For 2010, federal income marginal tax rates begin at 10% and lurchingly rise to 35% on every dollar of taxable income above $373,650 for married filing jointly.
And then the marginal tax rates stop rising. Couples who make $374,000 per year, well, they're about as rich as it's worth thinking about, right.
A generation ago, it made sense not to worry much about squeezing a little extra tax revenue out of people making extremely gigantic amounts of income because there weren't very many of them and it didn't add up to all that much.
Today, though, the term "orders of magnitude" just comes up a lot more when thinking about income.
Consider baseball contracts as a well-known example. Free agency started around 1975, but by the 1980 season, only one player, Nolan Ryan, was averaging a million bucks per year over the life of his contract. During the 1989 season, Eddie Murray was averaging the most at $2.7 million. By 1996, Ken Griffey Jr. was getting $8.5 million, and then pay really exploded, all the way up to Alex Rodriguez getting $25 million in 2001. Today, Rodriguez remains the highest paid at $27.5 million.
So, today, the marginal tax rate on Alex Rodriguez is the same as on a utility infielder making the minimum major league salary of $400,000. How much would it really hurt the economy in the long run if Alex Rodriguez faced a marginal tax rate that was 5 or 10 points higher than that of the lowest paid major leaguer?
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104 comments:
Yglesias has made the same point.
I propose a 10% overall wealth tax on all net worth above $10 million. The definition of net worth includes unrealized capital gains.
Actually, you really miss the point in not focussing on the disparity between earned income and capital gains.
A person who earns money through working can have a marginal rate as high as 35%. A person whose money is earned through investing pays a 15% rate, at most. A worker hits that rate when his adjusted income tops $34,000. The worker has to worry about a 7.65% payroll tax, too, up to the first $106,800.
Per today's deal with the Obama Administration, the Republicans have now decided that extending the tax cuts for the rich is worth $900 billion in new deficit spending over the next two years, which doesn't even take into account the probable increase in interest rates.
Kinda lets you know where their priorities lie, doesn't it?
It would hurt a lot because then our government would be that much richer and it's our government that is most responsible for destroying the economy. Anything that makes our government richer and more powerful is horribly destructive.
Our left-wing fascist government is the enemy of its own country and Obama, that deeply stupid affirmative-action parasite is only a symptom of our irredeemably evil ruling class. No more money for them.
As far as I can see, a progressive income tax with a fairly low top marginal rate is just one gigantic incentive for the government to maximize its host society's income inequality. The more of a company's revenues go to the highest earners, the more money for Washington. In the long term it's a bad idea because of that incentive, and in the short term it won't be enough to solve our deficit crisis, so why bother? When the treasury market finally blows, pinching a few pennies from A Rod won't make much difference. We'll still have to monetize everything, devalue, and cut spending.
The point of the top marginal rate was originally to discourage high salaries, for which you need a top rate way higher than a measly 35% (as the last few decades here have shown, considering the income trends for the top 1%). From WWI to the 70's (apart from a brief interlude at the end of the Roaring Twenties) it was well over 50%, and in many countries it still is. Although it sounds like a policy with an egalitarian basis, I suspect the real reason for it was that the financial oligarchy never had to worry much about taxes, so they used the top marginal rate to keep the middle class from becoming a threat.
Either the super-rich mysteriously lost their fortunes and power, or (as I think rather more likely) they no longer faced any significant threat by the time Reagan came along, and indeed it suited them for executive after-tax pay to fly through the roof, to create a potemkin plutocracy of CEO's worth a few billion dollars, put them on the phony Forbes list (if you honestly believe that the richest guys on earth are mostly into publicly-traded equities...well, that's too much for one pair of parentheses) and rest assured that if things went to hell and the pitchforks came out, they would be skewering silly people named Gates and Buffett and Slim.
Yes, the tax brackets are antiquated. A $300K salary ain't what it used to be.
The government used to take 70-90% of the income of society's most productive people. It's remarkable that innovation and productivity have not improved since that tax burden was slashed to 36% (and 15% for capital gains). Of course, it's not a perfectly controlled experiment since we've been depleting our human capital during the same time period.
"The government used to take 70-90% of the income of society's most productive people."
No it didn't. Those may have been the top rates, but no one paid anything close to that. There were enormous loopholes that the most productive people were able to access (the tax reform act of 1987 closed most of them).
Captain Jack alludes to another good point: Why is A-Rod paying the same amount of payroll tax as a stiff making $106K?
No wonder we're up a creek.
The implication of this line of thinking is that, if we just gave the government enough money, we would solve the problem of deficits/debt. Does anyone seriously doubt that if the government had more money, it would spend all that money and more, still finding a way to run us broke?
But the larger problem with this type of analysis is that it enters the debate on the terms of those who advocate big government. That is, it concedes that there is nothing wrong with confiscating as much of people's property as you see fit, as long as you can make the case that you are somehow optimizing outcomes for "the economy," or "jobs," or "the middle class."
It's this kind of thinking that describes opposition to higher tax rates as "giving" money to rich people. You're not giving them anything, and the money is neither yours, nor the government's.
But if you subscribe to the notion that the reasoning behind tax policy should be some combination of "because we can" and "because that's where the money is," then you make some good observations.
OT
Social Security 2010 Results – Long Slide into the Red
Payroll tax receipts: 655
Benefits Paid: 702
So in 2010 payroll taxes paid will not cover benefit outlays.
The only thing that matters is the cash position. That is negative for the first time in 27 years and is a harbinger of things to come.
SSA has produced a forecast that has the cash position returning to a small positive number over the next few years before going permanently negative in 2015. The economic assumptions used to produce that forecast are not going to be realized.
And they want to reduce SS taxes as part of the tax deal?
There is big trouble ahead for SS.
First off, check out Hauser's Law. When marginal tax rates are raised, and you use a static analysis, then you expect a river of cash to come into the treasury. When you use a dynamic analysis, then you see that people modify their economic behavior and growth in the economy slows, resulting in little change in tax revenues as a percent of GDP. Hauser points to 60 years of data which show that revenue in the form of income tax has remained in a very narrow band, around 19% of GDP, despite the top marginal tax rate moving from 92% to 28%.
If you're going to put forth the argument that "this time it will be different when we raise the top marginal tax rate" then you need to explain why it will be different.
As far as I can see, a progressive income tax with a fairly low top marginal rate is just one gigantic incentive for the government to maximize its host society's income inequality.
If I understand this point, then you need to account for the fact that about 75% of the foregone revenue from the Bush Tax Cuts can be attributed to the very broad middle class rather than the Top 1% or Top 5%. Your strategy ignores this and focuses on the 25% of revenue that would come from the very elite class.
The government used to take 70-90% of the income of society's most productive people.
There's a difference between having a marginal tax rate of 92% on your gross adjusted income and having 92% of your marginal dollars going to taxes. Alongside the top rates were thousands of deductions that could be taken. The effect of the deductions was to reduce the effective tax rate far below the notional tax rate.
The question isn't whether it would hurt the economy ... the question is whether it would *help*, right?
Why would I want to hurt some rich guy, if it doesn't even help the economy? Am I just a prick?
Let's ask the right question: *are* high marginal rates even a good idea? Is now a good time to start partying like it's 1979?
If you look at the fraction of taxes paid by the top 1 percent paid during the Clinton administration its actually larger than the fraction paid during the Bush tax cuts. Perhaps 35% is above the Laffer maximum for some, not very long, time frame (at least for the types of people who might be in the top bracket and the ways in which this income might be made).
Another way of looking at it. Nobody should have to pay 1 million dollars let alone 5 million in taxes for services rendered by our government. I'm no libertarian but that is extortion, pure and simple. We should be thinking about what services the government should provide and how much the government ought to cost and then thinking about how much it's reasonable for everyone to pay. We should not be thinking about how much we can get from each person without hurting the economy to much.
Robert Gordon at Northwestern makes this point. What counts for economic growth is the incentive provided by the reward-to-required effort ratio for very talented people. Higher taxes cut the reward numerator. But changes in the economy, affecting chiefly sports, entertainment and finance, have reduced the required effort denominator for very talented people.
The Republicans may have won the wrong battle, if boosting the economy was the aim. Cutting or trimming unemployment insurance might be more effective than holding tax rates constant in restoring growth.
At the end of WWII, we had a rather huge adjustment to make. About 10 million men were rapidly unemployed by the end of the war. I believe they were given $50 a week for 52 weeks, no longer. We had a deep, but brief, recession.
Far and away the "middle class" portion of the "tax cuts" were the bigger part of the deal. Restoring the old rates will cost us $280BN/year. The taxes on the rich will cost us $70Bn in future revenue. But extending them really costs us nothing, since we haven't had the revenue since 2002. The bottom line is we are living off of borrowed money since 2001, yet we still are ramping up government spending and not materially increasing revenues. Government giveaways like Medicare Part D (thanks W) and wars (abt $150BN/year) don't necessarily help either.
Tax cuts are stimulative (much moreso than government spending) and any less nickel the government gets is a good thing. I am thinking the Republican plan to starve the beast may work in the short-to-medium term.
In 1927, under Calvin Coolidge's administration, only the top 2% of all Americans paid ANYTHING in income taxes.
Didn't the Progressives of the time sell the 16th amendment as a "luxury tax" on the wealthy anyway?
On top of that, a system with high rates and lots of loopholes (credits, deductions, shelters, distinctions between kinds of income) raises just as much revenue as a system with low rates and no loopholes. But has fewer opportunities for graft, corruption, bribery, rent-seeking, and lobbying. And is therefore useless to career politicians and social engineers.
Steve, strongly disagree with your take here. Forget about Alex Rodriguez and think about Silicon Valley. Few points:
1) The government will NOT use that money to benefit you
2) You will soon be classed as "rich" (you are in the top 5% globally, right?)
3) The "rich" invest in startups and build companies
3) The "rich" -- aka the people who produce so much vqlue that people give them millions of dollars for their services -- are not passive cash cows to be arbitrarily milked. They are actually highly mobile actors
5) The truly rich will spend money on lobbying, tax lawyers, Cayman accounts, and ultimately even expatriation to escape random, politically motivated seizure of their assets. Thus all tax law is ultimately inverse-U shaped, and never hits the top end.
All in all, taxing and demonizing the "rich" and the "educated" and the "white" is about failing to acknowledge that there are some people who are capable of creating new technologies and building businessss and that there qre others who are not. Failure to acknowledge the reality of merit means the assumption that most of the wealthy are crooks or heiresses. That kind of thinking led to terrible 20th centuries in Russia, China, and countless other countries.
"Does anyone seriously doubt that if the government had more money, it would spend all that money and more, still finding a way to run us broke?"
Find me $1 trillion in budget cuts with a reasonable chance of acceptance by the people, then make that argument. Cut the military budget, cut foreign aid (please), cut unemployment benefits and ag subsidies and food stamps and whatever else you like. You still won't get to $1 trillion.
The argument of too many Republicans is that you can always keep cutting taxes. Well, no, you can't. I'm certainly a conservative, if not thrilled with the GOP, and I'd love lower taxes, too. But at some point your income has to be reconciled with your outgo. Slashing taxes from 70% to 35% may have a huge effect on behavior, but trimming taxes a few
measly points does nothing but break the bank.
"When you use a dynamic analysis, then you see that people modify their economic behavior and growth in the economy slows"
Bullshit. Economic growth in the 80s and 90s was higher than it was in the 00s, despite the fact that, at some points, capital gains taxes were twice as high as they were in the 00s. Our government hasn't had a balanced budget since the inception of the Bush tax cuts, and those exceptionally low taxes haven't prevented the economy from remaining in the doldrums for a record-beating recession.
Magical thinking has got to go. The question is, how do we equitably divide the bill for the costs of government? A 15% max rate on cap gains but a 35% max rate on income makes no sense whatsoever. At the top, the tax cuts need to expire. At the bottom, fewer people need to be exempt from paying any taxes at all.
Further, the Republican deal to extend tax cuts for the rich comes at a huge cost: $1 trillion in deficit spending over the next two years, which completely undermines the arguments of the Tea Party, and which includes another yearlong extension of unemployment benefits. This means that the unemployed will have no incentive to take all those jobs "Americans won't do" and send illegal immigrants home.
I see no problem with a policy of slightly higher taxes for the rich, a budget closer to balanced, fewer welfare handouts, a lower unemployment rate, and fewer illegal immigrants. The deal the GOP just made is the opposite of all of that.
The fact that Matt "the miracle of counterfeiting" Yglesias has made the same point should cause you to think twice, Steve.
Ever notice that the pack of Scots-Irish who are so blase about printing money (Yglesias, Klein, Krugman, and the Ben Bernanke) turn into green eyeshade people when it comes to the necessity of seizing yet more of your assets?
Why don't they just print money to cover the taxes?
The question answers itself when you realize that printing money is the ultimate tax, as it dilutes everyone else at the expense of the government. The leftist who gets their 212-proof tax ("Quantitative easing") won't want to give up their 100-proof tax.
There are a lot of people who write for a living -- journalists, academics, gubmint officials -- who only have the vaguest sense of what it takes to build a billion dollar business...something which is so valuable to society that people *voluntarily* think what it produces is worth more than a billion dollars each year.
I won't bore you with the tax calculations. "That be white", as they say in the hood. Let's just say that confiscatory tax rates on top of the down economy and insane new regulations mean we'll just have to move operations overseas.
It sounds like you view American citizens as sheep, to be fleeced for the benefit of the wise and benenevolent government.
Maybe baseball players will stay in the US for this fleecing but many people with such high human and/or financial capital will leave.
The extra revenue will not solve the USG's budget problems. Needs and wants are infinite and the USG has proven itself incapable of prioritizing its spending and living within any means.
Instead of asking "how can we get more tax revenue out of the people," maybe we should be asking "what does the government need so much money for?"
- JP98
Steve, there is a big difference between Alex Rodriguez and most high-earners. A-rod does one thing worth millions: play major league baseball really well. (He can also endorse, but his star power is based on field performance.) MLB is a monopoly with a fixed production schedule; A-rod cannot increase his productivity by playing more games for them. And although he can decrease productivity by working less (pretending to be injured, maybe), there is little reason to do this, because his "job" is, after all, a game.
But most high-earners are not in an analogous position. Their work is work, not play. They usually have full control over how much they work, because they are owners, not employees. And finally they are usually brainworkers, meaning they have many other things they can do well and get paid well for. One of the things you can do with IQ if you have it, is read the tax code and find loopholes. Another is jockey at the Federal trough for some of that sweet, sweet, Federal money. The rest of the economy may be shrinking, but Washcorp is still growing.
Especially if we made savings tax exempt.
Aside from my gut instinct of "anything that's bad for the feds is good for the country", the simple mathematical fact of the matter is that it just wouldn't help.
Go to the IRS website. Download the tables indicating the number of returns in each income category with the associated dollar amounts. Bust out your pocket calculator and subtract the taxes already paid by the >$250,000 bracket from their total taxable income. You'll find that the resulting number - the current total after-tax income of "the wealthy" - is just smaller than the federal deficit.
In other words, even if you taxed away every cent of the high incomes, you still wouldn't plug Uncle Sam's fiscal hemorrhage. And that's without even taking into account the economic damage from such a confiscatory transfer.
AL's got it right. When I think about tax rates, I think less about the economy and more about fairness. Why should A-Rod pay $10 million and some outfielder pay $50,000 for the same services they receive from the government?
"Because he can afford it" Never struck me as a good answer.
Actually, the highest marginal rates (40+%) are on people in the $70K-140K range (approximately double for marrieds), because of "deduction phaseouts" and other tricks. The marginal rate (the percentage of the next earned dollar paid to Uncle Sam) is less on higher incomes.
So the Federal income tax falls hardest on the successful middle class (think engineer, CPA, registered nurse). (This is probably deliberate to make sure those folks can't accumulate wealth and rise into the exalted class.)
Also, as Captain Jack pointed out, only the rich get to choose whether their income is denominated "salary," "interest," "dividends," or "capital gains" so they can pay less tax on it.[1]
The rates are highest on salary and interest which working stiffs get from their employers and banks (well, that is, before Obama and Bernanke set the interest paid to savers at nil). The rates are much lower on dividends and capital gains, which only the rich get routinely. Hedge-fund guys (super rich) are even allowed to take their commissions/contingency fees (on which even lawyers have to pay "salary" rates) as "capital gains" at 15%.
[1] If you're one of those idiots who thinks that special low tax rates on capital gains "promote investment" or some such, consider "stock buybacks." That's when a corporation, instead of declaring a dividend, uses cash to purchase its own stock-- thus delivering capital gains to stockholders. Whatever form of payment is least taxed, that's the form the corporation will deliver to investors. "Interest" is what small-time savers earn, even though it is equally "return on investment." If you (foolishly) think capital gains should be taxed at a low rate, you have to explain why interest income should be taxed at a high rate. Good luck with that.
"Captain Jack alludes to another good point: Why is A-Rod paying the same amount of payroll tax as a stiff making $106K?"
The Medicare part of A-Rod's payroll tax is uncapped. The Social Security part of his payroll tax is capped because his Social Security benefits are going to be capped too; i.e., his SS benefits are going to be based on $106k and not $25mm.
It's probably an urban legend, but supposedly Sweden once had a top income tax of 101% for very wealthy people.
Peter
If Jeremy Siegel is right, then the working poor are being cheated by social security.
6 percent real gains over 200 years for equities.
Let them, the working poor (and the rest of us) give their money to Bogle (index funds) and let them (and us)buy cheap term life policy.
goatweed
The best form of wealth taxes are real property taxes, because you can't hide real estate from the tax man.
California has the worst possible state tax system. We have basically the lowest property taxes in the country, which are impossible to avoid. At the same time, we have a 9.4% income tax that can be cheated on easily and a sales tax that just requires you to buy stuff online to avoid.
Texas is much better, with no income tax and very high property taxes.
A marginal rate of any more than 40% is robbery in my book. In addition, it is essentially impossible to collect for the highest earners, regardless of how many loopholes there actually are in official tax law. Your humble narrator got sick of funding California's dysfunction (17% combined tax rate + an "IOU" collected this year above-and-beyond anything authorized in the tax code, supposedly to be refunded in 2011) and so got his California-based employer to transfer him to a state that does not build $500 million inner-city high schools.
For the super-rich the options are of course sky's the limit. Tiger Woods specifically lives in Florida to take advantage of its non-existent income tax. So does John Travolta, who pilots his own jet while "commuting" to work in L.A. There are lots of other gimmicks, of course, like the $1 salaried CEO with millions (billions) in stock options. And of course one can simply pick up stakes and become a "citizen" of Luxembourg, Monaco, the Cayman Islands, etc. while still keeping that beach-front house in Malibu. The U.K. had a top marginal rate of 90% in the 70's, yet I don't see Mick Jagger pinching pennies.
I reject the notion that "working" is somehow morally superior to "investing."
While I applaud working, I also applaud investing, for it's risky and when the risks results in a pay-off, it does so, most times, not only for the investor but also for a worker, a worker who derives a job because someone else took a risk.
There's only one A-Rod; there re scores of utility infielders who can't put people in the seats.
This post/topic is interesting (and disturbing) at a number of levels.
You use the classic “bait and switch” tactic of employing a title (“Who is rich?”) which in no way represents your “woe is me” financial view of squeezing just a bit more out of the ultra-rich. Despite the stated desirability of a high IQ population that I read about here, evidently there are quite a few communist/socialist readers seeking to punish the successful. I never thought the politics of envy would show up at this site.
(Note: Professional athletes’ salaries are a straw man argument, since the DOL shows that 16,500 workers were employed as professional athletes in 2008; 0.0001% of the labor force. Should we not reward the best in any profession? Steve, you may feel that your intellectual ability is way beyond Alex Rodriguez’ – and it likely is – but the ability to hit a baseball is valued more by the population. That’s a completely different article and argument than “let’s tax him because he makes more than I do, and he won’t miss it.”)
Would this topic be an issue if we had a government surplus? Does no one recognize that we caused our possible demise by allowing our elected representatives to spend beyond our means? We have a class of people who make more by staying home on welfare than working. People are generally rational (even my brother-in-law figured it out). We need to examine the root cause of that behavior. Vote these “representatives” out. If you think the system is so corrupt that we can’t do it – well, that’s a completely different article and argument than “tax rich people to make up the deficit.”
“Let me tell you about the very rich. They are different from you and me.” They leave high tax areas for low tax areas – sometimes they leave a state, sometimes they leave a country. Because they can. Do you want to give the most productive people a reason to leave this country?
@Captain Jack: Where do you think capital for long-term investment comes from? The reality is that after a (potential) 35% haircut from income, the investor then deploys the remaining capital into investments that are subsequently taxed at 15% (or a much higher rate if sold before reaching a one-year holding period). Then we all get the shaft at death when the estate tax – an even higher rate – kicks in (and, yes, I know that the estate tax is 0% this year, and the tax, when implemented, is on a marginal amount of net worth).
Steve – make your site 100% subscription. See if that changes your personal economics. Dare to be a true entrepreneur using your intellectual ability....
Also, would the Internet/tech boom of the 90's have been possible with a 70% top marginal tax rate? In geo-strategic terms I'd take China's steel mills over Facebook, market cap be damned, but you have to admit this has been one legitimate success story for the U.S. economy- probably the only sector the U.S. is still dominant in.
In addition, a punitive tax rate (and don't think for a moment if a "responsible right" allowed it to creep to 50% it would magically stop there) tends to secure the position of the already-rich- meaning the same multicultural, nation-killing Ford Foundation types who already do so much damage would now have an even bigger stranglehold on the economy and culture, with no parvenus like Limbaugh, Dr. Laura, Howard Stern, etc. to countermand them.
I'd like to have the country re-think the progressive income tax.
In this entitlement culture, we've educated millions to believe they are deserving of what others have, even if they themselves are middle or upper-middle class.
And, we've seen to it that the poor are very happy, thank you very much, to remain poor--you get lots of stuff off another's dime and sweat.
This doesn't look anything like the REAL DEPRESSION, in which people huddled in camps along the railroad tracks, kids left home, families grew gaunt through lack of food, people knocked on doors.
The "poverty-stricken" welfare families I know were the first to get a rear-projection, 46 inch tv a decade ago. The overextended middle class family next to me had a $35,000 pool built a few years ago. Now he's unemployed, and crying about the bills, but kinda content with his unemployment check each month.
I'm sick of the lack of individual responsibility, from pol to everyone else.
Captain Jack made the real point - those who work for a living and earn income are taxed much higher than those who do not earn income from a job. The truly wealthy can get their money from tax-sheltered investments and pay little or even no tax.
Of course the net tax rate is much different from the nominal rate. It was said that Kennedy reduced the top rates because he learned that the only person in the US who actually paid the 91% top tax rate of the Eisenhower years was Floyd Patterson. Everyone else had deductions - big deductions.
Personally I reject the nearly universal acceptance of the morality of progressive taxation.
For most of Western history it was just the opposite - the rich sucked their wealth from the poor. If that seems wrong to you consider art, architecture, music and literature. All the high works of civilization were funded by exactions from the poor. Even today a "fair" meal is a bowl of rice and a "fair" house is a hut.
Personally I've known a number of millionaires and at least one billionaire. They were universally better people than the poor people I knew when I was a social worker.
Taking money from the prosperous is harmful but giving money to the poor is also harmful. It gets you more poor people.
It's the banana problem again. You know how to start but not how to stop. Pulling a brilliant child from an impoverished village and giving him an education is a wise policy from every perspective but sending every peasant kid to Harvard is just plain stupid.
Morally taxing the poor seems like a sounder stance. If you want to create jobs, exempt the personal income of business owners from all taxes. Exempting ball players from taxes might get us better ball players - generally tax exemptions draw people into the favored professions. But we have granted tax exemptions to all those who are too lazy, stupid, or incompetent to support themselves properly.
Albertosaurus
What? Spoil the Republicans number #1 issue (keeping zillionares out of the poorhouse)!
Truth: Is that 10 percent per year? Why not just burn down their houses and stick their heads on poles?
Seriously, my main reservation about high taxes on the "rich" is that looking at income year by year may be unfair to some people.
A musician, or athlete, or small-time entrepreneur may make, say, $500,000 per year for five years - and a modest income before and after. I'm not sure I'd want to treat him the same as the successful doctor or lawyer who earn half a million steadily for several decades.
Cennbeorc
Mr. Sailor,
Here's a puzzle. The last several decades have seen the rise of a new class of black ultra-rich celebrities - athletes, rappers, actors, singers, etc.
In fact, I believe that blacks are over-represented in the class of famously rich Americans.
By this I mean, ask an avg American to name specific people that they know make many millions or tens of millions a year. The avg person doesn't know any of such people in real life so it's mainly famous people they can think of.
Today there is a long list of very famous blacks that everybody knows makes huge amounts of money: Kobe Bryant, LeBron James, Shaq, Obama, Oprah, Denzel Washington, Michael Jordan, Tiger Woods, Jay Z, Beyonce, Will Smith, Ray Lewis. I could go on. This is a fairly new phenomenon in American history.
The most popular sport by far is the NFL which 60%+ black, the NBA is 90% black. Blacks are only 10% in MLB, but hispanics are almost 30%.
Yet this rise in famously rich non-whites has not, as far as I can tell, produced a tax-the-rich-black-guy response among middle and lower class whites.
I find this a bit surprising. Any idea why?
I recognize that blacks are still a low % of high-earners overall, but I think that blacks being over-represented in that small subset of people who are famously rich would have an effect, especially on poorer, less educated whites.
In the past the famously rich were mainly industrialists -- Rockefellers, Carnegies, etc. Today we have Gates and Jobs, but that's about it.
When poorer whites imagine taxing the super-rich, who do they picture? Are they imagining some anonymous Google billionaire and the Silicon Valley elite? Are they imagining the equally anonymous (to the poorer whites) Wall Street banker? Or are they imagining the very specific individual sports stars and celebrities that they know by name?
Naively, I would have predicted that the rise of the new black ultra-rich would produce more support for higher taxes on the super-rich among middle and lower class whites.
Why hasn't it?
Exactly. Why should Wall Street billionaires pay the same tax rate as small businessmen? And why is the GOP for the superrich when your average superrich person is more like George Soros, Sergey Brin, Haim Saban, Warren Buffett, and Bill Gates(all liberals)while the main support for the GOP comes from main street?
my Sarc-0-detector is going bing-bing-bing. But seriously, increasing taxation (excluding a flat total compensation tax) encourages corporate and investor cooperation with the taxing authority, with political donations and favoritism exchanged for preferential regulatory change.
It really is that simple.
I'd like to see a breakdown of how many "rich" there are, and how much they pay in taxes, and how much of it goes where. I'd be surprised if the amount subject to income tax was as significant as implied by the Rush Limbaugh set.
An income tax is a fine imposed on people who work and unemployment insurance payments are a reward for those who do not work.
Why is working a crime?
I recommend a special income tax on lawyers: how about 90%?
Naively, I would have predicted that the rise of the new black ultra-rich would produce more support for higher taxes on the super-rich among middle and lower class whites.
LOL, most black pro athletes are dead broke within 5 years of leaving their sport. Child support, rims, pitbulls, support for massive entourages and wasted money on silly family business ventures are the main reasons.
See Scottie Pippen or Antoine Walker, both of whom made $120+ million in their NBA careers but have recently declared bankruptcy.
Magic Johnson and Michael Jordan are a rare exception - they had the good sense to invest in valid enterprises and put their trust in real financial advisors, rather than put cousins or uncles in charge of their money.
For every rich black athlete, 25 wealthy whites are created.
“It's this kind of thinking that describes opposition to higher tax rates as "giving" money to rich people. You're not giving them anything, and the money is neither yours, nor the government's.”
Rich people enjoy billions of dollars in services for police, fire, and the legal system, plus their political pull with the government which can get them diplomatic and even military intervention unavailable to the average citizen. They get this for far less than their share of the costs; it is absolutely correct to call their low rates "giving money to rich people".
Steve, this money is going to be blown on backscatter scanners, bombing Iraq, and bringing "services" to millions more illegal aliens.
Aubrey, the trillion dollars in spending cuts needs to happen. Needed to happen a long time ago, in fact. It didn't happen. That's why the US is screwed and will default on its debt and hyperinflate its currency. In the process of course the guy who risked his life savings to build a business will be attacked as the "rich" from whom Barney Frank can "recover dis money" at gunpoint.
Well f that. I am a software entrepreneur. Not Gates, but employ about 30 people. I have had it up to here with this idea that the few people who saved and managed their money well through this environment are marks to be fleeced, ants to be mugged to provide for all the grasshoppers with NINJA loans. Lest you forget, have visa and can *and will* travel. The business is in our heads and on our laptops -- and Shenzhen is looking pretty first world these days.
Nobody yet, when writing about tax brackets and loopholes, has mentioned the AMT - Alternate Minimum Tax. This alternate calculation (you pay whichever is highest,of course) was passed way back ( 30's, 40's, maybe?) to negate the legal loopholes that only a very few (like < 100 ) rich Americans were legally using to calculate their income taxes.
Now, after steady inflation over the years, this alternate tax is affecting multiple millions of Americans. It would probably affect even more, if those people knew about it and wanted to be totally honest (no, the IRS doesn't catch as much as people think - they want you to think they are crackerjack, but they're big fat greed moonpies). You might want to ask that $25 million/yr ballplayer's accountant whether the AMT is involved in his tax calculations.
I concur with the poster above that any money given to the Federal government is a bad thing and is just encouraging them to spend. It's not like the money will be spent to help you in any way. It's not even like it will be wasted (i.e. if all gov't workers stayed home and played computer games but got paid). It's worse than this - it's more like you are paying them money to screw you over.
Why do y'all want to do that? Just hire somebody to come over with whips and chains and beat the crap out of you, and leave the rest of us out of it! Get it out of your system, for cryin out loud.
Tax rates probably (excepting capital gains/investment) don't matter much. What matters is demography, and capital investment.
Wealth is produced by: A. a homogeneous, high-trust society. B. Low amounts of poor people constantly entering the labor market. C. High wage rates (low labor supply). D. Cheap land. E. High investment in capital to leverage expensive labor.
Marginal personal tax rates generally have little effect on that. Property taxes that prevent family formation, do, and so do policies that encourage investment in capital abroad (factories in China vs. highly automated, productive ones here). Taxing Tiger Woods and Bill Gates won't have much effect either way. Rich folks can dodge taxes by shifting income into capital or moving abroad like the Beatles and Sean Connery or many other ways.
Low tax and high tax nations have both generated wealth, but they have benefited from high-trust, mono-ethnic/religious societies, low taxes on family formation and capital investment domestically (and capital flowing form abroad into not "hot money" but factories and such) and the fundamentals. Finland does well with high marginal rates, so does Hong Kong with low marginal rates on personal income.
There are lots of other gimmicks, of course, like the $1 salaried CEO with millions (billions) in stock options...
I always get a kick out of the CEOs who have a salary of $1 per year. They wear this as some sort of a badge of honor. Yet, they are really screwing John Q. Public. If they really wanted to be a mensch they would take a salary of $106K, or whatever the max salary subject to social security and medicare taxes is, to contribute to the fund that is going bankrupt that John Q. Public is relying on for future retirement. The $1 salary short changes social security and medicare.
"Let me tell you how it will be,
There’s one for you, nineteen for me,
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Should five per cent appear too small,
Be thankful I don’t take it all.
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
(If you drive a car ), I’ll tax the street,
(If you try to sit ), I’ll tax your seat,
(If you get too cold ), I’ll tax the heat,
(If you take a walk ), I’ll tax your feet.
Taxman.
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Don’t ask me what I want it for
(Taxman! Mister Wilson!)
If you don’t want to pay some more
(Taxman! Mister Heath!),
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
Now my advice for those who die, (Taxman!)
Declare the pennies on your eyes, (Taxman!)
‘Cause I’m the Taxman,
Yeah, I’m the Taxman.
And you’re working for no-one but me,
(Taxman)."
Is that the way you want it, Steve?
It is obscene for any government anywhere to take more than 10%, a tithes-worth, of any citizen's income.
You'd think that after 2008 there'd be more support for progressive taxation. Everyone now knows that many of the ultra rich are wealthy only because the government bailed them out. These CEOs have no more talent at innovation than welfare queens, and are the true parasites in our economy. How about a limit of $500,000 on total compensation for anyone in any company that contracts in any way with the government, including someone like A-rod when public money is used to build his stadium.
The simple fact is the GOP isn't going to cut Social Security one iota, and will only increase military spending. We are going to spend no matter what-those are the big dogs right there. If we tax the rich, who can afford it, we at least don't debase the currency.
Either way all accounts are paid. Either by tax or by inflating the money supply, which is a tax on all dollar holders.
I'd rather we soak the rich if only to give them an incentive to fight further spending.
OT, but even large parts of the left can now see that Obama is an empty suit. From Frank Rich in this week's column:
"But the real problem is that he’s so indistinct no one across the entire political spectrum knows who he is. A chief executive who repeatedly presents himself as a conciliator, forever searching for the 'good side' of all adversaries and convening summits, in the end comes across as weightless, if not AWOL. A Rorschach test may make for a fine presidential candidate — when everyone projects their hopes on the guy. But it doesn’t work in the Oval Office: These days everyone is projecting their fears on Obama instead."
Buffet's salary is $1,923.09 a week which incurs a 25% tax rate. He declares stock dividends of $42,583,971 upon which he currently incurs a 15% tax rate. Under Obama's plan, his dividend rate grows to 20%. If the stock dividend was taxed as income the tax grows to 35%. It's really little wonder that he endorses Obama's tax plan.
What surprises me is that no one challenges the Democratic Party framing of the issue -- that the top 3% are rich. Seriously, $250,000 per family is not even close to rich,
Reform the tax code by introducing Henry George's concept of a land value tax. Labor and productivity will not be taxed in George's plan. The LVA will generate enough revenue to implement a Citizen's Dividend, distributable only to citizens of the country. It will allow citizens to complete with immigrants for the lower wage jobs.
Shenzhen is a shabby Potemkin village.
Isn't "rich" like talking about a position, like a location between NYC and LA; and "income" like talking about a vector such as speed. At $15 mil/year I may be going pretty fast but be located in Pittsburg. Warren Buffett is in Orange County.
A person who has just completed four years of college and three years of law school with hefty loans may make $160K first year of employment on Wall Street or in DC. Would you call that person rich? They have no assets, they have large debt, they live in a high tax high expense location. they are seven years closer to retirement with no savings yet. If they want a family the next 20 years are going to be providing education for the kids (at list price, when maybe 80% of the public gets a discount called financial aid).
I invested in myself and made the best decisions I could for years. After I was 40 years old I made a significant income, the government taxed me the exact same as someone who made my salary from their 21st birthday to their 40th birthday. We are both equally the ricch and in equal measure to the government.
Mel Torme:
Sooner or later, we have to balance our budget. There are really only two choices there--we cut spending or we raise taxes. Right now, we're spending a hell of a lot of money on stuff we can't afford.
As best I can tell, everyone in power or close to it understands this. Everyone understands that sooner or later (probably not anytime very soon), our failure to balance our budget will lead us off a cliff, probably after a couple unforseen disasters on the scale of 9/11 and the financial meltdown.
But everyone in or close to power also knows that their ability to keep and expand their power, short term, is best maximized by ignoring all that long-term unpleasant stuff, and simply fighting hard for whatever will win them the next election, or win what their district needs, or get their industry or state some of the federal loot.
My guess is that we will continue like this, until we have that chain of disasters. And then, instead of some kind of gradual decade-long drawback of our overextended overseas empire, we'll have an abrupt Soviet-like collapse. Similarly, instead of addressing the disastrous incentives of our screwy medical system, we'll wait till we must make huge cuts in crisis mode.
Taxes are easier to raise than spending is to cut, because the pain is more widely distributed--you can get away with taking $100 apiece from a million people far more easily than you can get away with taking $1 million apiece from 100--the million people will probably never get organized enough to fight you, while the 100 will be willing to spend $999,999.99 apiece to stop you.
"What surprises me is that no one challenges the Democratic Party framing of the issue -- that the top 3% are rich. Seriously, $250,000 per family is not even close to rich."
Outside of the east and west coast it is. 250,000 a year won't buy a deep sea fishing boat or an extra vacation home, but it's substantial enough for a nice house, nice car, nice vacations, etc.
"Wealth is produced by: A. a homogeneous, high-trust society. B. Low amounts of poor people constantly entering the labor market. C. High wage rates (low labor supply). D. Cheap land. E. High investment in capital to leverage expensive labor."
Homogenity, low amounts of poor people, low labor supply, cheap land...yeah, all characteristics of the U.S.A.
"I recommend a special income tax on lawyers: how about 90%?"
Oh how clever, a lawyer joke. Anyway, it isn't exactly lawyers who are responsible for the current mess we're in.
As an aside:
Any moral argument regarding the wrongness of taxing the productive to feed the unproductive (whether that's poor people or politically connected companies) applies at least as strongly to borrowing in their name. That's just a commitment to get more taxes later, however you get them. One difference is that the higher taxes will land on many people who can't yet vote.
What a stunning lot of innumerate, envious, thieves. You were rich, soon you'll be poor.
“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded—here and there, now and then—are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as ‘bad luck’.”
– Robert A. Heinlein
If that seems wrong to you consider art, architecture, music and literature. All the high works of civilization were funded by exactions from the poor.
iSteve's Sweeping Generalization of the Day.
Superficial post, and comments as well.
It's all fiat money, people. It's completely untethered to the physical universe.
It only exists as a confidence trick, and the humans in control (in this case Bernanke) can inflate it at will, which guarantees its destruction.
So arguments on tax rates just aren't interesting anymore. They probably still were, say, ten years ago, when maybe there was still something worth saving in the system.
We've gone off the deep end, folks, and there's no going back except to gold and silver.
Somehow, someway, we'll get there.
BamaResident said...
"Oh how clever, a lawyer joke. Anyway, it isn't exactly lawyers who are responsible for the current mess we're in."
They are exactly who are responsible for the mess you are in (the decline of the USA).
Lawyers are the high priests of the age. Because they deal with a man made system whose ultimate test is opinion rather than measurable reality they have a very particular way of viewing the world.
That view of the world is only useful in a few areas of society yet lawyers have stolen prestige and come to dominate many areas they aren't suited to, to your detriment.
"Let's just say that confiscatory tax rates on top of the down economy and insane new regulations mean we'll just have to move operations overseas."
Well silly me, I thought companies were already doing that under the current Bush tax rates.
"I'd rather we soak the rich if only to give them an incentive to fight further spending.
Exactly.
"Aubrey, the trillion dollars in spending cuts needs to happen."
Nice. You brag about being one of the masters of the universe, then act as if you then weren't partly to blame for the mess we're in. Look at who contributes to political campaigns, and at who they contribute to. Your fellow software entrepeneurs gave largely to Obama. They and just about every other industry wanted that extra trillion in deficit spending, even the ones that allegedly lean Republican. How can I tell? By looking at who they contributed to. Overwhelmingly their money goes not to "Democrats" and "Republicans" but to the most inlfuential party of all, "Incumbents." They don't want an ideology, they want to buy a vote.
Lead with your money, then bitch about how you're going to relocate to Outer Mongolia, because that trillion dollar gap has got to be closed. The bill has to be paid, and dividing that bill equitably is the task at hand. I'd love to see it all come out of the spending side, or the vast majority of it, anyway. But guess who's stopping that from happening? The business lobby that's willing to add $900 billion more to the next two years' deficit in order to keep a few tens of billions in tax cuts.
"Also, would the Internet/tech boom of the 90's have been possible with a 70% top marginal tax rate?"
Probably not, but few here are advocating 70% rates. Most are simply arguing for pushing the cap gains rate all the way up to...20%. Keep in mind that Google, Microsoft, Apple, Intel, and Cisco were all founded when cap gains rates were 20% or higher.
OT/ Indians killing Bangladeshis on Border:
http://www.nytimes.com/aponline/2010/12/09/world/asia/AP-AS-India-Border-Abuse.html?_r=1&hp
> It's worse than this - it's more like you are paying them money to screw you over.
EXACTLY.
How is it that iSteve commenters and Steve himself don't understand that he is talking about giving money to the EEOC, the IRS, and the TSA?
> Your fellow software entrepeneurs gave largely to Obama.
Huh? What a non sequitur. I voted for Ron Paul. And your fellow internet commentators elected Obama! In other words, 99+% of people don't understand HBD. How are the less than 1% of people who do understand it to blame for the rest?
Your anger is misplaced, sir. You need to come to terms with the fact that increasing taxes at this time is just accelerating the absolutely inevitable collapse of the USA, soon to be known as the former USSA.
Bills need to be paid. They ain't going to be paid. The debt is going to be monetized and the currency hyperinflated. And the guy up thread who called out the Soviet-style collapse is absolutely right.
The only question now is what arises in its aftermath. It'll be difficult (= impossible) to rebuild on a land which is now 50% black and Hispanic. But if you, like others, persist in blaming "the rich" for the collapse you'll be in a psychic prison and won't even be able to rebuild abroad.
To be crystal clear: the Scots-Irish on Wall Street and in the government who caused this collapse are no more an indictment of capitalism than the Muslims who caused 9/11 were an indictment of aviation.
> Homogenity, low amounts of poor people, low labor supply, cheap land...yeah, all characteristics of the U.S.A.
Truth, you are truly the comic relief of this blog. You don't appear to grasp that all that new diversity and poverty is NOT an asset for the US, and will in fact be the cause of its downfall.
Let me be the only honest person in this discussion to go on record with stating the morality that we all feel, to wit: Screw the deformed morons who lie at a lower socio-economic level to myself and my loved ones (or where I expect to be in under a decade) and hang the callous conniving profiteers who tower over me at higher socio-economic classes to my own.
I genuinely feel this way and so does every non-autistic on this thread. Can't we be open about the thing and then come to some sort of arrangement?
Anon:
That's basically the strongest argument for a flat tax--it eliminates the ability for most people to vote for tax hikes on someone else that won't affect them. It changes matters when you are campaigning for a tax hike on yourself. That said, if we can't cut spending, we have got to raise taxes on just about everybody, or we keep increasing the deficit every year.
Where do people get the idea that the "most productive" are those making high six figure incomes? You've been reading Atlas Shrugged too many times.
The real productive work is done by workers making a lot less than $250,000/year. The rich are those who get the profits from that work, not the people who do that work.
"Outside of the east and west coast it is. 250,000 a year won't buy a deep sea fishing boat or an extra vacation home, but it's substantial enough for a nice house, nice car, nice vacations, etc."
You make my point, because having a nice house, a nice car, nice vactions, etc. isn't MY definition of rich, or most peoples.
To "none of the above":
Nope, you say people in power understand this, that we are going off a cliff with our budgets (I say this goes for personal and governments, BTW).
I agree about the "going off a cliff" part, not the "people in power understand" part. I have been following government for 25 years or so, and I know that the only people in power that care are very few in number or the ones that are looking forward to a collapse. The can has been kicked down the road continually, and there is no getting off the track that leads off the cliff at this point.
Any additional money from taxes that the US Government collects WILL be spent. They will only quit spending when the money runs out, which will be soon. Yeah, they can print more, but it will just delay the collapse a short time, as hyperinflation will result.
From Anonymous:
Isn't "rich" like talking about a position, like a location between NYC and LA; and "income" like talking about a vector such as speed. At $15 mil/year I may be going pretty fast but be located in Pittsburg. Warren Buffett is in Orange County."
I know the point you are trying to make, but that terminology is wrong. Speed is NOT a vector - speed and direction comprise velocity, which is a vector. Speed is a scalar.
The part of math you should present is Calculus, whereas, wealth represents the integral of income, and income, therefore, is the derivative of accumulated wealth.
i.e. Infinitesimally small bits of income over tiny increments in time can be added (integration) to equal wealth. The instantaneous slope of wealth with time (derivative) equals the net income (whether + or -). Of course, you could get less fancy, and just say (due to finite sums, not smooth curves) that wealth is the sum of net income, added over days for instance.
OK, just being correct about the math - I do get your point.
"Outside of the east and west coast it is. 250,000 a year won't buy a deep sea fishing boat or an extra vacation home, but it's substantial enough for a nice house, nice car, nice vacations, etc.
Sure, it's a decent income - it doesn't make one rich. As many have noted, income is not wealth. So, if you had a doctor who was a good saver (haha, OK, this usually doesn't happen due to the divorce, the airplane, the power-boat, and the BMW, but just hypothetically) for 20 years, and manages to put away $75,000/year after taxes and all, the guy may be considered "fairly rich" after those 15 years, with 1.5 million bucks. Even that is not really "rich", though.
Blogger Truth said...
"Wealth is produced by: A. a homogeneous, high-trust society. B. Low amounts of poor people constantly entering the labor market. C. High wage rates (low labor supply). D. Cheap land. E. High investment in capital to leverage expensive labor."
"Homogenity, low amounts of poor people, low labor supply, cheap land...yeah, all characteristics of the U.S.A."
Hey, sports fan, his point was that America used to be like that. Of course, it's not anymore, and we don't have a rich country any more. The wealth is being drawn down fairly quickly, just as an unemployed guy will draw down the bank account fairly quickly.
Bad, times are a-comin', sure as my name ain't Mel Torme.
At one time I was against highly progressive taxation. After years of illegal immigration, mass immigration,war forever, bank and big business bailouts I say tax the rich until they bleed. I don't care if it produces revenue or not.
Given how unwilling Steve seems to subsidize those who have less earning power than him, I'm not sure why he thinks A-Rod should have to subsidize him.
The same goes for the rest of you populists. Wanting to live off other people is disgraceful, assuming you're not too mentally or physically handicapped to function like an adult and support yourself.
oops, I meant 20 years both times in my post about the hypothetical high-saving doctor, not 15 years.
"Personally I've known a number of millionaires and at least one billionaire. They were universally better people than the poor people I knew when I was a social worker."
I haven't known any billionaires but I agree with the rest of this. The rich people I've known thought they could pretty much get anything they wanted--and they expected to have to pay for it. The poor people I've known also thought they could pretty much get anything they wanted--and they expected others to have to pay for it.
I hear a lot about the insufferable arrogance of the rich but it's nothing compared to the insufferable arrogance of the poor.
Steve,
What is making you change your mind on higher marginal tax rates for the wealthy and/or high income earners? You did seem somewhat sceptical of supply side theory or lower tax rates in the past but it seems more salient now. Why is that?
"You don't appear to grasp that all that new diversity and poverty is NOT an asset for the US,"
Poverty not an asset? No, you don't say.
As far as diversity, it has always been an asset of the U.S. The land was graciously donated by the native AMERICANS, the labor was graciously donated by blacks, and but other "whites" who at the time were hardly considered white. Hitler did have to have a rationale for killing so many of you, after all, and the Germans had to have one to go along.
Yes, there will be a donwnfall, but not for the third-grade reasons you people think that there will be, there will be a downfall, because that is what parasites do; they suck the life of the host until it runs out, than they exit for a new host.
Your overseers have quite easily, with no effort at all, really, involved you in the oldest shell game in the history of man; they have stolen everthing you own, while simultaneously giving you "cause" to cast a jaundiced eye upon people on your financial level...and below. It says much about your general IQ, really.
Of course, it's not anymore, and we don't have a rich country any more.
It it isn't, what country is?
"Wanting to live off other people is disgraceful, assuming you're not too mentally or physically handicapped to function like an adult and support yourself."
Speaking ot that, I cannot tell you just how many proud, whte tea-partier types I've met who are on disabillity and unemployment recently.
Anon:
How about wanting someone else to foot more of the bill for our pointless wars, endlessly increasing medical costs for Medicare/Medicaid, billion dollar unuseful weapons systems, etc? I mean, someone must pay for this crap. Why is Sergei Brin or Bill Gates a worse person to pay for it than me?
Given how unwilling Steve seems to subsidize those who have less earning power than him, I'm not sure why he thinks A-Rod should have to subsidize him.
The same goes for the rest of you populists. Wanting to live off other people is disgraceful, assuming you're not too mentally or physically handicapped to function like an adult and support yourself.
While I agree wholeheartedly that grasping for taxpayer goodies is disgraceful, I have to point out that America is now an oligarchic kleptocracy.
How does one encourage or exhort morality in such an environment?
@Captain Jack: Where do you think capital for long-term investment comes from? The reality is that after a (potential) 35% haircut from income, the investor then deploys the remaining capital into investments that are subsequently taxed at 15% (or a much higher rate if sold before reaching a one-year holding period). Then we all get the shaft at death when the estate tax – an even higher rate – kicks in (and, yes, I know that the estate tax is 0% this year, and the tax, when implemented, is on a marginal amount of net worth).
Even I know that your investor does not pay a 15% rate on that remaining capital.
I agree with the tithe guy, government has no business stealing more than a small fraction of a man's sweat.
As for paying down our debt, well, the gubbmint has a lot of assets. They're what bankruptcy's for. E.g., the feds own about half, maybe more, of the real estate in the western U.S. Why listen to the mewling about the debt until that's been sold off? What does a used aircraft carrier get you?
Random reactions:
Another unintended consequence of the Income Tax, enacted after the constitiution was amended to allow it in 1913, is that it paved the way for Prohibition. Till then, the federal government depended on liquor taxes for about a third of its revenue. Of course, some say that this was an intended consequence
Mick Jagger is a tax exile.
What bugs me about taxes is not the rates but the use of the tax code to attempt to influence my behavior. We get bribes, uh, "tax credits" or deductions if we engage in behavior X or avoid behavior Y. When did a once-free people decide that they could be flucked for bucks like that?
airtommy said
>we've been depleting our human capital<
A point not to be forgotten.
In any conventional economic calculation, the value of human capital seems to be taken as a constant. That would be a fundamental error, one so significant that it could possibly wreck a country - and might even be wrecking ours now.
Half Sigma sez:
> The real productive work is done by workers making a lot less than $250,000/year
No. Gotta be blunt here...but matchstation.com is the work of a journeyman programmer. It is not Google. It is not even a decent web startup. It is mediocrity.
Now, mediocrity cannot understand talent. But talent is real, talent exists, and talent is necessary to take something from a flat $0 to a $100MM or more run rate.
Half Sigma refuses to believe that it is his own laziness and lack of ability that has kept him a mediocrity. Instead he wants to blame someone else. Those above him must have cheated. They couldn't be smarter, better organized, and harder working. He should spend their money. Listen to him, for he has a blog and can complain.
"I haven't known any billionaires but I agree with the rest of this. The rich people I've known thought they could pretty much get anything they wanted--and they expected to have to pay for it. The poor people I've known also thought they could pretty much get anything they wanted--and they expected others to have to pay for it. "
Never met any arrogant rich people? You have clearly never been down frat row of a large southern university. Or check out the website "TFM" where these guys gloat about their inherited wealth.
I agree that poor people are often just as arrogant though. Older rural poor people aren't, but they are a rapidly dissapearing demographic.
It's the middle and upper middle class who are being squeezed most disproportionately.
Speaking ot that, I cannot tell you just how many proud, whte tea-partier types I've met who are on disabillity and unemployment recently.
Of course you "can't", because the number would be unimpressive, and you "can't" admit anything that wouldn't support your crypto-leftist babble.
"Of course you "can't", because the number would be unimpressive,"
I can think of 4 in the past year:
One white Cuban from Miami who has been unemployed for over a year.
One tatted up white guy who lost the use of half his body in a motorcycle crash 5 years ago.
One Ventura county Republican who has a special needs daughter who has been in and out of the hospital since she was born.
Another guy who got a minor injury at work and has been milking it for two years on disability.
Three of these people are generally nice people that I like, yet they are all on this mouthbreathing Ron Paul pull-yourself-up-by-the-bootstraps thing that is just ridiculous looking at their current situation.
"In any conventional economic calculation, the value of human capital seems to be taken as a constant."
No, wrong. The open borders lobby certainly knows how to argue about the importance of highly skilled workers to the American economy: 'all the Indians in Silicon Valley' and all that.
The flipside is never discussed, or even allowed to be discussed. Immigrants can always make us smarter, or harder working, or give us better family values. They can never make us dumber, or lazier, or more dysfunctional.
"Homogenity, low amounts of poor people, low labor supply, cheap land...yeah, all characteristics of the U.S.A."
They used to be, back in the good old days.
"Never met any arrogant rich people? You have clearly never been down frat row of a large southern university. Or check out the website "TFM" where these guys gloat about their inherited wealth."
I didn't say or write that.
Try reading what I wrote, not what you think I wrote.
I'm no fan of frat boys, sorority girls or posters who attribute sentiments to me that I did not express, all of whom seem equally arrogant to me.
Anonymous:
Lots of brilliant, talented people aren't that good at business, or aren't very good negotiators. And they often don't make a big pile of money, even when they're amazingly brilliant creative people, or scientists who ultimately change the world.
Indeed, my impression is that the folks who are having the biggest long-term impact on the world are scientists, who usually don't make a whole lot of money. (Some do, and that's a good thing, but most don't get rich, even if they do really important, world-changing stuff.)
By contrast, any number of highly successful salesmen, lawyers, and financiers seem to me to be taking their impressive gifts and using them to enrich themselves, usually without doing much for the rest of the world. That's fine--they don't owe me anything--but I also don't owe them anything.
Or how about this: I'm not willing to accept a nickel of new taxes for anyone until I get a verifiable government audit of where the tax money is going, including where the 1.3 trillion that went missing from the pentagon went.
The idea of "the rich vs. the rest of us" is a distraction. The real issue is Wall St. vs. Main St. Parasitic finance capital vs. real production.
In the meantime, someone please give me a reason why I should believe that ALL the richest people in the world are New Money. Slim, Gates, Turner, Buffett. Not ONE old money family slipped through the cracks? Maybe it's the dynamism of capitalism? I wish the supply of Bridges in Brooklyn could meet demand.
I think you are all missing a very important element of this tax debate.
Let's consider the the facts: for the last few decades, the Republicans and Democrats have ossified tax policy in basically two directions, at least from the perspective of public consumption:
1) The Democrats only want to raise taxes for the rich.
2) The Republicans want to lower taxes across the board.
What is the logical conclusion of this policy stance? That taxes for the middle and working classes should not have gone up for decades.
Is that the case? No.
Working class and middle class people have seen their taxes rising in the same period that Democrats promised tax increases on only the rich, while Republicans promised tax decreases for everyone. In addition, for the majority of those decades, the Legislative Branch, and thus the taxing authority, has been controlled by Democrats.
What does this mean?
It means that Democrats have routinely lied about taxing the rich. They don't believe in it. In all the years that Democrats have controlled Congress, they have actually imposed tax increases on middle class and working class people, not the rich.
In practice, the Democrat "soak the rich policy" is in effect a "soak the middle class" policy.
That's what you would expect since the Democratic Party is the Party of the rich and the poor.
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