Article on Taxes

[Aileron]

Wall Street Journal

 

I'd like to discuss this one, though the discussion will be short as this is pretty factual.

 

 

Personally, prior to this, I never was passionate about higher taxes for rich people. To me all it meant was that instead of the obscene amount of money going to the person who 'earned' it, it goes to some government stooge who didn't. Either way, the working man doesn't see a dime of it. Now that it doesn't increase revenue, I say forget the idea.

 

Yes, corporate executives make way more money than they are worth. There seems to be a perception in companies that there are only a handful of people qualified to do a CEO's job, when in reality there are a lot more.

 

If the government would do anything on the subject, they should try to reduce those salaries rather than take it for themselves.

 

(Side note: Did you ever notice how many common criminals in history compared themselves to Robin Hood? They rob some rich company such as a bank and all of a sudden they aren't greedy crooks; they are rebel crusaders upholding social justice! In my opinion, 'rob from the criminally rich and give to the poor' is a lot different than 'rob from the legitimately wealthy and keep for yourself'.)

 

A better solution is to give companies tax breaks proportional to its number of employees times the median salary of those employees. (Note: Median, not Mean. The mean would get raised by those ridiculous CEO salaries. An adjusted mean could work though.)

[FMBI]

The only problem, of course, being that you cannot have infinite growth, and lowering taxes has unforeseen consequences. For example, allowing too much capital to float around creates bubbles which then pop and leave everyone except a lucky few holding the bag. This is just what we've seen in the housing boom - tax rates lowered, the rich had more money to invest, but there weren't enough legitimate things to sink it into, so they threw it into get-rich-quick schemes that ended up in a housing "crisis" which was then blamed on every poor person for getting an adjustable rate mortgage for (what appeared to be) a lower rate.

 

It doesn't really matter if raising taxes increases revenues (although I personally must disagree with the article on that, for reasons I'll discuss some other time), because you're still reining in the rich and preventing the wealth gap from growing too large. If that happens, then the price of everything increases while fewer people are able to pay for it. I would say that social equality is a better goal to strive for than somehow hoping to use finite resources and fuels to achieve infinite growth, all the while avoiding schemes by the rich to avoid taxation (which is worse now than it used to be, in fact).

 

And besides.. for the 30000th time (and I mean that literally), the super rich did not earn their money. You earn your money if you work a legitimate job and get paid a legitimate amount (even if it might be $300 an hour), but when you simply cash out on stock bonuses and make $10 M in one year, then send it overseas to avoid the (already tiny) capital gains, inheritance, or other taxes, then you didn't earn a penny of it.

 

There's something to be said for a silent partner who keeps money in the company through good times and bad, but when you see the sort of thing we have today (where executives give themselves millions of dollars in stock options, often conveniently forgetting to notify their shareholders and/or workers) then you have to concede the whole "they earned it, let 'em keep it" argument is bull!@#$%^&*.

 

And finally - who says the working man doesn't get a dime of the money? As usual, that's a libertarian fallacy of "It doesn't happen here, so it can't happen anywhere" - in the Nordic welfare nations (which have been allegedly suffering states of economic collapse for the last several decades, despite their being far ahead of the US in healthcare, R&D, and living standards) the government wisely reinvests the money back into the nation and everyone gets a share. The problem is that in the US the conservatives have taken it upon themselves to reduce the effectiveness of government while the liberals have seen fit to drastically expand the scope of programs without ensuring that they're performed correctly. That's left us with a bloated bureaucracy that misleadingly gives the impression that "all government is bad," when in fact our government is one of the few outside of the third world that can boast such inefficiency.

Edited May 28, 2008 by Finland My BorgInvasion

[Aileron]

Hey, I put 'earned' in quotes for that reason. Okay, so we have a rich person who got a lot of money for not much effort. If we tax that person's money away, now we got a government person who got a lot of money for not much effort. That's not an improvement, at best it is a step sideways.

 

The goal is to cause poor people to earn more money. If revenues are the same regardless to how much the rich are taxed, then the only purpose taxing the rich will serve is to cause the rich to keep less money, which doesn't meet the objective of helping the poor. If you want a government program helping the poor, fine, but that process is different than the one of taxing the rich. Even if the government has programs which successfully help the poor, the revenues of those programs are based upon the constant 20% of GDP revenues. Taxes for the rich are irrelevant towards the end of helping the poor.

 

Unless you believe that money floating around the economy is a bad thing, there's no reason to tax the rich. That's precisely what your claim was in your first paragraph, but that's bull. I could claim that the housing bubble was a result of rich people trying to protect their income from being taxed. At the end of the day, both of those arguments are unproven rhetoric. The theory the article cites is hard science.

 

A good analogy is that taxing the rich is like taking half of Donald Trump's money and burning it in a bonfire in a town square. It would do nothing to help the rest of us. Sure technically it would reduce the 'income gap' by making Donald Trump less rich, but it also reduces the total wealth. At the end of the day, it hasn't made any of the rest of us richer, and on the side it has pissed Donald Trump off. The only purpose it fulfills is that of jealousy, which is an at!@#$%^&*ude that is counter-productive because it displaces the desires of socioeconomic justice.

[Aileron]

Jeez, anyone else want to state an opinion other than myself and the Komrade?

[»Ducky]

Nothing really to add mate, I've always agreed with what you've said about corporate fiscal matters and taxation in general.

[SeVeR]

Actually, taking half of Donald Trump's money and burning it would help the poor. By reducing the amount of dollars in circulation we would undoubtedly increase the value of the dollars still in circulation. The value of the dollar is stupidly low at the moment because the Fed keeps printing more money to loan to the government, thus devaluing the dollars of everyone in the country. In effect, the people of America are paying for the war.

 

Okay, so we have a rich person who got a lot of money for not much effort. If we tax that person's money away, now we got a government person who got a lot of money for not much effort.

Since when should a government use effort to get money, and how is this an argument? The goverment is there to be the back-bone of the country, providing services to all. You all put money in, you all get something out.

 

Even if the government has programs which successfully help the poor, the revenues of those programs are based upon the constant 20% of GDP revenues. Taxes for the rich are irrelevant towards the end of helping the poor.

I'm not sure i understand. % of 5 billion is more than % of 3 billion. Edited May 31, 2008 by SeVeR

[»D1st0rt]

How about we tax Harvard

[NBVegita]

I'll hop into this later but I read that article earlier in the week distort, and I agree, tax harvard.

[AstroProdigy]

Anyone who takes a little time to figure out any flaws in this theory would find gaping holes in this "theory". First of all the suggestion that taxing the rich less as a percentage of their earnings produces the same revenue as a percentage of GDP is absolutely WRONG if you don't take into account parallel developments. One way it could stay stable with the reduction in revenue is if the percentage earned by the rich as a percentage of total GDP (including the middle and lower classes) has fallen in the same way. In fact the opposite is true, however. Also, if the rich are earning more and more each year then taxing them less and less naturally produces around the same revenue. However lowering taxes on the rich simply because you can since you'd get the same percentage of revenues compared to GDP thereby robs the country of an opportunity to balance the budget and save our crumbling infrastructure when the opportunity presents itself. Another explanation is that parallel to the lowering of taxes as a percentage of tax revenue for the rich there could be a raising of taxes for the middle and lower classes. Seeing as I'm lazy and have been having trouble finding the amount of taxes paid by the non rich as a percentage of total revenues I'll let someone else do that or otherwise we can all be lazy.

 

This graph may be pretty, but it's also overly simplistic. The real facts are that cutting taxes for the rich make the rich even richer and this allows them to use that extra money to drive up inflation as a result, which will make the middle and lower classes poorer. Sure that sentence ignores the trickle down economics theories, but it's pretty well proven that at a certain point in a large economy the negative effects of lower taxes for the rich outweighs the benefits of investment.

 

You could do it in a way that provides more benefits than consequences, but that requires regulation and a reduction in government spending to do so. Otherwise bubbles occur waiting to pop and hit the lower classes the hardest and less revenue for government spending necessitates the increased printing of money, thereby boosting inflation, respectively.

 

Sure the rich are more able to send there money somewhere else if they're taxed more, but the middle class is more likely to fall under the cracks if they're taxed more thus making for a society increasingly composed of super rich who can't stand to see their money taxed parallel to a large class that can't even get by. That's one of the stages described by Marx people! If you secretly want communism to take hold then go ahead and keep promoting the same neo liberal policies that fail consistently in hopes that it will spark a revolution. Otherwise let's be fair here. The rich make their money mostly on the backs of the middle and lower classes anyway so I still don't see how people can find it morally adverse to tax that money and use it to make life affordable for the lower classes so that they have a chance to join the rich on their own merits too.

 

If you want to figure out ways to increase GDP in the long term that requires having good infrastructure and a well trained workforce because the low skill manufacturing work is NOT coming back unless you're willing to heavily impoverish the majority of Americans so they'll be economically compe!@#$%^&*ive again.

[FMBI]

Exactly, Astro.. I was going to make a post very similar to that one, but I wasn't sure I could bring myself to do it and hear more things like "It's pretty obvious the race was rigged before but it isn't now" or "Israel just wiped out Hezbollah"..

 

 

Anyway, I have this quite amusing book you should all take a look at. It's called Myths of Rich and Poor, and all the cover endorsements are from a variety of Libertarian groups (Cato, Reason, etc).. Pretty interesting, really. It offers a convincing look at how everything has been getting better for everyone over the past few decades, and the poor are way better off than they used to be..

 

Well, actually, it's almost convincing, until you realize all the internal inconsistencies it's got going for it. Then it just starts to look like another piece of propaganda. Sort of sad, really, since I was hoping to prove myself wrong by reading it.

[Aileron]

Astro, obviously anything printed in a newspaper is going to be simplified. Overall, its a theory, meaning that now is the part where other economists test it.

 

 

 

Finland, I agree with you about the existence of the problem. My viewpoint on the solution is what is different. I'll even agree that taxing the rich won't hurt! I just don't think it will help.

[»D1st0rt]

Why don't we solve the underlying problem and cut government spending

[FMBI]

D1s, that is a major problem (in fact, due to the way SS and Medicare are set up, we'll never be able to end debt through growth), but I find it highly unlikely that anyone will do it. Remember that Reagan, Republican Incarnate, actually sent a higher budget to the Democrats than they ended up passing? Basically, no matter who's the president, you're going to have ever-higher budgets. The only way to counter that is by having a principled and/or pissed off Congress, but due to the combination of powerlessness and corruption, I doubt we're going to see anything like that again.

 

Also, we will need to raise taxes, even if we cut government spending in half tomorrow. We've got (I forget the exact numbers) something in the range of a $50 trillion shortfall in a few decades?

 

That wouldn't be so bad if the US actually had a decent economy these days, but when you're racking up close to a trillion per year in debt, it starts to look like Sisyphus rolling that boulder up a hill.

[AstroProdigy]

Aileron when there's giant holes in a theory that the guy who created it completely ignored we call that bad theory. You don't test any bull!@#$%^&* when it's a logical fallacy. It's like saying let's test having everyone jump off a bridge because until we test it we'll never know if its the magic economic bullet. Using a flat tax is well tested and in tiny countries and in relatively smaller countries for short periods of time under the right conditions it can work for a while, but then it fails to be sustainable. Estonia has this system in place as a response to the years of communist domination and it's working great for the foreseeable future, but eventually it will fail when Estonia gets to a certain level and the country will have to switch to the good old Scandinavian system (under Finnish pressure I bet) that has lasted very nicely for decades and shows no signs of being unsustainable today. Sustainable is having a strong government system that invests heavily in infrastructure and education and in things like health care and childcare so people actually have a chance of living comfortably simply by working hard.

 

Overall the US is pretty badly screwed. Our debt is high and will only go higher for the foreseeable future. Growth comes entirely among the rich with the rest of the population being able to afford less on average when adjusted to inflation. While there are certain situations to take a turn to the right the only thing that could possibly save our economy today is a turn to the left and in many ways.

[NBVegita]

Sustainable is having a strong government system that invests heavily in infrastructure and education and in things like health care and childcare so people actually have a chance of living comfortably simply by working hard.

 

Sounds an awful lot like socialism to me.

[Aileron]

Astro, in response to your statement - huh? You aren't exactly attacking the theory. You are attacking an imaginary theory about a flat income tax being the solution to all problems. A better way to interpret if is to say you can increase taxes to a point, but that there is a natural cap to how much can be taxed after which point revenues are not increased.

 

 

The other at!@#$%^&*ude is how 'the US is badly screwed'. The US still has the strongest economy in the world. The value of the US dollar is still higher than any other strictly uni-national currency. Yes, there are problems, but those problems are relatively small given the larger picture, and the solution to those problems should also be relatively small.

 

 

 

I guess a good book on the subject is "Crazies to the Left of Me, Wimps to the Right" by Bernard Goldberg. He essentially states that the problem with the democrats is that long ago they stopped being the working man's party and became the party of unproven idealism, while the republicans have sold out principles in order to buy votes. He doesn't state a solution, but I will.

 

The major problem is that there are large segments of working populations which will vote Democrat period end of story. For instance, the Democratic Party gets votes from the Unions. Because of that, they don't have to compete for the unions, and can afford to politically avoid the unions. Meanwhile, the Republicans won't bother to help the working man because its already a lost cause. The whole situation can be solved if a few unions cross over. If those votes became contested ground, politicians would fight over it.

[FMBI]

Astro, in response to your statement - huh? You aren't exactly attacking the theory. You are attacking an imaginary theory about a flat income tax being the solution to all problems. A better way to interpret if is to say you can increase taxes to a point, but that there is a natural cap to how much can be taxed after which point revenues are not increased.

 

No, the point of the article is to paint a misleading picture of how revenues remained flat no matter what the top rate - however, as Astro mentioned, it completely ignores the massive hikes in taxes on the low end of the continuum. Reagan, God of Finance and Lord of all Logic, raised payroll taxes by 15% - Bush pulled the same trick by letting the AMT skim middle-class / lower-upper class people while he dropped taxes on billionaires. It may not explicitly call for a flat tax, but it pretty much says "connect the dots" - except, of course, that a few of the dots are black holes from which there is no escape to reality.

 

 

The other at!@#$%^&*ude is how 'the US is badly screwed'. The US still has the strongest economy in the world. The value of the US dollar is still higher than any other strictly uni-national currency. Yes, there are problems, but those problems are relatively small given the larger picture, and the solution to those problems should also be relatively small.

 

The US does not have the strongest economy in the world. We're still practicing chronic overabsorption, giving the illusion of having a stronger economy while at the same time our real economy is being eviscerated. If we got rid of the debt tomorrow, aside from the immediate effects of paying off such a massive sum, we'd see a drop in living standards because we'd no longer be paying for today with tomorrow, and thus people would have much less short-term income. Also, perhaps you haven't heard of the Pound, the Canadian Dollar, the Swiss Franc, the Australian Dollar, etc? In case you haven't, those are reserve currencies used on a much smaller scale than the USD, they're based off of smaller economies, and they're still worth almost as much as (or more than) the USD. Perhaps a better way to put this is - how can you possibly have the world's largest reserve currency, backed by the world's largest economy, drop by tens of percentage points against the world's (much smaller) secondary reserve currencies? The answer is that those currencies are worth something, while the USD isn't.

 

 

I guess a good book on the subject is "Crazies to the Left of Me, Wimps to the Right" by Bernard Goldberg. He essentially states that the problem with the democrats is that long ago they stopped being the working man's party and became the party of unproven idealism, while the republicans have sold out principles in order to buy votes. He doesn't state a solution, but I will.

 

ROFL.. I really had a laugh with this one. The democrats rely on unproven idealism? Yeah, I guess they still believe in things like taxing people at a fair rate, investing in public schools, not endlessly dropping trade barriers with countries that can supply labor at a tenth of the cost of the US.. That sort of thing. Stupid idealists. I do agree with the fact that republicans have sold out principles, though.. That is, if they even had them after Eisenhower left. Let's see.. Nixon, Reagan, Bush, Bush II.. Nah.

 

The major problem is that there are large segments of working populations which will vote Democrat period end of story. For instance, the Democratic Party gets votes from the Unions. Because of that, they don't have to compete for the unions, and can afford to politically avoid the unions. Meanwhile, the Republicans won't bother to help the working man because its already a lost cause. The whole situation can be solved if a few unions cross over. If those votes became contested ground, politicians would fight over it.

 

You're complaining about the unions blindly going democrat, but aren't you forgetting the religious right? They vote republican every !@#$%^&* time. A few have switched over to being democrats, but the vast majority will support any policy the republicans come up with, no matter how naive or stupid. I feel much more comfortable watching unions mindlessly support democrats than I feel watching a quarter of the electorate vote for disaster, time after time. And as for the republicans ever caring about the working man.. Yeah, right.

 

Oh, and..

 

Sustainable is having a strong government system that invests heavily in infrastructure and education and in things like health care and childcare so people actually have a chance of living comfortably simply by working hard.

 

Sounds an awful lot like socialism to me.

 

Apparently the government isn't supposed to invest in infrastructure (decaying roads, bridges, buildings), education (fix the schools that Bush has virtually !@#$%^&*ed with No Child Left Behind), healthcare (the US is only 37th globally.. but then, that report was compiled by the UN, and we all know Europe is trying to make us look bad because they're jealous), or childcare (as if our infant mortality rate isn't high enough already?)

 

I know exactly what you mean. Any government doing that would end up looking like Norway, Sweden, or Finland, and we all know how they turned out.. I mean, world leaders in education, modern infrastructures, high quality healthcare, high incomes even after the (supposedly murderous) taxes, and rapid technological innovation. I'm glad we don't have to live in a country like that. I much prefer my decaying inner cities, falling real income, incompetent government, and looting corporations.

 

 

Darn, I ended up sounding pretty negative. :\

Edited June 6, 2008 by Finland My BorgInvasion

[PaRa$iTe]

^

 

Also, the government isn't supposed to KEEP the tax money for itself. The government isn't there to earn money - it is there to act as a central system which has the capacity of handling things on a larger scale than the individual citizen could - including such things as infrastructure, health care etc. If the bureaucrats actually keep the tax money for themselves - the "step sidewards" that you mentioned - then the government, not the taxation, fails. Now, since I live in the Communist Welfare State of Finland, my opinion is probably biased (and I expect someone will point this out), but I think that pretty much everything Aileron says basically screams out that there's something wrong with The Government.

Edited June 6, 2008 by PaRa$iTe

[SeVeR]

This kind of argument is always the same. The leftists propose taxing people at a rate proportional to their wealth. They propose that the government uses this money to provide a first rate health service and education system. The conservatives called this socialism... end of argument. The thing is, the leftists, usually knoww where this argument comes from; they know the American government has been circulating anti-socialist propaganda for decades, while Europe has been making these principles work with democracy, enjoying a much better way of life. Of course the conservatives will claim not to have been influenced by the society they live in, but they offer no real alternate solution other than a continuation of the status quo.

 

What lends support to the conservative argument is the wasteful spending of the conservative government that they themselves have voted for! This is quite frankly ridiculous, as conservatives support a government and then use it's mistakes to justify voting for another government of the same kind! "Oh we must vote for a conservative government because governments spend too much money". It just begs an explanation, but i don't even try to understand these people. I think the problem is they don't understand themselves.

 

The above poster, no, the government doesn't keep money. They overspend, they try to be the hero of the people by lowering taxes, but then covertly tax us even more in other ways. The Fed prints money and loans it to the government to use in Iraq. But America doesn't become "wealthier" when the Fed prints more money, it simply diverts the wealth into the hands of people the government are paying for their war. Average Americans keep the money they have, but they become less wealthy because their dollars are now worth less due to all these new dollars being printed. Thus, the value of the dollar is extremely low and Americans are hit with a massive invisible tax on every dollar they have.

[NBVegita]

http://allfinancialmatters.com/2008/05/13/...favor-the-poor/

 

http://www.cato.org/pub_display.php?pub_id=6621

 

And as commendable as the accomplishments of Finland, Norway and Sweden are, their combined populations don't equal the population of New York state and barely beat that of the entire state of Florida. We have 10 states with a higher population than the largest country you just mentioned.

 

Combined they have a population equal to 6% of the United States of America, the greatest single of the three is only at 3% of our population.

 

I am not taking anything away from their governments or people, but it is impossible to surmise because something works on countries with gross populations of ~4,600,000, ~9,000,000 and ~5,200,000 that it will work for a country with a population of ~300,000,000.

[AstroProdigy]

How about France? Even with overly damaging regulations on the freedom of companies to operate, a GDP considerably lower than ours, high unemployment (resulting from the very strict work regulations), and a large population of poor Arabs that easily rivals the intransigent poverty of African Americans they still managed to recently p!@#$%^&* us in the Human Development Index and that's only with the 2007 estimates. I'm sure the 2008 ones will show a nice big drop for the US relative to other countries with the recession. The fact is that not providing services like child care and health care as well as decent infrastructure and education HURTS our compe!@#$%^&*iveness because for the first two force companies to pay for them in the long term while the latter two reduce productivity and skill. All this does is make us more compe!@#$%^&*ive with third world countries in the realm of what makes them appealing which, in case you hadn't noticed, is a !@#$%^&*ty goal because it means we have to have a large underclass like them and our quality of life can't go up until all of theirs is higher.

[SeVeR]

Putting health-care and child-care into the hands of companies who's only goal is to turn a profit will always be a recipe for disaster. Government is supposed to be there to provide the services we all want and need, but is instead taking "donations" from these health-care companies (Hillary Clinton) to take a route that keeps the status quo intact. When a politician goes far enough into the realms of socialist health-care, they are hit by a wave of propaganda from lobbyists, paid for by health-care companies, shouting "down with socialism", on government-influenced TV Networks...

 

The people are too stupid to know what the heck is going on thanks to a deteriating education system, and those who do realise it don't do anything about it because they're still given the right to choose... even if their choice is outweighed by those who have lost that right due to sucking up the crap that someones else wants them to think.

 

America, "Land of the Free"... Hah!

[NBVegita]

Sever you keep talking about the propaganda that is socialism, but no matter how you cut the pie, what you're talking about IS SOCIALISM.

 

That means it is not propaganda. (Well actually we've had that debate before so we'll p!@#$%^&* on the definition of propaganda).

 

What I find funny is the concept that the "liberal" minded people quote on quote detest the government taking control over our lives, yet they turn around and want the government to control our lives. I personally want as little government control in my life as possible. We already run a social-capitalist economy, no thanks on a socialist economy. If you would like to debate the finer points of socialism vs capitalism, by all means lets start a new topic to do so.

 

Astro, yet again if you add the populations of every country on that list in front of us, the do not equal the population of the United states. Indonesia, the next closest to our population falls to 107 on the list. China and India, the only countries above us in population are: 21, and 128.

 

Of the countries with the 10 highest populations in the world, the only country that ranks higher than us is Japan.

 

China - 21

India - 128

U.S.A - 12

Indonesia - 107

Brazil - 70

Pakistan - 136

Bangladesh - 140

Nigeria - 158

Russia - 67

Japan - 8

 

The closest to us on the list in 19th in population with less than 20% of our population.

 

That doesn't really make for a fair country comparison does it?

[SeVeR]

NBVegita, you keep talking about population size as if it's supposed to support your argument. So what exactly is it about a large population that makes socialism difficult.

 

In your response to my post: Yes, i am talking about socialism. What i'm saying is America has demonised something that actually works. When a government actively tries to influence the minds of it's populace into despising something for reasons that are a distortion of the facts, i would call it propaganda. I don't know how you define it.

[NBVegita]

What makes you so sure that socialism works?

 

on your HDI, Norway, Finland, Iceland, Australia, Canada, Ireland, Sweden, Switzerland, Netherlands, Japan, and France, the only countries ranked higher than us, are not Socialist economies.

 

So that proves that socialism works how? Even France whom astro tried to use has been consistently moving away from socialism since the 1980's.

 

As for my populations I'm stating that simply because you can get a high GDP and HDI with a very small country does not mean that if you scale that countries population by ~6000% that they would still have a high GDP and HDI.

 

I'm sorry I didn't think I had to spell that out for you.

 

As I've said if you would like to debate socialism vs capitalism, by all means create another topic and I'll be happy to oblige you.