middle class, perhaps you should stop and think about whether it might not make more sense to just let the middle class keep their money in the first place. A tax that pays for a program that goes back to the same person is about the most inefficient kind of tax there is.
The left’s biggest problem today is that it’s moved beyond the old goals of just helping the very poorest people get a leg up on the socioeconomic ladder. Now it wants to be the distributor of funds and programs to the population, whether they’re rich or poor. It wants to punish the rich and give the money to the middle classes, well into the upper middle classes.
Social programs for those in need are defensible, as are taxes to pay for them. Social programs and taxes to give benefits to people perfectly capable of looking after themselves and who are already living comfortable lives are indefensible, in my opinion. They’re also unaffordable and destructive to the economy as a whole.
They also take freedom away from the people.
So the we would expect socialist Europe, which gives incentives like parental leave and child assistance to have higher birthrates: they don’t. More teenage mothers: they don’t. Maye Europe is special. In the US the conservatives states should have a lower birthrate and less teenage pregnancy: nope. In fact, by any measure of “goodness” you see that states with conservative govts are worse off: crime, poverty, education, teenage pregnancy, health. As a whole, the US does worse when conservatives are in power. But still conservatives have the gall to insist that there policies are correct. You do not have a leg to stand on.
Isn’t this where someone is supposed to say that Europe has lower productivity?
You realize though that Milton Friedman’s concept was what gave rise to the Earned Income Tax Credit (EITC), which is what results in CP’s favorite out of any meaningful context factoid that the lowest 47% of wage earners do not pay any income tax (as the EITC offsets what they owe on that particular Federal tax. Of course income tax is not equal to all federal tax and those same people still pay a good chunk of the total Federal tax burden.)
Detail of how Friedman’s idea inspired the EITC can be read about here.
How come that doesn’t apply to a 99% top marginal income tax rate?
If anyone offered me 1% of one million dollars, I’d take it in a heartbeat. 10k is 10k more than I have in my pocket now.
Shit, I still pick up pennies!
The rich really aren’t like the poor, the poor actually understand the value of an extra dollar.
CMC fnord!
Everybody making $13/hour or less would quit their job as they will make the same or even more money not to work. To combat this, suddenly the guy slinging fries at the Mickey D’s will be making 70K and inflation will make anything less than that worthless.
Are the magic pixies going to make up the slack for all the lower level jobs that won’t get done under your system?
Because 1% is much less than 50%.
Oh, come on. That’s not what we’re talking about. We’re talking about a businessman trying to decide whether to risk his capital to grow his business. He’s making a million a year. If he could double the size of his business with a 5 million investment, he might do that, because he’ll earn it back in five years, and after that make a profit. But he’s not going to put up $5 million for a chance at increasing his annual salary by 10K and giving the rest to the government.
Millionaires invest their money. They invest it in things that yield higher return for more risk. Take away the return, and capital will not be invested in risky ventures. Seed capital would vanish. Venture capital would vanish. Small businesses would not grow past a certain size.
If you taxed the top people 99% of their marginal income, you wold kill the engines of economic growth and the economy would stagnate.
The rich really aren’t like the poor, the poor actually understand the value of an extra dollar.
Says you. You are trying to make welfare arguments with a somewhat narrow and ill-considered slice of data. If anything, it is more dangerous than hand-waving because it adds a veneer of respectability. A wider frame tells us that many of the states on your list, supposedly the most attractive targets for immigration on account of their economic freedom, have the lowest median incomes and the highest numbers of incarcerations. This tells a reasonable person that perhaps they are not such great places to be, after all. We could play dueling data all day; the only thing that really matters is how we weight the importance of each series in our overall welfare calculation.
I think you must have misread. These are federal tax receipts. The attractive states you list receive massive wealth transfers from the fine states of New York, California, New Jersey, Delaware, etc.
I’m not writing an academic paper here, either. I am just not accepting the data you do provide uncritically. If anyone has an appetite for academic papers, I can certainly dig some up from the optimal taxation literature.
Got a cite for that?
Don’t get your example. I have capital and I am going to invest it. Do I invest it in something that may return double my business, increasing the value of my business by … oh let’s use a multiple of 10, which is conservative since this is obvious a growth industry I am in … 20X, while increasing my income by 2x gross which due to absurdly high taxation nets me a 10% annually? Or do I put it in a savings account and earn interest income that gets taxed at that same marginal rate.
He didn’t get to be successful by being stupid. He’ll invest in his business. Increasing the value of his capital is the way to real wealth and he knows it.
Obviously, an advantage (e.g. everybody else’s factories are in ruins while yours are intact) can compensate for a handicap (e.g. taxes are draining off too much investment capital). Without the offestting advantage, the handicap becomes more damaging.
You don’t “get it” because your counterpoint leaves out the factor of risk.
The investor risks his money. He might get an increase in the value of business. He might not. He might get a corresponding increase in personal income because of the increase in business value. Then again, he might not. Chances are high he won’t.
The psychology of taking a risk and dropping millions into a business that might return more income only to be later taxed at 99% is not the same as depositing money into a risk-free savings account that will return interest.
Ther are a host of problems associated with an annual wealth tax. There is a time value to money and people will demand about the same real rate of return. This will basically raise interest rates by 2.5% across the board, it will also tend to move people away from debt and towards equity. Add the income tax to that and you are looking at risk free interest rates in the 7-8% range and even then most ofthe money is going to come from foreigners who are not subject to the wealth tax. Domestic wealth will be invested in things that are either not subject tot he wealth tax (items that would typically be excluded from a wealth tax would be homes (a 2.5% wealth tax on my home would quadruple real estate taxes)and life insurance policies, there are probably other things that would fall into this category).
Americans have a net worth of over 50 trillion. A 2.5% wealth tax would generate more revenue than the income tax unless you provided for a large exemption.
I think the estate tax needs to be fixed so that it isn’t so easy to plan your way out of paying anything but the once in a lifetime wealth tax (in the form of an estate tax) works pretty well.
If we were to have a wealth tax we would need a large exemption so that your first million dollars or so would be exempt and then the tax would have to be on closer to 0.1% than 2.5%.
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[quote=“Sam_Stone, post:72, topic:537416”]
I just can’t stop…
You got anything on income disparity by state?
By definition the top 1% only account for about 1% of the population (very rough approximation), the top 1% in France account for about 1% of their population as well.
The welatrhy carry the lion’s share of teh income tax in the US, and because we have a progressive tax sytem (like almost every other inddustrialized natiojn in the world), the rich carry a higher tax burden as a proportion of their income than the poor. But when you say taht the rich pay a large portion of the overall tax burden you are forgetting that the top 1% used to earn almost half what the entire bottom 50% of the country earned. Now the top 1% earns about DOUBLE what the entire bottom half of the country earns.
In our capitalistic system, we don’t need to provide tax incentives to encourage people to strive for wealth.
WOW!!! 99% tax on the millionth dollar I earn? Kinda confiscatory, don’t you think?
With that system, everyone under about 100K would pay about what they pay now (the bottom half of America pays almost no income tax and the 100K earner pays about 25% of their income). But your tax curve has a hyperbolic trajectory. generally speaking, federal tax rates in excess of 50% start to get counterproductive.
I agree, read the thread. Then people reading can decide whether Professor Wolff, the most-referenced, most-credentialled expert on wealth in America is right about this or whether Sam, with a long and much-remarked-upon track record of posting disingenuous nonsense on this board, is correct about what he thinks Professor Wolff’s own data says. I’m guessing most people will be agree that the Professor has a better knowledge of his own data and published work than Sam does and can probably be believed when he says that wealth inequality has doubled since the 1970s after falling for forty years.
Money is not the reason people work or innovate. If you are familiar with Mazlow you are aware of that.
There is a lame program I bumped into a couple times where bosses disguise themselves and take low paying jobs in their company. They were surprised to find out how hard and diligently the low paid workers toil. These people ,in the upper levels of society ,look down on and think if only the minimum wage worked as hard and cared as much as they do would be successful. But the vast majority work hard and do a good job regardless of how little they make.
So the idea that a billionaire will quit trying if they don’t get more billions is bogus. People don’t work for money. The Financial pros who destroyed the world economy should have bonuses stopped. The humane ones will still do the job. In the end it is the job that matters.