If you consider yourself middle class—and statistically, I know most of us do, even those of us who are marginal on either side of the divide—and you’re wondering if you’re the only one who can’t seem to get it together, finances-wise, well, you’re not alone. The mid-20th century idea of “middle class” was not just middle income, but financial stability and possession of assets, and by that definition, the American middle class is small indeed and shrinking. (Hat tip.)
* Only 31 percent of middle-income families match our profile for being securely middle class. That is, despite falling into the broad range that defines middle-class “income,” fewer than one in three families has the necessary combination of other factors to ensure middle-class security.
* Our Index results vary by race. Thirty-four percent of white middle-income families are securely in the middle class, as compared to 26 percent of African-American middle-income families and only 18 percent of Latino middle-income families.
* One in four middle-class families matches our profile for being at high risk of slipping out of the middle class altogether.
* One in five (21 percent) white families is at high risk for slipping out of the middle class, as compared to one in three (33 percent) African-American headed households and an alarming two in five (41 percent) Latino families.Lack of Assets
* More than half of middle-class families have no net financial assets whatsoever-that is, no financial assets or debt levels that exceed their assets.
* Only 13 percent of middle-class families have sufficient assets to meet three-quarters of their essential living expenses for nine months, should their source of income disappear.
* About four out of five middle-class families do not have sufficient assets to cover three quarters of essential living expenses for even three months should their source of income disappear. We defined essential living expenses as food, housing, clothing, transportation, health care, personal care, education, personal insurance and pensions.
* Middle-class families have a median debt of $3,500 and median net assets of $0.Insufficient Income to Meet Living Expenses, Cover Housing Costs, and Buy Healthcare
* Twenty-one percent of middle-class families have less than $100 per week ($5,000 per year) remaining after meeting essential living expenses. These families are living from paycheck to paycheck with very little margin of security.
* In nearly one out of four middle-class families (23 percent), at least one family member lacks health insurance of any kind.
* Twenty-eight percent of middle-class families spend 30 percent or more of their income on housing expenses, putting them above federal guidelines for housing affordability.
There seem to be some immediate villains—lack of employment stability, rising cost of living, rising housing and health care costs especially. In my parents generation, the income that my boyfriend and I bring would be enough to buy a home and raise a couple of kids. Now it’s enough to buy an XBox.
There’s some solutions that come immediately to mind, and we know they work, because they’ve worked in the past or in other nations. Universal health care that brings down the cost of health care and employs price controls would be a start. But one thing that’s critical is a return to high marginal tax rates. The existence of a super-wealthy class has a lot of negative side effects for working people, but one of them is that we have to compete with them in the housing and food markets, and since price is no object for the rich, they drive up prices. Supply and demand 101, and it’s especially true in terms of housing.
Another big difference between the 1950s and today is that top marginal tax rates have fallen dramatically. From 1951 until 1963, the top marginal tax rate was above 90%. Now it’s 35%. So if you were trying to accumulate wealth in the 1950s, it would’ve been sensible to look after the long-term health of your business and rely on a steady income, year after year, in the lower brackets. Nowadays, you don’t have to do that. You just have to juke up the stock price without tending to the fundamental health of the corporation you’re running, earn an insane paycheck for a short period of time, and the low marginal tax rates will allow you to keep two thirds of the money you make. So CEO pay runs to 800+ times the minimum wage rather than the mere 50 multiple that prevailed in 1965, and the people at the top are ready to take the money and run.
I’m actually with the Laffer Curve people part of the way here — you collect less in taxes when you run the top bracket above 90%, because people stop pushing for big salaries when they can’t keep their money. But that’s just fine with me. If restricting CEO pay just leaves more money in the till for workers to take home, I’m happy enough to run the downward redistribution of wealth through the private sector rather than through government-run social welfare programs. It’s actually fine to be on the far slope of the Laffer curve, because that’s where money flows down to people in the lower brackets.
Higher worker pay is an immediate possibility, as well as more stable benefits like proper pensions instead of the riskier stuff you’re encouraged to enroll in now. But Neil’s 100% right about how a lot of our economic woes go back to what my mother used to decry as “quarterly thinking” when she was in investment lending—the prioritizing of get-rich-quick investments over the long term health of your business. From the work she was doing, you saw a microcosm of the damage low marginal tax rates did to the housing market in Austin. Everyone wants to make a few million in a year and retire for the rest of their lives, of course, and the existence of the super-wealthy meant that there was a decent market for $2, $3, $5 million homes. So speculative builders all rushed into that market, in hopes that they’d get to be instant millionaires, too, and the production of reasonably priced homes slowed for a long time. (Until the mansion market reached a saturation level.) Now imagine all that if both getting rich quick and the super-wealthy class were non-issues.
It’s not just housing, but business in general. The get-rich-quick mentality that makes CEOs unwilling to invest long term in a business trickles down (even if their money doesn’t). Workers bounce around from job to job; the very idea of investing your career at one business is fading from view, as is the income stability and pensions attached to that.
168 Responses to “What middle class?”
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There seem to be some immediate villains—lack of employment stability, rising cost of living, rising housing and health care costs especially. In my parents generation, the income that my boyfriend and I bring would be enough to buy a home and raise a couple of kids. Now it’s enough to buy an XBox.
Inflation, inflation. How much paper money have we printed since the 50s? Too much. If a dollar was now what it was in the 50s, we’d have $30 Ipods.
You want less inflation? A good place to start is lowering government spending and paying off the national debt.
“The existence of a super-wealthy class has a lot of negative side effects for working people, but one of them is that we have to compete with them in the housing and food markets,”
???? Since the super-rich are quite few, are we really competing for them in the FOOD market? They may have multiple mansions, but they can only eat so much.
I share your view of the damage done by the short term view that CEO types take. I worked for 30 years in Silicon Valley, and watched this develop in the 80’s and 90’s. I ended my career by leading a revolt and getting an Executive VP forcibly retied because of his utter inability to think beyond the next quarter. And it was damaging our ability to stay in business. It cost me my job too (dis-loyal SOB that I was) but it was well worth it. I don’t know what can be done about this corporate disease. I’m not sure that the people who want to be our political leaders have enough smarts to out-think the corporate types. I disagree with your desire for high marginal tax rates. I suspect how one views this may be formed in part by how one grew up and what their early work experience was like. I remember my first engineering job, and my first pay raise. I got a $200 a month raise after 1 year on the job. I was so excited, but when I got my first new paycheck, $66 went to the FEDS, $22 went to the State of California, and $15 went to Social Security. I got $97.
I thought it was a mistake until payroll explained it to me. At the time I couldn’t figure out what the FED and State government had done to get half my raise.
I still wouldn’t understand it today.
eric: well, but food prices can go up according to what the wealthier can afford. the super-rich may not blink at the costs, so they can go up and up. shopping at Whole Paycheck is an object lesson in this.
Food prices don’t go up because of the “Super rich”.
First of all, the “super rich” aren’t buying Mac ‘N Cheese and Miller High Life.
Secondly, they are such a small part of the population any effect they would have would be negligible on prices.
Its inflation, people. Its there as it always was, the government is just better at hiding it by only letting it go up a little bit each year instead of a whole lot. But it adds up over a period of five years.
The desire for short-term gains isn’t just because greedy CEOs want big paychecks. It’s because those CEOs, greedy or not, have to answer to institutional investors and mutual-fund managers who own big chunks of stock in their businesses and want the stock price pushed as high as possible. This “make your quarterly numbers” mentality is antithetical to long-term thinking and can push companies into disastrous decisions.
The super-rich may be a small part of the population, and they may not be buying mac-and-cheese and miller high life, but they are sure as hell screwing with oil prices, which in turn has an effect in transportation costs, which DOES impact on food prices.
I don’t know about y’all, but I’m paying 4 bucks a gallon for milk, and I have three kids. We go through about 3 gallons a week. Only a year ago, I was paying $2.50/gallon.
The super-rich may be a small part of the population, and they may not be buying mac-and-cheese and miller high life, but they are sure as hell screwing with oil prices, which in turn has an effect in transportation costs, which DOES impact on food prices.
I don’t know, I sure know a lot of middle class people around here who bitch about $3.50/gallon gas while simultaneously driving Ford Expeditions and Chevy Suburbans. Hell, I know working class people doing this. This might be anectodal, but I don’t think SUVs would be the best selling cars in America if only the super rich bought them.
There is one thing screwing with food prices, though. Ethanol subsidies. Farmers are turning their corn into ethanol (and sometimes even turning fields that make other foods into corn fields) to take advantage of the artificially created market of corn ethanol. The supply of food constricts, prices go up. This would not be happening without government subsidies.
Add to this inflation due to government spending (see above) and you have a clusterfuck.
Food prices are going up, but it’s simply not that bad, at least in my experience. There’s a wide variety of choices in the food market which keeps prices down…now things could very well be better..changing subsidies towards more healthy foods is a wonderful idea..but it’s not TOO bad…
When compared with the costs of higher education, housing, transportation, energy and health care among others, food prices are relativly sane.
The real problem truly is the desperation to maintain overheated stock prices, motivated by short-term capital gains based investing. A top marginal rate would fix things, but I happen to think that raising the rate for capital gains (with an one-time exception for retirement money switching into an annuity) to almost punitive levels (say 66-75% or so), so that more money is made through buy and hold dividends than through the current ponzi scheme system.
It’s good to hear some objective agreement with the experiences I’ve been having. Just five or six years ago, what I made was enough to get by on, with a little left for a few modest luxuries, like a brief vacation with the kids, etc. Now? I can barely put food on the table. And food is outrageous - those 4 dollar gallons of milk are bad enough, but we eat a LOT of fresh fruits and veggies, and those have become simply astronomical. In the height of apple season, for instance, prices didn’t get lower than 1.59 a pound. And a single pound of apples is, what? Three? Maybe four? Lettuce is 3 bucks a head, even freaking GARLIC is 50 cents a head, where just a couple months ago it was 25 cents. And don’t even get me started on my bank account fees.
I’ve never understood why we can’t tax people who make $200,000/year or more half of their income. They’d still have $100,000/year, which is more than 5 times what I get as a grad student.
Also, 1/3 of my income goes to rent. It would be great if we could get some price controls or something.
One thing is that I’ve noticed is municipal utilities are much cheaper than private utilities. The city of Lincoln, NE owns the electricity, so our electric bill was $48 last month (although that was without heat - with heat it might be $70 - $100). And we’re running 4 computers, cooking, and using the dishwasher. That’s significantly cheaper than what I was paying for electricity in Missouri, even though our heat and stove was natural gas there. And natural gas is terribly expensive.
I drive an SUV, but I have never bought a car in my life because I cannot afford to buy a car. All my cars have been hand-me-downs from my parents. Yes, I realize how very, very lucky I am to have parents that can afford to do this for me. The reason my parents drive SUVs is because they live in northern Wisconsin where the roads are crap for 9 months of the year. A lot of working class and middle class people in the Midwest drive trucks because they live on farms and they need to haul things and drive on dirt roads and snowy roads. Sure, a lot of people have them that don’t need them. I can’t imagine why city people would even want one.
I drive an SUV, but I have never bought a car in my life because I cannot afford to buy a car. All my cars have been hand-me-downs from my parents. Yes, I realize how very, very lucky I am to have parents that can afford to do this for me. The reason my parents drive SUVs is because they live in northern Wisconsin where the roads are crap for 9 months of the year.
Well I live in central Virginia–which hasn’t had a snow storm of any sinifigance since 2000–and in an urban area to boot. But there seems to be no shortage of SUV love among people that make around $35,000 a year. This includes one of my co-workers, who in the next sentence complains about the price of gas while he just bought a Ford Expedition. Call me cold-hearted but if you’re dumb enough to buy a gas guzzler yhou have no right to complain about gas prices. If they were really “too high” you would reduce your consumption.
I have an old VW Gulf Diesel, ftw!
Also, 1/3 of my income goes to rent. It would be great if we could get some price controls or something.
All that does is create a housing shortage since the landlord has no incentive (and much less cash) to either rent or build more housing. It also raises the price of rent greatly for those outside the rent control area, and ends up becoming welfare for the rich. This happened in New York and Cambridge where millionaires would end up living in rent controlled areas in luxury apartments. This despite the fact it was intended to help the poor.
Does anyone know of any books that examine this in more detail?
atomic fruitbat: you can’t live on kraft dinner and high life, though. decent food is getting more expensive. a lot of that is tied to oil price, it’s true — particularly where produce is concerned. bad food remains cheap, though, and healthier foods are more expensive.
That’s true up to a point, but knowing how to cook can greatly reduce your food bills. Convenience foods and takeout are several times more expensive than food you cook yourself.Of course, many people do not have the time or energy to cook because they have to work and/or commute such long hours to pay for everything.
bitter scribe: well, but it’s important to factor in energy costs, too: rice and beans are cheap, but if you have to use energy to cook them a long time, your energy bill will go up. flour’s cheap, but you still have to bake it into bread. with that on top of the time-cost, it gets tricky. and the foods that are cheap and don’t require a lot of cooking energy tend not to be very good for you.
if you want to eat lots of produce and try to go organic and avoid HFCS and other additives, that also drives up food costs. i know how to cook, but time’s hard to come by, and just the ingredients for a simple meal can be more expensive than you’d expect. we try to offset this by going the rice-and-beans route, but that does start getting rather wearisome.
I definitely see the impact of quarterly thinking in my industry. Our company earns a profit, but not enough of one to satisfy investors. So we’re constantly cutting costs, not filling positions, etc., to try to make the bottom line look better to investors to increase the share price. Meanwhile, morale sinks and people bail. On the one hand, I feel like I shouldn’t complain because I’m making more money than I ever have and I live in a town with a low cost of living. On the other hand, quality day care is wicked expensive, we’re constantly having to do this or that to the house to keep it from falling down around us, our new health insurance plan bites, and by the time you factor in the increased premiums, I’ll only be making 1.5 percent more next year than this year. Not sure exactly what inflation is, but I’m pretty sure it’s more than that. There definitely is a feeling of falling behind.
But on the consumer side, I think middle class folks aspire to own a lot more stuff now than they used to and there just is a lot more stuff to spend money on. I’m not even talking about SUVs. I’m talking about cell phones, Internet, cable, home computer. We didn’t have any of that stuff growing up - it didn’t even exist. And growing up, we definitely didn’t eat as well as we like to eat now. We ate a lot of ground beef. It was cheap and filling. Today we eat a lot of fruits and vegetables and whole grains. It costs more.
I’m not trying to downplay this problem or say it doesn’t have socioeconomic causes. It does. But our patterns of consumption and our expectations have changed drastically as well.
But on the consumer side, I think middle class folks aspire to own a lot more stuff now than they used to and there just is a lot more stuff to spend money on. I’m not even talking about SUVs. I’m talking about cell phones, Internet, cable, home computer. We didn’t have any of that stuff growing up - it didn’t even exist.
Thats an excellent point. Even discounting things that weren’t invented in the 1960s (personal computers, cable TV, internet, video game consoles, microwaves, etc) people that are considered middle class in 2007 would be filthy stinking rich in 1967.
How many tvs would a middle class family own in 1967? How many cars? What would the average size of their house be? A whole lot freaking less on all counts.
And that brings up another point to the whole mess…
Dignity.
In reality, that’s what people are looking for. To be respected. By and large as a society we don’t even respect the people that go without the trappings of modern life, when we probably should revere them.
Those stats are scary-accurate to my experience.
Well, social security is for your own retirement. As for the rest, it sounds like you take a lot of things for granted - the roads on which you drive to work; national security (getting to and from work is a bitch in war zones); the police and court system (which make it far less likely that some thug is going to steal the $97 that you have left), for a start. Don’t you think that you should contribute to all that?
Anonymous Kate:
Absolutely I should contribute! But I think 33% is the right number, not 50%. I’ve read comments here and there that want the number to be 90% on marginal incomes. What is fair?
Well if it isn’t the oldest dodge in the book. A few extra TVs as a product of capitalism’s long run tendency to make commodities cheaper hardly makes up for persistent life-time economic insecurity of the great majority, while a tiny minority (you know, those people who actually own all the companies) accumulate essentially the whole of the benefits of economic growth (excepting the cheaper TVs).
Do you have any rational reason for that judgement, or are we supposed to base social policy on your emotions?
Look, running a civilization is expensive. Those who benefit the most should pay the most. That’s not the way it is for a lot of people now. Remember, those percentages are on taxable income, not total income. When my husband and I were graduate students we paid about 25% of our total gross income in income taxes. Once my husband got a job and we were making triple our former income, we were paying only 15% of our total gross income because we could afford a house and got the home mortgage interest deduction and could itemize our other deductions. That’s not right.
ack, that came out snarkier and nastier than I intended. Sorry about my tone.
Well if it isn’t the oldest dodge in the book. A few extra TVs as a product of capitalism’s long run tendency to make commodities cheaper hardly makes up for persistent life-time economic insecurity of the great majority,
Hello? Did I ever said it would make up for chronic economic security? I don’t believe I did.
But let me just ask you–would you rather live in a 1960s middle class home with one car, one black-and-white tv with three channels, no air conditioning, and a house that has about half the square footage? Or would you want to live in typical middle class house in 2007? If you say 2007, then you have to admit we are in a lot of ways better of than our parents. In other ways, I agree no we are not.
Look, running a civilization is expensive.
I bet if we eliminated a lot of the fat in government–corporate welfare, pork barrel spending, and endless imperial adventures to start–it would at least be less expensive.
Thats an excellent point. Even discounting things that weren’t invented in the 1960s (personal computers, cable TV, internet, video game consoles, microwaves, etc) people that are considered middle class in 2007 would be filthy stinking rich in 1967.
Only if you add it all up and get a house with a yard. Which you don’t. Not even remotely close.
Only if you add it all up and get a house with a yard. Which you don’t. Not even remotely close.
That would greatly depend on where you live. If you’re in New York City or even Atlanta you probably don’t.
In Fredericksburg, you can.
I won’t argue that housing is extremely over priced because of speculation. But I guess thats at least one upside to the housing crisis–prices will go lower and lower until people can afford homes again.
Anonymous Kate:
No tone problem from where I stand. Thanks for the gracious follow up.
I’ve been in many different tax brackets in my career, and have paid anywhere from 0% to 44% of my total (not adjusted) income at times. Part of the problem in my opinion is that the tax code tries to serve too many purposes at the same time. Revenue generation for the needed services as well as trying to steer social policy. I’m not sure if there is a “rational” way to set rates, but a fairer system must surley be possible. I’d support paying up to 50% of my total income. Make $1M, and send $500K to the gov’t. No questions asked. But my irrational emotional side rebels at make $1M and send in $900K. I’ve never bought into the next dollar utility model.
Just a comment about the food prices. The note about the ethanol subsidies is correct. These decrease production of food at the expense of fuel. This also has wider effects, since less of the corn is available for feed, (and what is available costs more) farmers cannot afford feed large herds and that directly translates into less and more expensive beef,pork milk and eggs.
Next high fuel prices directly affect farmers, tractors unfortunately don’t run on grass but on diesel. At our small place we have had to raise our prices on our hay for example because we cannot survive selling at less that it costs us to make it.
Iso:
Methinks you don’t understand what a marginal tax rate is. It’s not on you whole income, it’s on the last dollar. So with a 90% marginal rate, if you get a raise from $900K to $1M, you send 90 of that extra $100K to the government. Not 90% of the whole shebang.
Meanwhile, the idea that only 1 on five middle-income families has even enough money to cover three months interruption in income is pretty terrifying. And we don’t own more stuff than people did in the 60s, we rent it — how much of those purchases that go on the credit card are still in use by the time the balance gets paid off?
Jim-
I’m assuming you are a farmer. Do you agree with me that corn ethanol is a boondoggle for big agribusiness and is pretty useless as a method for getting off foreign oil?
Food prices going up is bad — it’s regional. I think it’s worse in high urban areas than more rual ones. Oil price increases are having an impact.
Nevertheless, it is true that the increased costs of other things may be more significant. However, for the desperate poor, which will matter more: increased education costs or increased food prices?
chingona
December 1, 2007 at 4:26 pm
But on the consumer side, I think middle class folks aspire to own a lot more stuff now than they used to and there just is a lot more stuff to spend money on.
People in the 60’s didn’t have jewelry and luxury vacations? They didn’t have land to buy? No books? No fun at all?
People bought stupid toys half a century ago, just like now. We just don’t see it as trendy. They definately had more raw buying power and more economic freedom, and they definately could fritter their money away if they chose.
The problem is the pie has been shrinking for those who aren’t middle-class, so those who didn’t successfully invest in the 60’s can’t maintain that lifestyle now.
AtomicFruitbat
December 1, 2007 at 4:34 pm
How many tvs would a middle class family own in 1967? How many cars? What would the average size of their house be? A whole lot freaking less on all counts.
A lot more of the middle class would own their house outright in 1967, as opposed to the default renter situation of the modern day. TVs weren’t that useful — hell, most stations didn’t even broadcast 24/7. How many European vacations did people go on in 1967? Damn sight more than now. The mere existance of more large houses doesn’t mean that the population at large benefits from them.
With a HS Diploma and a bit of will, a white male in 1967 could go to work and use that job to purchase a house. A freakn’ house. If it’s smaller than many houses of today, who gives a damn? You can’t buy a small house with a solid post-high-school job nowadays. You can’t buy any kind of house at all.
And this was the situation before the housing bubble, long before — we were bandying about the decline of home ownership in the 80’s. This is a consequence of a kleptocratic economy, not some short-term Fed snafu.
AF is right about ethanol. Complete bullshit there. I’d go a step farther and say we need to return to localized food production in order to cut out transportation costs. This would also reduce pollution and, obviously, reduce dependency on foreign oil. The agribusiness conglomerates are parasites.
Contrastive anecdote time — By the time my parents were my age, they owned their own house in a suburb of a medium-sized city, had two relatively new sports cars (my mom had a ‘65 Mustang and my dad had a ‘69 P1800), a very nice set of furniture that they’d bought for cash (none of this “on time” stuff), a tv, and a lot of the luxuries of life. There was no question about whether they could afford to have kids or not; I doubt it ever even came up.
I make, in inflation-adjusted dollars, slightly less than what my mother made as a first-year teacher in 1966, and I have a Master’s degree and five years’ experience. (When my mom started teaching, primary-grades teachers didn’t need to have graduate degrees.) I live in a small rented house in the downtown of another medium-sized city and share with a roommate. I couldn’t afford a car if I even had a license, and I’m still years away from paying for my education. Even though postsecondary education is heavily subsidised here, it still cost relatively more for me to go to school than it did for my parents’ generation. Buy a house? Forget it. I don’t want kids, but even if I did, also forget it. Most of my posessions are “hand-me-overs” from someone or other. I don’t own a tv or a cell phone or a videogame console. I do actually own three computers, however (which, given my line of work, is not unlike a mechanic owning a very serious set of tools), but one of them was a birthday gift from my ex, another was a gift from my father when he got a legal settlement, and the third I bought on credit in 1999 when I started grad school and just paid off last year. The newest of my computers is three years old…
I thought it was a mistake until payroll explained it to me. At the time I couldn’t figure out what the FED and State government had done to get half my raise.
Well, it must have been a mistake unless your $200 raise catapulted you into the 33% tax bracket. And if it was a mistake, you got your money back when you filed taxes. And if it wasn’t a mistake– hey, I wish I had made enough money to be in the 33% tax bracket, which I don’t think we even have any more.
We are very fortunate to have bought the house we did when we did. Housing prices escallated after our purchase, and our neighborhood has held its ground in the recent drop because it is close in yet next to the woods. People actually value commuting costs, suddenly.
Sure, we have 22 steps to the front door (easier to go around from the driveway), but we have a south and west exposure with a north and east nestled into the hill we are on.
Add in a modest house size, good winterization, solar hot water heat (aged beyond repair, but still sort of working) and a host of other things that I noticed in 1998 that were below the realtor radar (plus investment in energy star appliances), and we end up using 1/3 the water and paying 1/2 the heating bill of anybody I know. We don’t shower in a barrel or take interrupted showers, either. We just built conservation into the infrastructure, as did the previous “Creation Care” fundie owners, use compact florescent lighting, and have a timed thermostat that drops the temps whenever we are not likely to care.
Good thing, since we were both underemployed for too many years. We have one car, and planned our mortgage on a house to coincide with the amount that one full-time or two-part time or underpaid jobs could carry. I will admit that we don’t have much saved for college or retirement, but we should soon because our income has gone up and our usual expenses are fairly low. Just call it the benefits of thinking about it a bit, and planning for the day when energy is not cheap and jobs are not easy.
No, it’s not. That’s a pernicious meme designed to make people think privatization wouldn’t destroy the system. Social security is insurance–insurance against becoming disabled, or widowed, or old without a pension. It’s the price you pay to have streets that aren’t full of starving old people. Whether or not you ever get a dime from the system has little to do with whether or not you’ve benefitted from it.I’ve never understood why we can’t tax people who make $200,000/year or more half of their income. They’d still have $100,000/year, which is more than 5 times what I get as a grad student.
Because, apparently, they will lose all incentive to work, give up their jobs as corporate attorneys or stockbrokers, and smoke dope instead. Do you want to be responsible for a sharp increase in the price of dope?
Anyhow, I could probably dig up a reference showing that Western economies have done quite nicely under tax rates considerably more than America’s, up to 60% during one period for Denmark IIRC. Of course, the social compact was different - they actually got economic security in conjunction with their high taxes.
grendelkhan - point taken
Still, a huge percentage of it goes to retirees and when one retires how much one gets is based on how much they made for -about the last 3 years before retirement (I can’t remember exactly).
I agree that privatization would destroy the system - that would be true even if it was for retirement.
Anyhow, I could probably dig up a reference showing that Western economies have done quite nicely under tax rates considerably more than America’s, up to 60% during one period for Denmark IIRC.
Denmark–an extremely homogeneous, tiny country that has the population of the Baltimore-Washington area on a crowded weekend.
I could drag up statistics for Hong Kong and Singapore, two places that seem to do extremely well despite almost non-existent taxes and regulation. But I don’t because I know its inaccurate in the extreme to compare two city-states to a continental Republic of 300 million people.
Ha! Sixty percent is chicken feed. From 1951 to 1963, the top marginal tax rate (the $400,000+ bracket, equivalent in 1951 to about $3.2 million in 2006, equivalent in 1963 to about $2.6 million in 2006) was a mind-blowing ninety-one percent. (There was a statutory limitation on the total tax exceeding 87 or 88 percent of the total income, but that’s just a detail.) That’s why we had a big freaking middle class in the 1950s. That, and a huge military-industrial complex.Our top marginal tax rate is now thirty-five percent. The very, very rich now keep more than seven times the portion of their last dollar than they did during the golden years that conservatives long for. Curiously enough, they never seem to long for those “confiscatory” tax rates.
I should add, as AtomicFruitbat has expressed skepticism that the United States could ever support such insane top marginal tax rates, that those rates were, in fact, the rates for the United States federal income tax. Pardon my US-centrism.
Atomic Fruitbat:
We moved to Fredericksburg from a bigger city thinking we’d be able to afford a bigger house but the cost of living is so freaking expensive in this town that it costs more to own a home here than it did there.
Who are you? It’s such a cramped town I bet we know each other.
archaism (at) gmail (dot) com
I should add, as AtomicFruitbat has expressed skepticism that the United States could ever support such insane top marginal tax rates, that those rates were, in fact, the rates for the United States federal income tax. Pardon my US-centrism.
They maybe have been 90+% on paper, but due to the insane amount of deductions and offshore banking they weren’t 90% in reality.
Now, if theres one thing I hate more than higher taxes its a complicated federal tax code.
Who are you? It’s such a cramped town I bet we know each other.
I’m not in Fredericksburg, I just picked it off the top of my head as a medium-to-smallish town. I actually live down in Richmond. Fredericksburg is a great freaking town, though.
Richmond has a pretty low cost of living, and I figured it would be lower still in Fredericksburg. I guess NOVA-itis has moved to the shores of the Rappahannock. I hope its not anywhere near Fairfax levels yet!
Down here you can get a 3-4 bedroom house in Chesterfield for $200-250 grand.
In Fredericksburg, you can.
Really? Because I added up all those items, trying to imagine spending A LOT on each one—the TV is big screen, hi-def, etc. and I concluded that in Fredericksburg, you can buy a house for $10,000-$30,000. As a consumer of many modern electronic goods—well, at least my boyfriend is and I tag along without a murmur of complaint—I can assure you that it’s not worth enough to buy a 1 bedroom house in Shitsville, TX. Call me skeptical about the consumer goods theory. Plus, we may have TVs, but my grandparents’ generation bought stuff like, oh, motorboats and RVs, stuff that’s way more expensive than even a 60 inch HD TV.
Denmark–an extremely homogeneous, tiny country that has the population of the Baltimore-Washington area on a crowded weekend.
The U.S.: A large, diverse nation that saw unprecedented middle class growth in the 50s with a marginal tax rate of 90+%.
The U.S.: A large, diverse nation that saw unprecedented middle class growth in the 50s with a marginal tax rate of 90+%.
It wasn’t really 90%. See above.
The circumstances of the 1950s aren’t going to return ever, Amanda. In case you forgot, a pretty big war had ended recently and all of the U.S. economic competitors were under piles of ruble. In addition, all the demobilized soldiers (and people on the homefront who were forced by the war to save money) were now spending the massive amount of money they saved during the war. Call me crazy, but I think that had more to do with the good economy than a 90%+ tax rate.
Back in 2000, I compared notes with Vern, the operator of a welding shop in Lunenburg, Nova Scotia, while his “best guy” was patching up the resonator in our 1993 Escort Wagon.
For his taxes, which were not much really, he got daycare for his similar aged kids, and healthcare for the whole family. As a small business operator, he didn’t have to pay healthcare for his employees, either, which put more money in his pocket and made his business solvent.
I worked at Harvard, which has awesome benefits, and I still couldn’t match him when my outlay for part-time daycare and healthcare costs were figured into the mix.
He threw up his hands and said “Wow! I couldn’t live there - I’d be broke and out of business in a month!”
So much for job growth through the small business sector. Our tax rates may be low, but what we pay for other shit sure eclipses them in no time - and we don’t have much to show for it at the end of the day!
Nor is it really 35% now. What’s your point? They get all those deductions, etc. and that just means that we need to keep jacking up the rate until they are actually paying some damn taxes. Right now, the average working class person and wealthy person pay the exact same percentage of their income to taxes, after all the finagling etc. So why *not* jack up the rate so there’s even a semblance of progressive taxation?
In case this isn’t abundantly clear, the flaw in your thinking is this: you’re acting like the rich won’t pay much higher taxes under 90% with deductions than 35% with deductions. There’s exactly 0 reason to believe that. The proof is in the pudding, as it were, the giant shifts in economic practices from the mid-century to now.
Nor is it really 35% now. What’s your point? They get all those deductions, etc. and that just means that we need to keep jacking up the rate until they are actually paying some damn taxes.
Why not just eliminate all the deductions that exist and simultaneously reduce the rate by 5%? I bet you would still end up with more revenue and from a political stand point it would be an easier sell at election time for your party.
I think we could both at least agree (at least I hope) that our tax code is overly-complicated, arcane, and irrational.
How about spending more of our tax money on actual services for the people who pay the bulk of it, and less on vanity wars that serve only the interests of the wealthy people who pay little in taxes?
Your crazy Fruitbat. To think that the tax rate isn’t directly linked to the prosperity of the populace is ludicrous. Try all of western-freaking-Europe for comparison. And please, no bullshit about size comparisons; you can see the effects of an elitist, tax-free upper class in any government, larger or small. Small feudal states were just as inefficient and corrupt (for the majority) as large ones were.
And I don’t recall Hong Kong being a model of economic justice; it has a pretty sizeable underclass supporting the prosperity of its rich. Ridiculously bad counterexample.
There’s just no way sane to argue that higher taxes for the wealthy, those that benefit economically the most from society’s infrastructure, isn’t an economically sound choice.
Anyone know what income range was considered middle class or middle income for that survey?
The fact that those massive tax revenues were plowed back into low-cost loans and grants for housing and education for those returning soldiers, thus pretty much creating the great American middle class, made that good economy. You’ve got the cart in front of the horse, there. High taxation on the rich levels things out. It’s pretty much the opposite of the grotesque stratification and concentration of wealth that’s been happening since the 1970s.It’s pretty simple. High marginal tax rates at the top (so long as don’t entirely flow right back to the upper class) bring people into the middle class. Low marginal tax rates at the top turn us into a fortress society, with a few oligarchs imprisoned in their gated castles, surrounded by the teeming destitute.
atomicfruitbat is doin’ the libertard dance - claiming all the credit of technological innovation for cheaper consumer goods, and trying to pin all the blame for our increasingly difficult economic situation on governments. At the same time, as the libertarians always do in these threads, he or she is deliberately avoiding clear comparisons between our parents’ home-buying power and ours. Because these two issues - housing affordability and healthcare affordability - are the key 2 issues which affect all of our futures.
The libertards want us to squat in the ruins of our once-great societies, playing the best xbox games and waiting to be turfed onto the streets from our rented shitty housing when we retire, so that a small few can afford mansions and boutique health care.
The sly people like high marginal tax rates and high estate taxes because those things do one thing extremely well…
get rid of deadweight elites
Some commenter on Feministe made a good point the other day. She said (and I paraphrase, she was more eloquent) that rich people complain about not being able to keep their money because of taxes. But it’s actually the poor who don’t get to keep their money, because they spend all of their income on necessities.
If marginal tax rates got higher than 50%, you’d see two things happening. One, a substantial industry built up around tax loopholes, dodges, and questionable tactics, with only the rich able to afford to avail themselves. Two, entrepreneurs moving away to other countries. Damn straight I would. Million dollar salaries netting out 100K would create a serious brain drain, whatever other beneficial results. Ultimately, I think the cost benefit equation would go into the red fairly shortly.
Already happened. Heck, it’s probably worse than it would be under a high-marginal-tax system, because (a) rich people are whiny like you wouldn’t believe about paying their taxes, no matter how much money they take home, and (b) there’s more money at the top end now to support the tax-evasion industry. Oh, no! Atlas will Shrug!I think you grossly overestimate the importance of this country’s super-rich. Also, you’re not figuring the taxes properly. If we return to a 1950s system, the 90-percent bracket would start at around two million dollars. I don’t care how brilliant you are, nobody working a salaried day job doing actual work makes that. Overfed parasites make raking in dividends from their capital make that.
Grendel, Rand notwithstanding, I think you’re missing the point. Plenty of folks who aren’t parasites make $500K-$2M+ without stock. For someone who has built up from scratch to that amount, only to have the majority of it sucked out, yes, I think we’ll see some undesired attrition.
I agree with you that there are many overpaid, underworked parasites out there. But this kind of strategy would overcorrect for that, and lead to some results nobody wants.
octogalore, it would never be the majority. If the 90% tax rate kicks in at a million bucks, then a person earning 2million bucks loses 900,000 of the last million, not 1.8 million of the whole lot.
And very few people, parasite or not, make more than 500k.
If your attrition argument is so strong, where did all the 50s entrepreneurs go? Seems to me they stayed in the US and paid their taxes… we should NEVER buy the whining lies of the rich that they will take their bat and ball and go home if we make them pay taxes. They LIE.
Keep in mind that the poor pay more in taxes than the rich.
The poor have sometimes objected to being governed badly; the rich have always objected to being governed at all. — G.K. Chesterton
Where the FUCK have you been? Seriously?! This comment is mind-numbing. Are you being faceatious? There is a multi-billion dollar industry dedicated to tax avoidance — and evasion. Billion. With a “b.” And said industry has been blessed by the courts, by no lesser luminaries than Cardozo and the like.
As for the brain drain, too late — or have you been paying attention to that brand-new phenomenon known as “outsourcing?” You know, when scientists and engineers abroad hit our own professionals hard because our economy is rigged for the rich?
Seriously, did you just skip the last three fucking decades?
No they don’t. You can’t make 7 figures without taking advantage of the U.S. infrastructure in a way that no one in the middle class possibly can.
You haven’t just skipped the 80’s and 90’s, you’ve forgotten about the 50’s and 60’s. Are we discussing the Civil War era here? Do you realize that we have an entire set of two decades of economic prosperity that refutes your argument utterly, besides a wealth of common sense and logic?
He actually has a point here. The post-1970’s trend of increasing economic insecurity and lifetime accumulation of zero net assets represents a return to the norm over capitalism’s history for the majority. The post-war era of increasing wealth and economic security for the majority certainly was a historical aberration. Though I don’t think that’s quite what he meant…
Disagree with Neil about running the downward redistribution curve of wealth through the private sector for three reasons.
1. Government leaves money on the table that it could have used towards improving social services such as education which aids in the increase of national economic growth which benefits all of us in the long term.
2. People who are/could be in higher income brackets would not only have a reduced incentive to aspire to positions at the very top income brackets…..but also a greater incentive to cheat the system through loopholes, off-shore accounts, and outright tax evasion. While the IRS can use punitive measures to discourage this through making examples of people…..this would not only be an added drain on the IRS budget….but also alienate taxpayers in similar situations which would encourage more cheating by making the tax evaders into heroes which would encourage more tax evasion and more costly punitive IRS measures in a spiraling cycle.
In the end, this won’t benefit anyone. Unless I and several other commentators are mistaken, even the US in the 1950’s and 1960’s did not go that far as the highest tax rate was on marginal income above a certain point….not the entire amount.
3. This is unnecessary and lets the economists off the hook. Their knowledge should be put to work in intensively researching the best tax rates that get us as close to the most optimal point of the laffer curve so the government gets the maximal tax revenue possible for carrying out its duties to provide for the greater public good without creating a situation that discourages aspiring to the highest income bracket jobs, alienates taxpayers in the highest income brackets, and encourages cheating the tax system and if punitive measures are taken….making them into anti-government heroes.
This is a much better use of economists’ expertise than having them sit around writing tomes in support of their pet economic theories.
A little historical context: The current top marginal rate is little more than half its value over the whole period from 1913. The top marginal rate was above 70% between 1918-21 and 1936-80. It was above 90% in 1944-45 and 1951-63. The pre-Reagan top rate was higher than post-1980 top rate in every year except 1913-16 and 1925-31. By the historic standards of US capitalism, we are living through an anomalous period in tax policy. Also a period of high inequality.
I’ve only read through half the comments, which left me wondering whether anyone knew anything about what was happening in the rest of the world.
Yes! Everybody could have health care! Everybody could make a living wage? Any goddamned job would have decent pay and decent benefits because it would be a universal right!
Countries with higher taxes are eating dollars for breakfast and shitting euros.
I gave up the right to be a white male in exchange for six weeks of paid vacation a year*; who wouldn’t?
Any discussion which involves why the U.S. can’t do anything better than it’s already doing, or why the U.S. can’t do what everyone else is already doing, puts me in mind of the first “Planet of the Apes” movie, where Charlton Heston flies a paper airplane to refute the impossibility of flight.
*Technically I was nearly 50 when I retired, so it doesn’t really count.
Since, as my name indicates, I’m an asshole, let me dilate a little bit about marginal tax rates.
When my brother and friend and I started our company we elected to form it as a subchapter S corporation, essentially a partnership, such that the company’s profits showed up proportionately on our personal tax returns.
There is a certain thrill in claiming nearly a million in income, if merely as an accounting formality. What could you really do with that sort of income on a regular basis? Eat a Maserati? Mainline a Mont Blanc?
{we actually paid ourselves comfortable wages and put the rest back into the company. We paid a higher tax rate (~55%) )than we would have had we been an normal corporation (~35%, but we reduced our basis by the amount of our retained earnings, so it was a wash when we sold out, paying only the capital gains tax, or so we were advised.}
Anyone who thinks capitalism is mostly about profit is either playing fast & loose, lying or not paying attention.
Simply, France’s working class has the best health care in world and a relatively high standard of not having to work their whole frickin lives away because they’re organized and mobilized. Every time France’s government comes at them for belt tightening they fight back in the streets like the recent strike wave.
Here in the US the left is weak and dysfunctionally wed to the democrat party, who never deliver anything. The US rich will pay more taxes when the feel threatened. Liberal wankerism about tax policy isn’t a threat in the least.
PS France has an even lower unionization rate than the US, but they know how to resist.
If we had better public schools, then there would be a larger number of school districts where it would be desirable to live and housing prices might be a bit lower.
If it were more feasible for people to live closer to where they work, then this would save them on commuting expenses and on time.
I think the problem with corporate governance goes beyond the tax code. How could so much of Wall Street fool itself about subprime mortgage backed securities? The moneys given to the departing CEOs is obscene; but surely everyone knew that these weren’t AAA stuff. One can only imagine that (short-term) greed overcame common sense and ethics.
“No One of Consequence,” of course tax evasion and brain drain are already happening. But hardly to the degree that would happen in this day and age if a marginal tax were to apply. Not even close.
Also, keep in mind, since you’re such a history buff, that company loyalty was much more the norm in the 50s-60s. I’m in the search field, and am well aware that the greener pasture is always a twinkle in the eye of people who, if they’d been around in the 50s, wouldn’t have thought of deserting their employer based on tax changes.
And yeah, I used to think the same about the 500K-2M+ people, but I know plenty of examples of folks who leveraged into this bracket from the middle class.
Correction: meant to say if a higher-than-50% marginal tax were to apply.
Amanda’s post opines about many problems facing the “middle class” as victims of the “super rich”, and neither term is even defined.
This piece was like eating cotton candy. You bite into it thinking that you’ve got something– just to find slightly flavored air.
““No One of Consequence,” of course tax evasion and brain drain are already happening. But hardly to the degree that would happen in this day and age if a marginal tax were to apply. Not even close.”
There seems to be a fundamental dichotomy going on in this discussion.
One claim is that the tax rates in the US are already too high, and if they are raised even higher (in an attempt address - huge - income and tax rate inequalities between the rich and everyone else), the only useful, meaningful, and productive people (the currently rich - by definition) will flee the country taking their superior brains, financial skills, and awesome productivity with them. And then we’ll REALLY see who the superior people are as we suffer in a future third-world version of America.
The other claim is that other countries (especially in Europe) are economically deluded hellholes where politicians have foolishly embraced the false promises of Socialism, providing their citizens with all kinds of childish and unnecessary perks to give them the illusion of progress while destroying them with confiscatory tax rates which will inevitably result in a painful Atlas Shrugged moment that will cause those countries’ spectacular collapse into third-world barbarism etc. (maybe even cannibalism…).
If the rest of the world is so hellish, where would Paris Hilton and all those incredibly productive golden-parachuted CEOs go if America was just too hostile to live in (due to making them actually pay taxes)? And why aren’t those people in those other hellish countries with confiscatory tax rates already “shrugging” to force those countries to eliminate those confiscatory tax rates?
Does anyone else see the contradiction here?…
I love moderation, I love moderation, I love moderation…
:(
For those still flailing around, seeking a way around the cold, hard facts about how healthy marginal tax rates are for the economy, here’s a post from Angry Bear, run by not one, but three bloggers with doctorates in economics, arguing that the high marginal tax rate of the 50s was a major factor in the unprecedented prosperity. Perhaps it would be useful to remember, for those who are flailing around, clutching their wallets, that we call it a “marginal” tax rate for a reason, because a marginal number of people are affected.
And why shouldn’t they be? The top 1% of Americans who would be affected by this tax own 33.4% of the country’s wealth. Which is why I scoff at conservatives who whine about the government taking “their” money. Unless you can prove to me that 1% of Americans somehow managed to create, with their own hands, 33.4% of America’s wealth—no assistance from workers or use of government assets like roads or building permits or buildings themselves unless the owners built them by hand with no employed assistance—then they are eligible for a tax rate reflecting how much assistance they’ve gotten from society in creating their wealth. 90% is generously low by that measure.
Well, “Forest Devil,” you can hardly carp at Amanda for using the term “middle class,” which is a centuries-old commonplace of what passes for political and social discourse in the USA. Since it’s such a well-established term, perhaps you can define it to your satisfaction? Or are you saying it means nothing whatsoever?
I cannot speak for Amanda but to me it is obvious that this term implies some kind of model of society assuming an upper class and lower class both distinct from the middle. If we look at those two first there are very obvious criteria for defining them, clear way back in the times of Jefferson and Hamilton:
A lower class is economically dependent on an upper class, in the sense that the latter controls the conditions the former seeks to survive under.
More specifically, in a capitalist society it should be obvious that the lower class is the working class–people who can only meet their day-to-day needs by agreeing to work for a wage for someone else. Whereas a capitalist upper class is obviously those people who own enough productive or potentially productive assets to expect to get a sufficient income from profitable investment of those assets to sustain a lifestyle distinctly superior to the working class. How much more opulent that lifestyle is is a matter that varies from nation to nation and time to time.
My parents were able to support a family of four on what my father made in the Army.
We didn’t ‘kick the lights fantastic’ but we got by pretty well as I remember.
We were probably, then, on the bottom rungs of ‘middle class’. We did go hungry a few times but it was always due to the military payroll screw ups that seemed to happen too often.
I remember once, his checks got sent to Vietnam! Yeah, that would work well for him there. Another time he got a promotion and the checks just stopped coming. A feature of the promotion no doubt.
Odd that in Michigan the disappearing middle class voted for Bush in ‘04 judging by the bumper stickers.
Yes, yes, yes. We forget also that many corporations pay zero dollars in taxes, even though they benefit more from the laws and infrastructure than most individuals. hell the laws are written for them.
The other problem is they have whittled away at inheritance taxes. The best way for the ultra-rich to maintain class relations across generation is inheritance. Why do we allow people to continue to control resources from their graves? A better plan would be to automatically place those resources back in the pool through taxes. Let the “heirs” have one house or $1 million and the rest goes back into the economy where it belongs.
I remember getting into a discussion about the inheritance tax with someone who was probably very far from ever having to worry about it.
The comments from them centered around the ‘death tax’ and how it was going to ‘decimate the rural farmer’ and ‘drastically raise taxes’.
I have to give the Bushist machine credit because they had that poor person totally eating the Bushit about how that tax would result in ‘poor family farmers’ losing their farms and livelihood and put so many out in the street.
I started laughing in the middle which didn’t do the discussion any favors. They were insulted and called me an ‘elitist’ for wanting to ‘kill family farming’ which made the laughter worse. It got to where I couldn’t stop laughing. And here this person was, foaming at the mouth about a tax that effects what, less then 10% of the population? A tax that was meant to stop dynastic wealth accumulation? A tax that will cost George W. Bush and his siblings MILLIONS of dollars and their offspring not one red cent?
I still shake my head at that discussion. Never underestimate the public’s gullibility…
People on this site are seriously enamored of Depression-era tax rates and hate the tax rates of the baby boom — the period of greatest middle-class economic prosperity? Are we discussing geography with flat earthers? It sure as hell feels like it.
Um, bullshit. We have two centuries of U.S. history which contradict your viewpoint, which has the connection to reality we’d attribute to an Aztec sacrifice to Cihuacoatl.
And, guy, do explain to me how tax evasion could get “worse.” Right now the majority of the rich effectively don’t pay taxes at all. They pay pennies on the dollar when they do pay.
You have it bass-ackward. The present system presents a moral hazard for the rich, rewarding bad behavior and punishing good behavior. The not-fucked-up persons on this site want to do the opposite. There is nothing to suggest that a higher marginal tax rate would present the same moral hazard — oh, wait, as a matter of fact, we have historical evidence that it quashes the moral hazard (when implemented alongside an IRS that is made to do its job).
But hey, I’m interrupting valuable obsidian-knife sharpening time. . .
Company loyalty has been reduced because companies fire people more often than ever before due to economic policies that favor the elite. Assets are protected by our courts and executive more than labor, outsourcing, etc. In other words, the policies and values of the 50s-60s have been dismantled by the corps and that has, among other things, reduced company loyalty. So sell me another.
waldteufel, you fail to define “opine,” “problems,” and “neither.” Any dumbass with even passing command of English knows what those words mean. So it goes with “rich” and “middle class.” Hell, the source article describes a consistent definition of the latter term.
As was already pointed out several times, TODAY, right now, is the height of legal U.S. tax avoidance, and TODAY, right now, is the height of illegal tax avoidance, partly because low income tax means that there is more incentive for short-term investments and free-wheeling. This slippery slope argument is completely nonsensical and completely at odds with historical evidence. Quite simply, this argument does not apply to our species.
*blink*. The two biggest, recent hits to the IRS budget have been:
1) The reprioritization of the IRS to persecute the poor and ignore the rich. Bush made it federal policy that the chances of being audited are equal between the rich and poor, even though the poor don’t even justify the cost of an audit. Further, Congressmen have been known to actually pressure, or even have fired, IRS employees who do their job and audit tax cheats. Finally, high-end tax cheats pay pennies on the dollar on what they owe IF they actually get a case taken to trial, and that’s after taxpayers pay for the trial. This actually makes it profitable to avoid paying taxes, since a deferred tax is, in fact, a reduced tax (since you can invest would-be tax monies elsewhere, etc.) Everyone here arguing for the status quo on taxes — frankly, that view is as surreal as discussing world politics with a guy that believes the Bavarian Illuminati run everything. A good source to start on this stuff would be David Cay Johnston’s book Perfectly Legal.
2) The IRS budget has been cut ever year for close to 20 years. It was cut under Clinton and it has had the hell cut out of it under Bush. We lose billions because our aristocracy doesn’t want taxes collected. Low revenues mean that the majority of private individuals — those that work for a living — end up paying more out of pocket to maintain their lifestyle. Less money for roads means more money spent on car repairs. Less money on bridges — do I need to go fucking on? Okay, I will: less money on levees. . . So, seriously, tell me another about how the IRS is a drain.
Ignoratio elenchi. Economists on this issue are completely irrelevant. I might as well argue that white collar crime’s increase in popularity is the responsibility of economists because it ultimately presents a drag on the economy. Or that soldiers raping children in Iraq is something economists should investigate, since mismanagement of the Iraq war presents a drag on the economy. Sheer bullshit. The government should tax such that the utility of collective efforts are maximized, and when your bridges and streets are collapsing and your cities are wiped out by nature and your states have no long-term planning and your citizens have negative fucking assets you know that point has not been reached. No degree required.
I just wanted to follow up on a sane person’s point.
Can anyone here point to a single example of an army of professionals fleeing the U.S. because of teh incom tax!!!!1!!? One? Fucking? Example? Because we had two decades of economic prosperity under higher marginal tax rates and, um, that didn’t happen to my recollection. . .
Lets see, there are eight OCED countries with lower or similar income tax rates for both individuals and corporations than the United States. Canada’s is only slightly higher, about what ours was in the 1990s. They also all have lower measures of inequality according to the Gini index. This includes places like Iceland, New Zealand, Japan, and South Korea. I don’t think anyone on here could seriously call these nations banana republics. Poor Australians aren’t starving in the streets and Japanese grandmothers aren’t eating Alpo.
Don’t you all think there just might be something else at work here besides income tax rates?
Simply, France’s working class has the best health care in world and a relatively high standard of not having to work their whole frickin lives away because they’re organized and mobilized.
Yes, we should envy the French for their economic stagnation, high youth unemployment (especially among minorities!) and their banlieue riots. Try again.
The French system is great–for older workers, Union members, government workers, and those already entrenched in the system. It outright sucks for younger workers and immigrants.
“Don’t you all think there just might be something else at work here besides income tax rates?”
Yeah, very little “defense” spending compared to the US’s self selected role of “world’s policeman” (pre-Commander Codpiece) or world’s political/economic bully (post-Bush).
Gee, I wonder what our tax rates could be and what services we could provide Americans if 100’s-of-billions of dollars weren’t going down various defense-related ratholes, never to be seen again…?
Atomic Fruitbat: non sequitur. Have any of those places lost entire cities to weather effects due to lack of funding for infrastructure? Are they facing chronic problems with said infrastructure due to lack of funding across the board? Do they have rapidly-falling standards of education? Do they have universal health care?
Sure, there’s more going on than tax rates. But it does not follow that tax rates in the U.S. are not a significant effector of wealth disparity. And, just upthread, I thought you were arguing that we couldn’t compare ourselves to other countries due to differences in population? Oh, yeah, there it is at #42.
Atomic Fruitbat: non sequitur. Have any of those places lost entire cities to weather effects due to lack of funding for infrastructure? Are they facing chronic problems with said infrastructure due to lack of funding across the board? Do they have rapidly-falling standards of education? Do they have universal health care?
The Japanese don’t have problems with infrastructure nor do the South Koreans. They recover from serious earthquakes pretty quickly and rapidly. They do this with tax rates lower than ours.
How is this possible? They are much more disciplined with their government spending, something we need to take after them on.
I agree with you all we have some serious funding problems in the federal government. But I believe it comes from a mal-distribution of the revenue the government already gets, rather than a lack of revenue. Theres the military-industrial rathole Mike mentioned above, theres corporate welfare, theres pork barrell spending, theres the Department of
FatherlandHomeland Security. I could go on.Sure, there’s more going on than tax rates. But it does not follow that tax rates in the U.S. are not a significant effector of wealth disparity. And, just upthread, I thought you were arguing that we couldn’t compare ourselves to other countries due to differences in population? Oh, yeah, there it is at #42.
Well the genie got out of the bottle up thread so while were at it I thought I’d make some comparisons of my own. Japan is much closer to us in population than say, Denmark though.
“How is this possible? They are much more disciplined with their government spending, something we need to take after them on.”
They’re much more disciplined alright. Every year they painfully work up the courage to say NO! to a $500-$800-billion defense budget. I’m sure they’re tempted though…
Atomic:What’s at work is the ability of money (or to be more precise, capital) to actually maintain large amounts of control over the population at large, as well as being able to use said money to make even more money, etc.
High marginal rates would effectively eliminate this, and change it away from the pursuit of short-term money towards the pursuit of long-term stable assets, which would have a lot of economic and cultural effects, and be generally a good thing all around. I’m not convinced that raising the top marginal rate is the way to go, I honestly think that limiting it to capital gains is a better idea, but no matter how we do it, the moral hazard brought about by the current investment markets needs to be brought into check.
There’s no question of this.
…I mean, who wants to spend money on wimpy stuff like “health care”, workers rights, livable minimum wages, a social safety net, and all other sorts of panty-waisted stuff, when you could make the choice to buy really cool guns, really neat bombers, and a bunch of other great military boys-and-their-toys crap…
They’re much more disciplined alright. Every year they painfully work up the courage to say NO! to a $500-$800-billion defense budget. I’m sure they’re tempted though…
South Korea has an excellent military–one of the best in the world–even though they spend not even 25% of what we do on defense. The belief that the Pentagon is somehow sacrosanct and therefore can never face serious budget cuts needs to end.
How does closing every single loophole (corporate or otherwise) in the tax code and simultaneously cutting the rate by 5% sound?
Doing that would also get rid of the retarded Alternative Minimum Tax–aka the Blue State Tax.
This includes places like Iceland, New Zealand, Japan, and South Korea. I don’t think anyone on here could seriously call these nations banana republics.
muttermutterWinstonFuckingPetersmutter
But sir/ma’am (sir, right?), your belief is not supported by any evidence. There is evidence to suggest that decreasing taxes for the rich, but de facto and de jure reductions, have led to increased moral hazards for the rich, government corruption, increased tax evasion and avoidance, and has had, in and of itself, a delitorious effect on the economy. The mere existance of other problems does not invalidate this one.
I could fall into a fallacy to parallel your own. “Because the low taxes on the rich hurts our economy, lack of universal health care and election fraud simply aren’t problems.” Same fallacy, different perspective.
And MikeEss pwned with his comment about fiscal discipline, more than a little. Discipline doesn’t mean “spend less” it means “spend morally.” Bush spends a lot, more than any other president, and he spends this increase on evil things.
And what Karmakin said.
I’m all for tax cuts on the middle and lower classes — not for a generic “I wanna” reason, but because we all truly are financially struggling and need an infusion to pay off debts and break the cycle of debt. But tax cuts for the rich is simply irresponsible, even with the elimination of loopholes. The aristocracy isn’t paying its fair share of the expenses. The only way one could justify reducing the tax rate on the rich would be to nearly eliminate taxes on everyone else (in the interest of fairness), bringing the income tax back to what it was before WWII: a tax only the rich needed to be concerned about. I’m fine with that, too — we have plenty of payroll taxes and sales taxes for the rest of us to pay — but I do not know if we have sufficient revenue in that scenario. I doubt it.
>the only useful, meaningful, and productive people (the currently rich - by definition) will flee the country taking their superior brains, financial skills, and awesome productivity with them.
I’m amazed that no one has cited the fact that, short of renouncing American citizenship (and never being allowed to set foot in the country again) moving offshore doesn’t relieve one of the obligation to pay US income tax.
I love how these discussions are always sidetracked into the possible tax problems of the rich, away from the actual hunger and health problems of the poor.
And MikeEss pwned with his comment about fiscal discipline, more than a little. Discipline doesn’t mean “spend less” it means “spend morally.” Bush spends a lot, more than any other president, and he spends this increase on evil things.
Government spending, even if spent on “good” things causes inflation which hurts working people more than anyone else. A combination of high tax rates, high spending, and a massive deficit will send us right back to the “stagflation” of the 1970s.
That doesn’t make spending bad, just makes it complicated. The government spent a lot of money to build the interstate highway system. That spending wasn’t inherently bad by virtue of it being spending.
Spending is a red herring here. Sure, “bad” spending is bad and “good” spending is good. Spending “less” solves no problems in and of itself. If we never increased our budget we’d still be using horses and carriages.
Ding, ding, ding, ding, ding!
Remember, kids, the boogey is out to get you! ABOOGABOOGABOOGA!
The commies will kill you! We must build more nukes!
WMDs will kill you! We must invade Iraq!
Scary taxes! Scary, scary, scary! Can’t raise them, they might bite! Maybe they could, really!
People afraid of taxing the rich have produced arguments composed of pixie dust and moon beams.
Meanwhile, I’m in debt, and some asshole living a few miles away who doesn’t pay taxes due to his wealth is using his vast disposable income to lobby for republican policies.
This is why nuclear boogeymen work so much better. There isn’t an economic boogeyman that can become scary enough in fiction to rival the status quo. What’s boogey going to do, take away my health care? Oh, wait. War works better because nukes could, in fiction, Kill Every Motherfucker Up In Here. Economic boogeymen don’t have that kind of clout.
South Korea has an excellent military–one of the best in the world–even though they spend not even 25% of what we do on defense.
South Korea has a population of just under 50 million.
The United States has a population of just over 300 million.
South Korea has a land area of about 38,000 square miles. (That’s just slightly larger than Indiana, FWIW.)
The United States has a land area of about 3,537,441 square miles.
How, again, do the two countries compare?
South Korea has a population of just under 50 million.
The United States has a population of just over 300 million.
South Korea has a land area of about 38,000 square miles. (That’s just slightly larger than Indiana, FWIW.)
The United States has a land area of about 3,537,441 square miles.
How, again, do the two countries compare?
Hey, I wasn’t the one who started country comparisons. Don’t compare us to Sweden and Denmark and I won’t make any comparisons to South Korea, Japan, Australia, or Iceland.
Tell you what, Teac. If we cut our military spending in half we would still spend more than any other country in the world combined. Look at it here.
Hmm. according to the Heritage Foundation, in the US government spending is about 27% of gdp, and in Japan it’s about 37% of gdp. So I guess having a lower defense budget isn’t all of what makes their infrastructure so much better than ours.
Fruitbat’s concentration on income tax is misleading.
If we cut our military spending in half we would still spend more than any other country in the world combined.
No duh.
This includes places like Iceland, New Zealand, Japan, and South Korea. I don’t think anyone on here could seriously call these nations banana republics.
Number 1, in New Zealand we also pay a uniform Goods and Services Tax on pretty much everything we buy so there’s maybe more taxing going on than you think. Number 2 we have free healthcare (for most things and subsidised healthcare for others), funded education and funded culture and environmental stuff. We also pay pensions and have a huge fund of money socked away in a fund to pay for eventual boomer retirement.
What we don’t have is a large army.
By the way tax cuts…just as inflationary as government spend (more so in the short term as it’s an immediate increase in ability to spend).
Atomic Fruitbat, the economy in THIS COUNTRY sucks for younger workers and immigrants. i’m 25. most of my friends are in roughly that age-range, and most all of us are underemployed, when we are employed. benefits of any kind are hard to come by. those of us with health insurance are in the minority, and only a few of us have jobs with any kind of leave time at all — paid sick leave is a rarity, let alone paid vacation. no retirement benefits to speak of. all of us make under 30K a year, most making something around 20K a year — before taxes. plus we all have ungodly student loans, since most of us have college degrees and some of us even have master’s degrees. if we do get laid off, it’s not like we have any sort of fallback, either. most of us are a paycheck away from getting evicted, and all of us rent. buying new cars — even used cars — isn’t possible for us, let alone buying our own homes. and savings? what savings? we’re not irresponsible with our money, either — some of us are, but not most. there just aren’t enough decent jobs in this country for us to make a decent living.
so, in fact, to us, the situation in france doesn’t seem to suck that much in comparison. hell, i wish more of us were rioting in the streets, but we all know it wouldn’t do any good, and besides we can’t afford the time off work.
i got moderated? whyfor?
Number 1, in New Zealand we also pay a uniform Goods and Services Tax on pretty much everything we buy so there’s maybe more taxing going on than you think.
You may be right, but IIRC New Zealand is consistently rated slightly higher than the United States on economic freedom (i.e. more capitalistic) so its hardly a European social democracy.
I’m curious, is your health care system single-payer or a mandate model? Is there still private care or is it illegal?
NOOC, three. simple. examples. of how tax rates affect behavior:
1. The tens of thousands of French professionials currently living in London as tax exiles.
2. The tens of thousands of Americans (everyone from Tiger Woods to Rush Limbaugh) currently living in Florida to avoid state income tax.
3. The thousands of businesses that have left California over the past decade to avoid excessive taxes and regulation.
If you don’t think high taxes affect behavior, then you are the biggest fool on this blog.
Although individual rich jerks may choose their residence for tax advantage, the proof of the pudding is still in the eating: look at high-income states where the population is content (lower crime rates, less divorce) and you’ll find a bias toward sensible rather than artificially low taxes.
I love how these discussions are always sidetracked into the possible tax problems of the rich, away from the actual hunger and health problems of the poor.
There was a tax proposal I’ve been touting for a while that I see was just presented by an economist in a local paper last week. I’ll see if I can put an article on it on my blog tonight.
You may be right, but IIRC New Zealand is consistently rated slightly higher than the United States on economic freedom (i.e. more capitalistic) so its hardly a European social democracy.
Oh, brother.
From the Wikipedia:
“Modern social democracy is unlike socialism in the traditional sense which aims to end the predominance of the capitalist system, or in the Marxist sense which aims to to replace it entirely; instead, social democrats aim to reform capitalism democratically through state regulation and the creation of state sponsored programs and organizations which work to ameliorate or remove perceived injustices inflicted by the capitalist market system.”
The post-1984 reforms were in response to inefficiency in the markets due to unwieldy government interference. There’s still a strong commitment to “social democracy” as witness the Resource Management Act, KiwiSaver and the commitment to the Kyoto Protocol. It’s just that regulation tends to be cleverer and devolved to local authorities where possible.
This gives a fairly good look at the reform period.
No One of Consequence,
I am not against increasing taxes on the highest income tax brackets/Capital Gains as I do think the current rates are too low.
I am disagreeing with Neil’s quoted assessment in the quote above that the government should tax so high that it ends up getting less tax revenue as I think that would hurt both government’s ability to get the optimal amount of taxes necessary to maintain the infrastructure and social services for the public good and its ability to get tax payers in higher income brackets to pay their fair share with the minimal fuss.
The way it was worded, not even the US government during the ’50’s and 60’s era went that far as far as several other commentators have noted.
Moreover, I think with some diligent effort by government policymakers and economists working together to devise a tax code that would place the highest tax brackets as close to the optimal point on the laffer curve…..what Neil is advocating would not be necessary.
exholt — if Neill had actually been saying that, you might have a point. But nowhere does (very hypothetically) going past the top of the laffer curve for the richest 1% or so imply an overall drop in revenues. In fact, his point was that by ending up with a more equitable distribution of income you could end up with greater prosperity, which means more money available for the government to tax, even if less money is coming to the government from the top 1%.
Interesting discussion. I’ve heard nearly all the old reasons for how raising taxes is going to kill off america.
I like the ‘If you want to live like a Republican, vote Democrat’ saying. It seems to cover it pretty well.
I hate the idea of these ubber-rich dynastic families getting off with very little taxes. I also can’t stand the dripping rich corporate ceo types that exploit and extort their money.
Bill Gates’ father joined with Warren Buffet to condemn the massive Bush tax cuts.
What has the ‘Bush tax cuts™’ gotten America?
Falling bridges, rotting infrastructure, the richest Congress in history and so much more… Arecibo is losing it’s budget. The Voyager space craft, about to leave the bubble that our solar system resides, are in danger of not being monitored and missing out on any science that could be obtained and all for what? Sending real people to Mars?
Taxes are part of the price people pay for living in a civilized society. Someone has to pay the bill and as the economy lifts the poorest in our society, it lifts us all… Giving more money to the ubber-rich is like throwing it on a fire. It ends up being consumed but not providing much benefit except for some smoke… They go and spend it on gold cell phones, French lotions and imported food and chocolates and planes and boats and imported cars. There simply isn’t enough of them that purchase enough of the products whose sale supports the ‘rest of us’ to make it a win-win for the whole of America. Yet, give the ‘poor’ and the middle class a few thousand dollars and they spend on things like domestic cars, washers, dish washers and home renovations and other things that actually ‘trickle down’ to other Americans.
Hope that all made sense.
By that logic, every state without income tax is a “tax haven.” You screwed yourself here: this is support for an argument against the sales tax and for income tax. And driving out the super rich is hardly a concern. The rich in Texas happily buy out of state and benefit from public largesse.
3. The thousands of businesses that have left California over the past decade to avoid excessive taxes and regulation.
Oh, I’m sure that doesn’t have shit to do with California’s school system going into the crapper after Prop 13 passed, and I’m certain you can come up with a cite that shows that taxes have somehow slowed down one of the strongest economies on the planet.
The point of my argument was that higher taxes WOULD affect behavior! So sounds like we do have a dumbass in the running for biggest fool on the blog: end a post that undermines your argument with a strawman argument. Good job, stud!
But that isn’t a) what was advocated on this blog, from what I can tell, and b) super-high taxes FOR THE RICH simply is not a threat. It’s not on the horizon, it won’t be implemented, and any harm it COULD cause is simply non-fucking-significant compared to our problems right now. The obsession with the THREAT of over-taxing the rich — which has never happened in U.S. history and is not a viable policy option at all — is both a strawman (no one is arguing for it) and a non sequitur (implementing just and sound tax regulation would neither cause nor implement super-high taxes on the rich). It’s absolute bullshit.
While we’re on the subject, we should discuss resistance to other phantom threats, like an attack from the Invid and regulation of time travel.
Amanda’s post invokes several bullet points which include percentages or fractions. O.K. Percentages of what number of people? Fractions of what quantity?
Fractions and percentages only mean something when we know what numbers are being measured. I really would like to know the size and scope of the population that Amanda is talking about.
Arm waving and vague or absent definitions don’t convey much real information.
Thanks for the extra helping of cotton candy, Mark.
Waldteufel: follow the link, you stupid troll.
On the third page you will see:
family income 2x-6x federal poverty line, head of household 25-64, net assets less than $500K (which excludes the top 1% of wealth regardless of income).
To my mind that’s a fairly reasonable definition of middle class, and any quibbles about how the boundaries might properly be drawn differently goes more to indict the state of US civil society than to discredit the study. (That is to say, if you think $40-120K for a family of 4 shouldn’t be considered middle-class, that says something pretty scary.)
No One of Consequence:
I just knew that someone would get around to suggesting we regulate time travel. Don’t you know that when time machines are criminalized, only criminals will have time machines? Then we’ll have too much temporal inequality. After all if Time is Money, and Time is Short, then of course Money is Short!
3. The thousands of businesses that have left California over the past decade to avoid excessive taxes and regulation.
People still believe this? Dude, that’s the economic equivalent of believing that the earth is flat.
Paul,
I would agree that a more equitable distribution of income is sorely needed in our society and that a sensible and optimized tax code is one legitimate means of accomplishing this so long as it is not taken to the extremes as it is now with too little taxation of the top brackets.
I just find Neil’s seeming cavalier dismissal of the potential negative effects of discouraging people from striving for higher incomes and presumably, higher income positions to be problematic as that mentality, if taken to extremes, could result in unintended economic consequences. If you want good examples of such consequences, just ask my relatives, neighbors, and classmates who lived and witnessed the effects of such policies in the former Soviet Union and pre-1979 Communist China.
“I just find Neil’s seeming cavalier dismissal of the potential negative effects of discouraging people from striving for higher incomes and presumably, higher income positions to be problematic as that mentality, if taken to extremes, could result in unintended economic consequences.”
The phrase “…as that mentality, if taken to extremes, could result in unintended consequences…” can be used in be used in a huge percentage of circumstances - hence it is meaningless.
All most progressives here are saying is:
“Pardon us, oh great capitalists who make our world go ’round, but is it possible, perhaps, that the tax cutting for the wealthiest in America might have gone too far? Is there a chance that the current social contract under which we live in this country might need some renegotiation? Are there other ways of looking at our lives and their relationship with government and business that might allow us (working together, of course) to arrive at a better balance between living, working, and having our basic needs met?”
All those who believe America is already perfect have nothing to add to the discussion. All those who admit America is not perfect but claim it’s better than any other country on earth so let’s not mess with it - you don’t have anything to add either. You’ve already decided that America is as good as it’s ever going to get.
The rest of understand that things are out of whack. That we must look at the way we tax, and the way we spend those taxes, with a cold sober eye and figure out how to fix what is so obviously broken…
Wowza. Who knew that Olaf Palme and Pol Pot were the same person?
No, questioning the notion that rich people might be dissuaded from earning the highest possible number of dollars right now is necessarily a bad thing is not the same as believing that private property and higher education should be abolished.
Exholt, you dishonor the people you claim to cite as your supporters.
I’m amazed that people who “sit on their ass” and have their income as a result of capital gains are taxed at 15%, but people who “bust their ass” laying asphalt in the hot sun have their income as a result of wages taxed at 25-35%. Where’s the justice in that?!?!?!? And people don’t seem to understand tax brackets. If you make $2 million and the tax rates are 15% for income up to 35,000, 20% for income up to 75,0000, 30% for incomes up to 500,000 and 50% for incomes up to $2 million and 80% for income over $2 million; that means that you pay 50% for the income between 200,000 and $2 million NOT for the income between $0 and $2 million. IN OTHER WORDS IT DOES NOT MEAN THAT YOU PAY %50 FOR THE ENTIRE $2 MILLION. The error is commonly made and rightly scares people. But in reality, the entire tax for this example would be about 44%. Now if people are going to say that that’s going to disincent people, so be it. Others will not be disincented and will gladly earn in the space between $200,000 and $2,000,000 for the ability to keep half of that money. Shit, I would. And for those saying that loophole abuse would soar - spend some of the increased tax revenue on IRS audits. Better yet, yank the loopholes and find a tax structure that is more progressive but WITHOUT ANY social policy setting - which is where the loopholes originate in the first place.
No One Of Consequence: “And, guy, do explain to me how tax evasion could get “worse.” Right now the majority of the rich effectively don’t pay taxes at all. They pay pennies on the dollar when they do pay.”
Where are you getting “guy?” Last time I checked… hmm, gave birth to a child… guess not.
And not paying taxes? Where are you getting that? I pay every penny and more. I don’t want to flag an audit, so I don’t even write off legitimate business expenses. And this isn’t an isolated example; most people I know are actually honest about taxes. It’s been demonstrated that raising the rates after a certain point actually lowers the amounts collected.
For the record, I agree with lauram’s comment and would have no issues with such a system.
“Guy” and “man” when used for emphasis are not nouns and, thus, not gendered at all.
Where are you getting that? Do you make more than seven figures a year? I was referring to the rich. Did you miss the word “rich” in the part of my post that you copied?
And the rest of your argument was a strawman, as described meticulously above. Moving on to something substantive:
But if you have the money honey I have the time so if I have honey I have short which gives me plenty of time to generate honey. . .Too. .. profound. . . too much.. . . too sooooon! Aaaaiiieieeieeeee!
This claim is obviously true if you raise the rate to 100%. Do you have some source for the implicit assertion that the effect is relevant at any practical tax rate seen in the real world? Please provide links.“Did you miss the word “rich” in the part of my post that you copied?”
No.
And while “you guys” is often used to refer to people, injecting “guy” into a sentence indicates you believe the addressee is male.
Further, your assumptions in your most recent comment underscore the improbability of this being simply a figure of speech.
grendelkhan: I cannot remember where I saw this, but will look for it. It’s a fair question.
“if Time is Money, and Time is Short, then of course Money is Short!”
NOOQ, that’s what passes as “substantive” for you? If A=B and A=C, then B does not necessarily equal C, so it’s not only nonsubstantive but actually false. I am a lawyer and I am a democrat, so are lawyers necessarily democrats? Um, don’t think so.
If A=B and A=C, then B does not necessarily equal C, so it’s not only nonsubstantive but actually false. I am a lawyer and I am a democrat, so are lawyers necessarily democrats? Um, don’t think so.
You just slept through the classes on the basics of algebra and on Venn diagrams, didn’t you?
Paul,
I would think from having interacted and talked with these “supporters” at length…in some cases from childhood that it would be clear if they felt I was actually dishonoring them.
From having long deep discussions about their experiences living in the Soviet Union and pre-1979 Communist China, the only times they felt dishonored was when I argue in favor of any form of what they view as heavy-handed governmental political and economic controls over individuals going about their business politically or economically.
That means I avoid having discussions about favoring universalized health care or any social spending to help the disenfranchised…all things they viscerally see as naive Americans stupidly adopting the same economic policies that they felt were discredited in practice by the societies they emigrated from.
However wrong they are on those points, I understand where they are coming from as they were reacting to living under an ideology which supposedly was founded with the intention to eliminate socio-economic inequality but actually only paid lip service to such while replacing one tyrannical ruling elite with another. Heck, some of my older well-educated maternal relatives were idealistic and naive enough to actually believe that Mao Zedong and the Chinese Communists had the answers to eliminate social inequality in China at the beginning and volunteered to aid in the effort until subsequent experiences showed them otherwise. Fortunately, their other maternal relatives and my father were skeptical of Mao and the CCP and thus, spared themselves decades of painful experiences.
In experiencing the worst that Stalinism and especially Maoism….most of my neighbors, classmates, and relatives tend to prefer as little government interference in their political and economic lives as possible.
I would like to second the point that in Japan, NZ and Australia there are high corporate and direct taxes, so that the claim that Japan taxes less than the US is quite misleading. Also it’s worth noting that Japan has a very large budget deficit.
Exholt, your post at 122 is really scraping the bottom of the barrel, comparing governments which levy high taxes with pre-1979 China where, how many, maybe 10 million maybe are estimated to have died from famine?
It is particularly ridiculous when talking to people like Phoenician (a kiwi) and me (an Australian) who live in high-taxing countries.
You may be right, but IIRC New Zealand is consistently rated slightly higher than the United States on economic freedom (i.e. more capitalistic) so its hardly a European social democracy.
It’s a better place to do business but that doesn’t mean there isn’t much more of a safety net than in America (in fact externalising health care costs takes a huge burden off of small businesses and removes some of the barriers to start up).
I’m curious, is your health care system single-payer or a mandate model? Is there still private care or is it illegal?
We have a network of public funded hospitals which are all free, all ongoing hospital treatment is free, most common (and some uncommon) drugs are subsidised with prescription. Visits to a family doctor do cost but have recently been subsidised more(and under sixes get special subsidies). All care around pregnancy is free (including abortions).
We also have the Accident Compensation Corporation, all businesses and car owners must pay ACC levies which are then used to fund ongoing care for injuries (especially for injuries that inhibit people’s ability to work) and even some income replacement for those rendered temporarily unable to work. Personal grievance suits are rendered very rare (and usually involve gross negligence and quite often death).
ACC will also pay out for medical misadventure which means that doctors don’t have to carry the kind of insurance that they need in the states.
Private insurance isn’t illegal and is cheaper than the states.
No One of Consequence said, “Where are you getting that? Do you make more than seven figures a year? I was referring to the rich. Did you miss the word “rich” in the part of my post that you copied?”
Sorry No One of Consequence, the top 1% of the wage earners in America pay 37% of the collected income tax. You have implied in two comments on this thread that rich people do not pay any taxes. That is incorrect.
See if you can follow me here. First, complain that the very rich pay too much in taxes. Argue for tax cuts for the rich. As income inequality rises, the very rich will pay a larger share of total tax revenue because they have most of the money. Then complain that the very rich pay too much in taxes. It’s a delicious cycle, but please try a thought experiment.Imagine that income stratification gets so bad that we have something like feudalism–everyone but a very small elite is living in borderline poverty, with no wealth to speak of. The only revenue the state can get is from the elite, because the poor don’t have anything. Imagine arguing that the problem with this system isn’t that wealth is concentrated in a few hands, but that those few hands have it so hard because their taxes are clearly too high. Try and do this with a straight face.
Ah, and I almost forgot. “the top 1% of the wage earners in America pay 37% of the collected income tax” is false; the top 1% by total income pay a large share of the total income tax. Calling the payouts from hedge funds’ ponzi schemes “wages” is a sick joke. Returns on capital investment make up a large portion of this income. You might as well say “the top 1% of investors in America”; it would be roughly as accurate.
“Phoenician in a time of Romans,” what are you smoking? If you don’t understand my comment, you slept through those classes. Additionally, I’m going to avoid credential blogging, but you really don’t want to go there with me.
Phoenician, let me provide an easier example. Lemon=yellow and lemon=sour. However, not everything yellow =sour, although some portion of yellow things are sour.
You are getting this misstatement confused with the transitive relation, in which: if A=B and B=C then A=C. So that: if Phoenician has Rusty Math and Rusty Math = Often Wrong, then Phoenician = Often Wrong.
Hope that helps!
“Another big difference between the 1950s and today”
or a few:
Families owned 1 car on average - now it’s 2+
No cable tv
Half the number of clothes they used to own
Families rarely ate out
The increase in standard of living considered “minimum” is the biggest culprit. How many of these households without health insurance have cable? That’s a consumption choice, not a crisis.
Go look up the word facetious in the dictionary. Seriously, you’re coming off like a twit here. The logic of the statement is completely irrelevant since the comparisons involved things that were not comparable: abstract concepts, such as time, cannot be compared to biological excretions —
Eh, fuck it. I’m trying to explain humor to a twit. That is pointless.
I made a reference to time travel and the Invid earlier; maybe you thought I seriously expected an invasion from alien masters of biotechnology.
No it doesn’t guy. I’ve heard this colloquialism used by females with females. It lightens a mood unless you’re dealing with a twit. Are there anymore humorless, irrelevant points you’d like to interject?
That, by the way, was sarcasm. Look that one up too. The intention was you not interject any other humorless, irrelevant points. I have no problems saying or hearing stupid things, so long as they amuse.
I pointed out that they don’t pay their fair share of taxes. Feel free to make more shit up if you find the facts aren’t going your way. Oh, wait, I needn’t suggest this — you’ll indulge no matter what. And —
— grendelkhan pwned you there, anyway. If you’re going to resort to a strawman, jcw, at least counter it with an argument which isn’t itself based on lies. Jesus, some people can’t even win when they cheat.
Scroll up to the top of the thread where this bullshit was refuted. Go on. Look at the parts where we pointed out that it was cheaper to own a home and that people had more disposable income for other things (land, vacations, etc.). Note that your entire argument is based on the pathetic prejudice that people really didn’t have any spiffy toys before your time period, a conceit that every generation has. Note that the argument, so much that it is, that you make depends entirely on your inability to imagine things to do if you lived in 1960 and not on any lack of luxury goods or investment opportunities.
Middle-class people of those past decades were better off and had more buying power than middle class people now. Fact. Feel free to argue otherwise; you’ll join the ranks of the Flat Earthers and those obsessed with the gnomes of Zurich. You won’t be as stylish as they are, though.
“The increase in standard of living considered “minimum” is the biggest culprit. How many of these households without health insurance have cable? That’s a consumption choice, not a crisis.”
Yeah! Transportation? What - feet not good enough for you?
Wearing clothes? We’re born naked, get over it…
Eating food? Hey, you could probably stand to lose some weight anyway.
Living in some sort of shelter? Hey buddy, ever heard of caves?
Those are ALL “consumption choices”, goddamit! If those people would just make better choices (as I’ve demonstrated conclusively here) then there would be any poor people…
BTW, everybody knows anyone can get health insurance for the whole family for the cost of cable TV. Duh…
[/snark]
Dr T, you’re a real dick - but I’m sure you wear that label with pride…
BTW, I’d like to thank some of the people here for helping me realize the thing about modern conveniences and health care and all that. If you take all the electronics that people have..myself, who likes my “toys”, to be honest..I don’t think I have 5k worth in my house, and that’s from over several years. That’s probably not even the down payment on a home, let alone if I had to pay for health care (not a concern for me. Living in Canada right now. Yay.).
Right now I have:Wii+4 games..about 600, 200 DS, a 300 TV, a 800 laptop, a 500 desktop (self built) a 20 dollar TV for the ktichen and a 100 dollar TV for the bedroom. Speaker system for the computer for 100, I have about 1000 worth of DVDs.
That’s the “trappings” of modern life that I have. Frankly, it’s a pittance.
No one of Consequence said,
“Right now the majority of the rich effectively don’t pay taxes at all.”
“Meanwhile, I’m in debt, and some asshole living a few miles away who doesn’t pay taxes due to his wealth is using his vast disposable income to lobby for republican policies.”
Those are your exact words. Both statements imply the wealthy don’t pay taxes. This is false. The wealthy pay taxes. Oh and please explain to me how they “effectively” don’t pay property, sales and other taxes.
Bullshit. You’re being deliberately obtuse. a) I put the word effectively in because I was pointing out that the wealthy gain so much more from the state than everyone else that any monies given to the state by them are more than made up for by services rendered by the latter. b) I was pointing out a specific situation (”*I’m* in debt. . . some asshole”), not making a generalization as to the whole socioeconomic structure.
Noticed you didn’t refute what grendelkhan said either. Instead, you decided to utterly fail to use the reading comprehension skills taught in 5th grade to create another strawman.
This bullshit is amazing. When this was first posted, I expected we’d all debate the finer points as to how to implement a new tax system or what should make it up. I didn’t expect a spate intellectually dishonest claims that the rich really are the ones we should be looking out for. No wonder the right wing has been so successful.
That’s part of the problem. It’s sooooooo much cheaper to buy toys than it is to buy necessities that it skews peoples’ perceptions.
I can buy an X-Box for a comparably small outlay. But health care? Even if I buy the insurance, it won’t actually pay for anything.
Our woulrd is bass-ackwards and many people (including several on this thread) are confused by it. Amazing luxuries are cheap, while necessities are overwhelmingly expensive. In the northeast and California, rent can be so high that being short on rent simply can’t be remedied by frugal living. I used to be an absolute miser: I lived in the South and penny pinching could help a lot. Living in the NE I find that buying in bulk, using a calculator at the grocery store, and figuring out the cost/weight/nutritional value of everything is pretty much a waste of time. I save $50 a year on groceries and rent is a grand a month. Woopee-fuckin’-doo.
Which would you rather have: cheap cars and cheap housing — or — the promise that the next Mario game will be affordable? Well, fuck you, I know what you want, but let me tell you what we get. . .
NOOQ, the “I was just kidding!” defense to being called out for a mistake? Tired and old. With the amount of bruising your ego must get on a regular basis, you need to refine your technique.
And I see I’m not getting that apology for your claiming I missed a word. Oh well.
It is particularly ridiculous when talking to people like Phoenician (a kiwi) and me (an Australian) who live in high-taxing countries.
Er, I wouldn’t go that far. Try looking at these statistics.
Phoenician, let me provide an easier example. Lemon=yellow and lemon=sour. However, not everything yellow =sour, although some portion of yellow things are sour.
You are getting this misstatement confused with the transitive relation, in which: if A=B and B=C then A=C.
Pardon me, bozo - but it was you who stated that “If A=B and A=C, then B does not necessarily equal C”, invoking transitive algebra - which is what the use of the “=” sign means.
Imprimis, if you want to say “lemons are yellow” and “lemons are sour”, go ahead - but the word “are”, assigning a property to an object, is not the same as the symbol “=”, which is mathematical equivalence.
Secundus, the statement “Lemon=yellow and lemon=sour. However, not everything yellow =sour” indicates that you still have problems distinguishing between statements assigning properties, and statements which identify sets and set relationships. Let me help - “lemons have the property of being yellow”, “lemons are members of the set ‘yellow objects’”. ‘Lemons have the property of being sour’, ‘lemons are members of the set ’sour objects’”. The set ‘yellow objects’ and the set ’sour objects’ are intersetcing, but not identical sets.”.
Tertius, you really need to read the Theory of General Semantics before you start trying to pass off empty word-play as substantive argument, doofus.
Octogalore,
NOOC must not have gone out to this website before he made his implications.
http://www.taxfoundation.org/news/show/250.html
All kinds of facts and figures to use to make tax arguments.
And NOOC, the poor don’t really pay as much in taxes as the rich do, at least as far income taxes go.
Ah, there’s that last part. Do you ever wonder why income taxes are the only taxes that rich folks whine about? Do you ever wonder why the other taxes that people pay are swept under the rug? It turns out that when you don’t squint at it by looking at only one method of taxation, the American system is much flatter than you’d think. Poor and middle-class people get hit much harder by payroll taxes (which tax actual wages) than the upper class does.And if you’re going to engage in an argumentum ad copypasta, please at least try to get your pasta right. See the above “wages”/”income” distinction; it’s especially amusing given that you’re ignoring payroll taxes, apparently because they only hit people who don’t really count.
Phoenician, intersecting sets aren’t described as either “are” or “equal,” sorry to say. If two sets intersect but each has areas not encompased by the other set, then one set cannot be described as “is” the other set.
Please don’t waste any further time on this — it’s not your area of expertise. And your slowness to grasp fairly rudimentary set theory is growing tiresome.
JCW –thanks.
grendelkahn,
You’ve been coming up with some good info. Do you have any books or a set of articles that you could recommend on taxation (in addition to what you’ve already linked to)?
Dunno if you read Krugman’s book “Conscience of a Liberal” yet, but he talks a lot about how the country as a whole has gotten vastly richer over the past 30 years, but that money’s gone to make the rich filthy rich, not to improve the lot of the middle class. The average household is a little more affluent now, but only because more women are working. The average man’s earnings, inflation-adjusted, have gone down in the last 30 years. Krugman analogizes what’s happened to the country to Bill Gates walking into a bar: when Gates does so, the average net worth of the bar’s patrons goes up exponentially, but the economic situation of the non-Gates patrons is exactly the same as before.
Seriously, are you stupid? I made a reference to time travel. That was obviously absurd.
Do you believe time travel exists?
Seriously? My god, you are stupid. That’s not a mere pejorative. It’s terrifying. Look at what you are implying: that I created equivilances between abstract concepts and honey — honey. You must, of course, take at face value that the Invid will be invading soon.
I honestly have no idea what you’re talking about here. I made no false claims. It might be best to leave it at misunderstanding, however, since I think it may be impossible to communicate with someone who believes that time can really equal honey.
. . . which brings us back to a more important point. Do you think the Invid exist? Do you even know what the Invid are? Were you in such a rush to insult and defend your illogical position that you didn’t even look the term up?
If you seriously believe in time travel or the Invid or that honey and time and money were comparable concepts — or lacked the basic ability of a child to discern absurdity — you should not be allowed outside without the presence of a caring adult.
As pathetic as it would be, though, there is something hilarious about someone who would treat the Invid with seriousness.
And, on a pathetic note, it is sad that Phoenician is finding flaw with your “logic” in your attempt to attack what was deliberately absurd. It’s like someone pointing out the Monty Python Department of Silly Walks sketch was impossible — and then failing to provide adequate proof.
This actually plays into a popular right-wing strategy: claim social security is in peril so that social security taxes — which only hit us working folks for any significant damage — will be raised. Social security will, of course, be raided by our corrupt leadership to pay for all manner of boondoggles, which allows one to lie and say “look, it’s in peril again” when it was never in any danger in the first place, save from theft. Krugman’s a good source on this too, especially now that he’s calling out Dems (recently, Obama) from buying this narrative.
I’m flattered! Frederick mentioned Krugman’s The Conscience of a Liberal; I got started on this kick by reading a piece he did called “For Richer”, and Marshall Brain’s “Concentration of Wealth” blog, which has pretty much stopped updating.I keep a stack of bookmarks on my del.icio.us; my economics-related ones are under economics; sets of useful facts are under debatereference. I fill in the blanks by faintly remembering something I heard once and Googling it up to see if I’m right, which is what I assume everyone else does.
Phoenician, intersecting sets aren’t described as either “are” or “equal,”
Duh. Except when >you confuse them, of course. Which part of the comment “the word “are”, assigning a property to an object,” did you not understand?
Please don’t waste any further time on this — it’s not your area of expertise.
Interesting, as I’m paid to write precisely. What exactly are you paid to do?
And, on a pathetic note, it is sad that Phoenician is finding flaw with your “logic” in your attempt to attack what was deliberately absurd.
I’m bored.
To clarify: I wasn’t criticizing you Phoenician, but bemoaning the fact that you were successful.
Real reason for posting: Krugman faced the SS Lie again, right on cue.
I’m going to try to figure out a way to inject the Invid and time travel into the race discussions on this site. Yes, that’s completely irrational. Please help if you can!
Dr T: How many of these households without health insurance have cable? That’s a consumption choice, not a crisis.
Cable must be really expensive in the US if by cancelling it you can cover your health insurance rates. If you pay the rent, eating one less bag of gummy bears a month is not a soltuion to the problem.
Should have been: If you can not pay the rent,…
sorry.
NoOC: Our woulrd is bass-ackwards and many people (including several on this thread) are confused by it. Amazing luxuries are cheap, while necessities are overwhelmingly expensive.
This seems to have been around since (at least) the beginning of the age of mass production. And it wouldn’t surprise me to find a Roman quote on the subject matter how supposedly poor folks can all be found at the circus these days munching salted otter noses or something.
NOOQ: you accused me of missing a word which, in fact, I didn’t miss. That is a false claim, or at minimum a false suggestion.
Phoenician: whether or not you are paid to write precisely, you clearly are not paid for anything involving mathematics. Your time/money example was incorrect, and you haven’t been able to justify it. Please accept that I did, in fact, earn a degree in a technical field in which this stuff was a prerequisite.
Further, why would you ask me what I am paid for? Clearly my comments here are in part motivated by self interest, admittedly, so you should have already concluded that entering into a “getting paid”-related “mine is bigger than yours” situation with me would likely not be a smart move on your part.
Grendelkahn: “I fill in the blanks by faintly remembering something I heard once and Googling it up to see if I’m right, which is what I assume everyone else does.”
Indeed! Thanks! I’ll take a look at those links…good reading for the day.
Phoenician: whether or not you are paid to write precisely, you clearly are not paid for anything involving mathematics.
Drat - I have to do the end-of-month net usage statistics for the unit too. Thanks for reminding me.
Your time/money example was incorrect, and you haven’t been able to justify it.
This would be my example which was a clearly joking remark made by someone else completely, would it?
Your powers of observation are exceeded only by your magnificent grasp of the complexities of human communication.
Please accept that I did, in fact, earn a degree in a technical field in which this stuff was a prerequisite.
Given the stuff I’ve seen on the state of American education, it wouldn’t surprise me at all…
Net usage stats? That explains a lot. Thanks for the clarification.
Net usage stats? That explains a lot. Thanks for the clarification.
And what do you believe it explains? Clue: I’m not tech support or a systems operator.
You didn’t miss the word. You ignored it — see post #129. And this is not the first time I have pointed out your deliberate obfuscations. If you had simply acknowledged your error, you would have at least seemed worth respecting. Instead, you pick an nonexistant nit. . . and we are still left with the conclusion that you cannot recognize absurdity when it occurs. You must be the death knell of every party that you happen to wander into. Your stupidity has ceased to amuse, I’m afraid. Twits get boring after awhile.
Thank GOD someone still recognizes humor.
I actually have this reoccuring nightmare that there will be a nuclear war but most of humanity survives but everyone loses their sense of humor except me and I, in insane frustration, resort to using a shotgun to mow down the last remnants of humanity collecting health packs and quad damage along the —
— Wait, that might be my marathon game of quake I played a few years back. Either way it’s pretty fucked up and I probably shouldn’t have been able to get a gun license so easily, but hey, the state says it’s cool for me to have semiautos.
NOOQ — Why do you think I ignored the word? In fact, I didn’t.
Phoenician — I didn’t think you were either of those. It still told me all I needed to know.
Rent costs have stayed the same over the past few years. It’s only the cost of buying a home that has gotten out of control and the market is currently bringing those costs down to a more reasonable level.
I’d also like to note that, in the long run, pensions are extremely unstable. They are predicated on the assumption of population growth/an ever-increasing pool of workers entering the workforce. That’s unsustainable and just simply isn’t going to happen. Over the next several decades, the U.S. is going to be looking at population decline.