Daningo
says 2011-08-12T16:15:25.000Z
How do you respond to these?
Depends on the point, I suppose. With respect to myth #1, I agree and disagree. I agree that the deficit results from the recession.
That has never, in my opinion, been in doubt. The question, therefore, is what impact have political decisions made on the deficit within
and during the recession period. The author assumes that Bush is only responsible for 2009, but makes Obama responsible for not only
current but also future deficits, which have not yet occurred. It makes Obama responsible for the impact of the tax cut, which continues
into the period of recession for which Obama takes the blame. Obama can be blamed for not ending the tax cut, but Bush still sustains the
blame for creating it in the first place, in my opinion. Bush doesn't 'get a pass' because now Obama is solely responsible for everything
that happens from 2010 on. Political decisions don't work that way, as we well know. Those decisions have a "long-term life."
The claim about corporate taxes is compelling, I think. I agree that it isn't as easy as no taxes and all taxes. The questions about
corporate taxes relative to GDP and the shift toward individual rather than corporate burden is persuasive.
The argument about progressive taxes is, in my opinion, a logical fallacy. While the author correctly points out that no one defines "fair"
what is ignored is the fact that those who don't pay taxes, in most instances, don't pay because either a) they don't make enough money to
pay taxes or
they work the exception, tax deduction system to their benefit so they pay little or nothing. In the case of the first issue
liberal are difficult to blame for this problem, because they have called for increases in minimum wage for many years and have been
resisted by both conservatives and businesses who argue it would hurt the economy. If you want more people to pay taxes, they have to have
jobs that put their annual salaries above the exception levels. In the second case, the exceptions that work to the benefit of those who
don't pay any taxes are exactly the same for the wealthy (rich) as they are for everyone else. In fact, those who are wealthy have
(or may have; I would need to do the research) to more exceptions, because their wealth extends to more property, stocks, etc. Areas where
the tax code gives considerable leverage for deduction and exception.
The final argument, in my humble opinion, is just simply wrong. I have heard few liberal argue for no spending cuts of any kind.
Obama was willing to go into the Trillions of dollars in spending cuts, provided that he received, back, an equal amount of revenue
increases. In my opinion, then, the final myth is a straw person argument. We aren't arguing about 100 billion any more. If this could be
solved by 100 billion or even 500 billion, liberals would be all over that. They are freaking out about 2 trillion and 4 trillion. That is
what they are arguing, over the next 10 years, will devastate the economy and those who are most vulnerable.
(One final point, though, about myth #1, Bush v. Obama). I think it is fair to point out that Obama did ask and call for a repeal of the
tax breaks for those who make over $250K. If congress had agreed to that request, back in 2010, the deficit outlook would be different.
It certainly wouldn't be perfect and it still might be alarmingly high, but it would also be lower than it is now and is projected to be in
the future. Should Obama be "praised" for wanting to reduce the deficit by ending the tax break for those over $250 or should he be blamed
for the fact that he couldn't get it passed through congress? That is a question that complicates myth #1, in my opinion.
It doesn't, however, fit into the mythology narrative that drives the essay.
Oh, and I have one final comment about the progressive tax code myth. (Sorry, I'm not trying to pile on, I'm just thinking it through in
my head). The author cites the fact that 70% of the tax revenue of the United States comes from the top 10% of wage earners. This, according
to the author, "would appear fairly progressive." Actually, it might not. The number seems like a lot, until you consider the percentage of
wealth that that 10% actually owns.
Conservative estimates put the top 10% of wealth holders in the US at around 70% of the nation's wealth.
Other estimates suggest that in 2007 the top 10% possessed over 83% of the financial wealth, which would make the 70% less progressive
if you assumed that progressive should equal the amount of wealth that a group of people possess relative to the rest of the nation.
While the policy conclusions of William Dumhoff are the subject of criticism, I believe that his data is supposed to be fairly accurate.
Daningo
says 2011-08-12T18:17:10.000Z
Wealth and Income can be very different - Income is likely fungible, Wealth is more likely to be illiquid
Wealth can be calculated in different terms. Sometimes it is calculated as property, stocks, etc., but sometimes as simply salary.
Or maybe I don't understand what you mean,
Daningo.
Does illiquid mean liquid?
If it does then I don't understand, because wealth, as I see it cited, unusually includes a house which is less liquid than salary.
Daningo
says 2011-08-12T18:20:39.000Z
I define Wealth to be the accumulated property, businesses, investments, cash on hand - whereas income is revenue
Daningo
says 2011-08-12T18:20:57.000Z
cash is liquid/fungible, property is less so
OK, so you don't include stocks in wealth?
Or by investments do you mean stocks.
If so, then I think we agree, and we are talking about the same category, "financial wealth," which is more than income.
Daningo
says 2011-08-12T18:22:29.000Z
investments would mean stocks, bonds contracts etc
It is in the area of financial wealth, the inclusion of investments, businesses that the greatest difference exists.
You might be arguing, though, that a definition of "fair" in income tax notions of proportional should not include wealth but only income.
Calaban
is 2011-08-12T18:23:40.000Z
that right?
Daningo
says 2011-08-12T18:24:30.000Z
But the increase of taxes on income, may not address the disparity in wealth - in fact may deepen it as it reduces wealth building
Daningo
says 2011-08-12T18:26:13.000Z
If those who are already wealthy see an increase on their income, it will not reduce their wealth
Daningo
says 2011-08-12T18:26:49.000Z
If those who are selling a business or gettign big paychecks, but are not yet wealthy, they will have less to build wealth
Daningo
says 2011-08-12T18:28:42.000Z
the wealthy will continue to grow, perhaps at a slower rate, but the 'up and coming' will not accumulate enough to even out the trend
Yes, I agree, but that is the liberal position.
The liberal position is not that the wealthy shouldn't be wealthy.
The liberal position is that increased taxes will not prevent them from being wealthy, BUT the increase in revenue CAN be used to change
the lives of those who are not wealthy.
Do you see my point? Your position, that taxes will not stop the trend, is perfectly consistent with liberalism.
Liberalism doesn't want to stop the trend of the wealthy, because additional wealth can and will lead to additional revenue.
What the liberal position doesn't want is an untaxed wealthy or a wealthy class that is taxed so lowly that programs to help those without
Daningo
says 2011-08-12T18:31:59.000Z
Yes, I see your point - I am trying to point out that the very information used to declare a need for more income tax (wealth disparity)
Daningo
says 2011-08-12T18:32:22.000Z
will not be remedied by that method
I agree, but the alternative is untenable to everyone, liberals and conservatives.
The alternative is more fully socialist perspective that continues an aggressive system of taxes, but then makes many currently private
enterprises public enterprises.
Daningo
says 2011-08-12T18:36:10.000Z
I'd agree that is untenable - by removing independent Business from the mix, you have only government to mind government - less accountable
Daningo
says 2011-08-12T18:37:17.000Z
much the same calculation raised against multinationals - they can play govt against govt and are less accountable to any one govt
Although I trust government more than I trust business, but that might be one of the true "differences" between a conservative and a liberal
With respect to the original post and the myth that the wealthy don't pay their fair share, I'll just repeat that the essay's conclusion is
weak on several points. The last of those points is the fact that 70% of the tax burden may, in fact, not reflect the true wealth that is
enjoyed by the top 10% of the wealthy in the US.
If a "fair" progressive tax means that you pay back in rough approximation to what you possess, then an additional 10%, to 80% would reflect
wealth disparities more fully. There may be many good reasons NOT to shift taxes in this way, but the notion of progressive tax and fairness
may not be one of those good reasons.
Daningo
says 2011-08-12T18:46:41.000Z
I'd like to see a comparison of annual total revenue to taxation by income strata and see if the same ratio exists as wealth to tax burden
But it won't. The reason it won't is because income for the top 10% is defined differently. A CEO will make $250,000 a year, but his real
salary for that year is 1.2 million, because of the stock options.
Declared income, in this instance and many like it, shifts drastically, because what is included in income can shift drastically, right?
That's one of the reasons that the tax code is so complicated. It is trying to figure out income not just through salary but through all
other means. I suspect that it fails at this task, at least in part, because there are so many different ways to
defer or even "hide" income once you've moved beyond the salary phase. (I don't mean hide in an illegal way, just in a tax beneficial way).
Daningo
says 2011-08-12T19:01:22.000Z
So, flat tax, anyone? (I've enjoyed these posts BTW)
Hey, now this is interesting and it might be sort of what you're looking for,
daningo.
This essay, published in the Journal of Economic Perspectives, asks exactly the question that are asking, "how progressive are taxes in US?
I've read some of it quickly, but what I've read is very interesting.
First, it looks at more than just income tax, it looks at corporate taxes, payroll taxes, etc.
The essay does conclude that the US tax structure "remains" progressive and that higher income strata pay equal or even more than their
share based on the income declared to the IRS. What the study seems to acknowledge is exactly what we've been saying here. That the income
declared to the IRS each year may not be the best indicator of wealth or of income over a lifetime.
Daningo
says 2011-08-12T19:05:54.000Z
I printed it out, we'll see if I have time to go through it tonight
Interesting reading, to be sure. To bad it is only to 2004, but that's the way research often goes. It takes time.