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Tax The Rich — Now!
We were given two choices to help pay for health care reform. The House plan would impose a 5.4 percent tax on people making over $500,000 a year. The Senate plan would tax “cadillac” health insurance policies, which often became so generous because they were given to working people in lieu of pay raises. Now it seems certain that the so-called cadillac tax will get into the final health care bill.
There’s no federal estate tax this year. Because of a dumb legislative fluke it is now zero percent. And while this is likely to be redressed sometime in the future, if the richest people in the country die now their heirs will not have to pay a penny in estate taxes to Uncle Sam.
A proposed transaction tax on stock sales, which for various reasons I’ve discussed in past posts is essentially a tax on the greedy Wall Street bonus babies now rigging the markets for their own benefit, is in Geithner limboland. Which is to say the bonus babies on Wall Street will have a continuing ability to feather their own nest while defiling ours without any tax disincentives to check their greed.
The most regressive tax in our national tax code, and one of the most regressive taxes on the planet, the payroll tax that funds Social Security, takes a big nip from those earning less than $107,000. It takes not a penny from those earning more.
In these ways, in so many ways, in virtually every way these days, the richest among us are getting a tax pass while in countless other ways, big and small, direct and indirect, less economically endowed Americans are getting shafted by government taxmen.
Even if the economic logic that decrees that without more equitable distribution of wealth you can’t have a flourishing economy doesn’t move you, the threat to our national comity being generated by this ongoing and growing inequity is well worth considering.
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85 Responses to “Tax The Rich — Now!”
“. the CxO's want to pay a pittance wage to enslaved kids overseas and charge the same prices over here that they always did. the savings aren't being passed along … they're being pocketed.”
I see your point. But if I read you correctly, the stock market plays a BIG role in that trend. Stockholders want their stocks to pay dividends. When the corporation gets cheaper labor, cheaper material, increased demand, or technilogical advances; it makes more money and pays stockholders through dividends or higher stock prices. Americans have become accustomed to “good times” and never allow the markets to adjust themselves through natural highs and lows. Everyone EXPECTS dividends or higher prices for their stocks than when they bought them.
You are right. Neither your situation or the stocks that drive it is sustainable. It doesn't help when the government (both parties, by the way) continues to attempt to legislate the market through pricing fixes or bailouts. This only keeps the status quo, and eventually, dumps on the middle class even worse than it would have had the government done nothing.
In my opinion, America could use another depression. Perhaps it would generate another “greatest generation”. I do not wish bad times on my countrymen, but a good dose of humility goes a long way.
A good dose of humility goes a long way.
Well said, Jefferson. Jobs are going overseas, and wages relatively low, because Americans have less competitive edge than they used to. You want to make more? Produce more. Boss is a bozo with a brain-dead job? Get promoted and show everyone how it's done. Working too many hours? Decide your work/life priorities and defend them.
Worried about your job going overseas? Sorry to hear it, wish I had a worry-free life to offer you. But worry, at least, is probably more progressive than the tax code. It's said that billionaires have silenced their financial anxieties, only to hear their mortal clock ticking louder than ever.
“I'll ask you to step back a moment, if you will, from the specifics in my post. I'm trying to get across the point that someone (other than our present Chinese bankers) is going to have to pay for all the things the government is doing or plans to do”
And that is a perfectly reasonable thing to discuss. And, as I've said before, I agree that the very rich probably should be taxed more (although I don't think that will make up the difference). So if that's really the discussion you want to have, why are you talking about bankers and wall-street brokers? I assume you realize that most rich people aren't bankers or wall-street bankers, so your ire toward such people doesn't justify your desire to tax the rich more. Like I said, I'm sympathetic to that view, but it has nothing to do with any perceived culpability that the bankers have for the current recession. I believe trying to connect the two is a class warfare tactic that is unfortunately gaining traction these days.
The previous comment by “Guest” was actually me. After I wrote it I realized I was being too harsh, since only 1 paragraph of your post was related to wall-street brokers, and even then you were referring to the Tobin tax, not taxing the rich more in general. I'm not too proud to admit when I've gone too far. I tried to delete it but instead it just disassociated my profile from the comment.
I've seen comments changed to “Comment removed by owner” in those cases. I also wish there was a way to delete a comment.
Yes, and now that I've disassociated my account for the comment, I can no longer edit it to replace it with something like that. And thus we see that the laws of justice have prevailed, my hasty comment persisting for all the world to see as a reminder to myself to reflect a bit more before I hit the submit button next time.:)
A few points, for your consideration,
- You just contradicted yourself, regarding the liquidity.
- Having a long writing career doesn't automatically make what you say
become fact, right, true or accepted.
- An oil company, wants to lock in a price for 50,000 barrels of oil, PER
DAY, 5 years from now. Even today, there is a $1-$5 spread sometimes. This
tax, will make sure, oil companies won't be able to do that. In tern, won't
move forward with projects as quickly. Reducing supply, and demand for
labour. Since we are bringing up CVs, I'm an Engineer, in Canada's Energy
Sector.
And, a question,
- In 2009, how much capital exactly, was directed away from “useful economic
sources”, because of “wall-street bonus babies” and “giant flash traders”,
running their “casino trading” systems?
Before Michael gets a whack, I have a question: How much of a tax are you envisioning here? The ones that I've seen proposed are quite small and meant mostly to hit on the high volume computer traders.
The proposed tax, is 0.25% on tax transactions, and 0.02% on futures.
All the subsidies are wealth transfers from the general public to some privileged group… If you want to kill farm subsidies, I will not stand in your way. It will be fun to watch most of the RED STATES turn into third world wannabes in less than a decade…
Ending factory farming won't hurt the RED STATES like you think. The subsidies drive down prices which hurt the family farms. It would make the least healthy food more expensive, but that would affect the coasts (blue areas), more than the rest of the country. Ending the distortion will help the general population, by killing off some of the artificially rich.
That's a little higher than some have proposed.
Even so, sorry, but that just doesn't sound like it would affect day-to-day traders, and certainly not any long-term investors. The value of liquidity, like everything else, has limits.
I know, that cost, without considering the snow-ball effect from it, doesn't
“sound-like” it would affect day-to-day traders. However, it will cause, an
unknown number of traders to stop trading completely. Maybe it'll be 10% of
the volume, maybe even only 5%, will stop. This number, is unknown. But if
even one group/style of trading stops, brokers margins will be
squeeze…causing higher fees for the rest…pushing more traders
out…causing higher fees….pushing more traders out. Until, a new
equilibrium is found. Nobody can predict, where that new equilibrium will
be. All the while, spreads on every asset will increase.
I'm shrugging my shoulders here…our hypothysis based arguments are pretty
much mute in the grande scheme of things.
Good-bye,
McLarty
The reason I noted some of my past professional experience was
because your original post implied that anyone who supported a Tobin
Tax was ignorant about market workings. It was a foolish implication
and one that deserved to be shot down.
About the oil company example you give. Every business tax is just
another cost of doing business. I hire you for my company, I have to
pay a hefty share of your Social Security taxes. That's part of my
hiring decision. In the same way a Tobin Tax in the example you give
might affect the buying decision of an oil company or change the
structure of the hedge the company decides to buy. It's just another
business hassle. There are thousands like it. This one wouldn't
change the world. It's also worth noting that Tobin Tax discussions
now underway do not always include taxing all manner of securities
transactions. They are focusing on the flash trading variety employed
by Wall Streeters.
As to my comment about such a tax and its effect on lessening
misdirection of capital away from economically useful purposes: For
heavens sake, man, look at how Wall Street is perceived today in
light of our present economy. Big time stock churners are less
popular than meter maids. The flash trading profit boom on Wall
Street is running directly in tandem with the bust on Main Street for
the simple reason that the Wall Street boom isn't based on activities
that enhance overall economic well-being. If it were, everyone would
be cheering huge Wall Street bonuses.
I don't hate markets. I haven't spent my professional career writing
about them to make shame-shame gestures in writing about markets. Too
much of market activity today is a pervasion about the good things
market makers are supposed to be doing, however. Tobin-like taxes
won't make everything better. But they might, in some small way, help
heel the Wall Street-Main Street chasm.
“I advocate eliminating the cap and taxing people with incomes above the present limit, while not adjusting upward (capping) the benefits these people ultimately receive to the present limits. Is this fair?”
Obviously, it is not fair.
More unfair still will be what I described is one cruel option the federal government and beneficiaries face in the future, when the fiscal problems underlying Social Security get worse, which is to make all benefits the same, and minimal, for everybody. That's even more unfair than just scrapping the cap but not adjusting benefits. But even though I say that it's a possibility, I do not say that it is good, or right.
Also,
“Haven't you noticed that no one gets back in the form of benefits exactly the amount they pay in taxes? No one.”
Are you saying that because some things currently in life are unfair or otherwise wrong, that it justifies more of the same, in the case of Social Security? That is actually what you're trying to say, at least.
“I think the most well-fixed segment of our population should come up with that extra money. They can best afford to do so.”
This, separated from everything else, is morally risky, but can stand on its own as a utilitarian gauge of tax policy measures. (Just don't join other lefties in lying, and misusing the word “fairness” to refer to it or other related approaches to progressive taxation. At its heart, you are immoral or amoral, and strictly utilitarian. Possibly “practical,” too; there is a logical and practical basis for the income tax exemption.)
Note that it's utilitarian, and simply rationalizes Willie Sutton's approach to revenue appropriation.
Our disagreement all seems to come down to the meaning of “fairness.”
In terms of Social Security-type benefits and taxes, I think the
approach used in almost all other economically advanced countries
(but not our own) is “fair.” There, Social Security-like benefits are
paid out of general revenues which are generated by progressive
income taxes. The rich end up paying more of these taxes and getting
the same end benefits. The rich subsidize the poor because they can
afford to do so. That strikes me as fair. Morally so, of course. But
as I've noted before, also because I believe it makes for a healthy,
happier, less strife-ridden society.
With regards to Willie Sutton, who said he robbed banks because
that's where the money is. If you look at what banks have done with
credit cards in recent years and the way they have feed at the
national trough, it would also be fairer to say that bankers of late
are more like Willie himself rather than victims of the man…
“Our disagreement all seems to come down to the meaning of 'fairness.'”
I want the word's meaning to be respected, and the word used correctly and honestly. Leftists do not. They like using the word “fairness” when referring to progressive taxation, as both a euphemism and as a bogus rationale. The utilitarian argument (and what accompanies it, such as the progressive devaluation of marginal income, for example) is the sound argument, morally risky as it obviously is. But for numerous reasons (to grapple with the moral questions or even guilt, to cloud the issue, to feel good about it), the world “fairness” is associated constantly with progressive taxation of income (and wealth), such as in numerous left-side texts on tax policy.
* * *
“There, Social Security-like benefits are paid out of general revenues which are generated by progressive income taxes.”
Actually, the more childish leftists and related people (including Conyers and Medicare for All) can insist on this approach to all federal entitlements here in the USA — making their funding “mandatory” out of general revenues, with the intention to raise these revenues out of progressive income and wealth taxes, and related class-warfare instruments such as the Tobin tax on stock and bond (securities) transactions. The most dishonest or wacky such people can even claim that deciding to do this instantly “saves” federal entitlements. (Actually increasing taxes or levying any new taxes is typically left to others, in the future, i.e., the most crucial and controversial details and elements are deliberately neglected or omitted.)
* * *
I'm not surprised you'd be creative as well as tangential with Willie Sutton and Banks 2010, but it's merely a diversion and I won't say any more here about it.
I want the word's meaning to be respected, and the word used correctly and honestly.
The word has no such precise meaning. What's fair depends heavily on your point of view.
Which makes it a questionable principle for policy decisions. How progressive should a tax code be to qualify as “fair”? Does it become “unfair” beyond that point? How do we know what that point is?
Dr. J., when the word “fairness” is wrongly used, or is dishonestly used in place of what should be used — due to imprecision with the other words, or due to evasiveness, or to an attempt (more rarely) to conceal what is really being said, then I say it's not being used correctly or honestly. Imprecision in the use of “fairness,” or the issue of whether it can be said to be that precise at all of a term, is a lesser gripe.
There is a long history of misusing “fairness” and attempting to make it synonymous, with progressive taxation. (Related to it frequently, incidentally, is a leftist objection to misuse by conservatives in light of tax policy and related issues of the word “successful.” That the latter word is used pliably doesn't justify more-blatantly-wrong misuse of “fairness,” to try to make people feel good about tax progressivity or merely to dishonestly give progressivity a nicer-appearing veneer.)
Dr. J,
“How progressive should a tax code be to qualify as 'fair'?”
Many say that progressive _is_ fair, (that there are degrees, not merely a threshold, of “fairness”), so the more (progressive), the better (the more “fair” a tax is).
There is a long history of misusing “fairness” and attempting to make it synonymous, with progressive taxation.
Whether the word has a precise definition is critical. If fairness is a matter of opinion and I feel it's fair to rob from the rich and give to the poor, I'm not misusing the term at all. You may disagree that it's fair, but you haven't substantiated your charge of misuse, much less of dishonesty.
“Whether the word has a precise definition is critical.”
Sorry, Dr. I thought you might have missed that point. In this case, definition is confused with use by the users. For what you write is how the typical users of the word for tax policy use it (heh):
“I feel it's fair to rob from the rich and give to the poor”
So you're saying there used to be a precise definition but isn't anymore?
Maybe not a precise definition, or a strict definition, but certainly an honest definition. To use the word outside the scope of meaning(s) it was meant truly to convey is to be deliberately imprecise, to say the least, and often dishonest (as well as perhaps evasive, etc.). That's what is done notably when using “fairness” to describe progressivity of taxation. (It's almost predictable like gravity coming from MIT Press books on tax policy I've encountered, for example.)
Okay, what's the “honest” definition?
“Okay, what's the “honest” definition?”
That would be the the condition and extent (matter of degree) of being fair.
So what's the “honest” definition of “fair”? That's where the real dishonestly lies. “Fair” is being misused in place of “desireable” or “desired.”
To show I'm misusing a word, you need to show that none of the common definitions reasonably fit my meaning.
In the case of liberals defending progressive taxation as “fair,” you haven't done that. Their use of the word fits pretty clearly within common definitions (“free from bias, dishonesty, or injustice” per dictionary.com). They do perceive societal bias making it easier for the rich to get richer and the poor to stay poor.
To back your charges of dishonesty, you need to show they're deliberately misrepresenting something. You haven't done that either. While I have some skepticism about how much societal bias holds people back, I have no doubt that liberals believe it matters a lot. If you're suggesting they really don't but are merely pretending to for nefarious leftist motives, what might those be?
“To back your charges of dishonesty, you need to show they're deliberately misrepresenting something”
Well, in some cases I'd have to back off and say they'd just prefer to use one word rather than another, because “fair” or “fairness” captures good feelings (the euphemistic approach), or that they confuse what they want with being “fair” or with “fairness.” But in other cases, I say they know the distinction between these words and what they actually seek or want (progressive taxation) and they prefer substituting their choice of words because it makes their position and them appear better (to them and to the ignorant, anyway).
Ability to pay as a basis for taxation (and for progressivity) is (superficially, at least) practical. But “fair”?
Sure it's fair, if you buy the victimization narrative. The rich don't owe their privileges to hard work, cleverness, and luck, but to victimizing the poor through exploitative jobs, capriciously high health insurance rates, sneaky fine print in contracts, and their exclusive access to the corridors of power. Of course the rich should “give back” to the dropouts and the delinquents and the derelicts to whom they owe their success.
IMHO “fairness” is so malleable it's useless as basis for policy, and I think most liberals simply haven't noticed. But I'm with them to a point in supporting progressive taxation. There's a practical reason: I'm going to have to pay for either schools or jails, and I'd feel better if it were the former. And I think the golden rule is a pretty good basis for policy; progressive taxation is easy to justify on that basis.
“Sure it's fair, if you buy the victimization narrative.”
Please note, that I don't buy this narrative, or the related “random luck theory of all consequences.” I've been among those stressing that “fairness” is being misused here to “justify” progressive taxation in particular as well as the ability-to-pay principle in general.
“I'm with them to a point in supporting progressive taxation. There's a practical reason: I'm going to have to pay for either schools or jails, and I'd feel better if it were the former. And I think the golden rule is a pretty good basis for policy; progressive taxation is easy to justify on that basis.”
Well, I agree with some of the logic inherent in it, the utilitiarian concept underlying ability-to-pay (how can, let alone should, taxes be paid?) and true fairness or decency in some progressive taxation, notably the concept of an exemption of a minimum income, in the case of the income tax (the most common and even typical tax thought of), as well as considering different values for different marginal incomes. But an honest admission of what is being sought, and honest explanations why, are long overdue, and there is no reason to engage in “social engineering” and intentional redistribution based on envy and resentment, and other dark motives, which aim for destructive tax and social policy. And certainly there's no excuse for weasel words that try to dress up sweetly what it is that people (really) are seeking.
(The same is true for public versus private sector presence in society. Public schools, for example — there is a lot of political baggage, especially since the 1960s, harming public schools and associated parties like teachers' unions. But do we really want to abolish public schools? Do we want in reality few but the wealthy and well-connected's children to expect to receive an education?)
Then what are they really seeking?
“Then what are they really seeking?”
They are really seeking redistribuition of wealth or income, or punitive consequences for making or having more than others.
Well, they're explicitly seeking redistribution of wealth, so no surprise there.
Punitive consequences rings true and isn't one of their stated goals. It certainly follows from the rich-as-exploiters meme, though. Exploiters deserve to be punished. And if you happen to be born to the exploiter class, you have a great deal of original sin to atone for.
“And if you happen to be born to the exploiter class, you have a great deal of original sin to atone for.”
Democratic Party contributions = indulgences?