It would interest me to know what you think of this bunch and their agenda
http://patrioticmillionaires.org/
To me, this is the most refreshing breath of fresh air in a long time.
We have often spoken about entitlement on this blog, and I think we all agree that frequently for the poor, a focus on entitlement can lead to ruin.
However, it seems to me that when wealthy people hide income because they have the ability to do so, that reflects a destructive form of entitlement. When wealthy lobbyists use their influence to shift a tax burden from the rich to the poor, that is a manifestation of a rather despicable form of entitlement. And so on, or as Caroline would say und, und, und.
I think they are naive on two important fronts. First, when governments get more money - they spend it. There are almost no examples where governments simultaneously receive more money, and reduce spending. These people are effectively just pushing for bigger government. Second, as the evidence shows (and i have tried to demonstrate in postings in the past) higher taxes do not increase income. When taxes go above 25%, the government does not take in incremental income.
ReplyDeleteI agree that it is unfortunate that the super wealthy (those making $50m+ a year) pay a lower tax than those making $300k per year. It is a function of a lower capital gains tax vs the income tax. There are many easy ways to solve this, such as raising the consumption and capital gains tax, and aggressively lowering the income tax.
I have asked many people the following question, and virtually 100% of people agree. If the government raised taxes for four years to 80%, and you knew with 99% certainty that this policy would result in more tax revenues and the government would use the higher revenue to also shrink government and pay down the debt, would you vote for this party? I absolutely would vote for this party, and others that are conservative that I have asked instantly agree that yes they would vote for this policy.
ReplyDeleteIf I am not mistaken, most government revenue, world wide comes from income and property taxes. This is unfortunate. I became convinced that these particular taxes were regressive many years ago.
ReplyDeleteOne of the more exciting moments in my career was when I was the senior agricultural adviser on a rather large CIDA funded agricultural project in one region of Ethiopia. Very briefly, we were working on a scheme where the main agricultural component would be that farmers not implementing agreed apon best management practices would pay a tax, whereas farmers implementing the practice may even get a positive incentive. Unfortunately, CIDA top brass nixed the project before it was begun for reasons that had nothing to do with the merits of the project. Had this project not been nixed, my career could have taken a very different turn.
That said, clearly the super wealthy don't pay taxes because of the strength of their lobby in Washington (and by carryover, in Ottawa). What puzzles me is why conservatives essentially support all tax breaks for the rich, not just income tax breaks.
Why are conservatives pushing that the US deficit be addressed on the backs of the poor. Why don't they promote a consumption tax or a capital gains tax as a response to the deficit?
And another thing about government: of course governments waste money, but where do they waste it? I submit that if it is used to bail out the wealthy [bankers], it is wasted, truly wasted. If it is used to give jobs to people who would otherwise be unemployed, it is never wasted. There are good work projects and very poor work projects, but if the money gets into the hands of impoverished workers and pays them for work they do, it is not wasted. So in terms of waste, to my mind there is a huge (vast, immense, brobdingnagian) difference between government handouts to the bank and hedgefund managers whose decisions resulted in the current financial crisis, and payments to workers through make work projects, even if those workers only dig one hole to fill up another. No doubt we could do better, but it is not wasted
In response to your question, it seems to me that the biggest impediment to realizing the ideal you are presenting is well heeled lobbyists. I had some doubts about that before Obama. Now I am convinced.
There are so many liberal myths in here. Lets look at the three biggest.
ReplyDeleteConservatives pushing that the US deficit be addressed on the backs of the poor? Where is there evidence conservatives want to push deficit spending on the poor? Mathematically, makes no sense. If you look at income tax, the top 10% richest Americans pay 65% of all income tax, and the bottom 46% pay none.
Conservatives support all tax breaks for the rich? Where is this from, most conservatives I know and if you look at perhaps the primary conservative economic hero Milton Friedman, he was very much in favor of no tax breaks, and consumption taxes. Did you know that the super-rich are disproportionately Obama supports and traditionally liberal?
Using government money to paying bankers was a waste, while paying good works projects are possibly good? While I was very much against bailing out banks (and still am) – all that money has been paid back so financially it was not a waste! Meanwhile, the massive $700mln+ stimulus that Obama passed, that went to work projects as you suggest – has been a complete waste! Unemployment kept going up, union bosses have been the main beneficiaries and the main accomplishment of the stimulus is that it has widened the gap between rich and poor. Why is it widened the gap? To finance all these projects the Fed has had to print more money, and given no one has confidence to invest in big projects at a time when the deficits are out of control and the government keeps passing more restrictive regulations, that money has gone into financial assets – benefitting once again the rich which own financial assets like stocks and bonds, while the unemployment rate for lower income keeps going up.
Myth #1: Didn't I read somewhere that the Republicans are opposed to raising taxes, and that in their view the deficit is to be reduced through reduction in spending, including social spending?
ReplyDeleteMyth #2: Are you saying that, with respect to a reasoned response to the deficit/debt, true conservatives are opposed to tax breaks for the wealthy and promoting a consumption tax? If this is what you are saying, we are on the same page. If that makes me a conservative, I'm OK with that. Are you saying that the reason we are not hearing about "Republicans for a consumption tax" is because the "liberal press" is refusing to report on that? If that is the case, I really do need to listen more carefully. Are you saying that the super rich support Obama's re-election campaign because in the end that will cost them less than paying more taxes?
Myth #3: If all that money was paid back, why are you against the bailout? I find it hard to believe that all that money has if fact been returned, but if that is in fact so, the bailout was a shrewd move. Bush should get credit for that.
So you are saying that the widening gap between the rich and the poor is the result of government stimulus programs, rather than other government action [or in-action]. That's counter-intuitive, to say the least.
Myth #1. Yes, Republicans oppose raising taxes and they want to reduce spending including social spending. I don't see this as being on the backs of the poor, but perhaps on the backs of some unions yes (union members are not poor). Federal spending adjusted for inflation is up almost 85% since 2000, and life was ok back in the late 1990s so spending is the problem. I would like to say that Republicans are against raising taxes, as they realize it would take in less money, but alas even most of them don't understand the data.
ReplyDeleteMyth #2; Yes, true conservatives are for eliminating the income tax. When there is a true conservative - like Michelle Bachmann who is a big supportor of Von Mises the Austrian economisist who wants to eliminate the income tax - the Media is too busy calling her a right-wing nut and flake (including Fox News).
Myth #3. I should be more precise, all the money that went to banks was paid back, with the government entities (Fannie and Freddie) not paying back their $165b. So excluding Fannie and Freddie (which have not paid back and likely won't given they are inefficient government entities), about 95% of the money has been paid back. I am against bailouts, as they create a moral hazard, by telling banks that they have a safety net for taking undoe risk, that the government will bail them out.
Yes, i am saying that the widening gap is the result of the government stimulus. Those with money have done fine, as they have their financial assets going up in value given all the money the Fed printed had to go somewhere. But the stimulus actually caused a reduction in jobs, as business lost confidence in the fiscal health of the country and have therefore laid off workers since the bill was past.
Well yesterday, President Obama laid out his plan to raise taxes on the rich. The data is unequivocal, raising taxes on the wealthy will not bring in more money, and hopefully everyone has noticed that no one has been able to refute this claim on this blog. Either Obama is not informed about how tax revenues work or he is intentionally hurting the country.
ReplyDeleteAnyway, he has now resorted to a more aggressive style of class warfare pointing to those that fly corporate jets and can expense it, as a big loophole. He mentioned 6 times in a speech yesterday about raising taxes on the “corporate jet” owners. Since he mentioned it 6 times it must be a big issue right? Well using aggressive estimates, assuming no one would curtail the use of corporate jets if the policy went through, not allowing to expense corporate jet travel would save $150million a year. I did some quick math, and $150mln is what the federal government spends every 10 minutes (over a 24 hour period over an entire year). So this is clearly just symbolic to anyone that can do grade 3 math. Additionally, when Clinton took a similar action on taxing yacht sales at a much higher rate in the 1990s, it didn’t hurt the yacht buyers, but rather those building yachts in the US – the middle class – as the wealthy bought boats abroad and no longer purchased them domestically.
But lets ignore the evidence. The strategy of the left is to attack the wealthy, even though the top 1% already pay 46% of all taxes in the US, raising their taxes will take in less revenues, and the issues they focus on (taxing corporate jet travel) are completely irrelevant financially even by their own projections. But if they can get the populous to blame the rich guy, instead of the real issue which is a bloated government, they can perhaps stay in power and increase the size of government.
I did not hear the speech.
ReplyDeleteSo was this a major policy speech? Is this the only tax break loophole he is proposing to close?
If that is the case, he is more daffy than I thought. I mean, if the only tax change the wealthy are going to experience as the US seeks to reduce its deficit, is that they will not be able to expense as much of their private jet travel -- well the tax change does not affect them at all!
I am sorry, but I am having a really hard time believing that the richest 1% of Americans/Canadians pay 46% of income tax revenue. The source of that data - would that be conservative or liberal? As to consumption taxes they clearly put an unequal burden on the poor/middle class/less than 100,00K /year folks as they will spend a disproportionate amount of their income on taxes. This of course assumes that consumption taxes include the basics of living(which in our country do include gas). In principle I agree with consumption taxes as being fairer and am all in favour of lowering income taxes, gov't spending etc. Hey , I am happy I am not getting all the government I am paying for. Just some quik thots.
ReplyDeleteKK
The top 1% paying 46% of taxes comes right from the IRS, so the source is neither conservative or liberal.
ReplyDeleteAgreed a consumption tax could unduly hurt the poor, so it would be important to exclude essentials such as milk and bread.
Obama's speech came at a critical time, as the congress decides whether or not to raise the debt limit. HIs speech was meant to put pressure on republicans to raise taxes, but creating an atmosphere of classs warfare. When done with no data, and simply emotion, it does little more than create anger and jealousy by those that believe in the "content".
I have just bothered to read Obama's speech http://www.whitehouse.gov/the-press-office/2011/06/29/press-conference-president . Tell me Karl, if that is the spin you put on this speech, why should I believe anything else you say. For class warfare, compare http://www.youtube.com/watch?v=MIZDnpPafaA
ReplyDeleteI wish you had focused more on data, that we can discuss and try to seek clarity on, but I am unclear what your point is. I am aware of what Obama said in his speech, for example he said:
ReplyDelete“If we choose to keep those tax breaks for millionaires and billionaires, if we choose to keep a tax break for corporate jet owners, if we choose to keep tax breaks for oil and gas companies that are making hundreds of billions of dollars, then that means we’ve got to cut some kids off from getting a college scholarship. That means we’ve got to stop funding certain grants for medical research. That means that food safety may be compromised. That means that Medicare has to bear a greater part of the burden. Those are the choices we have to make.”
So in other words, if they rich keep getting special breaks, people are going to suffer from food safety issues, and many children won’t be able to go to college. Boy I just hate those rich people! This is classic class-warfare and untrue. Lets look at the statistics I have brought fourth
-the top 1% pay more tax than the bottom 95% combined
-the federal government has more than doubled in size the past 10 years – last I checked people were doing well 10 years ago
-raising taxes above 30% won’t take in more money – hence reducing “tax breaks” won’t take in more money
Reading Obama’s sentence in that context, one has to conclude Obama is either ignorant to the facts or playing politics to get people to hate the rich for political gain. But this is what the left has to do as they do not want to diminish their power and shrink the size of government.
Not sure what your point is with the clip from Glenn Beck saying he thinks Obama doesn’t like white people. First, it has nothing to do with class. Second, Beck apologized for it 2 years ago.
And a quick word on oil companies, they do pay a high tax rate. The "biggest" of big oil Chevron and Exxon, pay 40% tax rates. Solar and wind companies on average pay no taxes and technology companies on average pay 25% tax rates, and the average retailer pays 32% tax. The reality is, oil companies pay amongst the highest tax rates in corporate America, so the claims that they get disporportionate tax breaks is inaccurate. Yes, oil companies expense their exploration costs, but this is no different than a manufacturing company expensing their factory costs, or a technology company expensing their research. Additionally, while oil companies make billions, their net profit % is no higher than other industries. So for Obama and the left to continually target "big oil" as getting unfair tax breaks, is a myth, but said often enough people believe it.
ReplyDeleteOK - I am going to ask another question. Do the same 1% who supposedly pay all these taxes(I still don't believe it and you can show me all the gov't data you want - still sounds like the fox telling the farmer " trust me I'll tell you how many eggs are laid") Anyway is the wealth of these top 1% collectively more than the bottom 99%? If any where close we have a very unhealthy (which we all knew) distribution of wealth. No I do not advocate any kind of communism but I believe that without a healthy "middle class" our society will be ultimately doomed.
ReplyDeleteKK
Well I understand that it looks high, but that is the data for the US at least.
ReplyDeleteIt is a very fair question as to their income. The numbers I have seen is that the top 1% earn roughly 20% of the income (which in general has been an upward trend the past 40 years which is troubling). Clearly this very disproportionate, but this seems about accurate relative to the amount of tax (roughly 46%) they pay. I would love to have a more healthy middle class and more even distribution of income as it makes for a healthier society, but I (as likely you) prefer equal opportunity to equality of results. I am all for proposals that lift up society in general and normalize results – that is why I am a big proponent of charter schools for example. If the goal is solely to equalize results, we can do that by simply taxing at very high rates both income and assets (as simply taxing income higher, makes it even harder for someone to ever become wealthy, and the wealthy keep their assets). The data suggests this would hurt everyone – including the poor – as the economy would slow materially, but it would equalize things more (as it would hurt the wealthy even more) with everyone being equally poor. But if someone is fine with lowering everyone’s standard of living, in order to equalize it, I would disagree with that goal but I would be happy that they have clarity on what they want to accomplish.
I am bothered by several things:
ReplyDelete1. How can KK just decide not to believe facts from the IRS? If you don't believe facts there is no point in having a discussion.
2. Why is KK comparing rich people to a fox? Kk himself is rich compared to most of the world so does that make him a fox? Does this make him a thief in society's henhouse? The riches or lack of them do not make the man. I think poor people take more from the henhouse than the rich people do but that is just a feeling with no facts from the IRS for people to not believe.
LK
Sorry for my slow response. The outside beckons in summertime.
ReplyDeleteFirst to Obama's speech: if others read class warfare into that speech there is little to say, other than "I am speechless." To my ears, he is saying we need to cut the deficit. This going to result in pain, and this pain needs to be distributed. If that is read as class warfare, sorry, we are on a different planet. I suggest the Beck clip is an example of class warfare, in this case not between economic classes, but between color classes. Whether Beck has apologized or not is irrelevant.
A study by the Southern Economic Journal found that "71 percent of American economists believe the distribution of income in the US should be more equal, and 81 percent feel that the redistribution of income is a legitimate role for government." So conservatives believe the the 29%.
Is there a causal connection between taxation [of the wealthy] and the size of government? To me these are two completely separate questions. Governments may link them, but that is because they choose to, not because they have to.
Given that income sources for the poor are pretty evident, and that the wealthy have umpteen different ways of hiding income, is there any relevance to the IRS figure?
Having said all of the above, I find it unfortunate that our governments and political parties are so fixated on income taxes. And in my view, the fixation is there equally, on the RIGHT and on the LEFT. Here in Canada we have our GST which is a consumption tax. It was introduced by Brian Mulroney and cut significantly by Harper. In my view this is a good tax, but whenever the news media talks about it, they are sure to speak of "the hated GST". Don't know why. Sure, I hate filling out my GST return, but on balance I think it is good. There are, in my view, better, more progressive consumption taxes than the GST, and that is direction we should be moving.
So to your ears, Obama is saying we need to cut the deficit. So Obama has tripled the size of the deficit of 2008 and consistently ignored calls to control it. Then he delivered a budget in February 2011 – that further increased the deficit (not just the debt) from these high levels – and he is a man you take serious on a desire to cut the deficit? Ok, well lets assume he is serious. If he is, blaming unfair oil company tax breaks (very misleading at best, and a lie at worst) and corporate jet travelers (an irrelevant item) do nothing to solve the problem. So yes, I find it very odd you read his speech as an honest attempt to cut the deficit as opposed to class warfare. But hey, if we are trying to seek clarity on the differences between our perspectives, we perhaps have that.
ReplyDeleteI include myself in the 71% that believes distribution of income should be more equal, but I do not believe we should accomplish this by damaging the entire country including further reducing the standard of living of the poor and middle class (which is what we would do if we raise taxes on the wealthy). Would 81% that believe in redistribution of income, suggest raises taxes if they knew the top 1% paid nearly half and that raises taxes further on them and oil would likely take in less income? I doubt it, I don’t believe they have clarity on the issue.
The IRS figures are taxes paid, after the hiding of wealth, so yes I think they are relevant.
I am not a fan of Obama's, but I find it more than a little disingenuous that focus of blame is on his handling [mishandling] of a recession brought on by the policies of the previous administration. I would not want to be in his shoes.
ReplyDeleteFurthermore, what has made the effective handling of the recession difficult is the deficit the US had going into the recession.
In other words, you may disagree with the way Obama has handled the recession. You may be a disciple of Hayek rather than of Keynes. And yes, the deficit is scary.
Nevertheless there is more justification for deficit spending during a recession (as Obama has done) than for deficit spending during boom times (as previous administrations have done). And the irresponsible spending of previous administrations has made Obama's job that much more difficult.
Your opposition to taxing the rich, is it based on your understanding of justice or your opinion of what is effective. I have never had clarity on that.
So what should the government role be in equalizing the distribution of income? We might agree.
Bush was bad with the deficit, no doubt. He ranged from a 2-3% deficit as % of GDP from 2000-2008. I would give him a C-, not good. Obama is running a deficit to GDP in the 12-14% range. That is order of magnitude worse, and I would give him an F. Yes, they were both bad, but one is so much worse than the other. To give Obama a pass because he inherited a problem is overly generous. Many countries had a weak economy in 2008, but yet of the major countries, only the opted to run deep deficits from 2009-2011. For anyone paying attention, its another sign that Keynesian economics is dead.
ReplyDeleteMy opposition to taxing the rich more is based both on what is effective and justice. From a justice perspective, i find that 1% of taxpayers paying for over 40% should make most people very grateful for rich people. Without them, the infrastructure and general health of the economy would be dramatically worse, so we should be thankful for them, and not falsely demonize them.
The role of the government, as i always say should be to create equal opportunity - not equal results. Therefore, they should try to see that anyone willing to work hard, has the means to achieve. Practically speaking for example, that means the ability to go to the right schools. This requires the abolition of the teacher's union, and charter schools, so that those from poor neighborhoods can go to the nice private schools (in case you are wondering, the Left bitterly opposes this, as they are in bed with the teacher's union). This is just scratching the surface, but ultimately I care about equal opportunity - not equal results. Equality of results is a utopian dream, with no practical achievements.
I have to agree with a couple of your latest points. 1) I love rich people paying fair taxes - As a matter of fact people always spin their head when I state I want to pay a million dollars a year in income taxes. I also love not so rich people paying fair taxes. ( I just don't always believe we get fair value for what we pay for )2) government roles is to create equal opportunity not equal results - love it.. One of the challenges lies in that not unlike parenting equal doesn't always mean the same does it!
ReplyDeleteKK
Re: LK comment - It appears quite common that governments "spin" information so that we the public believe what they want us to believe. My favourite example from our own Federal liberal governments promise to cancel gun registration should the cost exceed a million dollars. Well at last count it is close to or over a BILLION dollars. I have lost track as it creates in me very not nice emotions:)May Harper have success in eliminating and good bye to Selinger if he thinks it will fly provincially - way too many of the NDP electorate depend on long gun use procuring food to eat.
I was not comparing rich peple to a fox rather those government officials who are in charge and who release only the information they want us to know - sorry if my analogy failed.
kk
I have argued for a long time that the biblical ideal for government is very radically for equal opportunity. The book of Leviticus gives us a picture of how God would have it if a nation were truly under God. Fundamental to the Levitican model is the concept of Jubilee. Initially everyone got the same amount of land. People bought and sold. Some people lost all their land, Some people became slaves. Every 50 years all slaves are freed, all land is returned to the original owner. The role of government is to redistribute the factors of production, rather than the fruit of production.
ReplyDeleteDoes this model have any relevance today? How might this ideal be implemented in a modern economy? It suggests to me that the ideal would be a 100% inheritance tax.
I still have no better understanding of what practical policies an enlightened modern government would enact to further equal opportunity. Your example of of charter schools may be totally appropriate, but I don't understand it. In any case, I think Obama supports charter schools. And I also don't understand how teachers unions mitigate against equal opportunity.