Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktA Financial Times article posits that we are undertaxing the rich.
Another reason advanced for not raising taxes on the highest incomes is that it would not make much of a difference. In fact, the income shares at the top are so high that this is no longer true. Thus, raising the average income tax rate on the top percentile to 43.5 per cent from the low level of 22.4 per cent in 2007 would raise revenue by 3 per cent of GDP, closing much of the structural fiscal deficit, while still leaving the after-tax income share of the top percentile more than twice as high as in 1970.
However this assumes that capital gains are taxed at the same rate as wages, otherwise the income is just renamed and the effect of the higher rate is nullified.
Filed under: taxes |
All Things in Moderation 
What would be the incentive for those in that tax bracket to maintain their same level of production when essentially half of the fruits of that production would go to just federal taxes?
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What would be the incentive
The incentive increases because one must work ever so much harder just to stand still, of course!
Seriously, it all depends on whether there are “better” choices for the individual. If the effort will produce more net in another place, a move might be in order. The argument for low corporate taxes is based first on this notion – don’t tax more heavily than other competing nations do.
I am going to read the article after I come back from my neighbor’s party. The question I will be looking for an answer to is about that comparison to 1970 and whether it stands up to investigation.
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“What would be the incentive for those in that tax bracket to maintain their same level of production when essentially half of the fruits of that production would go to just federal taxes?”
Most of that ‘production’ comes from excess capital. What else are you suggesting they would do with it?
Would they spitefully refuse to invest the money because their tax rate changed?
Spend it instead? To which I would say: excellent. Keep that money in circulation.
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bsimon:
Most of that ‘production’ comes from excess capital.
What does that mean, “excess capital”. Excess generally means more than required or needed. What is the right “required” or “needed” amount of capital?
Spend it instead? To which I would say: excellent. Keep that money in circulation.
Actually the exact opposite would happen. High capital gains tax rates encourage people to keep their money tied up in existing investments rather than realize gains and invest in new things or spend it. So, for example, the comfortable owner of a business might choose to keep his money tied up in a marginally profitable business rather than selling out to someone with new ideas about how to make the business more efficient and more profitable.
With high capital gains taxes, you will get a lot less, not more, circulation of money.
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Why would one want to put one’s money at risk when practically half of what you would reap would be taken by the federal government? Why would that be an incentive? Also, I would think that you would invest that “excess” capital in the lowest risk possible. Why do you think they would choose to spend (isn’t investment spending by the way? If not, why?) when they aren’t spending now?
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Scott:
What does that mean, “excess capital”. Excess generally means more than required or needed. What is the right “required” or “needed” amount of capital?
Please explain how this is pertinent beyond one of your off in the weeds debate items.
Troll,
“I would think” blah blah blah. Got any actual backup for your statements?
I’m sincerely interested in discussion, but not at all interested in partisan talking points or semantics debates.
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okie:
Please explain how this is pertinent…
If you are suggesting that the term “excess capital” has no pertinence to the discussion, I suppose you may be right (although why you ask me instead of bsimon is rather bizarre). Since I don’t know what it means, I can’t defend its relevance, although I assume that bsimon included the phrase for a reason and am therefore interested in what he meant by it.
If you think the phrase itself is pertinent, you must therefore mean to suggest that my lack of understanding of it has no relevance. Which I find equally bizarre.
I’m sincerely interested in discussion…
Your tone suggests to me precisely the opposite.
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yello (from the article):
We reach this conclusion by combining widely accepted notions of fairness in taxation…
Sure. I’d like to know just what those “widely accepted” notions are. Given the fact that they are advocating highly progressive tax rates, I don’t care how “widely accepted” they may be, manifestly they are not in fact “fair”.
…with empirical analysis of the tax revenue loss (and so efficiency cost)…
How does tax revenue loss equate to “efficiency cost”? Efficiency of what?
Historically, the emergence of huge inequalities in wealth and political power has destroyed democratic republics…
Examples?
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Scott, your tone suggests precisely the opposite to me. How to resolve this?
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okie:
Scott, your tone suggests precisely the opposite to me.
Which words of mine suggest this to you.?
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lol, for the love, scott. Is this humor? I don’t even know that.
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okie:
No, not humor. I can’t imagine what in my posts, prior to your unprompted swipe at me and McWing, could possibly be considered to be a lack of interest in discussions, and was curious what made you say such a thing. It seems, by your inability to cite what makes you think so, that you weren’t serious and were just playing the childish “I know you are but what am I” game. C’est la vie. If this is your thing now, I guess we’ll just have to get used to it.
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markinaustin: The incentive increases because one must work ever so much harder just to stand still, of course!
Lower middle class folks (me) have been doing this for a number of years now. Others should not?
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The primary incentive of raising marginal rates will be to restructure the income so that it is sheltered or deferred until the rates are reduced (i.e. not take the capital gains).
Most people I know of who would be affected would rather pay tax lawyers and accountants to minimize or avoid the tax, regardless of how inefficient it is, than the government, even if paying the government would cost the same or slightly less.
As evidence of this, I would note the surge of tax revenue following the 1986 reforms, suggesting that income was successfully being sheltered and/or deferred and that following the changes it was more advantageous to just realize it and pay the taxes.
http://online.wsj.com/article/SB10001424052970204002304576629481571778262.html?mod=WSJ_Opinion_LEADTop
http://voices.washingtonpost.com/ezra-klein/2011/01/understanding_inequality_part.html
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jnc, thanks for the link. Have not yet read the articles but infer from your comment this model does not contemplate capital gains taxation at income tax rates?
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“okiegirl, on April 28, 2012 at 5:09 pm said:
markinaustin: The incentive increases because one must work ever so much harder just to stand still, of course!
Lower middle class folks (me) have been doing this for years a number of years now. Others should not?”
I don’t believe proposals to increase marginal rates are targeted at the lower middle class who would tend to react in the way you are suggesting. The people at the upper end of the income scale who are being targeted have options to defer and restructure compensation and investments so that they aren’t taxed at the higher rates because in aggregate they have sufficient cash flow available to make this work.
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“okiegirl, on April 28, 2012 at 5:13 pm said: Edit Comment
jnc, thanks for the link. Have not yet read the articles but infer from your comment this model does not contemplate capital gains taxation at income tax rates?”
It does. That’s exactly what the 1986 reforms did. The argument I’m advancing is that if you raise the rates, you create incentives not realize the capital gains by either deferring them or sheltering them until the rates go back down again.
Also, I would expect an uptick in “business expenses”.
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It seems, by your inability to cite what makes you think so, that you weren’t serious and were just playing the childish “I know you are but what am I” game. C’est la vie. If this is your thing now, I guess we’ll just have to get used to it.
Good grief. There was no inability to cite something, so no conclusions can be drawn from that. Scott, sorry I even broached the subject. Carry on.
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jnc, I’m intrigued but uneducated. So you base your opinion on that CG rates either will never be brought to income tax rate level, or if so will go back down differentially in future years?
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“okiegirl, on April 28, 2012 at 5:20 pm said: Edit Comment
jnc, I’m intrigued but uneducated. So you base your opinion on that CG rates either will never be brought to income tax rate level, or if so will go back down differentially in future years?”
I’m saying that you shouldn’t base expected revenue projections from increasing tax rates on current levels of revenue multiplied by the increased tax rates. Evidence from before the last major reforms in 1986 shows that those on the upper end of the income scale have options other than paying the taxes due to their ability to defer the income rather than realize it.
I’m all in favor of taxing capital gains at the same rate as earned income as part of a broad based tax reform that lowers over all rates while eliminating deductions and exemptions. I have no expectation that simply raising marginal rates on higher earners will prove useful from a fiscal standpoint.
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jnc, you and I are in agreement about what tax reforms should occur. But I’m skittish enough to want to see the increased revenue before seeing any rates reduced.
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“Historically, the emergence of huge inequalities in wealth and political power has destroyed democratic republics…”
You might think so, but our founders were far more concerned about leveling schemes and deliberately designed our government to prevent redistribution of wealth (as one restriction on overreaching government).
Read Federalist 10 if you don’t believe it.
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qb:
You might think so, but…
I wonder what examples there are of democratic republics being destroyed due to inequalities in wealth, huge or otherwise. Can anyone think of any?
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“ScottC, on April 28, 2012 at 6:27 pm said:
qb:
You might think so, but…
I wonder what examples there are of democratic republics being destroyed due to inequalities in wealth, huge or otherwise. Can anyone think of any?”
I’d argue it was a contributing cause to the fall of the Roman Republic. See Marian reforms.
http://en.wikipedia.org/wiki/Marian_reforms
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jnc:
I’d argue it was a contributing cause to the fall of the Roman Republic.
I read the link and I don’t see the connection between the Marian reforms and inequalities in wealth.
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“okiegirl, on April 28, 2012 at 5:34 pm said:
jnc, you and I are in agreement about what tax reforms should occur. But I’m skittish enough to want to see the increased revenue before seeing any rates reduced.”
This may be of interest regarding the divergence of views over optimal marginal rates:
Paul Krugman:
“The way Diamond and Saez do the analysis is to argue that because the rich are rich, their marginal utility of income is very low, which means that at the margin their income doesn’t matter for social welfare. So they should be taxed at the rate which maximizes revenue, which is 1/(1+ε) — where ε is the elasticity of labor supply from the rich. And since we have a lot of evidence suggesting that ε is quite low, the appropriate tax rate for the rich is quite high — 70 percent or more.”
http://krugman.blogs.nytimes.com/2012/04/03/the-simple-analytics-of-soaking-the-rich-wonkish/
Steve Pearlstein:
“A quick back-of-the-envelope calculation suggests that balancing the budget solely on the backs of those making more than $250,000 a year would almost surely require pushing marginal income tax rates well above 50 percent. That’s a level at which taxes begin to discourage people from working and investing. Almost certainly, it is a level that would prompt them to invest significant time and money to find new ways to evade taxes.
A lot of liberals make the argument that its okay to soak the rich because the rich have captured nearly all the income growth in the past couple of decades. There’s no disputing that income inequality has increased. But it’s also important to remember that there is only so much a progressive tax code can do to counteract the market. With the top 10 percent of households already paying 55 percent of the total federal tax bill, we’re hitting against that limit.”
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/16/AR2009041604462.html
I personally find Pearlstein’s argument that 50% is the marginal rate at which we cross to the other side of the Laffer curve more compelling that Krugman’s argument in favor of a marginal rate of 70% based on evidence from before and after the 1986 reforms. Note that these rates are combined rates inclusive of state and local rates, so they translate into a federal rate about 10% lower.
As a side note, I reject the premises from Krugman’s argument that income distribution should be reallocated by the government on the basis of the governments view of maximizing “social welfare” and that the purpose of the tax code is to raise the maximum amount of revenue possible. Taxes should be set to raise the amount of revenue necessary to fund government spending, and not any more than that. However, leaving that aside, I still believe he’s empirically wrong that a marginal rate of 70% maximizes revenue.
One other point of evidence regarding the futility of marginal rates is the historical rate of income taxes as a percentage of GDP:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205
The rate of federal income tax paid as a percentage of GDP post WWII varies between 5.7 and 10.2. More significantly, the variances do not seem to directly correspond to the actual marginal rates in effect at the time, so you can have 8.0 % GDP paid in 1952, 1971, 1988, and 1995 when there were very different marginal rates (and deductions and exemptions) in effect during those years. This implies to me that raising marginal rates back to 1950’s levels as is often advocated will be less effective than generally assumed by those on the progressive/liberal side of the argument.
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Also, on a separate subject Ken Rogoff annoys Paul Krugman with his analysis of the Euro as a joint checking account being abused by some members:
http://www.ft.com/intl/cms/s/0/bb16c228-8d2d-11e1-8b49-00144feab49a.html#axzz1suQN99cA
http://krugman.blogs.nytimes.com/2012/04/24/rogoffs-bad-parable/
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“Why would one want to put one’s money at risk when practically half of what you would reap would be taken by the federal government?”
That’s the question, isn’t it. If the tax rate went up, just what do you think would be done with the capital that is being invested now? I think that there would be limited change in behavior, as there’s limited appetite for the alternatives. But if you think behavior would change significantly, game it out for us. Would they put it between their mattresses? Would they drive down muni bond returns, seeking tax shelters? Or, in pursuit of returns in excess of inflation, would they keep doing what is done now?
“Why would that be an incentive? Also, I would think that you would invest that “excess” capital in the lowest risk possible. Why do you think they would choose to spend (isn’t investment spending by the way? If not, why?) when they aren’t spending now?”
That’s the point; I don’t know that behavior would change. The conservative argument is that the wealthy would lower their productivity in order to avoid ‘excessive’ taxation. What would those behavioral changes be?
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Jnc:
Just so you know you aren’t howling at the moon, thanks for the posts and links. Lots of good food for thought.
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JNC, good to have you back and excellent links.
Yello, I thought I would get to the first article you linked, but have not yet.
Okie, I actually did work less at the end of some years that I made it into the highest bracket, but I think it was because I could afford to; I admit that I was lazy on billing at the end of those years so some income would shift to the subsequent calendar year. In years when, if I had taken off after TG, I would have ended the year in a middling bracket, I kept working hard, and billing timely, even though I risked the evil of bracket creep.
So I have some respect for the bracket creep laziness effect, and for the bracket creep avoidance effect, but I think more like Pearlstein and JNC than like Krugman about it.
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“bsimon1970, on April 28, 2012 at 7:44 pm said:
That’s the point; I don’t know that behavior would change. The conservative argument is that the wealthy would lower their productivity in order to avoid ‘excessive’ taxation. What would those behavioral changes be?”
1. Defer realization of capital gains. I.e. don’t sell the stock.
2. Increased use of tax shelters and other vehicles to defer/avoid/minimize taxes.
3. Increase use of non-taxable compensation disguised as “business expenses”. See also the increased use of Me, Inc.
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“markinaustin, on April 28, 2012 at 8:50 pm said:
…
Okie, I actually did work less at the end of some years that I made it into the highest bracket, but I think it was because I could afford to”
Bingo. Unless you are driven by cash flow considerations, many if not most people will optimize for tax advantages at the income and marginal tax rate levels being discussed. I.e. limiting the increases to married couples making over $250,000 per year and marginal rate increases of 5% or more.
If the tax rate increases are limited to the top 1% (I.e. increasing taxes on “Millionaires”), then the options for restructuring compensation to avoid tax consequences are even greater.
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“ScottC, on April 28, 2012 at 8:55 pm said: Edit Comment
jnc:
I’d argue it was a contributing cause to the fall of the Roman Republic.
I read the link and I don’t see the connection between the Marian reforms and inequalities in wealth.”
“the expansion of the latifundia at the expense of small landowners”
The reforms introduced by Marius transformed the Roman army from a citizen army based on small landholders who were loyal to the state to one that was loyal to the generals. This trend culminated in the Civil War between Gaius Julius Caesar and Gnaeus Pompeius Magnus.
What made the reforms necessary was that the growing inequality of the Roman citizenry meant that not enough citizens fulfilled the property requirement to be of the appropriate class to be suitable for military service, due to the expectation that they would provide their own arms and equipment.
Edit – More detailed explanation:
“Especially since the end of the Punic Wars and conquests in the east, the small landowning classes had dwindled to dangerous numbers. Wealthy senatorial aristocrats and equestrian elite land owners bought up small farms from struggling families and worked them with vast numbers of imported slaves. The jobless and landless mobs in Rome swelled out of control and led directly to the rise of the Gracchi, who championed political reform for the common citizens. By the time Marius came to power, the typical Roman recruiting base was literally non-existant. There simply weren’t enough landowners available who weren’t already fighting the Germanics or Jugurtha to field a new army.”
http://www.unrv.com/empire/marius-reforms-legions.php
Second Edit:
Another link:
http://rtw.heavengames.com/history/general/marian_reforms/index.shtml
Apparently, if you are in favor of the Marian reforms, you can like them on Facebook.
http://www.facebook.com/pages/Marian-reforms/132853876754798
See also the Gracchi (Tiberius Sempronius Gracchus & his brother Gaius Sempronius Gracchus):
http://en.wikipedia.org/wiki/Gracchi
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jnc:
What made the reforms necessary was that the growing inequality of the Roman citizenry meant that not enough citizens fulfilled the property requirement to be of the appropriate class to be suitable for military service, due to the expectation that they would provide their own arms and equipment.
Was it the case that there was a decreasing number of landowners, and thus a shrinking number of people suitable for military service, necessitating a new way of populating the same sized military, or was it the case that the need for a larger military was such that the population of those suitable had to be expanded from what it had been in the past?
update: I see you have answered that question in a subsequent edit.
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J,
Pethokoukis provides a nice overview, in laymans terms, of why a high(er) marginal rate won’t be particular helpful. Two easy example he provides are the UK’s recent 45% to 50% tax rate increase actually reduced revenue and Clinton’s increase to over 39% only provided a third of the revenue expected.
http://blog.american.com/2012/04/7-reasons-why-higher-tax-rates-would-be-bad-for-economic-growth-a-response-to-diamond-and-saez/
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For any interested in the fall of the Roman Republic, I highly recommend the Masters of Rome series of historical novels by Colleen McCullough. They are technically works of fiction, but the historical events portrayed are 100% accurate and she has numerous appendixes with footnotes. The time period goes from Marius through Octavian/Augustus and the only thing I can think of that could have been done to improve them would have been to start the series at an earlier time period, specifically with the rise of the Gracci, their reforms, and subsequent assassinations.
The novels are:
The First Man in Rome
The Grass Crown
Fortune’s Favorites
Caesar’s Women
Caesar: Let The Dice Fly
The October Horse
Antony and Cleopatra
They are worth tracking down in hardback and savoring, like a fine wine.
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“Troll McWingnut or George, whichever, on April 28, 2012 at 9:34 pm said:
J,
Pethokoukis provides a nice overview, in laymans terms, of why a high(er) marginal rate won’t be particular helpful. Two easy example he provides are the UK’s recent 45% to 50% tax rate increase actually reduced revenue and Clinton’s increase to over 39% only provided a third of the revenue expected. ”
Yep. He’s refuting the same study that the Krugman quote I cited earlier was referencing. I agree with his summation of what rate should be considered optimal:
“Bottom line: I want a tax code where tax rates are as close to the growth maximizing rate—not the revenue maximizing rate—as we can get while still funding a lethal military, an efficient and effective safety net, and basic science research. Doing that does not require tax rates of 50% or higher. In fact, it demands rates much lower.”
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I completely agree with the Pethokoukis statement. I hate it when people assume that revenue maximization is the proper goal. It is a terrible goal.
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” 1. Defer realization of capital gains. I.e. don’t sell the stock.”
I don’t see that as inherently good or bad.
” 2. Increased use of tax shelters and other vehicles to defer/avoid/minimize taxes. ”
–
Again, what’s the inherent economic good or bad? As you note, that behavior already exists.
“3. Increase use of non-taxable compensation disguised as “business expenses”. See also the increased use of Me, Inc.”
That sounds like an enforcement issue.
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“bsimon1970, on April 28, 2012 at 11:22 pm said:
” 1. Defer realization of capital gains. I.e. don’t sell the stock.”
I don’t see that as inherently good or bad.
” 2. Increased use of tax shelters and other vehicles to defer/avoid/minimize taxes. ”
–
Again, what’s the inherent economic good or bad? As you note, that behavior already exists.
“3. Increase use of non-taxable compensation disguised as “business expenses”. See also the increased use of Me, Inc.”
That sounds like an enforcement issue.”
It’s bad because it changes behavior to be more economically inefficient to avoid taxes. I.e. rather than sell shares in an old company to invest in a new one with more promise, there is now an incentive to forego this to avoid the tax consequences.
Regardless, my primary point was to provide the examples of the behavior changes that were requested.
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The primary incentive of raising marginal rates will be to restructure the income so that it is sheltered or deferred until the rates are reduced (i.e. not take the capital gains).
The article does discuss the effect of time shifting income. These tend to be one-time windfalls such as the 1986 sell-off or massive profit taking in front of the Britain increases. And the only occur when the rules change. Consistency of policy dampens these effects.
The big selling point of traditional IRAs is that you didn’t pay taxes on the contributions until the withdrawal when it was assumed you would be in a lower tax bracket due to the absence of wages. As one example of that backfiring, Mitt Romney allegedly has millions in an IRA where he will have to pay the highest bracket rate because it will be taxed as ordinary income. After he made those investments, the capital gains rate dropped precipitously. If he had stashed in taxable vehicles with large capital gains he could withdraw it any time and only pay the current much lower capital gains/carried interest rate.
Inequal rates of taxation tend to draw money to the lower taxed activity which distorts the economy. The 1980s commercial real estate crash and subsequent S&L crisis were but one example of this.
Just how much did the home mortgage interest as tax haven drive the recent residential property bubble?
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I completely agree with the Pethokoukis statement. I hate it when people assume that revenue maximization is the proper goal. It is a terrible goal.
Why do something sub-optimally? Products and services are priced to maximize revenue and/or profit, why shouldn’t taxes?
From a Krugman article linked from the article jnc linked to:
Defending the upper income earners is strictly a philosophical argument. Progressive taxation is a long standing policy, one that has been effectively eroded over the years.
If we are currently being undertaxed (and it is highly unlikely we are ever going to cut government services and entitlements enough to balance the budget that way alone), I would prefer to have the tax revenue of those making more than me optimized before they come after my income (which likely would see a net tax increase as well).
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yello:
Why do something sub-optimally?
To think that maximizing tax revenues is necessarily “optimal” is to assume that government spending is a goal in itself. I don’t think simply spending money is a proper goal for government to have. The “optimal” amount of tax collection is that which covers the cost of proper government activity. Given the coercive nature of taxation, any collection of taxes over and above that which is absolutely necessary for the essential functions of government necessarily undermines the purpose of the government, and is therefore sub-optimal.
Products and services are priced to maximize revenue and/or profit, why shouldn’t taxes?
Because a private business exists to make a profit, and the government does not.
Because a private business spends money in order to create a revenue stream, and the government creates a revenue stream in order to spend money.
Because the revenues collected by a private business are paid by mutual agreement, while the revenues collected by the government are paid under threat of coercion.
The reasons are legion.
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I won’t try to improve on Scott’s answer to yello. I think this reflects a profound difference between philosophies. Maximimzing tax revenue as the object is essentially the same as maximizing government as the object. To me it is just about as wrong an idea as there is. Certainly, finding the most efficient and just way to raise revenue is important, but only the revenue needed for legitimate, proper government functions.
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“Because the revenues collected by a private business are paid by mutual agreement, while the revenues collected by the government are paid under threat of coercion.”
This.
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“yellojkt, on April 29, 2012 at 5:45 am said:
…
If we are currently being undertaxed (and it is highly unlikely we are ever going to cut government services and entitlements enough to balance the budget that way alone), I would prefer to have the tax revenue of those making more than me optimized before they come after my income (which likely would see a net tax increase as well).””
This isn’t a moral argument. It’s pure self interest in the form of why someone else should pay more for services that you support, but you shouldn’t.
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Yes. All taxes are theft. Besides, I am currently paying a lower rate than both Mitt Romney and Warren Buffett, so we have a ways to go before I start feeling sorry for them. There is a lot more blood left in those turnips.
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“yellojkt, on April 29, 2012 at 10:36 am said:
Yes. All taxes are theft. Besides, I am currently paying a lower rate than both Mitt Romney and Warren Buffett, so we have a ways to go before I start feeling sorry for them. There is a lot more blood left in those turnips.”
Did you mean to say higher rate?
All taxes aren’t theft, but appealing to morality as a reason why someone else should pay a higher rate to fund programs that you support isn’t a particularly persuasive argument.
[Insert argument for flat tax that has been stated previously here]
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Careful yello,
[Some people are]” … sincerely interested in discussion, but not at all interested in partisan talking points or semantics debate.”
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Thanks for the remembrance, troll.
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We probably all know our various positions, regarding taxes, by now.
Yello, thanks for the post. I finally read it. I think Wolf’s stuff in FT is always worth reading, and this was no exception.
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Mark:
We probably all know our various positions, regarding taxes, by now.
I’m not sure that is true. I’m not aware of anyone here who holds that all taxes are theft, but it seems that yello thinks someone here does. I’m wondering who that might be.
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QB – You might want to have a chat with Messr. Laffer. Was not the point of his famous curve that maximizing tax rates does not maximize tax revenues?
Scott – I would gently suggest that your sarcasm detector needs a fresh battery. I suspect that Yello doesn’t believe that government is inherently felonious.
BB
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QB – You might want to have a chat with Messr. Laffer. Was not the point of his famous curve that maximizing tax rates does not maximize tax revenues?
That’s a way of saying what his point was, but that is far different from an argument that the purpose of tax policy (or economic policy generally) should be to maximize tax revenue. The purpose of tax policy should be to raise the funds needed for government purposes, and no more.
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FB:
I would gently suggest that your sarcasm detector needs a fresh battery. I suspect that Yello doesn’t believe that government is inherently felonious.
Nope, nothing wrong with my sarcasm detector. I am quite sure that yello doesn’t view all taxes as theft. I didn’t say he did. But his sarcasm only makes sense if he thinks, or at least wants to imply, that someone else here does. Which is why I said that “it seems that yello thinks someone here does” and not “it seems yello does.”
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Did you mean to say higher rate?
Yes I did. Thanks.
“All taxes are theft” is a shorthand strawman for an extreme but common libertarian concept. Without the threat of coercion, nobody would pay taxes, not even someone as divinely altruistic as Warren Buffett. Just look at Greece to see the chaos that slack and arbitrary enforcement of tax laws results in.
And ‘soaking the rich’ can be defended philosophically. Those with the greatest ability to pay should pay the greatest amount.
The delicate balancing act is to not necessarily to maximize the total revenue of government but to balance the public good done through the public sector while minimizing detrimental effects to the private sector. The extremes, libertarian anarchy and despotic state control, are easy to find, but striking the intermediate balance is much more delicate.
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yello:
“All taxes are theft” is a shorthand strawman for an extreme but common libertarian concept.
Sure, but what relevance does it have to the discussion from earlier? Neither jnc nor I nor anyone else here that I am aware of has adopted this position, nor is it relevant to anything we said earlier. So why you introduced it is somewhat of a mystery.
And ‘soaking the rich’ can be defended philosophically.
How so?
Those with the greatest ability to pay should pay the greatest amount.
On what principle of justice do you base this conclusion?
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On what principle of justice do you base this conclusion?
I’m not familiar with the phrase ‘principle of justice’. Is there a list somewhere I get to pick from?
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yello:
Is there a list somewhere I get to pick from?
You’ve apparently already picked, which is why I asked. You said that the rich “should” pay more and that soaking the rich could be defended philosophically. This indicates that you have some principle or standard of justice in mind which leads you to make the claims. I’m wondering what it is.
It is possible, I suppose, that you haven’t actually invested any thought in the claims, and are just mindlessly repeating something that you heard someone else say. But I was giving you the benefit of the doubt.
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I am not a philospher and clearly haven’t spent as much time creating a comprehensive world view on theories of government but here is one philosophical quotes which underpin the concept of progressive taxation, which I realize is pretty much anathema in these circles, by Adam Smith:
And as for philosophers there is always that guy who talked so much about giving everything to the poor.
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And as to personal income taxes, Yello, Smith was for a flat tax, but exempting the poor. I have quoted that before, here.
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“yellojkt, on April 29, 2012 at 6:01 pm said:
And ‘soaking the rich’ can be defended philosophically. Those with the greatest ability to pay should pay the greatest amount.”
Not without coercion it can’t. As a test of this, the next time you go out to dinner with friends rather than divide the bill based on who ordered what, ask everyone to state their income and divide it based on their ability to pay. If you can get them to buy into this, then make sure to go out with your well off friends regularly and order the lobster.
Where “ability to pay” crosses over into “theft” is when progressive taxation is combined with income redistribution. Then it simply devolves into taking from people you don’t like in order to give to people you do. This is a wholly different purpose than arguing for taxes for public goods, such as roads, bridges, defense and the like.
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yello:
here is one philosophical quotes which underpin the concept of progressive taxation, which I realize is pretty much anathema in these circles, by Adam Smith:
It doesn’t underpin anything. It is a simple assertion, little different to yours. He’s not making an argument. He’s just asserting.
And as for philosophers there is always that guy who talked so much about giving everything to the poor.
As is all too typical of liberals who appeal to the authority of Jesus, you are confusing government with “the poor”. Every dime that the government takes from me in taxes is a dime that I can’t give to “the poor”.
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