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13 April 2010

Comments

Russ

Gee, what a surprise, the top 20 percent of household pay over 80 percent of the taxes.

Steven Frisch

Gee what a surprise the top 20% of households make hold 85% of the net worth in the American economy.

So shouldn't they pay 85% of the taxes?

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

George Rebane

Every once in a while it's good to see a progressive openly promote asset taxes.

Steven Frisch

Ironically I would totally go for a graduated asset tax.

George Rebane

In what way do you see irony in your preference?

Account Deleted

Reward the folks that piss away what they have and punish the folks that husband and save. What sort of society will you get? Why not a consumption tax? If you really are poor, you won't pay much and if you are rich, you will have to pay more if you are to enjoy your wealth. If you are wealthy and don't spend much, then you will invest and it will certainly benefit society. People modify their behavior in response to the type of taxation they are subjected to.

Steven Frisch

I see irony in my support for asset (and consumption) based taxes because they are usually considered a conservative innovation, and I am labeled a liberal here. In general a tax structure that taxes assets (a person or family's net worth) or consumption (a person or family's spending) is fair. We would still need to deal with the question of minimum tax threshold.

George Rebane

Since it became practical to track various sources of income, conservatives have turned away from asset taxes. In the olden days assets were presumed to generate sufficient income to maintain the owner and pay his taxes, and they were easy to assess. But absent that, asset taxes are a means of government confiscation of property and denial of property ownership to certain classes.

I think in a future post it would be useful to examine various tax policies with respect to the kinds of social orders that they promote and inhibit.

Taxes have always been a slippery thing that historically have changed the faces of nations, or simply ripped them off.
http://republicans.waysandmeans.house.gov/UploadedFiles/DemTaxIncreases1.pdf

Douglas Keachie

Of course this is so. This clearly explains why the top 1% in the nation went from owning 8% of the nation's wealth in 1980 to owning 20% 0f it today. The poor rich folks are having to take care of more and more stuff. Good thing they aren't greedy.

Mikey McD

I am a proponent of Ron Paul's Liberty Tax Amendment.

I had a very interesting Q/A session with my 5 year old this a.m. (100% true story).
Q- Dad, do you pay taxes to get married? (she found a wedding photo laying around)
A- yes, you actually have to pay for the governments permission to get married, it's called a marriage license.
Q-Dad, do have to pay taxes for your truck?
A- yes, I actually paid sales tax when I bought it, I pay a tax every year to register it, and I pay taxes each time I put gas in it.
(heater comes on)
Q-Dad, do you have to pay taxes on our heater?
A- yes, I actually had to pay $400 tax to the county for permission to replace our old heater. I also have to pay taxes on the electricity/power the heater uses.
Q- Do you have to pay taxes when you die?
A- Yes, in most years their is a death tax; every year their is probate tax.
Q- Is that why mom says we don't have money for a cookie at Raley's?
A- yes.


http://www.house.gov/paul/congrec/congrec2003/cr013003c.htm

Mikey McD

I watched a documentary last night covering the war in Sudan. The wondering refugees lived on mud, urine, bugs, etc for years/decades. I wonder if they would have accepted the following scenario:

Food, shelter, liberty and security will be provided for each of you. However, there will be some among you, based on ability and/or luck that will have more food and shelter than the rest. Do you agree to this system?

Douglas Keachie

Let's see.

If I own more and more of the wealth of the country, as each year goes by, and some of that wealth produces income, then it rather stands to reason that I will be paying more taxes, as I own more of the income producing wealth of the country.

George, seems to me your chart shows this trend of a concentration of wealth in the hands of the rich perfectly. Good job!

George Rebane

Doug - tying your comment to Mikey's, I understand you to mean that the wealth of the the top 1,5, or even 10% was garnered at the expense of those in the respective bottom tiers of the economic ladder. In short, you know of sustainable goverance systems that provide the bottom tiers a higher quality of life than ours, without the concentration of wealth that we have.

We would waste time citing any of the EU countries, since they are ALL on the road to rags as their entitlement programs eat up ever greater fractions of their GDPs, the required growth of which their very same social policies inhibit. But perhaps we should broaden our search.

Douglas Keachie

The chart does have one funny feature. The bottom 40% seem to be paying negative taxes, or, in other words, the government is paying them money after they file tax returns. How exactly is that possible? One would then question the veracity of the rest of the chart, if nobody poor actually gets checks from the IRS. Do you know of any folks getting checks from the IRS, other than refund checks?

George Rebane

Re your last comment Doug - one of the problems with asset taxes is that they increase the risk of husbanding and assembling assets prior to the realization of their potential to produce income (additional wealth). That has been (classical) liberal insight of the 19th century. (Bastiat, et al) When you tax assets prematurely, it always inhibits their aggregation for subsequent wealth production which then would create additional businesses and jobs. It was ever thus.

Douglas Keachie

So you do agree that the rich are getting richer, despite having to pay more taxes, and that is fine with you? After you knock out EU countries, how many 1st world countries are left? Canada/Japan?

George Rebane

The CBO considered all transfer payments (positive and negative) which explains their showing the bottom two quintiles actually benefitting from the Bush tax cuts.

Yes, as the pie grows the rich are getting richer, and so are the poor. As we approach the Singularity, this phenomenon may actually intensify as fewer and fewer people are able to competitively sell their labor on global markets. In these pages, in the Union, and on the podium I have argued that some means of wealth transfer will be required. The problem is how to do it so that the pie continues growing and the poor don't lose out.

In this the communists have failed miserably, and the communists-lite (aka socialists) are heading for the mud and back to communism. I believe there are better solutions, and have tried to get a discussion going by offering the concept of Non-profit Service Corporations (qv).

Mikey McD

Yes, the bottom 40% actually get paid by the government while the top 60% pay taxes.

This is what fuels the class warfare in our country. We need to speak about percentages. I agree that a billionaire and a family making $50k should pay the same percentage in tax.

George Rebane

A correspondent pointed out a significant omission in this thread. One of the glories of our system is income mobility. The top percentages, as well as the bottom percentages, are not cast in stone but highly dynamic. This is an irritant to collectivists which they are able to quickly erase when coming to power. Their result is always a mass of poor egalitarians husbanded by the well-to-do leadership elite. More here -

http://www.outsidethebeltway.com/archives/income_mobility_in_the_united_states/

George Rebane

Just posted to the comment thread on 'We Remain Unstimulated' that deals with taxes that may also be appropriate here. It follows -

According to my lights, these are my thoughts on tax related governance.

• Were it as easy as ‘the Constitution says what it says’. English, and no human language, communicates unambiguously. EVERYONE interprets the Constitution, especially those claiming to speak ex cathedra about it. That the Constitution suffers from this malady testifies to the hundreds of thousands of lawyers and jurists who have always made a good living from this shortcoming, the proof of which is documented in an uncountable number of legal briefs and opinions. So I shall give mine.
• The Founders in their ‘original intent’ writings did their best to constitute us as a democratic republic with a minimalist form of federal government that was sufficient to keep the otherwise sovereign states together, and to assign certain limited functions and the power to fund them to the central government.
• Nowhere did the Founders recommend or anticipate that the federal government would have or exercise confiscatory levels of exacting tribute from its citizens in the several states. The famous ‘takings clause’ of the Fifth Amendment is an explicit attempt to codify and remedy such extreme actions by the government. A person’s money is his property.
• Nowhere did the Founders ever contemplate, recommend, or intentionally provide for the federal government becoming the agent or instrument of wealth redistribution among its citizens. By its seminal nature, such forceful redistribution is an abomination that has caused the many perversions of society that we witness.
• The Founders knew, and sleazebag politicians have paid lip service to the aspect of human nature that is summarized in the Peter/Paul Principle. It is the road to the ruin of democracies (including, especially, democratic republics). We are now speeding down that highway, attempting to overtake the Europeans.
• With Singularity’s advent, I do believe that some means of state-mediated wealth transfer must be established to forestall a bloody luddite revolution. The current solutions trumpeted and pursued by the collectivists are on their face bankrupt, and will hasten the day when our government starts executing its citizens en masse per the exemplars of Mao, Stalin, Hitler, … .
• Better solutions are possible for providing rewarding work to those who no longer can sell their labor competitively. Unfortunately, we have now entered an age wherein for MOST people education is no longer the panacea that it was even as little as fifty years ago.
• Near term prophylactics to employ the maximum, hold off the debt dragon, and provide for the aged/infirm are all based on a ‘fundamental transformation’ of the US tax code that includes the establishment of a 11-13% flat tax on ALL personal income. Corporate taxes should be abolished since the taxes they pay are nothing but an accounting perversion to soothe and garner the votes of the mal-educated.
• There MAY also have to be a consumption tax (e.g. some form VAT?). There should be no tax of any kind on assets, since every assets tax, from inflation to real estate, is ultimately confiscatory and in the interval promotes dissatisfied social classes.
• Taxes should be collected as locally as possible – in short, where people live and spend. Also, local jurisdictions should then send appropriate portions to higher jurisdictions in proportion to actual benefits/services received from such higher jurisdictions.

There is more, but that should be enough to chew on for a while.

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