When will our endless suffering cease?
Michael Medved didn’t get the memo from the Republicans. You know, the one that states, “Hey, our actual policy ideas are going to be wildly unpopular, so your job as a pundit is to deceive, mislead, distract and obfuscate.” But even if he missed the memo, you’d think he’d get the idea from the lies to get us into Iraq, the attempt to turn Social Security into a cash giveaway to the very rich by calling the plan “personal accounts”, and relabeling the estate tax the “death tax”, which implies that, for instance, all the soliders and poverty-stricken New Orleans residents that have wrongly died on BushCo’s watch have to pay taxes when they die or something. Medved here actually tries to make the argument to middle class readers that we should carry the bulk of the tax burden and spare the poor, suffering rich. Conservatives are so nostalgic for the 1950s, except for the 90%+ marginal tax rates the wealthy paid back then. In fact, that’s basically the dance they do—they make people long for a time when a male high school graduate could support a wife and a passel of kids by himself, and claim that what people are missing is the sexual repression, the racism, the sexism, and the conformity. Odds are they miss the prosperity.
But we shouldn’t want prosperity, according to Medved, because it’s kind of wicked to want that.
The political calculation in this pitch is diabolically clever, of course. Nearly all Americans consider themselves “middle class,� no matter how much or how little they make, so her support for reduced taxes for “middle class families� sounds wonderful. Meanwhile, less than 2% of tax returns show income in excess of $500,000 a year so the Speaker is, in effect, inviting 98% of the public to improve their status at the expense of a tiny minority that’s already widely resented because of its “excessive� success.
Is it me, or does this paragraph not make a lick of sense? He sort of implies that it’s foolish of people to consider themselves in the middle class majority that Pelosi is invoking, and then admits that we’re in a majority of 98%. Is it not a majority until it hits 99%? If that’s how wingnuts do the math, no wonder they think “abstinence-only” is a realistic philosophy to push when 95% of Americans have had premarital sex. 95% is hardly a majority, I guess.
Anyway, the very idea that the great unwashed peasantry is exploiting the millionaires is almost more laughable than risible. How dare we want them to pay their fair share of taxes when they merely decide whether we’ll have a job, whether we’ll be able to survive on our wages, whether we’ll get health insurance, etc. How dare we ask them to contribute their fair share in this one area when they get to decide how much of a life we have outside of work, and how many hours they’ll allow us to enjoy it?
Realizing that “pity Paris Hilton and Tucker Carlson” isn’t necessarily going to work to dredge up our sympathies, Medved does indulge in some straight up lying.
1) Tax hikes hurt the economy. Pelosi proposes to take money out of the hands of people whose investment and entrepreneurship create jobs, and to place it into the hands of government, which creates only job-stifling bureaucracies.
This argument only works if you assume that people who work for the government are volunteers or something, instead of paycheck-drawing employees. That, or you don’t think that government employees are human beings. If you think the latter, then I highly suggest you offer that opinion to the next police officer who pulls you over.
Perhaps the assholes who defend killing soliders needlessly by pointing out that our military is all-volunteer literally think that the solider are volunteers. Maybe they should show up at funerals for fallen soliders and yell at the people burying them, “Get a real job, bureaucrats!”
Anyway, another lie in general, and this argument relies on people’s short memories and inability to remember the marriage between raising taxes on the rich and economic prosperity. Also, Bush tipped his hand on this issue—conservatives are hoping that Americans don’t consider the money we spend on gasoline and milk to be investing in the economy, but when Bush pleaded with us, aristocratic desperation in his eyes, to spend money after 9/11 lest he and his rich friends become slightly less rich, the truth came out. Too bad his class warfare priorities blind him to the fact that whittling down wages and raising taxes on middle class Americans has the same effect on spending over time as the halt to shopping from the shock of a terrorist attack.
2) Higher rates are ineffective in producing higher revenues, and encourage both laziness and sleazy strategies of tax avoidance. Obviously, the higher the tax rates, the more the incentive to dodge taxes.
Tautological argument, actually, since it’s true that laws can only be broken if there are laws in place. The question is whether or not the enforcement costs outweigh the costs of not having the law to society. The War on Drugs is a good example of how enforcement hurts society way more than the crime. Not true of wealthy tax dodgers. IRS accountants, who also have real jobs with paychecks despite what Medved will tell you, don’t make million dollar salaries, so they more than earn their keep in keeping millionaires and billionaires in line. The higher rates/higher revenue thing makes no sense. First of all, it’s a lie. Second of all, what does that have to do with tax dodging? It’s not like rich, immoral asswipes who dodge taxes are saying, “I’m not giving this money to the government because it doesn’t create higher revenues anyway.” They’re capitalists. They understand that when money goes from point A to point B, point B’s ledgers go up.
What I find interesting about the conservative nonsense that somehow higher taxes don’t equal higher revenue is that the implication is that higher revenue is a desireable thing. They shouldn’t even go there, because that implication undermines their most favoritest argument, which is that we shouldn’t be funding the government anyway.
3) High tax rates are wrong and unfair – and only lead to the growth of government.
And as we know, government and people employed with are just bad, bad people. In fact, I recommend next time you’re writing a solider in Iraq to jsut scrawl, “Get a real job!” on a piece of paper and mail it to him. Damn solider-leeches, wanting armor and stuff so they don’t get killed. Wah wah. Welfare queens, the lot of them.
What? You think I’m exaggerating? BushCo is a bunch of right wing ideologues who are convinced the only productive people in society are corporate management. If you really believe these arguments that imply that only private sector investments are real, that people who work for the government are subhuman leeches, etc., then it makes sense to let solider-leeches get shot while giving defense money to Halliburton for cheesecake. Iraq is the logical result of this Corporations Uber Alles thinking that Medved is peddling here, this belief that the only truly moral people in society are the rich and maybe, to a lesser degree, those who show the proper deference to their wealthy superiors.
On the fairness thing, well, I have to remind you that Medved is a Christian* and so he’s probably aware that if he keeps pretending like he cares about “fairness”, he’s going to hell. If he actually cared about fairness, he would be talking about two real arguments for fairness.
1) Since the rich benefit more from the system, it’s only fair they pay more into it.
2) The inherent unfairness of capitalism itself, where people unfairly are allowed to profit off others’ labor. If your main concern is fairness, then capitalism should repulse you to your core. Sure, I can smell the people about to say, “But rich people work, too!” Some do, sure, but unless your average CEO has broken the space-time continuum and has 400 times more hours in the week than his average employee, then his “compensation” of 400 times more is not fair.
The argument for capitalism is not that it’s fair, but that it works. If you forward that argument, then you can’t lean on the “it’s not fair!” crap when it comes time to levy high taxes on the rich to pay for the system. It is fair, but even if it weren’t fair, gosh, it works. We do have to be pragmatic here.
*Correction: He’s one of those practitioners of “Judeo-Christianity”, which means nominally Jewish but in full agreement with the right wing nutjob Christo-fascists.
74 Responses to “The maudlin concern for the ever-suffering pampered wealthy”
Leave a comment
Line and paragraph breaks automatic, e-mail address never displayed, HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>
Amanda, when will you plebes learn, prosperity is for the rich. You should be happy being a cog in the wheel that grinds the soylent green to feed the masses so the rich can live off the fat of the land.
And you must have woken up on the wrong side of the bed if you missed the implications of this gem from Medved the legal theorist:
BRILLIANT. Why didn’t I think of that? Consider: The greater the punishment, the greater the incentive to avoid it. If we just make the penalty for murder a $20 fine, nobody would bother trying to escape punishment, and there would be no unsolved murders. We would hardly need police forces. Maybe a few Blackwater goons to guard our castles. And since all our guns keep us safe anyway…
Even OJ could stop wandering the golf courses of Florida looking for Nicole’s killer.
You have to admit it’s fun watching the rightwing pundits melt down since the last election. The people are fickle, so if you substitute a knee-jerk, xenophobic populism (the people say Iraq so it must be the truth) for actual analysis, when the ground shifts under you, as it has with the likes of Medved and Geraldo Rivera, you can’t just go with the flow, since we have your rants on tape. Tap dancing anyone?
Poor Geraldo, now on the wrong side of war-mongering, left muttering under his breath about Keith Olbermann, making schoolboy threats, and drawing maps in the dirt with a stick. Delicious.
They seem to think that money in the pocket of someone in the middle class will just get wasted on lotto tickets and beer?
People in the middle class create jobs. Most people who own small businesses (or start them) are middle class.
This is why national health insurance is so important. It is but another thing that enslaves employees to their job. COBRA is unaffordable, buying your own insurance is unaffordable and not having insurance means that when you get insurance (from another employer) you will have all sort restrictions on that new insurance. Most health coverage will refuse to pay for existing conditions if you have an insurance coverage gap. Too many people end up staying at jobs or doing anything to keep them because they can’t do without health coverage.
Lack of financial independence and savings contribute too. When losing a job means losing your house and no way to even buy groceries, people are pretty beholden to their employer. I hear people like this guy blame it on irresponsible behavior. If you just quit buying those lattes and digital cable you would be financially independent. Not. It is the big things like healthcare costs, over the top costs for housing, transportation and education that are killing people financially. All three of those factors are caused by corporate greed and the current screwed up situation.
It’s kind of like how allowing Medicare to bargain with drug companies will FORCE the drug companies to cut all spending on R & D (you know, the source of their wealth in the first place?).
The mean, mean government wants them to share, and just like the childish creationists who just can’t accept that everything in the world doesn’t exists so that their special asses can enjoy it, they just don’t want to accept reality. And they’ll throw a fit and hold their breath until they’re blue in the face until Mommy (AKA the eeevil government) gives them what they want.
Poor little spoiled rich kids.
An excellent point about the “gummint cannot create jobs!!!!” argument. I’ve had that rattling around in my brain for a couple years now, ever since I saw Norquist quoted as saying, “taxes are when you take money from people who earn it and give it to people who didn’t”. Soldiers, schoolteachers, park rangers, cops, firemen, road crews, FBI agents, Congresscritters, genuine beaureaucrats with desk jobs, code enforcement officers, judges, bailiffs, sheriffs, school janitors, librarians, lunch ladies, prison guards… and that’s just people drawing a _direct_ tax-payed paycheck. And the vast majority certainly do earn them thank you very much. And let’s not forget the vast, VAST number of virtuous private-sector employees and shareholders getting that “job-stifling” money in their pockets… like those working for Haliburton, Lockheed-Martin, Boeing, Bell Textron, General Dynamics…. Gee, there sure are a lot of unproductive leeches/second-handers out there!
Who wouldn’t want a government job? So much security, so much time off, such good benefits. Plus, these people have forgotten all their history. FDR created a lot of jobs. My great uncle was in the CCC’s.
Spot on, as usual!
There’s also the point about using tax dollars to create infrastructure that’s used by business. Taxes to pave the roads used by trucks to deliver a larger of goods to and from an area; air traffic controllers necessary for dealing with an increased number of business and freight lines, internet and phone lines required in bulk by businesses, increased electrical generation, water management, intellectual property management and the civil court system.
Whether it’s government or business, services will be provided that are required by society, and it means money out of my pocket to receive those services. In the end, it really doesn’t matter whether it’s a business providing my phone service, or a government agency: all I care about is cost versus quality. (To that end, the fastest way to restore American perception of socialism would be to reform the Department of Motor Vehicles to be more efficient and accessable to the public)
My personal view is that socialized services would probably work better independently of government; standalone organizations owned equally by the consumers of the service, as opposed to the wealthiest of stockholders, but that’s my own ideology speaking out.
The argument is that government cannot be profitable in the usual sense so agencies cannot create more jobs without additional tax revenue. That is what they mean when they say government cannot “create jobs” but I would argue that the positive effects of having working teachers, administrators etc going out spending money helps create jobs in other sectors.
So, the government can’t reproduce, it has to recruit?
Gotta love the way he cites Putin as a positive example.
Otherwise, I could have written this column in my sleep; it’s a sad rehash of every anti-tax talking point the right has used in the last 25 years. Government doesn’t create wealth! (Except, y’know, for all the government spending–on education, on infrastructure–that makes it possible for people to get wealthy.) It’s unfair to tax the wealthy at a higher rate! (Except that they actually derive more financial benefit from government than the poor or middle class.) And so on.
Obviously, the higher the tax rates, the more the incentive to dodge taxes.
It seems to me what he’s really saying is, “rich people have the resources to succesfully engage in tax dodging (whereas normal middle class people don’t). Even if you change the law, you still can’t make us pay! So you might as well stick with taxing the people who can’t get out of it.”
I’m not saying that the spirit of his argument is correct — I agree with Amanda completely. But what scares me is that this assertion is probably correct. If we cut taxes for the non-wealthy and raised taxes for the wealthy, would governmental revenue go down because a bunch of punk-ass rich kids can pay off their CPAs? That 98% majority can’t do much when our taxes are raised. But wealthy people can weasel out of paying and cost the government millions in IRS audits and investigation.
Dammit. I just made myself angry.
It’s so cute when the ultra-rich whine about how their taxes aren’t “fair.”
Like it’s “fair” that they are born with a net worth of $million/billion? Like it’s “fair” that the sheer, unwitting luck of their birth grants them a lifestyle at a level of posh that 99.99% of the world’s population cannot even dream of?
These poor little rich people need to be dropped into a 3rd world country with nothing but the clothes on their backs for 1 week. Then maybe we can begin to talk “fair.” Until they know actual hunger, not the choice-hunger of the rich&thin, they should shut up and happily pay taxes for the support of the government that protects them from the mobs who would otherwise be inclined to “share the wealth.”
It reminds me of discussion when Bush. was trying to “privatize” Social Security. I don’t know who came up with this, but I love it — When the Social Security system was created, it was approved by the poor because it was better than starvation, it was approved by the middle class* because it was better than the pressing threat of being poor, and it was approved by the wealthy because it was better than being dragged out into the street and shot.
*I question the existence of anything like a true “middle class” at that time, but such sayings work better in 3s.
Rich people tend not to have a high proportion of earned income; a lot of their income is from interest on investments or capital gains or stock options.
I have to remind you that Medved is a Christian
Really? Has he become a “Jew for Jesus”, like Dr. Laura?
If it weren’t for the government, I wouldn’t be employed at all, and I work in the private sector. My first real job, I got because of a government program which gives employers a wage subsidy to hire people who need experience in their field. Later on, I found myself unemployed, and as part of being on social assistance, I signed up for a publicly-funded small business development program. Now I’m a consultant with a stable of clients, and it’s all thanks to the Beneficent State.
On the other hand, in Canada, the government has a very effective role as an economic engine, and most people know it. The argument is, I guess, that it can work if you let it.
I have to say, rich people are whiny babies. I’d do a dance of joy at the opportunity to pay taxes on $300,000 a year. I would fill out forms every day through the month of April if that’s what it took.
Stupid, stupid rat creatures !
zuzu has aptly pointed out the difference between rich and wealthy.
Rich is when you earn a high income. Wealthy is when you live off investments, inheritances, dividends and properties that generate income without you having to perform any actual work.
According to a strict interpretation of the Calvinist work ethic, rich people are therefore the most immoral because they don’t work, but rather, live lifestyles of extravagant self-indulgence financed by the labor of others (usually, their predecessors).
That perceived moral failing might explain why there is such a widespread distrust (if not outright hatred) of the wealthiest Americans and a general agreement that they should be paying more in taxes.
Okay, so I support a tax increase on the class we are discussing, people making over 500K, but there are some problems with the argument here, and I don’t know if they are sarcastic or not.
1) The laffer curve is real, okay? Your blithe disregard for this fact is disturbing. If you raise taxes to 100% that will actually result in no revenue. There are a lot of arguments you could make as to why increasing the max tax bracket will increase revenue in this case and its mostly pretty obvious and I believe there is even plenty of actual data in your favor, but you should make this argument. Otherwise you can get dismissed as just missing th epoint.
2) There is a difference between employment and investment. Investment results in growth and further additional wealth, like investing in medical research making people’s lives better or investing in technologies that reduce the cost of oil extraction. Employing people to go fight in Iraq has no benefit however. That is wasted money and does nothing for our economy. I know this is not the specialty around here, but its also not a super advanced concept and I see this misconception around here a lot. The thing is, government spending can also be an investment, like scientific research, or education. So bigger government is not strictly worse, in this sense.
So Medved is pretty much a hack, but I’d rather see honest rebuttals of his arguments.
I think bringing up a 100% tax rate is a bit of a strawman.
mpowell:
1. If people don’t have jobs, or only crap-paying jobs, then they don’t buy things. Without buying things, companies go under.
2. Poor people and the middle class can invest too. They have bank accounts, retirement funds, and, if they can, buy homes or stock.
3. Most “low taxes bring high benefits” arguments and plans that I have seen are generally advanced by the rich and lack the honest qualifier “for us” after the words “taxes” and “benefits”.
I know that such a commentary is not “super advanced”, but it has the virtue of being honest and accurate.
And the Laffer curve is not without its critics, as you know. Further, where that optimal tax rate rests on the LC is a matter of ferocious debate. Rich people and their apologists bandy about low numbers (flat taxes at 20%, 35%, for example) but there is evidence that it can go as high as 80% before the downward curve kicks in.
Lastly, a Laffer Curve argument such as yours almost always ignores what happens at the other end of the curve if people at the higher end of the income scale get away with paying too little: compliance at the poor end of the scale suffers as well, poor tax and middle-class tax avoidance jumps (more cash deals, more illegal activity, for example), resulting in lower revenue. The flawed assumption in the argument as advanced by pro-Laffer types is that they assume that the Curve exists solely in a percentage payable context, and only to the rich: they wholly ignore the fact that the model can’t exist without a compliance context, and that compliance context operates for people of low and middle income too.
An alternative to punishing the poor with higher costs to benefit the rich in hopes that the golden showers will magically trickle down to the rest of us thanks to the blessings of St. Ronnie and the Invisible Hand…
Bottom of the Pyramid Economics
Too true. The guy who does yard work for my mother can’t put as much time as he wants into his growing landscaping business because he’s chained to a lousy factory job for the health insurance. And boy howdy, does he need it: His five-year-old son has leukemia.As for Medved, he should go back to sneering at grade-Z movies. Even with all the stupid puns, xenophobia and gay-bashing he used in his prose, he still was more valuable then than as a parroter of right-wing talking points.
“1. If people don’t have jobs, or only crap-paying jobs, then they don’t buy things. Without buying things, companies go under.”
Lotto tickets and beer create jobs. The rich have snowed us into thinking that they do it.
A Canadian friend once told me “Sure, we Canadians believe in solid taxes. We ALSO believe in SERVICES”. Much of the tax revolt grew from resentment toward Federal taxes, but most of the consequences fell to local and state coffers, where Americans get most of their services.
After dinner during a workshop where I got cornered by Canadian academic and government types trying to convince me to send my kids to college in Canada, I have been giving it serious thought. Why? Not just because my brother is emigrating and he and his wife can ride herd, but because it is vastly cheaper for an equivalent education. Top schools like McGill run about $5-6K a semester for US kids, and $1500 for in province.
My 11 year old was actually entertaining this notion by googlewhacking for art schools in Toronto and Vancouver. He said to me that he knew that it was much cheaper because he, at his age, came to the realization that Canadians spend their money on schools instead of wars.
After I picked myself off the floors, I told him he had the gist of it.
BTW, Medved is engaging in the classic “how to lie with numbers” game by saying that wealthy/rich people are only 2% of the population.
That may be, but that 1% of the population controls 40% of the wealth and 60% of the stock. Sounds a bit top heavy to me … the kind of top heavy that brings about necessary levee-breaking adjustments if people up there get a bit too smug.
For more see http://www.endgame.org/primer-wealth.html
Last year was my first time paying taxes (as an employed-full-time, non-dependent person). My father, who falls into the upper middle class, rich-but-not-wealthy category has a savings account jointly in my name that will actually be turned over in a couple of years.
Because I was employed as a first-year private school teacher, I qualified for food stamps. While working full-time. Oh, to have a union. And live in a country with freaking priorities. Anyway, had those been my only earnings, there’s no way in hell I would have had to pay any additional taxes, and probably would have gotten a refund on a significant chunk of what had been withheld from my paycheck.
The interest earned on the savings account, while of course significantly less than my salary, actually meant I had to pay several hundred additional dollars in taxes. Never mind I still don’t have access to the actual money in that account; as far as the government is concerned, that doesn’t mean anything. In the moment it was a huge strain on my budget, but I grit my teeth and wrote the check and biked instead of drove for a few months.
And, you know what? That’s exactly how things should be; interest and other things you don’t actually work for should have the bejeezus taxed out of them. Because, regardless of whether you earned the original money in the account, the interest is just gravy. And I have to say, I will gladly pay taxes on that from here to forever, just as some small represenation of how incredibly thankful I am to have been born so lucky that my parents were in a situation to do that for me.
For all the rich like to say the poor should learn to live within their means, they need to learn that lesson themselves. If you make $300,000 and the taxes you have to pay are a burden? You’re living beyond your means. IOKIYAR, I guess.
Not if they can’t afford the medical technology which comes about as a result of it. Not if their health care plan forbids them access to such technology because their HMO won’t profit by providing them with that access. And not if certain types of medical research are roadblocked by religiously-motivated governmental politicking, which somehow becomes allowable when it emanates from the right.
That’s oil extraction, notice, gentle readers; it isn’t to be expected that these lower costs of oil extraction will be passed on to consumers. Only the producers are to benefit, because consumers, especially middle-class consumers, would probably just spend the money they’d save on gasoline on frivolities which would sap their moral character to their ultimate detriment. After all, they’re only middle-class, aren’t they? How virtuous can they be? If they were decent people they’d be rich.
Here I will refrain from noting that lower-costs-of-oil-extraction are of less benefit to oil extractors in the absence of access to oil than in the presence of access to oil, but I will note that Halliburton and Brown & Root seem to have done pretty well for themselves out of the government’s willingness to employ people to go fight in Iraq. But these are exceedingly wealthy corporations, and therefore they deserve all the governmental bennies they can garner.
You seem to have forgotten a few of your Medhead talking points, mpowell; I’m just trying to remind you what they are.
mpowell-
The whole Laffer Curve is a strawman. Blithe statements about its veracity are not honest rebuttals of its criticism. None of the posts I’ve read here have suggested that tax rates raise to 100%, which, along with 0% are the only actual points on the Laffer Curve. Everything in between is conjecture that calls for a variety of assumptions to be true. At best, the whole Laffer argument is that there is some optimal rate of taxation that produces maximum revenue. It has been argued that there may be more than one peak, or even more than one curve. Assumptions about what the role of government spending produces are also debatable. There is very little agreement on where the US is on a presumed Laffer Curve. There is no clear evidence of the truth or existance of the Laffer Curve. ‘Cause if “the Laffer Curve is real”, it would be apparent and verifiable, okay? Bush41 was right to describe it as a faith-based form of economics.
And the government employing people vs. the government investing is also a handy canard. Your blithe dismissal of military employment is just odd but fits the pattern of your argument. Are we actually wasting money down a rathole paying service members or are we investing in our national defense? That’s the problem with this type of argument: ‘the Government’, like Soylent Green, is people. People who spend their paychecks buying stuff. You know, spending their money investing in stuff to make their life better and the lives of the people who sell it to them better. It isn’t some abstract concept that you need to specialize in to understand. The only way to make this type of argument work is to have ‘the government’ either materialize products or to burn the tax revenue. Like that Laffer curve, reality don’t work that way.
And as for the point Medved was getting at, and related to the whole Laffer idea, supporters of Laffer draw clear cause and effect between tax rates and tax income and generally ignore the positive effect of government spending. That spending is not given credit in Laffer evaluations. The Kennedy administration cut tax rates, but there was also the little matter of the build-up in Viet Nam and the whole inventing Tang effort. So did the revenue go up just because the tax rates were lower or was it that perhaps the multiplier effect of increased government spending spreading a bunch of money around?
Bah.
“Employing people to go fight in Iraq has no benefit however. That is wasted money and does nothing for our economy.”
Hold. The. Phone. Only because you employ the qualifier “in Iraq” do you enjoy any agreement from me, whatsoever. And I would consider, by far, the greater cost and waste in Iraq to be in the form of human lives, not intangible dollars.
Wages are not “wasted money,” nor do they do “nothing for our economy.” I sincerely hope that was not your intended meaning. Wages are perhaps the prime example of how money is like manure, working when spread around. Middle and lower wage earners have obviously less ability to save money and so, proportionally, must give more back to the economy than Mr./Ms. Silver Spoon who needs neither to work nor to spend much of a percentage of his/her income to live. Additionally, middle and lower wage earners will necessarily spend most of their dollars locally, on needs like food, fuel, housing. In contrast, there is no guarantee that the uber-wealthy will spend any money locally. After all, who wants to summer on the Gulf Coast when you could be on the Gold Coast?
The neo-feudalists would like us to not remember, and they will pay good money to mouthpieces to catapult their propaganda, but our nation and our economy grew most healthy when our middle class was growing.
“That’s exactly how things should be; interest and other things you don’t actually work for should have the bejeezus taxed out of them. Because, regardless of whether you earned the original money in the account, the interest is just gravy…”
I’m not to sure if I agree with that, wren. You not only earned the original money, you earned the right to dispose of it as you saw fit, including turning it into a way that earns you more money. The problem is not that investment interest received is or isn’t an undeniable good or bad, the questions are rather “taxable to what proportion” and “taxable on whom”.
Regarding the former, no sensible arguments can be made against taxation of interest earnings per se. One can make arguments as to percentages, or comparative taxation rates for employment v. investment income, or as to which investments shall be tax-minimal or tax-exempt. (In Canada, for example, dividends from investments in Canadian corporations on interest [up to, I believe $42k Cdn] are tax-free.)
Regarding the rate, I look at it from a personal perspective, too. I have no savings at all at the moment. None whatsoeve. (In many ways I fit poverty line.) But if I scrimp and save and buy a stock or two, the last thing that I want — and the most unfair thing — would be to snatch away the downstream results of my hard work by arbitrarily stating that I haven’t worked for the interest and have that bejeezus-taxed out of me.
Regarding “on whom”, we should be wary-to-paranoid about increasing the tax breaks as we move up the scale, lest we punish people just for being poor and/or reward them just for being rich. But we don’t want to punish people for being successful, either. The aim of fair government is to let everybody be free to earn and keep a fair buck. Sensible, progressive government is highly dependent on consent and concern for all members of the community. And nothing makes people forget their community and turn selfish conservative faster than having one of their few breaks or successes snatched out of their hands with a triumphant HA-HA! by the tax man.
stryx makes an excellent point regarding what happens in the middle of a Laffer Curve. See for example the nice little summary of the Neo-Laffer-Curve found at wiki. “http://en.wikipedia.org/wiki/Laffer_curve#The_Neo-Laffer_Curve
It is always the topic of taxes that makes me depressed at the power of right-wing media. It some ways it is easy to see why a majority of Americans would vote against, say gay marriage or any civil rights for a minority, they have very little interest but fairness in supporting such rights. But for some reason the majority of Americans today have a deep seated need to protect the rights of the rich minority.
What has happened to our culture between the 50’s when we had a tax system that was much fairer to the majority and now when the majority seems ready to fight tooth and nail to see the rich pay less in taxes? How could the right have been so successful in getting so many of us to vote to our own obvious detriment?
It’s so cute when the ultra-rich whine about how their taxes aren’t “fair.�
Solution: Keep ultra-rich income taxes at the current rate, raise the estate tax to 95%. How can you be unfair to a corpse?
1) The laffer curve is real, okay?
Alas, the Laffer curve was drawn on a napkin. It is “true” in that it captures a few obvious facts about the extremes, but any real examination shows that, in the real world, it is irrelevant - taxation is nowhere near those extremes. Increasing tax rates increases revenue for real world values.
Which brings to mind a few simple facts:
i, Government services must be paid for.
ii, Sooner or later.
iii, If they’re not paid for by the rich, they’ll be paid for by the poor or middle class.
iv, If they’re not paid for sooner, they get paid for later. With interest.
v, And this interest goes to holders of treasury bonds - i.e. the rich and foreign banks.
Let’s assume you’re rich. Would you rather pay taxes or spend the same money purchasing government debt, giving you an income leeched out of the general tax contribution forever and ever, amen? All that would be needed to do so would be to keep the tax rates of the rich low and to run a deficit - and disregard the effects on the future of the country.
Strangely enough, in America, these are Republican Party policies…
On my first point, people have pointed out that a 100 percent tax rate is a strawman and that the laffer curve has its critics. Well, they have pointed out that its not a simple curve. These are both true, but they miss the point of my criticism. There are legitimate criticisms of the claim that raising taxes on the richest 2 percent of America won’t raise revenue, but it is not the trivial claim that Amanda makes it out to be:
“They understand that when money goes from point A to point B, point B’s ledgers go up.”
As I said, if taxes are 100%, the government gets no revenue. The reason I point this out is that it shows that some form of a Laffer curve must exist. What if its 95%? Probably less revenue than the maximum. 90%? Who knows, this stuff is pretty complicated. But there is plenty of evidence that we are well below the tipping point where revenue stops increasing. Since conservatives are making this claim on an actual economic argument, some reference to its refutation would probably be a good thing. This is not that refutation:
“What I find interesting about the conservative nonsense that somehow higher taxes don’t equal higher revenue is that the implication is that higher revenue is a desireable thing.”
Then there is the second point. There were a lot of snide observations along the lines of- well, medical technology isn’t useful if people can’t afford it and reduction in oil extraction costs only benefit companies. I can’t believe I even have to point this out, but both of those observations assume a lot more than is involved in this argument. Medical inventions get cheaper over time even if the cost limits their initial availability (and some research is into reducing costs for pre-existing procedures) and if the market functions properly, which I believe we ought to try and achieve, companies are forced to pass on profits to customers.
There is another matter where I think we don’t see quite eye to eye: not all wages are equally valuable. If the government pays someone to build a highway, that holds a tangible benefit to our society. When the government pays soldiers to fight a foreign war that does more harm than good, there is no benefit (probably negative even) to our society or economy. Sure the wages will be spent either way, but the economy doesn’t function because people are pushing money around- eventually, something has to be produced. Both the government and private sector are capable of spending money in a profitable or non-profitable way and this is an important point to stress as a liberal attempting to rebutt conservative claims that we can’t raise taxes.
Mostly, I think Amanda does a great job of writing effective posts advancing important causes with good arguments and frequent humor/sarcasm. But even though I agree with the aim of this post, raising taxes on the rich, I think its too heavy on the humor/sarcasm part and short on the argument part.
“You seem to have forgotten a few of your Medhead talking points, mpowell; I’m just trying to remind you what they are.”
I understand the concept of concern posting, but that is honestly not what I am doing here. I think when you are refuting the laffer curve argument (which is essentially what Medved is referring to) some reference to the fact that in can be empirically misproven is in order, and I also think when are talking about the distribution of monies/wages, you have to recognize the more and less beneficial jobs/incentives that people can be given.
The laffer curve is real, okay?
Even the people who used to enshrine the Laffer Curve have distanced themselves from it, okay? You must be the last remaining supporter.
Please note Medved’s careful obfuscation: “less than 2% of tax returns show income in excess of $500,000 a year”. “Income”, in tax terms, has a very specific meaning, and it doesn’t mean “all the money you get”. Is he including capital gains? Investments? Annuities? Does he mean post-tax income only? Does he mean individuals’ tax returns (which includes married couples)?
And then there’s the humor of $500K a year being the ceiling for ‘middle class’. Anyone want to guess what Medved’s income was?
(Amanda, last I heard his religious role is as a token Orthodox Jewish lapdog for the Christian right.)
For some reason whenever I hear the name Michael Medved, I think of John Stossel.
The richest Americans may very well invest in companies whose products or services improve the lives of people in some meaningful way. The alleged humanism of their investment strategy, however, does not negate their responsibility to proportionately pay back the people of a nation whose legal, capital, political and property protections allow the person to accumulate that wealth in the first place.
It’s absurd to assume that there’s a direct path between capital investment and job creation. Most equity trades take place in the aftermarket, not the primary market. Unless I have a lot of money and a really good broker, it’s highly unlikely that I’ll be buying shares of an IPO or a secondary issuance of stock. Instead, my broker will be buying shares from another broker-dealer who either holds the shares or is acting as agent for a third party. In that situation, the party making money on the deal (even if stock is sold at a loss) is the joe schmoe broker who sold it to me, and not the company that issued it. The company itself won’t be making a dime on the transaction, though they might be paying ME dividends or interest (if I bought preferred stock). So, unless all rich people are only buying IPOs, underwriting secondary issuances or are primarily buying equities where the issuing company has a significant amount of treasury stock that they can hold while investors buy/hold and drive the price up, and even then absolutely nothing guarantees job creation, this idea that “investment” spurs job growth is spurious - unless you’re talking about the number of broker-dealers, operations and sales professionals employed in the finance industry, in which case I’d agree that investment spurs job growth. But again, that’s only temporary too, because a lot of those jobs (except DVPs and RVPs/RSS) are being outsourced to India. (See: Morgan Stanley and JP Morgan.) Also, mergers and acquisitions obviously result in significant layoffs of employees.
Private companies are a different matter, but there’s less of a ripple effect through the greater community.
Nah, no company has to hire more people cause it got more capital. The rich love perpetuating that myth. Wealth capture =/ wealth creation.
Maybe the reason I use the Laffer Curve is b/c I’m not trying to make an argument for reducing taxes, so I’m not afraid of the association. But to me, Medved or anyone who argues that raising taxes reduces revenue must be referring to the Laffer Curve, right? I mean, what else could they be alluding to? So when you say that “Even the people who used to enshrine the Laffer Curve have distanced themselves from it, okay?”, what you mean is that nobody is willing to use the Laffer Curve to advance an economic argument. But the problem is, I think some people really do believe this argument. Medved may not, but I think some of his readers might think, “maybe that’s true”. So when Medved makes the argument, you should point out that empirically, the Laffer Curve doesn’t help Medved’s claims: lowering taxes has reduced revenue. Maybe this is nitpicking- Amanda can use whatever rhetorical style she wants to criticize Medved, but I have an opinion on what it should include.
Deep6- its not that one specific rich person is going to be investing in IPOs or startups. Collectively we spend our wealth in different ways: consumption, investment, foreign debt payment, etc. Government policy can influence how we do this. When more money is available for investment, all other things being equal, growing a business becomes cheaper b/c capitol is cheaper. This was Rubin’s idea under Clinton: reduce the deficit so more money is shifted to investment. It doesn’t insure that everything will work out with the middle class being better off, but its still a good place to be putting money.
PiaToR: “Would you rather pay taxes or spend the same money purchasing government debt, giving you an income leeched out of the general tax contribution forever and ever, amen? All that would be needed to do so would be to keep the tax rates of the rich low and to run a deficit - and disregard the effects on the future of the country.”
mpowell: “reduce the deficit so more money is shifted to investment”
This is why as a fiscally conservative progressive I used to be driven to distraction by my [sometimes fellow] progressives in law school and after: not one of them ever recognized that deficits and debt were a net future gain to the rich to be paid for by the poor and middle class. The inability of the Left to see deficits and debt as a subtle class warfare tool infuriated me. Everybody, say, wanted the hospital. Nobody wanted to think about how we paid for the hospital in a way that minimized the gain to the rich and the burden to the poor.
If Chewbacca lives on Endor, you must acquit!
If 100% tax rates create $0 revenue, then the Laffer curve must exist. It’s just bad form to criticize other’s arguments using piss poor reasoning. To then go on to call someone out for concern trolling (when they were actually just being snide) after saying that you’re only trying to defend against super awesome rational arguments of conservatives just shows bad judgement.
Like many conservative arguments, yours mixes various unrelated points and then you complain when they’re challenged. Just stating that the Laffer curve exists does not make it so. Many vary bright people have studied this topic and the only ones who can make it work are those who have decided a priori that it does work. And even then they can only do so by mixing apples and oranges and using magical reasoning. Your invocation of ‘if markets function properly’ tipped your hand for sure. The infallability of the invisible hand is one of the prime conceits of the conservative mindset. To go on to make bald statements that some wages are better than others is just… I don’t know. You claim to want to rebut the conservative arguments, but you’ve swallowed their whole point of view. If ‘the government’ builds a bridge to nowhere, that’s an investment but if the government hires a low skill worker to empty bedpans in a VA hospital, that’s just pushing money around?
But this is the one that I just don’t get: ‘Medical inventions get cheaper over time even if the cost limits their initial availability…and if the market functions properly, …companies are forced to pass on profits to customers.’ No wonder you have trouble arguing with conservatives. What is it you are trying to say? And to top it off with “I think when you are refuting the laffer curve argument …some reference to the fact that in can be empirically misproven is in order…” It sounds like you are making an argument, but I really can’t tell. Can I empirically misprove the existance of god? I suppose I could logically, but if you appeal to faith, then you by definition trump reason. The same goes for the Laffer curve, which at its core is a political argument.
Now “…and I also think when are talking about the distribution of monies/wages, you have to recognize the more and less beneficial jobs/incentives that people can be given.” I’m pretty sure comes from the conservative arguments. The problem is, who decides and how do you know? Is a public sector employee automatically performing a less beneficial job than a private sector employee? Is the CEO of say Home Depot performing a more useful societal function than a primary school teacher?
Internalizing conservative hatred of liberty and equality leads to concern trolling and poor logic. Or to put it another way: That does not make sense! But more important, you have to ask yourself: What does this have to do with this case? Nothing. Ladies and gentlemen, it has nothing to do with this case! It does not make sense!
I think, mpowell, that stryx has you when (s)he points out that — amongst other tings — your assumptions do you in. We can’t assume that the market will work, because it often doesn’t. We can’t assume, for example, that those medical machines will become less costly because we can’t prevent other decisions being made in the interim: diversion of revenues into executive bonuses, artificial restriction of supply, and so forth.
Further, you can’t put an argument on the table and then pretend you didn’t. You went from “The laffer curve is real, okay? Your blithe disregard for this fact is disturbing” (a very blunt partisoanship of that theorem) to sliding it off onto Medved and his audience while still professing that you aren’t afraid of it.
Basically, we must concede the fact that Laffer is — like many pure theories in economics — utter nonsense because it based on unsustainable and/or unprovable assumptions: the numbers in the middle of the 0/100 - 100/0 are not amendable to blanket, consistent statements like the pythagorean theorem or a proposition of Euclid, however much Laffer might pretend them to be so. Amongst other things, the percentages in the middle change according to context. (You might, to make up an example, have 40% avoidance of a 60% tax rate in peacetime, but a 22% avoidance of a 70% tax rate in wartime.)
Laffer uses the same infuriatingly stupid base foundation that makes so much of Games Theory utter crap: assume that a variable is a constant. A variable, by definition, can’t be a constant, therefore any so-called hard assertions made from such a flawed assumption are like much of economic theory (as opposed to empirical economic science): a bunch of pretty numbers and exquisite math that mean absolutely jack shit. If I give you directions on how to get from one corner in NYC to another in Atlantic City, (”go one block, turn north…”) they are fine so far as they go. But if I simply move you to another corner, and call it the first corner, then the directions become wholly invalid because the context has changed.
A rant, admittedly. But the fact remains that the Laffer Curve is an ideology or faith, not a scientific principle. So, it’s not real, okay? That, naturally, brings us to mainstream American conservative economics, another faith-based ideology masquerading as science….
So many typos, so little time.
I’m probably just going to be accused of being a conservative troll or something, but I have to comment on this Laffer curve discussion. It’s driving me crazy. There seem to be two different definitions of the Laffer curve floating around in these comments, and it’s making people snarky.
First of all, the Laffer curve as a curve is just a visual representation of the distortionary effect of taxation. I don’t think you will find many economists who argue that this effect doesn’t exist in some degree for most people. Personally, I doubt I would keep working overtime, for example, if I was facing 90+% tax rates on my extra earnings.
I’m pretty sure that this is what mpowell was referring to in his much maligned comment. I know that my first thought upon reading Amanda’s response to talking point #2 was that she didn’t get that the author was trying to claim that this effect would lower tax revenues if tax rates were raised too high. I’m not saying that Medved’s point has any traction, just that it’s there.
Second, the existence of this distortionary effect was used by Laffer etc. to excuse massive tax cuts for the wealthy in the 80s, based on the idea that people were already forgoing income because taxes were so high. Cutting tax rates was supposed to give the rich incentives to earn even more money which would in turn increase tax revenues. This is the idea which has been discredited by most economists, not the very existence of the curve.
And just in case you’re wondering, I totally support the idea of the post. More taxes on the wealthy, by all means. And except for that one little missing piece, I think the post is great, as usual.
Melissa:
You’re a conservative troll.
There, now that I have that joke out of the way, I can move on to your substantive points.
First, I think that you make a valuable addition when you note the exploitation of Laffer (etc) to serve the tax cut agenda of the eighties. It ties into my point about ideologies and faith and preassumptions. Accurate facts (and I’m not conceding that the Laffer Curve is either valid or a fact) are used to justify preconceived ideological notions, no different than primitive tribes being manipulated by a shaman, pointing to a meteor shower and saying it’s proof that the gods want him to get the next virgin, or Pat Robertson saying that floods prove that Americans are sinners. (Personally, I’d rather listen to the shaman, but there you are.)
Second, you raise a point that badly needs elaboration when you speak of the distortionary effect of taxation. This is a favourite conservative hobbyhorse, but they use it in a ludicrious fashion. In a so-called conservative view, the market, operating on its own, works near-perfectly, and taxes introduce a distortion into the market which inhibits-to-prevents that smooth operation. This argument is tripe on so many levels.
(-A) No market is perfect. There has never been a perfect market. There will never be a perfect market. All markets are human, and therefore unpredictable and flawed.
(-B) Taxes are a part of the market, and always have been. Other than some rag-ass goat exchange up in the hills Back In The Day, every significant, measurable market has taken place within a governmental context of some kind, including taxes of some kind. To speak of taxes as some mythical Other is like saying that your kidneys distort your body function. No, they are part of your body function and can be called “distorting” only when they go wrong. [See “(-D)”]
(-C) Every significant activity in a market can be called “distortionary”. A distortion, by definition, is something that twists something out of its previous shape. Therefore, an innovation in technology or supply that radically reduces cost and increases availability can be called a distortion. But we don’t do that, do we? We call it the market operating well. And why don’t we? Because of (-D)
(-D) Distortion is simply a pejorative word for change, and not a valid verbal tool of analysis. One could argue that the huge tax cuts done under Reagan were “distorting”: they changed the fiscal situation of the US government out of all proportion to the established post-1945 peacetime practice and setup. Me, I would call them “distorting” because I believe in balanced budgets and equitable social benefits. But no conservative calls them “distorting” because those changes fit within their ideological/economic goals. Put bluntly and fairly, conservatives call taxes “distorting” because they represent a significant and measurable change of which they disapprove.
Wow, talk about misinterpretation. When I was talking about concern trolling, I was talking about myself- I know that I could be perceived as concern trolling, so you don’t give me the credit of the doubt and I was just trying to say I think concerns about how you phrase your arguments are important. Pretty much I have to thank Melissa for throwing in a helpful comment. I don’t care what you call the effect, but taxation does distort incentives and this is what I am talking about. One way to see this it to look at extremes. And extremes don’t necessarily tell you anything about the middle, but they do tell you where you will end up as you move to the extreme. Fact is, we may not be there now, but in the 50s there was a 90% max tax bracket. I wouldn’t be surprised if that’s usually too high for maximizing revenue type purposes.
Furthermore, everyone leaped on the examples I threw out on different points. I feel like you guys are only leaping on these ideas b/c you’re assuming I’m a conservative troll. A bridge to nowhere? That’s a terrible use of tax revenue. I was talking about building useful infrastructure. Emptying bedpans in a VA hospital? That’s a valuable service. I’m not the furthest left person here- I have a more business oriented perspective, its true. So investment in medical and engineering type technologies appeal to me. Are these bad examples? Maybe you don’t like them, but do you think we shouldn’t be investing in medical or engineering type research? Hey, maybe there are problems w/ health care and oil company monopolies in this country, but generally you invest in an area in the long run the public will see some benefits from that. Maybe I should use this example: the government should invest in solar energy technology. Now how are you going to turn that into a bogus conservative position? But ultimately yes, depending on what wages are paying for, they are more or less valuable to society.
“I think, mpowell, that stryx has you when (s)he points out that — amongst other tings — your assumptions do you in. We can’t assume that the market will work, because it often doesn’t. We can’t assume, for example, that those medical machines will become less costly because we can’t prevent other decisions being made in the interim: diversion of revenues into executive bonuses, artificial restriction of supply, and so forth.”
Wow- so are you saying this means we shouldn’t invest any money into medical research? I mean, come on, give me a break.
Trust me, I have no difficulty arguing with conservatives. I know which of their ideas can be used against them and which of their conceits need to be refuted. Its explaining myself to liberals when I demonstrate some appreciation of something that sounds like it might be a conservative idea that I have trouble apparently.
mpowell:
We are talking past each other. Your exact comment was this: “Medical inventions get cheaper over time even if the cost limits their initial availability (and some research is into reducing costs for pre-existing procedures) and if the market functions properly, which I believe we ought to try and achieve, companies are forced to pass on profits to customers.”
I’m not saying that you are a conservative troll. I am saying that you often advance arguments that are de facto conservative — or advance them in such a matter that it seems so — and we should examine them. For example:
“Medical inventions get cheaper over time.” That’s a bold, bald, unqualified statement; my point, in response, was maybe they do and maybe they don’t. I have given two examples of why they might not. A third might be one we are all familiar with: software that doesn’t work or continue to work past a certain date without expensive upgrades. Sure, the software might have gone from $300 to $120, but I’m also paying for three later upgrades at $75, so am I really ahead? There are thousands to millions such quirks in the market, and bald predictions of inevitable outcomes simply to not apply. Humans are just too damned keen on screwing each other for a buck or three.
“if the market functions properly, which I believe we ought to try and achieve, companies are forced to pass on profits to customers”
To be fair, this sentence marks you as most definitely not a conservative. But the point that some make — and I know that I was trying to make — is that many to most arguments today that are called free market based are in fact simply not so. They are conservative and/or corporatist arguments dressed up as market arguments. Some of the most enraged progressives I have ever known are, in fact, almost libertarian in their economic arguments, because they do believe that the “we ought to try and achieve” a “market [which] functions properly”, if necessary by economic “force”. People like Bush and Cheney don’t believe in markets which function properly, because if they do then the distorted (there’s that word again) market which currently exists, which grossly and disprortionately rewards their class and the corporations and trusts that they own and benefit from ends and a free market will sometimes-to-frequently punish them for their incompetence. They want to reap the rewards even if they fuck up, something that a truly free market doesn’t permit, Darwinian place that it is.
The fact is, neither conservatives nor liberals truly believe in a free market because whether they are aware of it or not or admit it or not, there is no such thing as a wholly free market. Where they differ is how state intervention is appplied, and in favour of whom. Conservatives want the country to be run for rich folks, liberals for most folks. Sadly, there are a lot of people in America who have bought into the notion that conservatism is for the little guy when it most palpably isn’t.
I think, mpowell, you may have run into trouble by metaphorically standing with conservatives and advancing their arguments (sorry, but the Laffer is laughable) and so you were taken as a conservative. There’s a reason for the old expression, “lie down with dogs and you’ll get fleas”.
If 100% tax rates create $0 revenue, then the Laffer curve must exist.
I’d really like to know who taught you statistics, because I think I can raise a lynch mob over the internets in no time flat.
You CAN NOT EVER infer the shape of a curve from a single observation or two observations just because some grade school teacher taught you that two points make a line. When you are dealing with highly complex systems like economic phenomena, you cannot, with any certainty, infer or interpolate from the extremes. You can only enter them in as baysian priors or as limits until your further observations of the system in various states increases your certainty and better defines your splines, smooths, or simple functions.
In other words, BULLSHIT.
I think I’m in love with Ms Kate. The whole objectively-correct-and-a-math-dominatrix thing is just too much for a sensitive boy like myself to resist.
You can’t tell me that raising taxes on the rich is going to make people not want to be rich. It doesn’t compute. If I made 10 million and paid 90% tax I’d be left with 1 million- still 20 times what I currently make in a year. I’d take that deal in a nanosecond. If the tax rate was 99%, I’d still be getting 100K- twice what I’m getting now. Sign me up.
The Laffer Curve is ridiculous on its face. It’s attempting to ascribe psychological effects to mathematical phenomena (I won’t want to make more money because taxes are too high). I don’t care how you try to weasel it, say there’s peaks and valleys and if you close one eye and tilt your head just so it actually can descibe reality. It’s bogus, it’s BS. Laffer Curve is a good name for it.
Anyone who claims the Laffer Curve is an accurate tool to analyze tax policy has zero credibility, IMHO. End of story.
Six-Oh-Seven-Nine,
As I said, you can use your own examples if you don’t think the particular ones I use are helpful. My point is that wealth can be spent in different ways. Some are more beneficial than others. Just b/c you are paying someone a wage, doesn’t mean I can’t question the utility. So I stand by my claim that paying someone to investigate better medical technology is a better use of money than paying someone to go fight in Iraq. I’m not sure how this discussion got dragged so far off course, but I don’t think you’d disagree with this claim.
As for the Laffer Curve and distortion, here is the last I will say on the matter. We know at least 3 points on the Laffer Curve. At 0% taxation, the government gets $0. At our current tax rate the government gets a lot of money. At 100% taxation, the government gets no money. Further, the government never has negative revenue. As long as this curve is continuous (and I don’t know how it could be anything but), you can show there is some tax rate, above which, the government receives strictly less money. Given just the 3 data points I have offered and continuity this is a mathematical fact. And when 90% tax rates are a historical reality, this property of the curve is worth recognizing. Now, conservatives did attempt to manipulate the existence of the curve to their advantage in the 80s; and fact is, Medved’s articles shows that they’re still doing it now. I don’t think you do yourself any favors if you pretend this curve doesn’t exist as an attempt to show that the republicans are wrong about what spot on the curve we currently occupy and its slope. Its the latter point on which the republicans have been shown to be wrong, not that the curve doesn’t exist.
As for distortions- yes, this can be a misleading term. But here is the point: we have some current economic arrangment. You can’t figure revenue from a tax hike by assuming incomes will remain the same in the face of that hike. Instead, the tax hike changes economic distributions, usually leading to a nonlinear increase in revenue with tax percentage. Sure, republicans use verbiage to their advantage when they can, but until the language changes, I’m going to call it what the economists do, which is distorting.
Mpowell, I agree that we can probably figure out an optimal tax rate. But at this point, the tax raises on the wealthy being fought over are still so low they don’t even get close to the areas of problematic that you’re referencing. Sorry if my post wasn’t as wonkish as is optimal for having an airtight argument. The reason I kept it low on wonkery is because I’m trying to create easily digestible counterparts to this.
And no, I don’t think Medved and those who make this argument are really considering the Laffer Curve. They quite literally argue to the guillible public that any percentage point of income taken from the wealthy in taxes vanishes completely from the economy.
“At 100% taxation, the government gets no money”
Actually, if the Stalinist experience is any guide that is not an accurate statement. I’m not saying that it’s right, or effective, or — hell — even sustainable. I’m just saying that it has been done, and so bang goes one of the three legs of your pro-Laffer stool. The 100/0 notion is predicated on a governmental unwillingness to use extreme force (an unwillingness not possessed by more than a few governments past and present) and predicated on the notion that there is no flow-back. Put alternatively, if the government is willing and able to kill or jail you if you don’t comply and if that government is willing to ensure enough flow-back in the form of meeting basic ration needs and giving you just enough hope to avoid desperation, then, yes, the 100/0 can be done.
“I don’t think you do yourself any favors if you pretend this curve doesn’t exist ”
Be fair. I didn’t argue that it doesn’t exist. I argued that it can’t truly be determined as is a bullshit theory without any practical value whatsoever, ever, a shamanistic piece of nonsense masquerading as science and a tool not of analysis and enlightenment but of obfuscation and ideology. For me to argue that it is a bullshit tool in the hands of those who are greedy and want to be greedier then I must, impliedly, concede that it exists. When I say “So, it’s not real, okay?” I am saying that it is not real in the way that you advance it: as anything scientific or worthy of note, let alone use.
sorry:
“be determined and is…”
mpowell, Melissa—I don’t think you’re conservative trolls. I think your points are valid and interesting. I have to butt in and make the peace. For the actual theories/ideas of economics, they are valid.
What I see going on, unfortunately, is an urge to give Medved the benefit of the doubt. I wouldn’t do that. He waved off the idea that government investment in the economy could help the economy at all. He’s not really trotting out economic theories so much as ideological absolutes. So any dollar put into the government is seen as absolutely taken out of the economy, and that argument of his was the one I was quarreling with.
Amanda,
I had always assumed that an argument like Medved’s was a reference to the old Laffer Curve stuff. I supposse that’s not necessarily true. I certainly wouldn’t want to give Medved the benefit of the doubt, but my view is that if you want to persuade people (theoretically, Medved readers), sometimes you have to in your argument. Of course, that’s a matter of opinion. And I certainly agree that government spending can be a good investment in our society (although as I’ve pointed out, I think Iraq is an example of poor investment).
Six-oh-Seven-Nine,
This argument got out of hand. No hard feelings, I hope. I don’t think there’s a lot of core disagreement here, just much different perspective.
I couldn’t agree more with Amanda on this one. The idea that people on more than $500,000 a year will have to start turning the heating off in winter and foraging for food if they’re taxed a bit higher is grossly insulting.
I don’t know what the situation is in North America but here in the UK, rents, council tax, utilities and public transport (ie. the necessities, especially if you’re on a struggling income) have all gone through the roof in the last couple of years, as the gap between rich and poor widens and our public services continue to get privatised. The idea that the rich contribute to society primarily through their wealth is ridiculous, and the sooner high income bracket taxes are raised and corresponding tax loopholes closed the better.
Gads… this conversation has gotten ridiculous.
I feel like yelling “HEY! AMANDA! WOMEN DESERVE EQUALITY!” and having her yell back “HEY! JOHN! MEN SHOULDN’T BE PRIVILEGED OVER WOMEN!” and see how long we can keep going on in violent agreement because we’re using different words.
It could be a heck of a comedy routine if done right.
(Looking around to see if someone is going to fuss over the difference between women having equality, and men being privileged. Deciding, consciously, not to answer if they do. Unless it looks like fun.)
No, see, it makes sense from Medved’s standpoint. If his wealthy bosses weren’t paying him to write this tripe, he might have to get a real job. And his current position of scanning cartoon penguin movies for any hints of teh gay is obviously much more important than any old government job like teaching kids to read, fighting forest fires, tracking down criminals, feeding the hungry, etc.
I commend Amanda Marcotte’s attempt to make peace. I think it’s of the essence that persons of differing religious convictions make peace; i. e. just because i don’t think that people who don’t stick to halal food are rightfully the prey of Shaitan, it’s in my interest, as a practical matter, not to make too egregious fun of those who do believe it. Similarly, though I don’t personally walk about marvelling at the divine symmetry inherent in the Laffer Curve as I might marvel at a vision of the Shekinah or the Virgin of Guadalupe, I understand that it’s not very good manners on my part to sneer at persons who do happen to be subject to such visitations.
So, in the light of that conviction and in the interest of further peace, I submit the following prayer:
A Prayer Upon Awakening
Now we rouse us up to serve
aspects of the Laffer Curve
and may Smith’s The Wealth of Nations
teach us our respective stations.
Ask for nothing, nothing get;
ask for all, get nothing yet—*
let that thought grant us the grace
to tarry properly in place.
Amen.
*(Something that must prove, I’ll bet.)
Fascinating stuff. You people have made some great points. So thank you for this wealth of information in this one little post. Does anyone know if there are any theoreticals out there that discuss “if you raise marginal tax rates for incomes above x by y% then the deficit disappears.” I’ve tried to find site(s) like this where you could plug in variables and see what it does to the deficit. As discussed above, I realize that the results are non-linear or “distorted”, but it would still be great fodder when dealing w/the tax hating wealthy to be able to use a few examples.
The inability of the Left to see deficits and debt as a subtle class warfare tool infuriated me.
Then teach them.
But it’s pretty obvious when you look at it. “The Education of David Stockman” lays out the basic principles for government finance in America - there’s a million reasons not to cut spending, and a million advocates for cutting taxes. Whenever someone proposes cutting taxes, they’re talking about budget deficits.
But how are deficits financed? Through borrowing - selling people interest bearing assets. And who buys these? Among others, the rich. And where do they get the money to do this? Well, their taxes have been cut, see…
You get money from the rich one way or another. If people see that the choice is between whether this is through taxation or by selling a claim to the taxes they pay in the future, then the class warfare aspect becomes obvious. You just have to lead them through the implications arising from that which is borrowed today must be paid for tomorrow.
Amanda, why do you use “solider” instead of “soldier”? I’ve seen it before and assumed it was just a typo, but it’s far too consistent. Is it an in-joke I’m not getting?
Six-oh-Seven-Nine … This argument got out of hand. No hard feelings, I hope. I don’t think there’s a lot of core disagreement here, just much different perspective.
None whatsoever.
Mellissa, I have to ask, as an amature scifi/fantasy/alternate history writer, what dystopia are you living in where you’re making an hourly wage (eligible for OT), and STILL paying 90%+ in taxes?! That Stalinist regime type problem would put me off working altogether, I’m afraid
A little more fuel for the fire:
If someone earns $500k in a year they’re rich, according to the above, and by some accounts should have the beJesus taxed out of them.
But what if that person had gone many years with zero income and taken substantial personal financial/emotional/health risks to earn that $500k? This is the problem with overly simplistic, annual income-based definitions of class, and this is exactly the type of scenario you might see from someone who had created a small business. This type of income would tend to show up as “unearned” or investment income, despite the fact that it was earned with years of uncompensated sweat equity.
It’s easy to say that “yeah, I’d get down on my knees and ____ for $500k and cheerfully pay 90% taxes”, but it’s a different thing to go years with zero income, no health insurance, sleepless nights as the savings dwindle, not to mention strain on the family–all to possibly succeed and get that reward and maybe a little security in your old age.
Any definition of class has to (as has been pointed out above) consider earned versus inherited income, but it also has to consider income averaged over periods substantially longer than a year–otherwise it almost specifically targets middle class entrepreneurs and the small businesses they create. And this is an area in which Democrats have historically lost small business owners, because the Dems treated small business owners as part of the evil rich.
And Laffer curve or not, if I have to bust my ass, erode my stomach, burn my life savings and risk my marriage over a period of years to earn, after taxes, 10% of $500k, no thanks.
Just sayin’
Dave,
I’ve considered that issue myself. I don’t know if there’s a good solution though. Rolling taxes averaged over five years? Maybe if the government could pass legislation that takes effect many years in the future, people could plan their lives to avoid this. But there is one thing to keep in mind: making law based on a few hard cases is a bad idea.
Dave from Dallas and mpowell: Aren’t such business losses subject to some sort of tax carry-forward? (My own business never ran in the red, so I’m not sure. Tiny black, yes, but not red.)
At the risk of entering into the wonkiness that Amanda said she wanted to avoid, from the article she linked to:
In a progressive tax system, when we refer to a 90% marginal rate on income over 500,000, it doesn’t mean a person who earns $500K pays $450K in taxes. They pay 90% on the money they earn in excess of $500K. The first $30,000 they earn is taxed at the same rate as the first $30,000 you earn, and so on.
Look at your own taxes. For instance, my taxable income puts me in the 25% bracket, but that doesn’t mean I pay a flat 25% of my total income in taxes. The first $5150 I get to keep, untaxed. The next $7550 is taxed at 10%, so I pay $755 on that. The next $23,000 is taxed at 15%. It’s only the remainder — the amount I earned over $36K, basically — that gets taxed at 15%. So my total federal taxes actually average out to around 10% of my gross.
That’s why talk of “tax brackets” and marginal rates are pretty misleading to the general public. It sounds like the government is leaving the pitiful millionaires no better off than the non-represented laborers they employ. But it’s not that way at all.
“At 0% taxation, the government gets $0. At our current tax rate the government gets a lot of money. At 100% taxation, the government gets no money. Further, the government never has negative revenue. As long as this curve is continuous (and I don’t know how it could be anything but), you can show there is some tax rate, above which, the government receives strictly less money. Given just the 3 data points I have offered and continuity this is a mathematical fact.”
*Math Undergrad hat on*
Why continuity? Hell, why even assume that it’s injective (i.e. for any given tax rate x, there is only one value y that the government revenue recieves.) I can easily think of simple reasons it would end up more like a bifurcation diagram - in that the tax rate you are coming from has as much influence as the one you are moving to - dropping to 60% tax would have a much different effect to rising to 60% even if all else was kept constant.
I also strongly object to 100% taxation means no-one would work. I mean, I’d assume if no-one has any money that food, shelter etc is all being taken care of. I’d be quite happy to continue working in academia gratis if someone promised to take care of all the details and ensure I was fed, clothed and sheltered - and provided with internet access preferably! I’d imagine anyone who enjoyed their job would do likewise. Getting people to do more icky jobs might be a bit harder, but if they were getting everything they needed to live (which minimum wage hardly supplies) I doubt the number signing up would be zero…
I haven’t followed much of this thread, but
“Further, the government never has negative revenue.”
This is not necessarily true. Tax income can be infinitesimal, but collecting the tax must have minimum cost, and adding other complexities could also result in negative revenue.
High tax rates betrayed and murdered my family.
If someone earns $500k in a year they’re rich, according to the above, and by some accounts should have the beJesus taxed out of them. […] And Laffer curve or not, if I have to bust my ass, erode my stomach, burn my life savings and risk my marriage over a period of years to earn, after taxes, 10% of $500k, no thanks.
Since we’re talking about the real world here, Western economies function quite well with top marginal tax rates between 30 and 65%. And, as has been noted, we’re talking about a marginal rate on income over a large amount.
I need to send my economics professor this link with a quick note of gratitude, because a semester ago I wouldn’t have understood an iota of this comment thread.
And for what it’s worth, I’m fairly certain that he would rip Mr. Medved’s article to shreds. He made the point, over and over again, that government expenditures are investments, that tax money isn’t just sent into a whirling vortex of oblivion, and that it is just as important as private investment when it comes to shoring up the economy.
He banged this idea home repeatedly as well, that deficit spending merely pushes the fiscal responsibility off to the middle- and working-class people of future generations, and that the people who benefit from deficit spending are generally the wealthiest classes of people, both foreign and domestic, because of the interest paid on t-bills and such.
The prof was no commie, by any stretch of the imagination, but he was also one of the harshest critics of US monetary policy that I’ve ever encountered.