There have been many examples given on this blog, of how the rich in the US do not pay low taxes (top 1% pay nearly 50% of all income taxes for example, and the bottom 50% pay no income taxes), and how raising taxes above 30% in fact cause the government to take in less money. The rich continue to take on a larger and larger share of the tax burden in the US. There has been no data refuting any of this the two times I have brought forth the data, yet it appears the same old non-researched, liberal lines of "the US is in trouble because of lowered taxes to the rich" are given. That is a shame.
The above from Karl's comment.
I don't believe I have any quarrel with the facts you present, but I do draw very different inferences. I have some data at http://www.equalitytrust.org.uk/ that takes no issue with the facts, but draws different inferences. It is however, a little difficult to deal with this in sound bites.
For example, you say the “top 1% pay nearly 50% of all income taxes, and the bottom 50% pay no income taxes”. I believe you imply that the top 1% pay more than their share of income tax. But assume a company where the CEO gets $1,000,000 annually, and the illegal migrant working on the assembly line gets ??? Both are essential to the operation of the company, although the migrant worker can more easily be replaced. Is that a fair distribution of the revenue that company generates? I expect you are saying yes. I would agree, if it were the floor sweeper who made that decision. But of course we all know that this is not the case. It is the CEO who makes that decision. To me that decision made by the CEO is as opportunistic, disgusting and smacking of entitlement as Bill Clinton's attitude with respect to Monica Lewinsky -- “I did it because I could.”
I've been there. When we were in Tanzania, I was getting, by NA standards a very normal salary, but it was brought to my attention one day, that I was earning in a day, what our office assistant was earning in a year. I never did anything about that inequality, and am, even now, not clear on what can be done about that. But I am convinced to this day, that this inequality is one manifestation of sin. For me, when I pray “Thy Kingdom come” I am praying that the economic systems that result in this kind of inequality will be replaced by something kinder, gentler. Why did the rich man (in the Lazarus story) end up in hell. I think it was because he was oblivious to the needs of Lazarus. The story does not say he abused Lazarus. What does that mean in today's world where the poor people are oppressed, not by individuals, but by an economic system?
And lest you think that this is a plug for communism, let me hasten to add that I see no evidence that communism has been more effective at addressing this concern than the system we have. Nevertheless, I do not think that the current world order is God's will.
I have no evidence that suggests you are wrong in your statement that whenever government raises taxes above 30% the result is that government in fact takes in less money. There certainly is some logic to that statement. On the other hand, I cannot conceive of how that statement would be backed up by data. How could one control for all the other variables that may affect the amount of tax revenue as tax levels are changed.
Nevertheless, if the statement is in fact true, I have a huge problem with the moral implications of that. Obviously the rich guy who is being asked to pay more than 30% of his income in tax, and is now actively seeking ways to shelter that tax (legally or illegally) is doing this out of a sense of entitlement.
My sense (I have no data) is that this sense of entitlement is much stronger among taxpayers in the US than it is in the European Welfare states, which is why, by all objective (as opposed to subjective) measures of happiness, people there are happier than in the US. See, again, the Equity Trust.
My most recent employer, a man who gives large amounts of money to charity, regularly cheats his employees and customers (My opinion, not his. Nevertheless, this is why I quit). He is driven by a sense of entitlement.
I find the conclusion of the Equity Fund very persuasive because it reflects my own experience. I have lived where beggars are omnipresent. I have lived where mothers came to our door with children in their arms who were sick and dying because they had no money to buy them the medicine they needed. I have lived where a young, attractive woman came to our door, asking for work. She explained how she had recently been thrust into difficult circumstances. We said we had no work for her. A few days later we saw her where the prostitutes hung out. It was the only choice left for her. I have lived where people came asking for work, and as I said “sorry, no work” I knew they would not find work elsewhere.
Why do I like living in Canada? There are many reasons, but one of the biggest, perhaps the biggest is that we don't have the desperately poor people here. There is no doubt in my mind whatsoever, that I would rather live in a country where there is greater equality than less equality – where those poorer than I are not much poorer.
How we achieve greater equality is another story. Can we agree that greater equality is a good thing, even if we disagree as to how we strive to get there?
I am not concerned with equality, I am concerned with equal opportunity. Clearly in most of the world, they dont have equal opportunity, which is sad and why they want to come to the US and to Canada (albeit to a lesser extent). What do you prefer, if a sysem had everyone making $15k a year or if half earned $20k and the other half $100k?
ReplyDeleteAs one piece of clarification, the reason less tax revenue is achieved above 30% is not because of tax evasion, but a simple function of elasticity. Similar to how you would sell fewer cars if you raised the price.
The answer to your question is obvious. But, as I see it, your whole case is premised in the assumption that the size of the pie is unlimited, and that premise is seriously flawed. I believe this assumption is fundamental to Reaganism and Thatcherism, and I expect it would not be hard to find data that would show that the poor are poorer as a result of their policies, although I do not have it at my finger tips.
ReplyDeleteSee my next post (which has been a long time coming).
Welcome to conservatism based on how you answered the above. As you do your research, you will find that the poor did in fact do much better under Reagan (and i believe Thatcher as well).
ReplyDeleteAre you suggesting that liberals and leftists don't want what is best for the poor?
ReplyDeleteI listened to a podcast of Palagummi Sainath talking about the situation in India just yesterday. http://www.tvo.org/TVOsites/WebObjects/TvoMicrosite.woa?bi?1273352400000
If you don't have time for a 1 hour listen, read this http://www.yufreepress.org/?p=1097
I came away from this really angry. Anyone hearing or reading what he has to say MUST be angry [with something].
My anger is against the economic system that makes the inequities of India possible. He attributes what he sees in India to capitalism. I would attribute it to Reaganism. I believe Sainath's portrayal of the situation in India is accurate, but I honestly do not believe capitalism NEEDS to be as heartless as he portrays it to be.
I wonder what you will anger will [or would] be angry about? Sainath? "The media"? Too much government?
I am suggesting, that liberals and leftists consistently take actions that "feel" good, but in reality are bad for the poor.
ReplyDeleteOf course it is sad to see what is going on in India. I have many friends who have family still living in India today, and the stories are very heartbreaking. What is the cause in my view? A government deficit out of control, and to fight their way out of it, they are printing far too much money - which is causing inflation. The state is very corrupt, and effectively grants monopolies to companies, which enables a select few to become very wealthy - this is not capitalism by any definition. Also as the article mentions, green policies of taxing fuels are also to blame, with food inflation hitting the poor. Tax collection, from the mega-corporations, also seems to be a problem as the article mentions. So yes, i am angry with the government. There is clearly no equal opportunity.
Once you discover, that Reagan's policies in fact were very beneficial for the poor, and wealthy in the US, I have a feeling you will change your view that there are any similarities between India today and Reaganism. Reagan, and India today, are almost polar opposites. Reagan pushed unpopular policies to end inflation (India is using inflation to solve their debt problems) and Reagan pushed to privatize and open monopolies to competition, while in India, the state controls most industries.
Today, in most of the world, there is no appetite to cut entitlements, and hence governments will have to follow India and print money to solve the problem. This is a big problem, and hence why we keep seeing Gold hit all time highs.
Fundamentally I agree with most (almost all) of what you are saying.
ReplyDeleteI even agree that liberals and leftists are prone to take "feel good" actions that in reality are bad for the poor.
My point has been that the big government/small government divide is inadequate. Size of government has little to do with whether the policies enacted by that government are benign or oppressive.
What I see Reaganism and India today having in common, is the tenet that if the government concentrates on looking after the rich, the lot of the poor will also improve. India's GDP looks good. The growth rate in the last decade has been exceptional. But look what it masks. I grant you there is more to Reaganism than just that.
This is why I find GDP an inadequate measure of the prosperity of a nation. And this is why I am drawn back to the Equity Trust data. There may, in fact, be more meaningful data, but I have not found it.
Incidentally, I have bookmarked the Doing Business web page referenced in the WSJ article you drew attention to. Having lived in Africa, I know something about bureaucratic obstacles to business.
It occurred to me today, as I was hearing again about the oil spill in the Gulf, that this was an unintended and undesireable consequence of market economics.
ReplyDeleteThis is, of course, economics 101. The market tends to trivialize social costs. The polluter does not pay, unless government intervenes.
What are the chances that BP will pay for all of the costs associated with its spill? I mean all of them, and there will be many -- just one example http://health.blogs.foxnews.com/2010/05/04/is-the-oil-spill-dangerous-to-your-health/ Minimal! It is my understanding that Exxon has not yet paid for all the costs of the Exxon Valdez spill in 1989, 32 years ago.
But this unintended side effect of depending on the market is doubly bad. 1) the company that should pay the costs associated with the spill, won't. This is not right, but 2) much more importantly, the price of oil will/does not reflect the true cost of bringing it to the gas pump. The result is that it is cheaper than it should be, and as a result there are fewer incentives to look for alternatives.
Bottom line: an unintended consequence of depending on the "invisible hand" of the market place is to reduce incentives to look for and develop alternatives to oil.
Isn't it nice when I don't have much to say?
ReplyDeleteI haven't really followed this story, can't be up on everything, ha ha.
Two thoughts:
1. You made the mess you clean it up. Whoever you are BP or some other company.
Be responsible!
2. Though it would be ironic that the government would not be interested in cleaning up an environmental mess. Where are their priorities? Sorry couldn't resist.
Personally I don't like to see those oil thingamajiggers out there on the water anyway, just seems wrong, call me naive, but they are out of my comfort zone.
India has a very large government, measured either by employees (I believe India has one of the largest public sector employment as % of workforce in the world) government spending, or deficits. I think the point remains - the larger the government, the smaller the citizen!
ReplyDeleteI think what Reagan, and what the founding documents of the US constitution spell out is not to look after the rich, but to create an environment for anyone that wants to be rich, to have that option. The US is very fluid, with those in the bottom 20% and top 20% of income earners, is constantly changing - moreso than any other nation. For example, the University of Michigan Panel Survey on Income Dynamics showed that, among people who were in the bottom 20 percent income bracket in 1975, only 5 percent were still in that category in 1991. Nearly six times as many of them were now in the top 20 percent in 1991 (Thomas Sowell is a good author that has many more stats, but i just can't recall at the moment). Now Obama (intentinonally or unintentionally) is trying to change that, and make the US more like India, one in which poor people stay poor people, and rich remain rich.
Given my biases, you will not be surprised to know that the big criticism I have of his policies is that they effectively put a halt to all the progressive stuff that was being done in response to the oil shocks of the 1970s. Those enterprises recognized the vulnerability associated with a dependence on oil, and they were a short run market driven response. However they did not lead to a long term market driven response, because the market does not respond well to that kind of thing. Witness the disaster unfolding in the Gulf.
ReplyDeleteEqual opportunity is a beautiful ideal. Thomas Sowell writes well - much better than Krauthammer (or whatever his name is). I have spent a bit of time at Michigan Panel Survey on Income Dynamics web site. The survey administrators don't seem to draw inferences - they only gather the data. Based on my anecdotal observations, I find it hard to accept the accuracy of conclusions that Sowell reaches. I could be wrong. But Sowell does not pretend to be a disinterested academic. He is a right wing commentator.
It is amusing, as one reads, that right wing and left wing commentators, both, refer to the beliefs of those who disagree with them as "myths." Ah well, where is the truth? I read somewhere too, that the most dependable determinant of whether one would be a conservative or progressive (what is the opposite of conservative?) is genetics!?!