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We debate tax policy quite a bit here on WSO, and it is often mentioned that marginal tax rates were as high as 90% during the Eisenhower administration. I ran across this interesting explanation of enormous tax rates and how modern economic theory (including the Austrian theories I so often espouse) are junk economics. Michael Hudson brings up a lot of interesting points, especially about how loopholes were written into the tax code to benefit the rich as early as the 1920's, and how those loopholes have led us today to be heavily indebted and have an average holding time of 22 seconds for stocks. I'm interested to hear what you guys think. Have we been dead wrong about tax cuts for the rich?

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Comments (125)

  • econ's picture

    Even if a lot of modern economic theory is junk science, that doesn't mean that super-high tax rates (on anybody, rich or poor) will not have serious consequences in terms of production/output. In fact, the argument doesn't depend on modern economic theory, but rather the simple economic theory that's been around for centuries. If someone only keeps 10% of their income by becoming an investment banker, entrepreneur, or CEO then why wouldn't they take a job that's much less stressful, offers significantly more leisure time, with only minor cuts in pay? While I don't support all kinds of tax loopholes for the rich -- or poor, or middle class, or anybody else -- I also don't support super-high tax rates on the rich. As far as I can tell, such proposals rarely stem from anything other than populism and envy. Legal scholar Richard Epstein eloquently addresses many of these issues in this podcast.

  • happypantsmcgee's picture

    econ - are you saying that the higher tax rates in the upper brackets disincentives work (or at least work at that level)? I'm not disagreeing, just asking for clarification's sake. I know you have a more extensive background in the field so I'm curious.

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • down on the upside's picture

    a lot of the loopholes are part of government policy to stimulate growth, spending, investment or any other government priority of the time. a good example of that is cca allowances in Canada that are constantly changing to reflect investment decisions the federal government wants to encourage.

    at the end of the day higher tax rates for the rich are, as econ rightly pointed out, a disincentive for ambitious, hard working, risk-taking people to use the skills and qualities they have to improve the global economy and through the spending of these taxes, an incentive for risk-averse, lazy people to continue their ways and enjoy a higher quality of life in the short-term. Flat rates for income taxes is the closest thing to "fair" taxation other than a pay per use policy for government services.

  • jeremydos's picture

    I only hope that members here will be able to have a honest discussion about the tax rates/debates.

    First thing, I spent couple Summers in the tax group in the firm I worked for; there are so many loopholes in tax system, rich, poor, rich corporations, small corporations-and etc.- that it makes tax planning pretty hard to do. I think it is an unnecessary burden on companies to always try to work the system to get nice returns; and get this 90% of the returns are not even verified by the IRS because they do not have enough staff to check them.

    One more thing: when it is said that the highest bracket is 35%, it means usually that the tax paid in average is close to 28-30%; you would need to add all brackets.

    Therefore, if a company does its due diligence, it should pay about 20% of its entire gross profit.

    That said, if the tax code was reformed to remove those loopholes and shenanigans, it would have been better to have the highest tax bracket at 30% and hopefully in average corporation would have paid 25%. Companies would have paid less in tax preparations, the IRS would have done a better job finding cheaters.

    As far as the tax rate for the rich, I don't see how we always want to combine people making 500K and small business owners. I know that when you have a business with employees you are required to have an EIN for each employee, thus my thought: why not giving the special rates to people who pay employees, and keep the greater rates on richer people?

    The fact and the matter is, it is easier for someone making $1M to pay $300K in tax than someone making $30K to pay $9K in tax.

  • happypantsmcgee's picture

    I don't think anyone disagrees that it's 'easier' for the guy that makes 1mm to pay 300k than it is for the guy that makes 30k to pay 9k as those are both ~30%. I think the big problem people have is that about half of this country pays zero income tax.

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • down on the upside's picture

    jeremydos you sound like an accountant man, in which case you should be happy that there are so many loopholes otherwise most of the big 4 firms would be laying off thousands from its tax practice, arguably one of the best performers at an accounting firm.

  • manbearpig's picture

    Not that something like this would ever happen, but in my opinion, the ideal tax system would be:

    Pay nothing on the first $40,000.00 earned, and then pay 25% of everything above that. That way people with low incomes aren't burdened with taxes at all, and someone making 100K still gets to keep 85K. The very high earning people will never have to turn over more than a quarter of their earnings, and so they'll have less of an incentive to try to "cheat" the system by evading taxes or finding loopholes.

    -MBP

  • In reply to manbearpig
    happypantsmcgee's picture

    everythingsucks:
    Not that something like this would ever happen, but in my opinion, the ideal tax system would be:

    Pay nothing on the first $40,000.00 earned, and then pay 25% of everything above that. That way people with low incomes aren't burdened with taxes at all, and someone making 100K still gets to keep 85K. The very high earning people will never have to turn over more than a quarter of their earnings, and so they'll have less of an incentive to try to "cheat" the system by evading taxes or finding loopholes.

    So you've read Friedman too huh?

    If you include removing all but one deduction (costs to secure employment) you just described his negative income tax plan.

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • MJP338's picture

    Correct me if wrong, but if you hold a stock for 22 seconds, it's short-term capital gains--and STCG tax = income tax. Therefore his theory about speculation due to 15% capital gains tax collapses, no? Maybe not completely, but substantially...

  • In reply to happypantsmcgee
    manbearpig's picture

    happypantsmcgee:
    everythingsucks:
    Not that something like this would ever happen, but in my opinion, the ideal tax system would be:

    Pay nothing on the first $40,000.00 earned, and then pay 25% of everything above that. That way people with low incomes aren't burdened with taxes at all, and someone making 100K still gets to keep 85K. The very high earning people will never have to turn over more than a quarter of their earnings, and so they'll have less of an incentive to try to "cheat" the system by evading taxes or finding loopholes.

    So you've read Friedman too huh?

    If you include removing all but one deduction (costs to secure employment) you just described his negative income tax plan.

    Haven't read Friedman. I'm a complete economics noob and have never taken a single course. Intuitively, this system seems more fair to me.

    -MBP

  • UFOinsider's picture

    It's kind of wierd - most of theories that our civilization bounces around are quite dated, or rehashes of older theories but still more or less effective for keeping the system going (more or less, lately.....less) but there has never been such a highly developed level of globalization. New circumstances lend themselves to new theories: I'm curious what the next decade of economics (and life in general) will come up with.

    Get busy living

  • Virginia Tech 4ever's picture

    I don't agree in exempting the first $40,000 of gross income. The tax base should be as expanded as possible with as many people as possible contributing to federal revenue. We have far too many people--about 50% of the country--that pay no federal income tax. Therefore, half the country has an incentive to vote for people who support the welfare and entitlement state. To say that it's "fair" to exempt half the population from contributing to the Treasury yet allowing them to vote for tax increases on others is actually what's unfair.

    Good tax reform should include mass simplification of the tax code, which includes lower marginal rates with far fewer--if any--deductions and the tax base should be as expanded as possible.

    To the point about historical marginal tax rates: it is rarely pointed out that at the time we had 90% brackets, the inflation-adjusted highest bracket was in the neighborhood of $5-$10 million and there was a far smaller proportion of citizens who earned that kind of wealth at the time compared to now. Bureaucrats never sunset laws or adjust them to inflation (see alternative minimum tax).

  • TNA's picture

    Dogs react to punishment, children react to punishment, but people think adults are happy to keep working as more of their reward is stolen. This isn't economics, it is common sense. Taxes are wages taken by the government and inefficiently spent and wages are what you keep and efficiently spent. Pretty simple. Cut taxes and people will spend or save more. Both of those are better than letting the government have your money.

  • manbearpig's picture

    @Virginia Tech 4ever:

    The fact of the matter is that rich people already pay most of the tax. The average person making 40K probably pays no (or so little that it doesn't make a real difference) tax after factoring in all the deductions. Might as well simplify the system so that by law, they are exempt from paying any taxes under 40K of income. This way, higher earning people also don't have to pay any tax on the first 40K. I'll make about 140-150K this year, and I think it is complete BS that i'll be paying almost 50K to the government. Under my proposed system, I would (happily) pay half of that.

    I do agree that people who are not paying taxes should not have the power to vote for tax increases on others though. It's similar to a population of straight people voting on whether or not gay marriage should be allowed. It really doesn't affect them, so they shouldn't have the power to decide the outcome.

    -MBP

  • Virginia Tech 4ever's picture

    So what you're saying is that we have a bad system now of exemptions and deductions on the first $40,000 anyway, so why don't we just codify it into straight-up law rather than beating around the bush? I disagree. I don't think you codify garbage into permanent law. In any case, a reduced tax base should not be part of tax reform because tax reform is fundamentally connected to the deficits and national debt. Any decrease in the tax base will simply exacerbate the problem with government spending and entitlements because politicians are being held accountable by fewer tax payers.

  • boutot4life's picture

    The premise that debt puts the brakes on the economy, and that excess national debt is a disincentive to savings makes sense. Obviously something happened, to turn the greatest economy the world has ever seen into a bonified shit show..Although I don't believe taxing should start with those making 250k, I think those in the stratosphere need to pay their fare share, being that a significant portion of their wealth has been derived through a subsidy in some form or another. If not, watch out because populism might begin to rear it ugly head.

    Current economic policies that subsidize radical speculation are corrosive to the American economy and stifle real investment. A significant obstacle however is that...
    When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.
    P. J. O'Rourke
    So get on board and lets ride this thing till the wheels fall offf!!jk

  • manbearpig's picture

    Would you be happier with this system?

    0 - 40K: 10%
    40K+: 25%

    This ensures that everyone is paying something, but to me it seems like someone earning 35K a year with a family to support would find even 10% to be a huge burden. That 3500 dollars can go very far in their life. It could be the difference between being able to afford braces for their kids or not. I don't think it's fair to deprive them of that, even if the alternative fosters a sense of apathy toward government spending.

    -MBP

  • In reply to manbearpig
    happypantsmcgee's picture

    everythingsucks:
    Would you be happier with this system?

    0 - 40K: 10%
    40K+: 25%

    This ensures that everyone is paying something, but to me it seems like someone earning 35K a year with a family to support would find even 10% to be a huge burden. That 3500 dollars can go very far in their life. It could be the difference between being able to afford braces for their kids or not. I don't think it's fair to deprive them of that, even if the alternative fosters a sense of apathy toward government spending.

    Braces? Really? Hardly a necessity but I digress. The point is, if you don't pay taxes, you shouldn't be allowed to vote on increases or changes to the taxes that other people pay. If you make more than 15k (or whatever the poverty line is) you should pay something. Period.

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • Virginia Tech 4ever's picture

    You don't think it's fair that voting citizens contribute to the revenue and operations of their government for which they receive services? There's obviously no way to debate this because we have a fundamental disagreement about what "fair" is or isn't.

  • In reply to happypantsmcgee
    manbearpig's picture

    happypantsmcgee:
    everythingsucks:
    Would you be happier with this system?

    0 - 40K: 10%
    40K+: 25%

    This ensures that everyone is paying something, but to me it seems like someone earning 35K a year with a family to support would find even 10% to be a huge burden. That 3500 dollars can go very far in their life. It could be the difference between being able to afford braces for their kids or not. I don't think it's fair to deprive them of that, even if the alternative fosters a sense of apathy toward government spending.

    Braces? Really? Hardly a necessity but I digress. The point is, if you don't pay taxes, you shouldn't be allowed to vote on increases or changes to the taxes that other people pay. If you make more than 15k (or whatever the poverty line is) you should pay something. Period.

    lol, ok, bad example, but you get my point. 3500 dollars is a lifechanging amount for someone with a low income. Even at 5%, 1750 is a very significant amount. So my question, how much should they be forced to pay?

    -MBP

  • In reply to Virginia Tech 4ever
    manbearpig's picture

    Virginia Tech 4ever:
    You don't think it's fair that voting citizens contribute to the revenue and operations of their government for which they receive services? There's obviously no way to debate this because we have a fundamental disagreement about what "fair" is or isn't.

    Look, I agree with you fundamentally. Everyone should contribute to their government in some way. But I'm sure you can agree with me that some people simply aren't able to contribute financially. To be honest, for me, paying 50K in taxes has a significant impact on my life so I'm not happy about it. But paying 25K in taxes wouldn't have a significant impact in my life, so I really wouldn't be concerned about paying it. When I'm earning 300K, I'm sure paying 75K in taxes won't really bother me. But I personally know people who are earning about 30K, paying 4K in taxes, who are barely able to buy groceries after paying for their rent and student loans. That extra 300 dollars a month that they wouldn't be paying in taxes would make their lives a lot more comfortable, and I don't think there is anything unfair about acknowledging this.

    -MBP

  • monkeysama's picture

    The 40k nothing and then 25 percent doesn't make a whole lot of sense. It's regressive on middle income salaries. For example, 25 percent margin is a lot harder on someone making 50k than 150k. That extra 2500 might make a huge difference to the family making 50k, especially if they have 3 kids.

    I like an income based approach where we tie the marginal tax rate to the Gini coefficient (http://en.wikipedia.org/wiki/Gini_Coefficient).

  • In reply to Virginia Tech 4ever
    manbearpig's picture

    Virginia Tech 4ever:
    How much should a billionaire be forced to pay? Any answer is arbitrary. The correct answer is "something".

    They should pay 25% of their income. I don't know any billionaires, but I think we can safely assume that John Paulson wouldn't be affected in any way if he "only" got to keep 75% of his multi-billion dollar yearly payouts.

    -MBP

  • In reply to monkeysama
    manbearpig's picture

    monkeysama:
    The 40k nothing and then 25 percent doesn't make a whole lot of sense. It's regressive on middle income salaries. For example, 25 percent margin is a lot harder on someone making 50k than 150k. That extra 2500 might make a huge difference to the family making 50k, especially if they have 3 kids.

    I like an income based approach where we tie the marginal tax rate to the Gini coefficient (http://en.wikipedia.org/wiki/Gini_Coefficient).

    Someone earning 50K in Canda is currently paying about 9K in taxes, so that 6500$ saving is hardly a bad deal for them.

    -MBP

  • GoodBread's picture

    The problem isn't high tax rates in themselves, it's the process of going back to them which would seriously hurt the economy. Being used to the current rates, even letting the Bush tax cuts expire will hurt the economy unless we are experiencing very strong growth to begin with. In the meantime, we can focus on streamlining the tax system and making things tougher on K Street that has been bending over the American taxpayer for decades now. Guys like Darrell Issa who are asking business what regulations should be cut should be tar and feathered on the spot.

  • bankbank's picture

    professional traders will report this income as trading business income = regular income, not capital gains (short term or otherwise). they will pay the normal income tax rate on this income.

    fairness of tax rates notwithstanding, this guy is a marxist quack. he's espousing the labor theory of value and he wants to tell us about "junk economics." c'mon.

  • Victor252's picture

    I strongly disagree with the notion that the money you get from land ownership belongs to everyone and not the person who owns the land.

    I also find it silly that the guest speaker is saying how a pro-land tax politician was the opposite of a socialist because he only wanted to heavily tax land and the revenues derived from it. Taxing rental revenue at 90% is only a very small step from total socialization of land such as what the Soviets had.

    If you chose to save your money and invest in real estate, you should be able to reap the rewards of passing up Coach bags, fast cars, and expensive liquor.

  • In reply to manbearpig
    monkeysama's picture

    everythingsucks:
    monkeysama:
    The 40k nothing and then 25 percent doesn't make a whole lot of sense. It's regressive on middle income salaries. For example, 25 percent margin is a lot harder on someone making 50k than 150k. That extra 2500 might make a huge difference to the family making 50k, especially if they have 3 kids.

    I like an income based approach where we tie the marginal tax rate to the Gini coefficient (http://en.wikipedia.org/wiki/Gini_Coefficient).

    Someone earning 50K in Canda is currently paying about 9K in taxes, so that 6500$ saving is hardly a bad deal for them.

    That's irrelevant. If you change the tax structure, you change the distribution of dollars and the value of money, so your 6500 is incomparable to my 2500. It might be worth more, it might be worth less.

    I will say that if we had this tax rate it's almost certain less tax revenue would be raised so I don't know how we would cut spending.

    Also - I just watched the video. The interviewee seems really pleased with himself about the tax rates going into 1920 but he doesn't seem to realize that at that period of time most of the uber wealthy were old money. The high marginal tax rates were just a way of keeping the upstart nouveau rich in their place while the Vanderbilts continued to wipe their asses with 100 dollar bills.

  • Aggravate's picture

    I think we should try and avoid steering this conversation in the direction of wealth distribution and the eventual 5:1 ratio of libertarian to socialist posting on that subject. Plenty of other threads to hit if that is your thing.

    Let me preface my statement with saying that I HATE paying taxes. All kinds of taxes. I'm also in cohabiting relationship with a government bureaucrat that takes every other Friday off, is paid pretty well and wouldn't know what a 45+ hour work week looked like let alone a 80+ one. She knows to not even speak to me during the middle part of April. I do however really like this country and from time to time people have to make sacrifices for it to survive.

    That said, the hard question I think you have to ask yourself is "do you want to balance the budget and reduce the deficit?" I do, not just because it appeals to my Presbyterian upbringing but because once we get it under control it will be a lot harder to pass wasteful spending. Right now the deficit and the budget are hitting cartoon numbers, to the point where nobody cares about increases because its attained a level of "biggness" that nobody cares about marginal movements.

    To get this thing under control we have a choice of raising incomes, cutting spending or some combination of the two. Budget is 3.8 Trillion and income is 2.5 Trillion, so we have a loss of 1.3 Trillion (rough numbers). Of that 3.8 Trillion 70% is spent on Defense (900 B), Social Security (730 B), Medicare (490 B), Medicaid (300 B) and interest payments (250 B). I'm sure there some waste in all those programs, most of all defense (if you want to argue that point with me, send me a PM I can talk for days about waste and worse misallocation that gives POGs golf courses at the expense of body armor for grunts), but for the most part that stuff we have to pay. In no situation is the American voter going to elect a majority of officials that will do away or cut those above programs. So if you buy that, we are still in the red if you cut out the remaining 30% of the budget which would include all the infrastructure, education, disaster relief spending in addition to government organizations that I think are important (Intelligence, Department of State, Department of Justice, EPA, etc). So what are we suppose to do? We have to raise taxes and taxing households making under 50k a year isn't going to get us there. The meat is in the top 1% and corporations that avoid paying the majority of taxes. I'm not arguing whether it is right or wrong for the government to go after that money but eventually they have to go there if the objective function is to reduce the debt or at the very least balance a budget. Or we disenfranchise anyone over the age of 40 so we can abolish SS, Medicare, Medicaid and become isolationists. I honestly don't know which option is more politically feasible.

  • monkeysama's picture

    Aggravate - a level headed discussion about our tax policy and deficit problems. SB for you!

  • In reply to Aggravate
    happypantsmcgee's picture

    Aggravate:
    I think we should try and avoid steering this conversation in the direction of wealth distribution and the eventual 5:1 ratio of libertarian to socialist posting on that subject. Plenty of other threads to hit if that is your thing.

    Let me preface my statement with saying that I HATE paying taxes. All kinds of taxes. I'm also in cohabiting relationship with a government bureaucrat that takes every other Friday off, is paid pretty well and wouldn't know what a 45+ hour work week looked like let alone a 80+ one. She knows to not even speak to me during the middle part of April. I do however really like this country and from time to time people have to make sacrifices for it to survive.

    That said, the hard question I think you have to ask yourself is "do you want to balance the budget and reduce the deficit?" I do, not just because it appeals to my Presbyterian upbringing but because once we get it under control it will be a lot harder to pass wasteful spending. Right now the deficit and the budget are hitting cartoon numbers, to the point where nobody cares about increases because its attained a level of "biggness" that nobody cares about marginal movements.

    To get this thing under control we have a choice of raising incomes, cutting spending or some combination of the two. Budget is 3.8 Trillion and income is 2.5 Trillion, so we have a loss of 1.3 Trillion (rough numbers). Of that 3.8 Trillion 70% is spent on Defense (900 B), Social Security (730 B), Medicare (490 B), Medicaid (300 B) and interest payments (250 B). I'm sure there some waste in all those programs, most of all defense (if you want to argue that point with me, send me a PM I can talk for days about waste and worse misallocation that gives POGs golf courses at the expense of body armor for grunts), but for the most part that stuff we have to pay. In no situation is the American voter going to elect a majority of officials that will do away or cut those above programs. So if you buy that, we are still in the red if you cut out the remaining 30% of the budget which would include all the infrastructure, education, disaster relief spending in addition to government organizations that I think are important (Intelligence, Department of State, Department of Justice, EPA, etc). So what are we suppose to do? We have to raise taxes and taxing households making under 50k a year isn't going to get us there. The meat is in the top 1% and corporations that avoid paying the majority of taxes. I'm not arguing whether it is right or wrong for the government to go after that money but eventually they have to go there if the objective function is to reduce the debt or at the very least balance a budget. Or we disenfranchise anyone over the age of 40 so we can abolish SS, Medicare, Medicaid and become isolationists. I honestly don't know which option is more politically feasible.

    One of the best posts I've read on a long while. +1 for DOD waste as well

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • manbearpig's picture

    Aggravate - maybe I'm being naive, but don't you think that increasing the tax brackets on corporations and super high earners will just encourage them to find newer and more innovative ways to get around paying taxes? And then the IRS will need to employ even smarter and more expensive people to counter this? I honestly think that if very high income earning people are taxed a fair amount, say 25% of their income, then they wouldn't bother with tax evasion or whatever, and government revenue might even increase. With a simpler system, it would also be a lot less expensive for the government to enforce the rules, and in turn, spending would go down.

    -MBP

  • In reply to manbearpig
    happypantsmcgee's picture

    everythingsucks:
    Aggravate - maybe I'm being naive, but don't you think that increasing the tax brackets on corporations and super high earners will just encourage them to find newer and more innovative ways to get around paying taxes? And then the IRS will need to employ even smarter and more expensive people to counter this? I honestly think that if very high income earning people are taxed a fair amount, say 25% of their income, then they wouldn't bother with tax evasion or whatever, and government revenue might even increase. With a simpler system, it would also be a lot less expensive for the government to enforce the rules, and in turn, spending would go down.

    You really think that if the tax rate on people worth millions and millions is decreased they'll just up and say 'oh, hey, this is less than I was paying, forget having my taxes done and paying as little as I can, I'll just use turbotax'

    If I had asked people what they wanted, they would have said faster horses - Henry Ford

  • Virginia Tech 4ever's picture

    Aggravate, I agree with much of what you're saying as I am a deficit hawk. However, balancing the budget is not absolutely necessary. So long as the GDP grows faster than or at the same rate as the federal deficit, we can go along pretty well given that by historical and industrialized world standards, our national debt is not yet out of control compared to overall GDP. The problem is that spending is fundamentally out of control, growing at 5% at normal clips and at 20+% in recent years. Even at 5% annual spending increases, the long-term outlook for our debt picture would be bleak given that 3% annual GDP growth is pretty good and to be expected from an advanced economy.

    The problem is SPENDING. The problem is NOT revenue. And raising taxes, in fact, would be a drag on the economy, reducing overall GDP growth and exacerbating the debt problem (again, the absolute deficit is irrelevant in a given year). When government grows a minimum of 5% each year and GDP grows a max 3%, your issue is problem of expenditure, not revenue.

  • In reply to happypantsmcgee
    manbearpig's picture

    happypantsmcgee:
    everythingsucks:
    Aggravate - maybe I'm being naive, but don't you think that increasing the tax brackets on corporations and super high earners will just encourage them to find newer and more innovative ways to get around paying taxes? And then the IRS will need to employ even smarter and more expensive people to counter this? I honestly think that if very high income earning people are taxed a fair amount, say 25% of their income, then they wouldn't bother with tax evasion or whatever, and government revenue might even increase. With a simpler system, it would also be a lot less expensive for the government to enforce the rules, and in turn, spending would go down.

    You really think that if the tax rate on people worth millions and millions is decreased they'll just up and say 'oh, hey, this is less than I was paying, forget having my taxes done and paying as little as I can, I'll just use turbotax'

    Maybe I only think this way because I'm not earning 7 figures or more. But at the moment, I feel like if I was earning 10 million a year, I wouldn't mind paying a quarter of it for the betterment of my country. I wouldn't try to find ways to pay less, because I think it's a fair amount. I would also gladly contribute a significant amount of what's left for philanthropic purposes. I don't feel a need to hoard wealth while the rest of the world is suffering. I just don't want to be forced to contribute half of my earnings to an inefficient government.

    -MBP

  • TNA's picture

    I am sorry, giving the government anymore money will only lead to more waste. They are addicted to tax revenue. This needs to change. Cut spending and become more efficient. Zero new taxes and the goal should be a continual decrease in taxes.

    Government workers should be target #1. No one should get a pension or have these cake jobs, especially not on my dime. Increase retirement age, start scaling back social security payments for future generations, cut DoD spending, cut the fat out of medicaid/care, etc.

    I could have an orgasm thinking about the cutting I would do with public schools also.

    Any talk on raising taxes is treason in my book. Does nothing to attack the root of the problem.

  • In reply to manbearpig
    Simple As...'s picture

    everythingsucks:
    Aggravate - maybe I'm being naive, but don't you think that increasing the tax brackets on corporations and super high earners will just encourage them to find newer and more innovative ways to get around paying taxes? And then the IRS will need to employ even smarter and more expensive people to counter this? I honestly think that if very high income earning people are taxed a fair amount, say 25% of their income, then they wouldn't bother with tax evasion or whatever, and government revenue might even increase. With a simpler system, it would also be a lot less expensive for the government to enforce the rules, and in turn, spending would go down.

    Corporations are always going to find away around paying taxes in order to keep up profit margins. And if they can't find a way around the tax code to achieve the profit margin they deem necessary than they are going to raise prices on services, cut spending (i.e. labor, etc.) in order to keep up profit margins. This type of thing would only hurt consumers (the poor and middle class) even more than a marginal increase in their income taxes would.

    patternfinder:
    Of course, I would just buy in scales.

    See my WSO Blog | my AMA

  • mike55555's picture

    My whole life I have looked down upon people who made less money than my family. My parents were never rich but they managed to make it to the middle class, maybe upper middle class without a college education, and I was convinced that with a college education I would make it even further. However, that all changed over the last few weeks when my father was diagnosed with emphysema and was told he could no longer do what he does. I will become what I have always hated, a beneficiary of entitlement programs. Sometimes it takes a situation like this to put things into perspective, and look at the world around you. Is Donald Trump's fourth yacht really more important than providing food and healthcare to thousands of children? A 90% marginal tax rate is quite excessive and in the long run would decimate most future productivity and output growth, but the line has to be drawn somewhere to set a basic standard of living for those who are least well off. I transferred out of SUNY Oneonta, and into Dowling College, where I have come to rely on the generosity of others to pay for my tuition. (I'm well aware this is a non-target, despite a few success stories, but it was the best choice given to me at the time given the financial situation of my family and the fact that the FAFSA form is going to take almost a year to accurately reflect the change in income of my parents.)

    Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions.

    -Niccolo Machiavelli

  • Aggravate's picture

    I think even on the laws currently on the books, execution is not matching intent. I don't think the intent was for corporations to be able to shuffle money made in the US overseas to avoid taxes or the myriad of loop holes that allow individuals to skirt taxes. My first instinct would be to go for cuts as well, but who finds where to cut (government employees?) and how do you get cuts passed through congress when cutting entitlement programs and defense crosses some of the most powerful interest groups and voting blocs?

    What do you do to re-organize the government work force so you can replace all the lazy, terrible people with smart ambitious people? Increase pay and standards while firing people? It might work, but would be tough during that transition period because it would still be an awful place to work full of lazy idiots for the new blood. Historically, (over 50 years ago), people in government service were people with a stake in the country (wealthy elite) and it was something they did for a while because they had a sense of duty. People don't have that now, so we'd have to design some kind of other program. I have no idea what that program would look like. Though I've heard suggestions of a public service academy (like the military academies) but doubt it would get the same kind of candidates.

    Also, I realize its your style Anthony, but the hyperbolic treason references are getting a bit stale. You called Assange a traitor even though he's not an American citizen (espionage you might be able to argue but not convict on). I know this particular topic gets your really riled up but words have meaning and the implication that anyone advocating tax increases is tantamount to treason is over the top. Personally I think anyone born between 1978 and 1988 who did not serve in the military in the past 10 years puts nothing above their own personal safety and wealth and therefore their loyalty to their country should be questioned and while I'm at it I might as well call them traitors. And their Dad's probably dodged the draft too.

    See what a did there?

  • TNA's picture

    My style? Get real. The guy who helped Julian is a traitor. I never called Julian a traitor. I think he is an enemy of the state though.

    Sorry guys, I apologize for my "hyperbole". Go pay more taxes because the government is now all of a sudden going to take that extra money and pay their bills. I'm a dick for thinking they will just piss it away.

    Thoughtful, well worded arguments are nice, but that doesn't make them correct. Sorry for cutting through the verbose and getting to the point. Brevity is a skill you might want to learn.

    Stop stealing from people who work and earn.

  • Aggravate's picture

    So who's going to fix operational inefficiencies in each government organization? Are you? They might give you a GS-9 and you can make 50k a year. You'd also be in an organization that cannot resists change in all forms and is institutionally trained to spend every dime they have in their budget, lest they get less the following year. Assuming those all got fixed that would just be the executive branch portions of spending. Cuts to all the entitlement stuff is never getting through Congress.

    Saying you'd fix the problem by doing things that are politically impossible isn't a solution. Fixing all the systemic problems with the Federal and State governments is necessary but realistically is a pipe dream in the short to medium term. It will have to be a gradual process of cutting spending and raising taxes (or enforcing the spirit of the tax code and removing loop holes). Left in the hands of politicians and the whims of the easily manipulated masses, this will never happen. So basically we are screwed.

    Given that reality, I think the only feasible option if you want a balanced budget is to raise tax revenue where we can, while unfair, at least we know any money the government takes in gets spent. Something that is not true of money made by the ultra-wealthy.

  • In reply to Aggravate
    manbearpig's picture

    Aggravate:
    So who's going to fix operational inefficiencies in each government organization? Are you? They might give you a GS-9 and you can make 50k a year. You'd also be in an organization that cannot resists change in all forms and is institutionally trained to spend every dime they have in their budget, lest they get less the following year. Assuming those all got fixed that would just be the executive branch portions of spending. Cuts to all the entitlement stuff is never getting through Congress.

    Saying you'd fix the problem by doing things that are politically impossible isn't a solution. Fixing all the systemic problems with the Federal and State governments is necessary but realistically is a pipe dream in the short to medium term. It will have to be a gradual process of cutting spending and raising taxes (or enforcing the spirit of the tax code and removing loop holes). Left in the hands of politicians and the whims of the easily manipulated masses, this will never happen. So basically we are screwed.

    Given that reality, I think the only feasible option if you want a balanced budget is to raise tax revenue where we can, while unfair, at least we know any money the government takes in gets spent. Something that is not true of money made by the ultra-wealthy.

    You make some good points, but I still think excess spending is the biggest problem.

    -MBP

  • In reply to TNA
    Edmundo Braverman's picture

    ANT:
    I am sorry, giving the government anymore money will only lead to more waste. They are addicted to tax revenue. This needs to change. Cut spending and become more efficient. Zero new taxes and the goal should be a continual decrease in taxes.

    Anthony,

    I'm actually thinking about writing a post about this tomorrow, but since you brought it up I might as well get your feedback now. What do you think about the about-face the Tea Party crowd pulled on cutting the budget mere hours after being sworn in yesterday? After all the noise they made on the campaign trail about reining in spending, they get to DC and it's like, "Hey, funny thing. All that shit we promised on the campaign trail? Turns out you can't actually do any of it in this country. Who knew???"

    Here's a link to what I'm talking about:
    http://market-ticker.org/post=176569

    Should the Tea Party supporters feel duped or betrayed? I know it's only tangentially related to the tax debate, but it is related.

  • TNA's picture

    You know what is politically feasible? Not raising taxes. I am sorry, all of your BS reasons still does not convince me that raising taxes will do anything but add to government waste. And since when did saving aka investing, become bad for the economy? Get real.

  • Virginia Tech 4ever's picture

    Aggravate, how can you argue with a straight face that there is a revenue problem in the United States? As I already mentioned, the federal government is growing at rates that far exceed GDP growth. Raising revenue will only incentivize more government spending and will actually be counterproductive in bringing the balance sheets back into line.

  • In reply to mike55555
    txjustin's picture

    mike55555:
    My whole life I have looked down upon people who made less money than my family. My parents were never rich but they managed to make it to the middle class, maybe upper middle class without a college education, and I was convinced that with a college education I would make it even further. However, that all changed over the last few weeks when my father was diagnosed with emphysema and was told he could no longer do what he does. I will become what I have always hated, a beneficiary of entitlement programs. Sometimes it takes a situation like this to put things into perspective, and look at the world around you. Is Donald Trump's fourth yacht really more important than providing food and healthcare to thousands of children? A 90% marginal tax rate is quite excessive and in the long run would decimate most future productivity and output growth, but the line has to be drawn somewhere to set a basic standard of living for those who are least well off. I transferred out of SUNY Oneonta, and into Dowling College, where I have come to rely on the generosity of others to pay for my tuition. (I'm well aware this is a non-target, despite a few success stories, but it was the best choice given to me at the time given the financial situation of my family and the fact that the FAFSA form is going to take almost a year to accurately reflect the change in income of my parents.)

    I guess this situation either turned you into a socialist or made you realize that you are one. I'm sorry for your fathers ailment, but it's nobodys responsibility to put you through school but yourself. Get school loans, private or government subsidized.

    Your reference to Trump's yacht was weak. It is not my or anybody elses responsibilitiy to take care of the "least well off". This is what got us where we are today. Freaking entitlement after entitlement until it's spiraled out of control.

    Just to be clear where I stand: phase out the ponzi scheme known as SS, drug test entitlement recipients, cut ALL giving to other countries, pull out of Iraq and Afghanistan, cut all spending across the board immediately by 10%, and total tax reform. I'm sure there are others, but I eating at the moment and can't think of them all.

  • In reply to Edmundo Braverman
    txjustin's picture

    txjustin:
    I know you asked Ant, but I'll give you my Libertarian supporting opionion. If they don't make good on promises, I will absolutely vote against them come election time.

    LOL.

    That'll show 'em.

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