I think most of the modern economic theories that see actual political and social use came out of Friedman’s butthole. It’s just that his butthole was a somewhat unusual one: it could be found near the top of his person, and it had a set of teeth…
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Everyone DOES have the same tax rate - you’re confusing a common simplification of the tax system with the actual method:
Each year, the first X-thousand dollars you earn have almost no tax liability; no matter how much your total income was, your first X-thou are tax-free, exactly the same for everyone. Your next Y-thousand dollars are taxed at the same N% rate as everyone else’s next-Y-thousand dollars, regardless of income. If you make an additional Z-thousand dollars, those are taxed at the same N+M% rate as everyone else who made an additional Z-thousand dollars. And so on.
There is no (labor) income level at which you end up paying more tax on your money than anyone else. Everyone pays exactly the same tax rates on every single dollar they earn, no-matter how many dollars they earn. (That’s why on your tax return you use look-up tables to calculate what you owe from your total income instead of just multiplying it by a percentage).
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Blaming the CU decision is a bit facile. The problem is far more deeply-rooted. CU basically says if I want to promote my political message, I can hire some guy to stand on the street with a sandwich board instead of having to stand out there myself. Does my freedom of speech extend only to my own physical voice, or can I write an op-ed in a paper that someone else paid to print?
The problem of money’s influence on politics isn’t solvable by half-assed band-aids. A functioning democracy requires an educated, involved, and functioning populace. Once we have that, all this manufactured news about how we need to cut taxes on the job creators or expel asylum-seeking immigrant children or torture more brown people will become far less effective, or at least much more expensive.
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I’m with you on talking about usefulness, but affirming that its been useful policy for its intended purpose so far is not rooted in any evidence, there’s much more evidence that rich people are getting richer and poorer people are getting poorer than there is that (at least) some segments of the population level of income is rising in parallel with the performance of investments.
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I’d love to see some numbers – and I could be wrong, of course – but my guess that the bulk of capital gains transactions are not on investments made into bona fida capital requirements of a company, but instead on purchasing an existing business asset (i.e., 1 undivided fraction of a company). My point was only to the narrower part of the question – new capital investment in business – and my own (limited) experience and my more extensive experience of friends and family doing this sort of thing is that no one will invest in a risky, start-up enterprise without some back-end tax preference.
I think that’s right, instinctively. But I think you have to identify, isolate and test these things differently.
And, in any event, with a policy change the right thing to do is identify the grossest excesses and work on those, first. And certainly hedge-fund carryovers and what not are less morally worthy than a tax preference for founders.
Which is what I said, not that everything needs to be tested separately, that may be so, but that it needs to be tested before its asserted. So don’t.
“Money spent is money invested in our economy. Consumers are the real job providers.”
This is a common, confused understanding of economics in which the only thing that matters is Demand. Supply somehow takes care of itself. As longs as consumers keep spending money we’ll there will be plenty to buy. Just keep printing money so everyone has money to spend. This was disproven by the Soviet Union in which people had plenty of rubles but there were limited cheese, meat, and blue jeans. As Rudyard Kipling explained the results of socialist economics: “But though we had plenty of money, there was nothing our money could buy.” Also, Milton Friedman declared “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”
When you spend money on a cruise, you expect to get a cruise in return. If you spend money developing a cruise, there is no guarantee that people will reciprocate by buying tickets to your cruise. Get the difference? If everyone spends money on created items but no one risks it developing new things, it won’t matter how much money you have.
Broad shoulders should carry more of the common burden.
After a 70 year experiment in the Soviet Union and a 50 year experiment in China, why do people continue to believe that this is a workable system? That is an economic, legislative system that is efficient for robots, not humans.
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A lot of the comments here are basically arguing all the different ways taxes can be deemed “fair.”
You cannot make a tax system that is “fair”. Fairness is not a standard. The most “fair” standard is that every member of a society pays exactly the same dollar amount in taxes. Obviously, the most “fair” option is not practical in a free society since it would require excluding children or people too old or sick to work. So we offer a flat tax instead but that’s supposedly not “fair” since rich people will still have more (???..yeah, well, just go with it). So we only tax consumption…oops! That’s too close to the first option since everyone has the same basic needs. So we use a progressive system, but the ultimate goal of a progressive system is that everyone has the same amount left over at the end. But that system penalizes working hard or more efficiently or more frugally than everyone else. It is unfair because the lazyist reap greatest profits. It is also way to make everyone equally poor except for those pulling the strings at the top (Soviet Union and China and North Korea).
“There is always inequality in life. Some men are killed in a war and some men are wounded and some men never leave the country. Life is unfair.” ~ Pres John F Kennedy
http://www.brainyquote.com/quotes/quotes/j/johnfkenn400130.html#yC4gsIk7B3W6TGym.99
Perhaps because “rich people paying much a higher portion of their income in taxes” worked great for the U.S. during the 1950s, when we were priding ourselves on how superior our economic system was to that of the Soviet Union or China.
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You say that like it discredits the idea. On the contrary, the fact that children inherently understand the idea of fairness suggests that it must have some importance to humanity, evolutionarily speaking.
It does discredit the idea for a modern society that affords individual liberty. Evolution is about promoting your own genome. Or that of your tribe. You might as well claim that murdering your neighbor and taking his land has some importance evolutionarily speaking. Evolutionarily speaking, I’m sure it does. If your goal is to have a society that is irrespective of origns, race, and creed and allows others to “pursue happiness” freely (ie value different things), then we need to discard utterly irrational concepts like “fairness”.
“When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put away childish things.” Paul of Tarsus, 1 Corinthians 13
Perhaps because “rich people paying much a higher portion of their income in taxes” worked great for the U.S. during the 1950s, when we were priding ourselves on how superior our economic system was to that of the Soviet Union or China.
It was better than the Soviet Union and China. But not for that reason. No one paid those high base tax rates. They simply avoided the behaviors that would face those high rates. And when JFK removed them, the economy boomed and so did the Federal tax revenue – just as he predicted they would. Because people were free to engage in more “productive” activities rather than “unproductive” ones (like avoid high tax rates).
It is true that progressives glibly fetishize a decade that they otherwise view with contempt.
That’s apt. You are talking about the ultra-wealthy who live a life a leisure, right? Because being on food stamps and living in the worst part of town isn’t exactly “reaping profits.”
Nevertheless, if we “cannot make a tax system that is ‘fair’”, then why are you so argumentative about it, and so defensive of the flat tax as being the most fair option?
Yes, life is unfair, it is also often unjust, but that does not mean we throw up our hands and say “I give up.” I am not interested in what’s fair when it comes to economics, since economics are a human invention anyway: we created it, we can dictate how it works, and it should work to benefit the most people, not benefit a few at the expense of the many. You can call that communism if you like, I call it morality.
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Nevertheless, if we “cannot make a tax system that is ‘fair’”, then why are you so argumentative about it, and so defensive of the flat tax as being the most fair option?
Because I want a tax system that encourages abundance rather than scarcity. One that encourages risk and innovation rather than scrapping over the relative sizes of the pie pieces. I don’t care about who gets more as long as everyone is increasingly affluent. I want a system where I can choose to live off the grid rather than be saddled with obligations to support “services” set in place for me by voters when my great-grandparents were young. I want to have the option to save the fruits of my labor and risk it all serving my fellow man with stuff he wants without being called a greedy bastard for doing it. And I don’t want to have my gains from that risk forcibly shared to pay the medical bills of a guy who risked nothing more in his life than a commute to to work and never avoided buying what tickled his fancy if there was still money in his pocket. In short, I’d like a practical tax system that is designed to collect the maximum revenue over time, just enough to accomplish the basic absolutely necessary common activities that are enjoyed EQUALLY by all citizens rather than a tax system designed to satisfy the envy of 51% of the voters.
I am not interested in what’s fair when it comes to economics, since economics are a human invention anyway: we created it, we can dictate how it works, and it should work to benefit the most people, not benefit a few at the expense of the many. You can call that communism if you like, I call it morality.
I call it childish magical thinking. Or Marxism if you’d rather.
Everyone DOES have the same tax rate - you’re confusing a common simplification of the tax system with the actual method:
No. It ends up being a higher percentage on total income. That’s math. And it is not just taxes that cost you as your income increases. You also lose deductions and subsidies (such as tuition grants and waivers for your children). But the progressive tier system does have the same effect on productive activity that a tax on cigarettes is intended to have on smoking activities. It discourages it. If I have reached to top of my tier and that doubling my labor and risk will not repeat nearly the same rewards as what I am already getting, then I’ve basically had my government ask me not to work any harder. I’ll put my subsequent profits in tax free municipal bonds and stay home or take a cruise. Okay for me. Not so good for you. We all benefit from a system that encourages high producers to waste their lives piling up huge reservoirs of wealth. I’m not saying they should do that, but we benefit from a system that allows that whether any particular person does that or not. And whether we ourselves do it or not.
You know there are points in between Stalinism and neo-liberalism right? I promise that there really isn’t a straight line between the 1% carrying a higher tax burden and the gulags, really there isn’t.
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But if you thought that 100 would go to 0 or if you thought a significant portion your profit would get taxed away, you would not have risked it in the first place. You would simply have put your 100 into a tax free municipal bond and lived off the proceeds. Fine for you. Not so great for the rest of us since it means there will be less general affluence in the future.
You know there are points in between Stalinism and neo-liberalism right? I promise that there really isn’t a straight line between the 1% carrying a higher tax burden and the gulags, really there isn’t.
Great. We can pick our own pockets just a little bit and only be moderately poorer over time rather than rough ourselves up and leave ourselves bleeding in the streets. Water over a 90 degree grade falls much faster than one over a 15 degree grade. But the same math and physics apply in both cases.
yes, let’s do away with public roadways, public utilities, the military, any public funding for education or the arts, any social safety net, etc, because it’s all just straight up communism. Okay. Sure. This is just the modern state. If you want to live in the neo-reactionary fantasy world, be my guest. I’m sure that Galt Gulch settlement in… wherever the hell it is will be happy to take your money and cheat you out of it.
Like it or not, we live in a society together, meaning we have interests in common. Deciding what that is is part of the democratic process. Yelling extremists at those you don’t agree with when they are not in any way advocating those extreme ideas is not conductive to democratic practices (edited to add: and I don’t find much of Marx’s interpretation of capitalism extreme, actually, just part of the enlightenment discourse - his perscriptions could be called extreme, no doubt, revolution, right). And sometimes, you don’t get everything you want, but sometimes you get some of what you want. And you just have to live with it and try to convince people of your POV the best you can.
Anyway, sorry if us untermenschen irritate you with our “commie” ways.
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You haven’t shown this.
Taking other people’s land or murdering them is surely the ultimate expression of your individual liberty.
On the contrary, if we are all to be collectively free to pursue happiness, then we need fairness — we need to ensure that all people are free, and that the freedom isn’t hogged by a few.
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