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Taxing the Rich

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ColeTrain
By ColeTrain | Oct 13 2015 11:32 AM
So... the first Democratic Debate is tonight... Obviously this is the US only, but a big issue is taxation. What are your thoughts about taxing the rich more?

http://www.brookings.edu/~/media/research/files/papers/2015/09/28-taxes-inequality/would-top-income-tax-alter-income-inequality.pdf
"Man is not free unless government is limited" -- Ronald Reagan
Topics: http://tinyurl.com/oh9tm6u
Ernest Ubisi
By Ernest Ubisi | Oct 31 2015 3:06 PM
ColeTrain: That's not fair
admin
By admin | Oct 31 2015 7:28 PM
Ernest Ubisi: Why?
I'm the main developer for the site. If you have any problems, ideas, questions or concerns please send me a message.
Let's revive the forums!
JohnMaynardKeynes
By JohnMaynardKeynes | Oct 31 2015 11:53 PM
I'm concerned far less with "fairness" than with efficacy -- the fairness arguments are extremely tenuous, and usually coincide with black-and-white "government is force" arguments made by particularly unclever people who haven't thought these issues through and examined their merits in adequate depth.

The question isn't whether taxing the rich is a panacea: it isn't. The question isn't whether there will be trade-offs to raising taxes: there are. There are always trade-offs associated with every single economic policy we consider, regardless of what political hacks tell you. It's whether the benefits exceed the costs -- and some of the benefits might be qualitative in nature (i.e., it reduces the political power of the affluent, insofar as our campaign finance laws remain horribly rigged).

My reading of the literature on this suggests that there is room to raise taxes on the affluent. The bulk of this ought to be done via closing distortionary loopholes: this is to say that lower taxes unto themselves are not a desirable end, but rather low taxes or tax incentives for meaningful, productive things we want to encourage (e.g., research on renewables).

So I would start there, which is where virtually every politician starts until the big money starts pouring in to cloud any meaningful thought they could conjure via rubbing together their collective three brain cells. The premise of raising taxes -- that we need to fund stuff -- is likewise flawed amid negative real interest rates and a $4.5 trillion Fed balance sheet and flight-to-quality flows pushing up the dollar's exchange value, all of which make funding government debt virtually costless. I haven't the slightest problem with merely running slightly higher deficits to fund productive expenditures, in lieu of taxing rich people more -- but closing loopholes seems like a meaningful end in itself. Maybe the right policy is a revenue-neutral reduction in marginal rates associated with closing silly loopholes. Then again, "closing marginal rates" to Republicans means "let's bleed the government dry, and then rely on dynamic scoring as our basis for saying we won't balloon the deficit." Dynamic scoring, of course, is a load of BS.
~JohnMaynardKeynes
"Those who cannot remember the past are condemned to repeat it." - George Santayana
"We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle
Dassault Papillon
By Dassault Papillon | Nov 1 2015 12:43 AM
The wealthy already pay the bulk of America's taxes.
http://www.thenewamerican.com/economy/commentary/item/18040-taxes-are-the-poor-paying-their-fair-share
Yes, "tax loopholes" should be closed, but the middle and lower classes should also be experiencing a tax increase, because they aren't contributing enough to the system which they benefit from more as it is right now.
JohnMaynardKeynes
By JohnMaynardKeynes | Nov 1 2015 1:12 AM
Dassault Papillon: The reason they pay the bulk of the tax bill is because they earn the bulk of national income -- if you look at the evolution of the *composition* of federal revenue, you'd see that the share of, say, corporate taxes has fallen appreciably, whereas the share of regressive payroll taxes has risen.

As a percentage of their overall income, more regressive taxes -- e.g., sales, payroll, property, etc. -- taxes falls on lower-income people. It would be *impossible* to meaningfully change the physical composition of federal revenue, acknowledging the current vast wealth disparity and the skewness in the distribution of capital income. Disparate capital-income accumulation and asymmetric political power merely exacerbate this divide.

I'm not for soaking the rich: I think it's stupid, callous and counter-productive, but the notion that there is any sensible argument for raising taxes across the board -- especially *now* when the gains of the recovery have been heavily asymmetric -- is ludicrous. If anything, I'd close corporate loopholes and redistribute them via a higher EITC: that's been proven to increase labor supply (i.e., raise the labor force participation rate), in which case lower-income people are paying more taxes, anyway. I know "redistribution" is a particularly toxic word, though (a) it shouldn't be and (b) it's usually only toxic due to rank ignorance and pointed strawmen over what it actually means.
~JohnMaynardKeynes
"Those who cannot remember the past are condemned to repeat it." - George Santayana
"We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle
Dassault Papillon
By Dassault Papillon | Nov 1 2015 8:51 AM
JohnMaynardKeynes: However, the way it is right now many Middle and Lower class people aren't even contributing what should be expected for people of their level of income.
Dassault Papillon
By Dassault Papillon | Nov 1 2015 8:54 AM
I heard a statistic once that around 40% of Americans (far from 40% of Americans consist of the Upper Class) do not pay income tax at all. If true, this is something that needs to change. Not being rich should not be an excuse for not paying what's fair for someone of your level of income to pay (which is why I like the flat tax). I don't know about the economic soundness of this but it seems like the most moral path to take.
Dassault Papillon
By Dassault Papillon | Nov 1 2015 8:57 AM
I think there should be a flat tax where everyone pays that same 10-20% (don't know which number is best) income tax and many tax loopholes should be closed for all groups. Neither a progressive nor regressive (which seem to be kind of biased terminology anyway) tax should exist. I do think that taxes should be raised overall because "cutting spending" has proven much harder than initially believed to implement sufficiently.
JohnMaynardKeynes
By JohnMaynardKeynes | Nov 1 2015 11:26 AM
Dassault Papillon: First, that's untrue -- they do contribute, and as a larger percentage of their income than a lot of more affluent people because the taxes they do pay -- payroll, sales taxes, property taxes, etc. -- are regressive. Once we strip out those taxes, and then strip out veterans/seniors on SS, the people who "don't pay taxes" dwindles and dwindles and dwindles. Ironically, the bulk of people who don't pay taxes live in red states: the blue states actually subsidize, on balance, red states.

I heard a statistic once that around 40% of Americans (far from 40% of Americans consist of the Upper Class) do not pay income tax at all. If true, this is something that needs to change. Not being rich should not be an excuse for not paying what's fair for someone of your level of income to pay (which is why I like the flat tax). I don't know about the economic soundness of this but it seems like the most moral path to take.


Wrong; Mitt Romney cited something similar, and it got ripped apart.

I think there should be a flat tax where everyone pays that same 10-20% (don't know which number is best) income tax and many tax loopholes should be closed for all groups. Neither a progressive nor regressive (which seem to be kind of biased terminology anyway) tax should exist. I do think that taxes should be raised overall because "cutting spending" has proven much harder than initially believed to implement sufficiently.


Again, horrid idea, and would constitute a tax cut for a bunch of rich people and tax hike for poor people, and would present a trade-off between not soaking poor people -- thus destroying the economy -- and funding the government (when "starving the beast" would destroy the economy).

The operative point is that deficits, right now, don't matter at all.
~JohnMaynardKeynes
"Those who cannot remember the past are condemned to repeat it." - George Santayana
"We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle
ColeTrain
By ColeTrain | Nov 1 2015 12:05 PM
My reading of the literature on this suggests that there is room to raise taxes on the affluent.

Just curious, how far does this "room" extend? Would it be a considerable increase in taxes, or relatively small?
"Man is not free unless government is limited" -- Ronald Reagan
Topics: http://tinyurl.com/oh9tm6u
JohnMaynardKeynes
By JohnMaynardKeynes | Nov 1 2015 12:41 PM
ColeTrain: Answering that question with any meaningful degree of specificity is above my pay grade -- especially since it's hard to predict the extent to which variable conditions, like the feasibility of offshore tax havens or the ability to disguise and shift forms of income, will change with respect to a tax hike. It's likewise difficult to predict the change in *effective* rates per change in marginal rates, especially since economic decisions are made based on expectations -- or an ex-ante basis -- when effective rates are usually ex post.

We probably could raise them considerably without ending up on the wrong end of a Laffer curve. That doesn't mean it would be desirable to do necessarily, but merely that in so doing so, the sky wouldn't fall. We would still need to spend the proceeds productively, or else it's totally useless.
~JohnMaynardKeynes
"Those who cannot remember the past are condemned to repeat it." - George Santayana
"We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle
True Capitalist Acolyte
By True Capitalist Acolyte | Nov 1 2015 5:30 PM
ColeTrain: People should think holistically about this. It would seem many have the deductive reasoning skills of an invalid. "Tax the rich" is good rhetoric and the low information crowd laps it up like the dogs they are.Who lobbies for money,favors, and subsidies in Washington? The rich. Who pays the most taxes? A certain kind of rich, those with earned incomes like entertainers, CEOs, sports players, etc. Why do people think Warren Buffet is always saying there should be more taxes? He won't be paying them because most of his money is based on his passive incomes via capital gains rather than an earned income, he knows he will be taxed far less. Either way, the ultra rich can simply hire the attorneys and accountants to make sure they pay little to nothing in taxes. Don't be fooled by the rhetoric and clever talk, they want to raise taxes so their buddies can lobby for more money. Aiding and abetting in cronyism via corporate welfare essentially.

The funny fact about Federal income taxes, almost half of Americans are either too rich or too poor to pay them.
True Capitalist Acolyte
By True Capitalist Acolyte | Nov 1 2015 5:42 PM
JohnMaynardKeynes: Wrong; Mitt Romney cited something similar, and it got ripped apart.

No, it was true because nearly half of Americans are either too rich(via many deductions,exemptions,etc.) or too poor(ineligible,exemptions) to pay Federal income taxes. They probably do pay sales taxes and any other taxes that they are required to pay at the state and local level. If you think the guy who works as a cashier at McDonald's pays Federal income taxes you are probably wrong. You have to make over $11,700 to pay federal income taxes. A family of four has to make over $26,??? to pay Federal income taxes. Most of these people who are inelgible to pay taxes tend to be young or elderly people.
JohnMaynardKeynes
By JohnMaynardKeynes | Nov 1 2015 6:32 PM
True Capitalist Acolyte: This is a failure of reading comprehension on your part. I *never* said a cashier at McDonalds paid federal income taxes. I said the figure Mitt Romney cited was flawed because he said not that 47 percent paid no *federal* income taxes, but that 47% paid no *taxes.* That was the line I have a problem with, because it was demonstrably wrong.
~JohnMaynardKeynes
"Those who cannot remember the past are condemned to repeat it." - George Santayana
"We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle
True Capitalist Acolyte
By True Capitalist Acolyte | Nov 1 2015 10:37 PM
JohnMaynardKeynes: Where did I say you said that the cashier at McDonald's paid no income taxes? I said "if you think," which means if you thought, I never said what you think because I am not a psychic. Failure to comprehend, speak for yourself. I'm glad I don't have an imagination that makes things up.

"47% of Americans pay no income taxes." Speaks for itself. You have a listening problem it seems, you might want to get that fixed.



JohnMaynardKeynes
By JohnMaynardKeynes | Nov 1 2015 11:33 PM
True Capitalist Acolyte: Nice try, but nope.

Here was the context:

Swag: Mitt Romney said 47% of Americans pay no taxes.

JMK: He said that, but it was wrong.

In particular, I said:

Wrong; Mitt Romney cited something similar, and it got ripped apart.


And you know this, because you directly quoted me -- to the extent that I copy and pasted this from your post. The antecedent of *it* was that "something similar" Miitt said. You responded with:

No, it was true because nearly half of Americans are either too rich(via many deductions,exemptions,etc.) or too poor(ineligible,exemptions) to pay Federal income taxes

This *directly* challenged what I said, calling into question the "it" on the basis of federal income taxes, thus calling into question whether I had challenged the notion of a McDonalds worker paying federal income taxes.

This isn't hard, and that I need to break this down step by step for you in the same way I would for the average DDO'er suggests that you won't make it that far on this website -- and really aren't off to a good start. That very video you cited has Mitt saying, "We have 47 percent of Americans who pay no income tax." That's wrong -- it applies to FEDERAL income tax.

Before you dare to insinuate that *I* have a listening problem, and to opine on things wildly out of your depth -- your last point was likewise ridiculous and uneducated -- make sure you aren't pontificating toward people who are far more intelligent than you'll ever be.

Moron.
~JohnMaynardKeynes
"Those who cannot remember the past are condemned to repeat it." - George Santayana
"We are what we repeatedly do. Excellence, then, is not an act, but a habit." - Aristotle
ColeTrain
By ColeTrain | Nov 2 2015 1:06 AM
JohnMaynardKeynes: Chill. Both of you. Goodness... It's a forum.
"Man is not free unless government is limited" -- Ronald Reagan
Topics: http://tinyurl.com/oh9tm6u
ColeTrain
By ColeTrain | Nov 2 2015 1:10 AM
JohnMaynardKeynes: We probably could raise them considerably without ending up on the wrong end of a Laffer curve. That doesn't mean it would be desirable to do necessarily, but merely that in so doing so, the sky wouldn't fall. We would still need to spend the proceeds productively, or else it's totally useless.

In summation, we could raise them considerably, but it might not be desirable.... so essentially, we *could* raise them really high if we so chose without dire consequences. From this interpretation, I'd say we should raise them *some,* but not a lot.
"Man is not free unless government is limited" -- Ronald Reagan
Topics: http://tinyurl.com/oh9tm6u
True Capitalist Acolyte
By True Capitalist Acolyte | Nov 2 2015 3:05 AM
JohnMaynardKeynes: Thanks Admin, no editing posts here. Therefore, no lying and no misnformation. The evidence has already been posted, so you are a liar or you have cognitive dissonance. Just stop, you are insulting our intelligence at this point we all know what you wrote and now your are trying to cover up by moving goal posts. Very clever, too bad it only works on stupid people.

Ladies and Gentleman, observe evidence A:
I said the figure Mitt Romney cited was flawed because he said not that 47 percent paid no *federal* income taxes, but that 47% paid no *taxes.*

Observe evidence B:
That's wrong -- it applies to FEDERAL income tax.

Didn't John Maynard Keynes say Mitt Romney said that the "47% paid no *taxes?*" Now JMK is moving goal posts to try to say it only applies to Federal Income Tax when he clearly had previously said Romney said that "47% paid no taxes." He is moving goal posts to be argumentative at this point, don't be fooled by such silver tongued tactics by the dishonest amongst us.

Again, exhibit A:
he said not that 47 percent paid no *federal* income taxes, but that 47% paid no *taxes.*

Does JMK think we are stupid? We know what he posted the first time, we can go back and read it as many times we like. I challenge any person to go back and read what he said and deny he is moving goal posts. JMK is a future politician, backtracking, moving goal posts, and now spreading misinformation. JMK, I just can't wait till the day when we have cameras everywhere and all information in society is recorded for dishonest people like you are rooted out. That day is slowly coming and I am excited waiting for it to happen.
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