• Facebook
  • Twitter
  • Subscribe
  • RSS

Warren Buffett: Tax Me More!

Warren Buffett has long been on a crusade to raise the taxes paid by people like himself. Usually, Buffett points out the he pays a lower rate than his secretary, on account of she pays Social Security taxes on all of her income and he only on a fraction of his. But that’s always struck me as silly: so long as we pretend that Social Security and Medicare are self-funding, it makes sense to cap taxation; after all, we cap payouts.

In an op-ed in yesterday’s NYT (“Stop Coddling the Super-Rich“) he makes a stronger case. Along with emotional nonsense like “While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks” — it’s just a non-sequitur–Buffett points to actual problems in the tax code:

Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

The rationale behind these provisions in the tax code is actually defensible. We want people to save money and  invest in stocks, since it keeps the flow of capital to the economy flowing and provides a nice retirement cushion under normal circumstances. It would be strange, indeed, to treat money earned by deferring gratification or taking risk over time in the same way as wage income; it would be better just to invest in bonds or spend the money.  But that rationale doesn’t hold for people who make their primary living buying and selling stocks. For them, those earnings are essentially wages.

There’s no doubt that many of the inequities Buffett rails about in the column are a result of plain old rent-seeking. The “mega-rich” are in a better position to influence government and get special treatment in the tax code. But that’s an argument about the political manipulation of the tax code more than it is about the “coddling of the super-rich.”

Still, as Tim Worstall notes, Buffett is engaging in some sleight-of-hand here. He’s considering personal income taxes and leaving aside corporate taxes, which super-rich people like himself tend to pay.

First, corporate profits are subject to the corporate profits tax, some 35% currently as the headline rate. Then dividends are taxed again in the hands of the recipients at the rate of 15%. This means that the effective tax rate on Buffett’s dividends from Berkshire Hathaway was not the 15% that he’s using in his calculation above (the 2.4% to take the total to 17.4% is presumably referring to the capped social security taxes and the income tax on his salary, not dividends).

Assume there’s $100 of profit which is to be paid in dividends under each of the  systems.

In the UK dividends are paid out of post tax profit, as in the US. However, that tax that had been paid on the corporate profits becomes, to the dividend recipient, a tax credit. If you are a lower rate taxpayer no further tax is due on the dividends received. Only if you are a higher rate taxpayer do you pay tax on the dividends taking your tax rate up to the same as it would be from any other income. So if corporation tax is 28%, your tax rate on your dividends is 28%, already paid at the company level. Or if you’re in the higher bands, 40 or 50%, just as with any other income (and yes it does get very much more complex but this is good enough) and made up of your paying further income tax on your received dividends.

There are tax systems where there is no tax on dividends at all: a higher corporate tax rate being used instead.

So in the UK system from $100 of profits that are to be paid as dividends the tax rate is 28% (the current corporate income tax rate), or $28, if you are a lower rate taxpayer or $40 ($28 at the company level, another $12 individually, at the very top, another $22) if you are a higher rate taxpayer. Tax rates of 28% or 40% or 50%, very similar to other income sources.

In the US system from our $100 first we take $35 at the corporate level. Then we take another $15, or the dividend tax rate of 15%, from the recipient. Giving us a tax rate of 50% on dividends. We’ve taken $50 from the total amount that was to be used to pay dividends.

That said, it’s still quite plausible that Buffett pays a lower percentage of his income in taxes than do even high earners in his employ. Taxing income is a tricky thing, indeed, and people at the top of the chain have all manner of ways in which to “hide” income by tricky accounting maneuvers. Doing so is not cheap–Buffett’s tax preparation cost is probably higher than the average American’s income–but the system is so complicated that it’s essentially a game.

It’s presumably possible to close off some of the loopholes in the system to collect more money. And it’s almost certainly the case that many of them actually ought be closed out of fairness; whether doing so is possible under our current political standoff is another question entirely. But any system where taxation of income is the primary means of collecting money for the Treasury and also the primary means of incentivizing certain types of economic conduct while penalizing others is going to be ripe for manipulation. And those with the most money for lobbyists, lawyers, and accountants are likely to come out on top.

Related Posts:

About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. john personna says:

    I see weakness in many of your responses to Buffet, but the most glaring is that a 10 minute holding is “investment” whose nature should be protected.

    Surely you can set the time horizon a little further out. At a minimum, a 364 day holding, should be income.

    Like or Dislike: Thumb up 5 Thumb down 0

  2. john personna says:

    The tricky bit comes in very long holding times, when income is very indistinguishable from inflation. The problem IMO with capital gains on a house you’ve owned 20 years is that much of the gain is false.

    I’d propose something like:

    < 1 year holdings, straight income tax
    < 5 year holdings, 70% of your top marginal rate
    < 10 year holdings, 50% of your top marginal rate
    < 20 year holdings, 30% of your top marginal rate
    > 20 year holdings, tax free

    Now that would encourage “investment.”

    Like or Dislike: Thumb up 4 Thumb down 0

  3. Rob in CT says:

    We want people to save money and invest in stocks, since it keeps the flow of capital to the economy flowing and provides a nice retirement cushion under normal circumstances. It would be strange, indeed, to treat money earned by deferring gratification or taking risk over time in the same way as wage income; it would be better just to invest in bonds or spend the money.

    Obviously this has resulted in some unintended consequences (that’s the charitable interpretation).

    First, there is the argument Buffet is making. Second, what role has this preferential capital gains taxation played in inflating stock market bubbles? Has this tax preference really done what you assert it is designed to do? Is there perhaps a better way of doing it?

    I’m all for savings and investment. I save, and I invest, and I agree that it’s best that we not discourage people from doing so.

    Like or Dislike: Thumb up 1 Thumb down 0

  4. Rob in CT says:

    Could you tax capital gains as normal income, with the caveat that it should be inflation-adjusted? So if you sell stock you’ve had for 10 years, you pay tax only on gains above inflation?

    Like or Dislike: Thumb up 0 Thumb down 0

  5. john personna says:

    @Rob in CT:

    I think inflation adjustment would be most fair, but it would make non-electronic tax reporting pretty impossible.

    It’s also possible that we have a societal interest in hiding exactly how much of that long term holding was eaten in inflation ;-)

    Like or Dislike: Thumb up 0 Thumb down 0

  6. JKB says:

    Look it’s quite simple. Let’s tax the super-rich investors and those with high income from wages and book, movie and music (copyright) royalties while exempting the income between $200,000 and $1 million generated by small business owners in which the taxpayer is one of the primary operators and also income from patents. We could tax the latter at a continuation of the below $200,000 rate

    Then you get the super-rich, you get people like Obama and Matt Damon who say they should pay more taxes but leave the small business owner and innovators to hire and innovate.

    Like or Dislike: Thumb up 1 Thumb down 1

  7. WR says:

    @JKB: That’s a good scheme — an entire tax code set up to reward people JKB likes and punish those whose political opinions piss him off.

    Like or Dislike: Thumb up 2 Thumb down 0

  8. JKB says:

    @john personna:

    Not a societal interest but certainly a governmental interest. They can raise taxes or spur inflation to pay off the government borrowing. Difference, people don’t notice the inflation tax so the Congress gets to keep their jobs.

    Like or Dislike: Thumb up 0 Thumb down 1

  9. Lit3Bolt says:

    That damn Warren Buffet…always waging class warfare.

    The is why the conservative argument against more taxation rests almost entirely on disingenuous naivete and rhetorical sleight-of-hand. If you raise taxes, the investor class will simply refuse to invest! And yet Warren Buffet points out in the same article that this dire event, predicted by conservatives, has never happened in his long experience.

    Also, our effective corporate tax rate might be higher simply because we don’t go after income brackets the same way the Brits do.

    I’m suspicious of calls for tax “reform” for pretty much all the reasons you listed, JJ. And yes, I guess I can see why you quibble with the word “coddling” when the super-rich have to go through all that effort of employing accountants, lobbyists, and politicians to write for them a favorable tax code. They earned those lower taxes through political manipulation fair and square! Strange how back-room deals hardly elicit a peep of outrage from you (indeed, you refuse to even call it coddling) but you apparently have nightmares of the great unwashed masses voting for benefits for themselves. That’s “robbing Peter to pay Paul.”

    Like or Dislike: Thumb up 5 Thumb down 2

  10. john personna says:

    @JKB:

    1) I don’t think active businessmen are granted the same breaks given to the financial community.

    2) Patents? Good folk make their patent money embedded in manufacturing or sales. I wouldn’t want to shield the patent trolls.

    Like or Dislike: Thumb up 1 Thumb down 0

  11. john personna says:

    Getting back to James’ arguments ;-), how about this one:

    Usually, Buffett points out the he pays a lower rate than his secretary, on account of she pays Social Security taxes on all of her income and he only on a fraction of his. But that’s always struck me as silly: so long as we pretend that Social Security and Medicare are self-funding, it makes sense to cap taxation; after all, we cap payouts.

    What happens when we don’t pretend?

    Like or Dislike: Thumb up 2 Thumb down 0

  12. JKB says:

    @WR:

    Would you not say that it is better than picking some arbitrary income number for higher taxes without examining the benefit of the underlying income generating activity to the overall economy?

    The “high wage” employee, who has no other skin in the game, is one of those like Obama said, can afford to pay more. And what could be more fair than those with educational and nurture advantages giving back to the community? Those who earn continuing income from copyrighted material, which neither unlike patents, does not become a utility to society in general after a few short years but goes on well after the creators death are unlikely to be de-incentivized from further writing, acting or singing. The super-rich seem to be the consensus group for increased taxation.

    But those who one and operate small businesses where the income in reported as personal income, who do most of the hiring, who represent both self-discipline and hard work, should not be punished for their efforts. The same for the innovators who create wealth for society at the small cost they be protected in profiting from their ideas and perseverance for a short time after which the technology becomes common goods.

    Like or Dislike: Thumb up 0 Thumb down 1

  13. OzarkHillbilly says:

    In the US system from our $100 first we take $35 at the corporate level. Then we take another $15, or the dividend tax rate of 15%, from the recipient. Giving us a tax rate of 50% on dividends. We’ve taken $50 from the total amount that was to be used to pay dividends.

    Is he stupid? Or does he just think I am? From the NYT:

    Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress.

    I think we can toss anything else the esteemed Mr. Worstall might have to say about taxes in the garbage disposal. James, quoting liars/simpletons does not reflect well on you.

    Like or Dislike: Thumb up 7 Thumb down 0

  14. john personna says:

    @JKB:

    Would you not say that it is better than picking some arbitrary income number for higher taxes without examining the benefit of the underlying income generating activity to the overall economy?

    How does it work now, assuming incorporation and retained earnings within the business?

    My solution would be to tax the small corporation lightly, but more strongly when earnings are distributed to principals as income.

    It doesn’t help investment or employment to exempt income removed from the business.

    Like or Dislike: Thumb up 0 Thumb down 0

  15. JKB says:

    @john personna:

    1. Well, the small businessman is busy making useful things. The financial community have time and money to buy a few policiticans

    2. Good point, the tax advantage should not be transferrable from the original creator. We amy also, not want to extend the benefit to corporate patent filers over a certain market capitalization.

    Like or Dislike: Thumb up 0 Thumb down 0

  16. Anyone who truly feels they’re not paying enough tax is free to send all the money they like to:

    Gifts to the United States
    U.S. Department of the Treasury
    Credit Accounting Branch
    3700 East-West Highway, Room 622D
    Hyattsville, MD 20782

    In the meantime, it should be remembered that Warren Buffet didn’t get to be Warren Buffet by giving away money. One of Buffet’s constant themes is to bring back the estate tax. Which sounds altruistic unless you know that Berkshire Hathaway has made billions off of purchases like Dairy Queen, where the original founder of a company died and his heirs were forced to sell off the business quick to be able to afford the tax bill.

    Not sure if there’s an angle here, but when big business starts backing a policy that seems contrary to their interests, there’s probably some logrolling or rent seeking going on behind the scenes.

    Like or Dislike: Thumb up 1 Thumb down 2

  17. john personna says:

    @OzarkHillbilly:

    Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress.

    We should certainly be drilling into that, to find out how big the scams have grown. It sounds on the surface like the decline of a market democracy.

    Like or Dislike: Thumb up 1 Thumb down 0

  18. JKB says:

    @john personna:

    I was speaking solely about income from a business reported as personal income by the owner/partners not dividends from incorporation. Incorporation already provides opportunities to protect business income from the proposed tax on “high-earners”.

    Sole-proprietorships are the most prevalent business type in America yet the proposed “high-earner” taxes directly remove money that could be used to grow the business or hire a new employee.

    Like or Dislike: Thumb up 0 Thumb down 0

  19. john personna says:

    @Stormy Dragon:

    Or we could try cutting everyone’s taxes, removing tariff income, and running the government on air.

    Like or Dislike: Thumb up 1 Thumb down 1

  20. john personna says:

    @JKB:

    But incorporation is easy, right? I ran my consulting business as a sole proprietorship, and just paid the freight (it was pretty much “income” anyway), but many of my friends incorporated.

    Like or Dislike: Thumb up 0 Thumb down 0

  21. @john personna:

    Ah yes, because “Warren Buffet has a history of acting like an altruist when he’s really promoting his own business interests” is exactly the same as “There should be no taxes of any kind”.

    Like or Dislike: Thumb up 1 Thumb down 1

  22. Lit3Bolt says:

    @OzarkHillbilly:

    Duh, I forgot that too. The effective tax rate for many corporations is negative. Of course, conservatives are far more worried about Social Security and Medicare than they are about enforcing the actual tax code that could pay for Social Security and Medicare.

    Then again, everyone who’s in the Taxed Enough Already Party can simply move to Mexico if they think their taxes are too high. This highlights the conservative patriotism paradox: They are willing to lay down their life for the defense of their country, yet refuse to give it a few hundred bucks more every year.

    Like or Dislike: Thumb up 2 Thumb down 0

  23. john personna says:

    @Stormy Dragon:

    I was reacting more to your “send money” line.

    Like or Dislike: Thumb up 1 Thumb down 0

  24. James Joyner says:

    @john personna: No, I agree with Buffett on that point. It makes sense to treat long-term holdings differently than wage income; it makes no sense for those whose very job is churning stocks.

    Like or Dislike: Thumb up 2 Thumb down 1

  25. James Joyner says:

    @john personna: If we simply treat Social Security and Medicare are ordinary spending–thus making them effectively welfare programs, rather than something that middle class people are setting aside to pay their own retirements–then it changes the calculations entirely. But, presumably, along with eliminating the ceiling we’d lower the overall rates.

    We create a double illusion under the current system. First, that people are paying for their own old age and aren’t on welfare when a goodly portion of recipients are in fact subsidized. Second, in so doing, we can make multiple line items and not seem like “taxes.” If we raised the marginal income tax rates to the current income+FICA+Medicare level, people would revolt.

    Like or Dislike: Thumb up 0 Thumb down 0

  26. Tsar Nicholas II says:

    Observing Buffett at this stage of his disintegration is sad, just plain sad.

    It’s like watching Muhammed Ali get pummeled by Trevor Berbick or Willie Mays staggering around the outfield in his last year with the Mets.

    Like or Dislike: Thumb up 1 Thumb down 4

  27. john personna says:

    @James Joyner:

    We can treat SS and Medicare as “mostly” self-funded retirement, and fudge it just a bit with a second (or third) graduation on income.

    There already is a transfer, from people who earn a lot and die young, to people who earn little and live long. I’m thinking it wouldn’t take much of a tilt to make that work going forward.

    Like or Dislike: Thumb up 0 Thumb down 1

  28. john personna says:

    @Tsar Nicholas II:

    Pure ad hominem. No engagement at all with the question of 15% tax rate for billionaires.

    Like or Dislike: Thumb up 4 Thumb down 1

  29. Rob in CT says:

    @john personna:

    Why would non-electronic filing be impossible?

    Like or Dislike: Thumb up 0 Thumb down 0

  30. john personna says:

    @Rob in CT:

    It’s a complicated calculation, year X to year Y, and inflationary impact. I suppose you could do it with an “inflation table” in the tax booklet ….

    Like or Dislike: Thumb up 0 Thumb down 0

  31. OzarkHillbilly says:

    @john personna: you are a mean person JP, acting like Trevor Berbick pummeling Muhammed Ali with that comment.

    Like or Dislike: Thumb up 1 Thumb down 0

  32. jukeboxgrad says:

    stormy:

    Anyone who truly feels they’re not paying enough tax is free to send all the money they like to:

    Gifts to the United States
    U.S. Department of the Treasury

    This is the standard response to Buffett, but it doesn’t make much sense. This argument only makes sense if you also believe that someone who favors higher defense spending is a hypocrite if they don’t make a voluntary contribution to the Pentagon. Is that something you believe?

    There’s nothing wrong with being in favor of higher taxes while also believing that everyone, including myself, has the right to pay only the minimum tax that’s legally required, and should pay only the tax that’s legally required.

    Money is a positional good. Being rich is relative. To a great extent it’s about comparative status, not about the actual utility of a certain extra sum. Therefore it’s actually quite rational, and not at all hypocritical, to advocate a policy where everyone in my group pays more taxes, while also not wanting to be the only one to do so. I can believe that the higher tax will create a healthier society for everyone, while also not wanting to impose a comparative disadvantage on myself by being the only one who pays it.

    What if I’m a business owner, and I think the minimum wage should be higher? Telling me I should just pay my own employees more is pretty dumb. My business won’t last if I impose that competitive disadvantage on myself. But even though I don’t want to be the only one who does it (because that’s not sustainable), it’s perfectly valid for me to want everyone to be required to do it (for example, if I believe it will lead to a stronger economy overall). Same logic applies when someone like Buffett advocates for higher taxes.

    One of Buffet’s constant themes is to bring back the estate tax. Which sounds altruistic unless you know that Berkshire Hathaway has made billions off of purchases like Dairy Queen, where the original founder of a company died and his heirs were forced to sell off the business quick to be able to afford the tax bill.

    I’d like to see a credible source for that claim, because I think the main source for that claim is someone who is a proven liar.

    Also see this comment, attached to the article by that proven liar:

    Wow, wrong in so many ways. 99% of BRK’s business is P&C Insurance not Life Insurance.

    Dairy Queen was a publicaly traded company not a family business. The family had 35% they choose to exchange into BRK stock, to avoid capital gains, i.e. they were not selling to pay the tax man. Jordan’s Furniture was sold to BRK so they could expand faster, the owners were not dead or dying, they arranged to stay and manage the company for BRK. Justin Industries was a publically traded company, family owned 20%, family did it to expand and stayed to manage it.

    Like or Dislike: Thumb up 5 Thumb down 1

  33. john personna says:

    FWIW, I like the estate tax in theory, and in practice. In theory, because I like capitalism as a sport you play from 18 to 80. At that point you count up the play money to see who wins. Inheritance ruins the game.

    I like it in practice because if you don’t tax inheritance, you have to tax something else. You have to tax living workers instead. In practice it’s much better to tax dead people. They are beyond caring.

    Like or Dislike: Thumb up 1 Thumb down 1

  34. john personna says:

    If you think kids “need” a million dollar gift, it must be because you think they are unfit to play for themselves.

    Like or Dislike: Thumb up 2 Thumb down 1

  35. WR says:

    @JKB: I’m sorry, but this nonsense about small businesses has become religious doctrine even though it is patently false. And I know this from experience because I have my own corporation.

    Here’s the funny thing — if I hire someone to work for my business, his salary is a business expense, and I don’t pay taxes on it. If I don’t hire someone and keep the money, then that is my income and I do pay taxes on it. So raising my personal income taxes doesn’t cut the pool of money I have to invest in the business at all — because only that which is left over after I fund the business is going to be taxed.

    In fact a higher income tax rate would most likely spur greater investments in small businesses, since it becomes more attractive to reinvest in the business rather than pull out the cash and pay more of it in taxes.

    Like or Dislike: Thumb up 4 Thumb down 3

  36. Austin says:

    People think to hard about this in general. Buffet buys alot sells a little. He actual income is lower than those he wants to tax. Buffet is only about create more wealth for himself. He will not pay much of a tax on the wealth he has because it is in stocks that he is not selling. His hires will be stuck paying all his taxes will he smiles in his grave.

    Like or Dislike: Thumb up 1 Thumb down 2

  37. jan says:

    @john personna:

    < 1 year holdings, straight income tax
    < 5 year holdings, 70% of your top marginal rate
    < 10 year holdings, 50% of your top marginal rate
    20 year holdings, tax free

    Now that would encourage “investment.”

    <2 year holdings 50% of top marginal line
    <5 year holdings 30% of top marginal line
    <10 year holding 15% of top marginal line
    15 year holding zero taxation

    The above staggered tax rate would encourage reasonably long term investment, while the 1st schedule tax rate is too high for too long and would discourage investment.

    Having said this, no capital gains would be the best ‘stimulus’ of investment than either of the above proposals.

    Like or Dislike: Thumb up 0 Thumb down 1

  38. Steve Verdon says:

    The rationale behind these provisions in the tax code is actually defensible. We want people to save money and invest in stocks, since it keeps the flow of capital to the economy flowing and provides a nice retirement cushion under normal circumstances.

    Then why do we tax interest on savings accounts? Why tax savings at all? Why not consumption? I agree with you, but in practice our tax system is an ad-hoc patch work of utter and complete Bravo Sierra that should be completely dumped, and we start all over again. Preferably while not listening to people like Buffet or Norquist.

    It would be strange, indeed, to treat money earned by deferring gratification or taking risk over time in the same way as wage income…

    Really, which is why interest income from savings is taxed just like wage income?

    Like or Dislike: Thumb up 2 Thumb down 2

  39. jan says:

    @john personna:

    If you think kids “need” a million dollar gift, it must be because you think they are unfit to play for themselves.

    That’s none of your business, as it’s not your money and not your kids.

    Like or Dislike: Thumb up 3 Thumb down 7

  40. JKB says:

    So apparently, everyone should just form one of those “evil” corporations rather then engage in productive growth investment activity as a single person. Must be full employment for lawyers and accountants program.

    Look, I realize many here hate business and free enterprise but if we want to get the country out of the doldrums we need to make it easier and cheaper for individuals to turn their ideas into profit making businesses that others voluntarily do business with for mutual benefit. This is different than the person who goes to the office or shop even if they make high-earnings. The business owners build the GDP, they hire others who don’t have the capital or risk taking nature to help them.

    But like they say, if you don’t want more of something tax and regulate it. Of course, in America, everything is taxed or regulated except for welfare. Oh, look, we got more of that.

    Like or Dislike: Thumb up 4 Thumb down 3

  41. mattb says:

    @jan: A build:

    < 6 months holdings, straight income tax
    < 1 year holdings, 70% of your top marginal rate
    < 2 year holdings 50% of top marginal line
    < 5 year holdings, 30% of your top marginal rate
    < 10 year holding 15% of top marginal line
    15+ year holdings, tax free

    The good idea about keeping the first 6 months as "straight" income is that it would discourage much of the computer trading that has helped destabilize the market — ie. the moving of significant amounts of share to make money on slight fluctuations in price. While not illegal, there is little question that this sort of activity isn't in anyone but the investor's long term interests (and perhaps not even those).

    I do think it's fair to ask the question (and use tax policy to shape) of what is the purpose of the stock market.

    btw, I'm saying this as a former employee of a publicly traded company that really got battered on the market by short sighted analysts and investors whose quarterly/6 month view influenced the company into making a lot of poor long term decisions in the face of huge technological and social chanegs.

    Like or Dislike: Thumb up 2 Thumb down 0

  42. James Joyner says:

    @Steve Verdon: My strong preference would be to do away with taxes on income altogether and instead tax consumption with zero loopholes. It would be extremely progressive, since rich people spend more on luxury goods. We could make it even more progressive by charging lower rates on fresh foods and medicine.

    Of course, we’d pretty much kill the lobbying and tax preparation industries with such a move.

    Like or Dislike: Thumb up 5 Thumb down 0

  43. TheColourfield says:

    @ JKB

    “Look, I realize many here hate business and free enterprise”

    No, they hate crony capitalism and subsidies for oil companies and agribusiness.

    Like or Dislike: Thumb up 1 Thumb down 0

  44. Moderate Mom says:

    It’s interesting that while Buffett is advocating higher taxes on the “super rich” (apparently even he doesn’t think the upper middle class earning in the $250K range needs their taxes raised), he never addresses all of the preferential loopholes in the tax code that Berkshire Hathaway so generously benefits from. It might have something to do with the fact that while he is the majority owner in Berkshire Hathaway, he is not the sole owner, and reductions in the rent seeking Berkshire participates in would lower their overall profits, thus reducing available dividend income for other owners.

    I would be more prone to take Buffet seriously on his proposals for things like a higher estate tax (which he has made sure his own estate will never have to pay, given the money he’s already given his children and they money he’s given to the Gates Foundation) or increased income taxes if he didn’t spend so much time and money making sure that he doesn’t have to pay one single penny more than the law requres.

    Like or Dislike: Thumb up 1 Thumb down 2

  45. WR says:

    @JKB: This is beneath you. Anyone can incorporate; it costs practically nothing and offers great benefits to a small business. It doesn’t take an army of accountants and lawyers — a couple minutes at Legal Zoom is more like it.

    But by setting up this straw man, you get to completely ignore the point, which is that all the whining about taxing millionaires hurting small businesses is a load of crap. And then you can start bitching about non-existent welfare programs.

    There are only two explanations for this: You either know the truth and try to change the subject to keep from having to admit it. Or you’re such a True Believer at the cult of tax cuts that you are unable to process a fact that disagrees with your religious convictions.

    Like or Dislike: Thumb up 1 Thumb down 1

  46. WR says:

    @James Joyner: How could this possibly be progressive? The poor and middle class spend a vastly greater percentage of their wealth than the rich do.

    Like or Dislike: Thumb up 1 Thumb down 0

  47. James Joyner says:

    @WR: Because it would take progressively more from those who spend more. If Warren Buffett buys are Toyota Corolla, he pays the same as a poor guy; if he buys a Ferrari, he pays vastly more. There would be no accounting gimmickry to hide behind, either.

    Like or Dislike: Thumb up 0 Thumb down 0

  48. JKB says:

    @WR:

    I understand you disagree with me but you are also wrong. But I’m unconcerned with whether you come to see my side or not. But if you’d bothered to have read my first post, you would notice I suggested giving the break to small business owners up to $1 million in income so I’m not sure where you see any whining about taxing millionaires. Perhaps if you didn’t have those red colored glasses?

    In regards to corporations being cheap. Well, besides needing officers, file corporate income tax, etc. Here is a young woman who would disagree about the basic costs of being incorporated. True, it applies to California but $800 a year just to be incorporated isn’t nothing.

    Like or Dislike: Thumb up 0 Thumb down 0

  49. Rob in CT says:

    @James Joyner:

    I think you’re overselling the progressivity of consumption taxation. Unless you exempt a bunch of stuff I doubt it would be progressive. The devil’s in the details, as usual. One would have to take your tax plan and do a side-by-side comparison vs. what we have now.

    I want tax reform too. I’m inclined to think that consumption tax (VAT?) isn’t the way to go, or at least not solely the way to go (as in no income tax).

    Like or Dislike: Thumb up 1 Thumb down 0

  50. Miscreant says:

    I’ve always found it interesting that- despite the left’s love of class warfare- you never hear rich Democrats taking about the need for generating revenues through a massive Wealth Tax (as is common in European socialist countries). Could it be that George Soros, Nancy Pelosi, John Kerry, the Kennedys, etc. are simply greedy charlatans, and don’t want their precious wealth redistributed to poor people?

    Gasp!

    Like or Dislike: Thumb up 3 Thumb down 4

  51. OzarkHillbilly says:

    @Miscreant: As a member of the left I can tell you we hate class warfare…. for the simple reason that the poor and middle class are losing.

    Like or Dislike: Thumb up 2 Thumb down 0

  52. Miscreant says:

    @OzarkHillbilly:

    As a member of the left I can tell you we hate class warfare…. for the simple reason that the poor and middle class are losing.”

    Then why don’t the ultra-rich Democrats lead by example to actually help the poor? Why are they always partying down at the Hamptons, buying more and more million dollar mansions, etc. while the poor they profess to be concerned about suffer?

    Like or Dislike: Thumb up 4 Thumb down 2

  53. OzarkHillbilly says:

    @Miscreant: I don’t know. They don’t hang out with me. Tell you what, I’ll ask the next rich Dem I meet why they don’t give away all their money to the poor and you can ask the Republicans in Congress why they are trying to destroy the economy.

    Like or Dislike: Thumb up 2 Thumb down 1

  54. john personna says:

    What we’ve found in the last 10, 20 years is that if we get rid of all the taxes we don’t like:

    – income, because I earned it
    – estate, because I earned it
    – capital gains, because all I’ve got is this darn house
    – corporate, because they aren’t people
    – tariffs, because we need free trade

    Then … it’s kind of hard to pay the bills. You can complain about “spending problems” but it’s kind of hard when every category of tax has been reduced … when we’ve developed these “philosophical” objections to each source of income.

    Like or Dislike: Thumb up 2 Thumb down 1

  55. john personna says:

    (I’m really confident that a consumption tax people could actually stand would also be not enough to pay the bills. Especially after the feedback loop, and lower taxed consumption, strikes.)

    Like or Dislike: Thumb up 0 Thumb down 0

  56. john personna says:

    @jan:

    That’s none of your business, as it’s not your money and not your kids.

    Your objection is funny, on both counts.

    Like or Dislike: Thumb up 0 Thumb down 0

  57. Steve Verdon says:

    Of course, we’d pretty much kill the lobbying and tax preparation industries with such a move.

    Which is why it will never ever happen no matter how much sense is makes.

    Good enough government right JP?

    Like or Dislike: Thumb up 1 Thumb down 0

  58. john personna says:

    @Steve Verdon:

    Good enough government right JP?

    We are certainly blue-skying somethings unlikely to pass in this thread, it is true.

    Though, we should probably expect some tax law cleanup and revenue enhancement, if we ever do want to bring down that deficit and debt.

    Like or Dislike: Thumb up 0 Thumb down 1

  59. Steve Verdon says:

    @Rob in CT:

    A consumption tax could be progressive by also including a large standard deduction.

    Please, do try to think a bit more about these issues.

    For example,

    I’m inclined to think that consumption tax (VAT?)….

    A VAT is a type of consumption tax. If you really thought about the issue you’d know this.

    There are a number of reasons to switch to a consumption tax, but I’ll leave that to you as homework.

    Like or Dislike: Thumb up 0 Thumb down 0

  60. anjin-san says:

    Look, I realize many here hate business and free enterprise

    Really? Do you realize you sound like a brainwashed idiot?

    Like or Dislike: Thumb up 2 Thumb down 1

  61. john personna says:

    @Steve Verdon:

    I’m inclined to think that consumption tax (VAT?)….

    A VAT is a type of consumption tax. If you really thought about the issue you’d know this.

    I’m pretty sure you misinterpret his syntax.

    There are a number of reasons to switch to a consumption tax, but I’ll leave that to you as homework.

    I’d really like to hear what categories you’d tax (food? rent? health care?) and then what level of tax it takes on the remainder to cover the bills.

    William Gale: Not really. The sales taxes that exist in the states may serve the purposes of the states quite well, but they are very poor models for a federal consumption tax. The state sales taxes omit all sorts of spending, typically health, food is often omitted, a variety of other things, housing. Health, food and housing is half of all consumption.

    So, if we want to have a consumption tax at the federal level we need to tax a very broad base of consumption, almost all consumption. So, if anything, the state, the experience that the states have with the sales tax tell us that it’s very hard to actually implement a clean simple broad based consumption tax.

    Ray Suarez: Well, let’s talk a little about implementation, Len Burman. Alan Greenspan said today getting from the current tax system to a consumption tax raises a challenging set of transition issues. Like what?

    Len Burman: Well, if you just say scrap the income tax and replace it with a sales tax or a value added tax, then it would be a huge tax increase on old people, old people who are paying tax on their income as they’re earning it, thinking that when they got to retirement they could spend money and they’d be paying a dollar for everything they bought.

    If you replace, Bill actually did some estimates that if you replaced all of our taxes with the sales tax, the sales tax rate would be something like 60 percent, so you could just imagine getting into retirement and finding out the price of all the goods you’re buying is now 60 percent higher than it was the day before. That would be like a 60 percent tax on all of the money that you had saved up over the course of your life. And there are other transition issues too, like the way it affects businesses.

    (link)

    I don’t think most folk who hear “consumption tax” are ready for 60%.

    Like or Dislike: Thumb up 1 Thumb down 0

  62. jukeboxgrad says:

    james:

    My strong preference would be to do away with taxes on income altogether and instead tax consumption with zero loopholes. It would be extremely progressive, since rich people spend more on luxury goods. We could make it even more progressive by charging lower rates on fresh foods and medicine.

    I like this idea.

    Of course, we’d pretty much kill the lobbying and tax preparation industries with such a move.

    No reason why they shouldn’t be able to apply for food stamps.

    wr:

    How could this possibly be progressive? The poor and middle class spend a vastly greater percentage of their wealth than the rich do.

    I think Steve answered this problem: “A consumption tax could be progressive by also including a large standard deduction.”

    I think the idea is that everyone who is willing to live at a moderate level of consumption (let’s say no more than $100,000 per year per person) can pay little or no taxes. But if I insist on spending a million dollars a year (or more) on fancy houses, cars, boats and travel, then that consumption should be taxed at a very high rate (I think 60% or more is perfectly fine).

    This way there is no penalty if I want to use my skills and capital to produce as much income and wealth as I possibly can, as long as I channel that wealth back into productive investments (which is what happens when I store my wealth in the bank or in the stock market). But if I want to burn up my wealth via lots of conspicuous consumption that is essentially just a form of waste, then that should be discouraged, and the tax man should get a very big cut.

    I think this would generate plenty of revenue, because the people spending a million or more on personal consumption every year have plenty of money to pay the extra tax, and they’re going to mostly keep on spending.

    The net result of this change is that our economy will channel scarce resources into building businesses and factories that make things people all over the world need, instead of channeling scarce resources into building and maintaining lots of big fancy houses for rich people that they hardly ever use, because they have 10 other houses. I know people are employed building and maintaining those houses, but in the end it’s still essentially a form of waste, just like it’s waste to employ people to dig a hole and then fill it in.

    john (citing someone being interviewed):

    if you just say scrap the income tax and replace it with a sales tax or a value added tax, then it would be a huge tax increase on old people, old people who are paying tax on their income as they’re earning it, thinking that when they got to retirement they could spend money and they’d be paying a dollar for everything they bought.

    This is an important and complicated problem, but it’s strictly transitional. There are always all sorts of transition issues with any kind of tax reform. There are various ways to address this, like by changing things gradually.

    And I think this problem is also addressed by a large standard deduction. I’m concerned about those old people being able to meet their basic or moderate needs, but I’m not concerned if they are forced to live in ‘only’ two or three houses in their retirement, rather than 5 or 10.

    I don’t think most folk who hear “consumption tax” are ready for 60%

    With a large standard deduction, that number for most people would be zero, or close to zero.

    Like or Dislike: Thumb up 0 Thumb down 0

  63. OzarkHillbilly says:

    @john personna: This…. it ain’t that simple, you f’n idiots.

    Like or Dislike: Thumb up 0 Thumb down 1

  64. Ben Wolf says:

    @Steve Verdon: There are very few good reasons to switch to a consumption tax. It would effectively drain reserves from a portion of the economy (the middle class and poor) which is already short of cash. It is the vast monetary reserves at the very top which need to be drained so that they can be put into circulation throughout the greater economy. The goal is to stimulate new economic activity not push it further toward deflation, which is exactly what your suggestion would do.

    Like or Dislike: Thumb up 0 Thumb down 1

  65. jan says:

    @john personna:

    Your objection is funny, on both counts.

    No objection was stated…just an observation.

    Like or Dislike: Thumb up 0 Thumb down 0

  66. jan says:

    @mattb:

    6 months holdings, straight income tax
    < 1 year holdings, 70% of your top marginal rate
    < 2 year holdings 50% of top marginal line
    < 5 year holdings, 30% of your top marginal rate
    < 10 year holding 15% of top marginal line
    15+ year holdings, tax free

    Mattb — I could get behind this.

    Like or Dislike: Thumb up 0 Thumb down 0

  67. john personna says:

    @jukeboxgrad:

    “I don’t think most folk who hear “consumption tax” are ready for 60%”

    With a large standard deduction, that number for most people would be zero, or close to zero.

    How on earth do you pay bills with a tax that is zero for most people?

    Like or Dislike: Thumb up 0 Thumb down 0

  68. An Interested Party says:

    How on earth do you pay bills with a tax that is zero for most people?

    I was wondering about that too…I understand why so many people want to do away with income taxes, but what other kind of taxes could generate that kind of revenue…

    Like or Dislike: Thumb up 0 Thumb down 0

  69. jukeboxgrad says:

    How on earth do you pay bills with a tax that is zero for most people?

    It’s mostly a question of where you set two numbers: the tax rate, and the size of the standard deduction. Maybe it won’t be zero for most people, but it can be close to zero. We already have a system where lots of people pay little or no federal income tax, so a new sales tax system doesn’t have to radically change that. We’ll just be taxing consumption instead of income, but roughly the same people will be paying roughly the same amount in taxes.

    Also, the tax won’t be low for all middle-income people. There will be some middle-income people who choose to spend a lot on luxury goods, and therefore the effective rate will be high for them. But that’s OK. It’s a choice they make.

    The key thing to understand is that most of the money is not in the hands of “most people.” It’s in the hands of a few people. The top 1% owns 40% of aggregate household wealth. The top 2% has aggregate income of about $1T. That’s roughly the same as the total amount we now collect from individual federal income taxes. Just taxing the top 2% at a very high rate would generate enough revenue to eliminate federal income taxes for the other 98% (either that, or immediately eliminate the entire budget deficit). I’m not suggesting we do that, but it’s a way of showing that your question has an answer.

    It’s a matter of having the guts to do it in a way that’s highly progressive. Aside from having a high standard deduction, this can also be accomplished by exempting certain goods and services. So food sold in grocery stores (or at least certain categories of foods) should be fully exempt. All public transportation should be fully exempt. Health insurance should be fully exempt. There has to be a way to make housing, up to a certain level, fully exempt.

    I realize that by setting up these various exemptions, it’s a slippery slope back to our current system of complicated loopholes. That’s a real concern, but it just boils down to having the discipline to write 3 pages of rules, not 3,000 pages.

    It’s separate from the discussion about sales tax, but we should also tax wealth at a higher rate. Until 1981, the top rate for the estate tax was 70%. I think it’s currently 35%. For very large estates (say, over $100 million), why shouldn’t the marginal rate be much higher?

    This is a way of addressing the current extreme concentration of wealth. The concentration of wealth is even more extreme than the concentration of income. To illustrate how much money we’re talking about, consider these numbers. The aggregate household wealth of the top 1% is about $20T. That’s over $6 million held by every man, woman and child in that group (on average). If their wealth was taxed at 75%, that would be enough to immediately pay off the entire national debt, and each person in that group would still have $1.7 million.

    Again, I’m not suggesting we do exactly that, but it’s a way of illustrating that we can solve our deficit and debt problem if we have the guts to tax the people who have benefited from the way the system has been tilted in their direction for the last 30 years. Their income has soared while everyone else’s has stagnated.

    Like or Dislike: Thumb up 2 Thumb down 0

  70. Rob in CT says:

    @Steve Verdon:

    I have thought about the issues Steve. Here is what James proposed:

    My strong preference would be to do away with taxes on income altogether and instead tax consumption with zero loopholes. It would be extremely progressive, since rich people spend more on luxury goods. We could make it even more progressive by charging lower rates on fresh foods and medicine.

    The only suggestion he makes to make it progressive is lower rates for foods/medicine. He didn’t mention a standard deduction (which could be considered a “loophole” – which he categorically rejected). In response, I suggested that unless he carves out a bunch of necessities, the tax wouldn’t be progressive.

    Regarding a VAT, perhaps I was unclear. I meant “consumption tax (VAT?)” as a question about what type of consumption tax James wanted, with a VAT being an often-suggested type. In other words, I’m perfectly aware that a VAT is a consumption tax. I wasn’t sure if James was proposing a VAT, or a different form of consumption taxation.

    Thanks for your response, though. It’s always nice to hear from my betters.

    Like or Dislike: Thumb up 0 Thumb down 0

  71. tyndon clusters says:

    Mr. Joyner’s suggestion to tax consumption is absurdly obtuse and here’s why.

    Lets say I am married with two kids and have a family income of 100k.

    Lets say Mr. Joyner is married with two kids and has a family income of 500k,

    We both send our kids to the same college and live in the same neighborhood, so our expenses lets say are roughly equivalent.

    I spend just about all my salary on consumption, what with two kids in college, a mortgage etc.

    Lets say that Mr. Joyner has similar expenses and he spends 100k on these items.

    If we are taxed 10% on our consumption, we would both pay about 10K ( a highly simplistic example but bare with me).

    So we both pay about the same tax. However, Mr. Joyner decided to put his leftover 400k in a savings account. He is not taxed on that money.

    So his effective rate is 10K/400k = 2.5%

    My rate is 10k/100k = 10% effective rate.

    Stick to the law Mr. Joyner, your economics are FRiGHTENING. How the hell is that progressive?

    Look, its clear that our present system works pretty well for most folks, but unlike past generations, we just don’t have the balls to tax the friggin ahole rich.

    Like or Dislike: Thumb up 2 Thumb down 0

  72. tyndon clusters says:

    Another thing, if the boomers were alive in 1776, we wouldn’t have had a revolution, rather the prevailing mood would have been to jail the turncoats and give the King more lands, titles and riches.

    We are a pathetic bunch. Worst generation since the 1840s.

    Like or Dislike: Thumb up 1 Thumb down 0

  73. James Joyner says:

    @tyndon clusters: I’m not sure what the argument is for taxing two people living the same lifestyle differently on the basis that one earns more money but saves it. Money that sits in a bank is loaned out to others, priming the economy. That’s a good thing. Presumably, at some point (say, retirement), the person will take that money out of the bank and spend it. At which point it’ll be taxed.

    Like or Dislike: Thumb up 1 Thumb down 0

  74. Rob in CT says:

    @James Joyner:

    So you support a far stronger estate tax than we have now?

    Like or Dislike: Thumb up 0 Thumb down 0

  75. James Joyner says:

    @Rob in CT: I’ve got some sympathy for the idea of an estate tax but ultimately reject it. Not sure why the son of a rich man should get to live a lavish lifestyle on the largess of his dad while his friend whose dad died early shouldn’t.

    Again, if we tax money going out rather than money going in, we solve much of the problem: It gets taxed when it gets spent.

    Like or Dislike: Thumb up 0 Thumb down 0

  76. Rob in CT says:

    So you support consumption taxation that almost certainly would fail to be progressive (from your description, you’d design one that wouldn’t totally suck for the poor, but the rich would do far, far better than the middle class) and back that up with no estate taxation.

    Can’t you see the long-term result of that? It’s a recipe for the runaway accumulation of great wealth in the hands of a few. Now, it’s true that things are on that path already, but I fail to see how your proposed system is an improvement.

    Let me concoct an example: a guy like Buffett makes his billions here in the USA. He travels abroad and spends most of it there (house in Costa Rica, House in the Alps, etc), while keeping his consumption relatively frugal here in the US. How does your system deal with that (if at all) and, in fact, doesn’t it provide a strong incentive for a billionare to behave in exactly that way?

    I see your point about the tale of two rich kids, one of whom’s parents die young. In response, it seems to me that between life insurance and the fact that any estate tax would have an exemption amount (let’s go with $1 million), the kid’s gonna be ok. Your example does present a fairness problem, but I think it’s a small and manageable one in comparison to the problems you would create by having no inheritance tax.

    Like or Dislike: Thumb up 0 Thumb down 0

  77. James Joyner says:

    @Rob in CT: Any tax system ever devised has been gamed. But my assumption is that rich people spend more money than poor people.

    Sure, one could buy houses in other countries and live there. But, at that point, why should they pay taxes in the USA?

    But, for the most part, Buffett is likely to spend tons of money domestically eating in nice restaurants, buying nice bottles of win, buying nice cars, and so forth. And my system would tax him for that luxury. Currently, by his own admission, he’s not being taxed at a level commensurate with his wealth.

    Like or Dislike: Thumb up 0 Thumb down 0

  78. Rob in CT says:

    James: because they made the money here in the USA?

    Back to Buffett-under-your-system: sure, but at some level of income you can live lavishly and still save far, far more than a frugal poor or middle class person. The amazing gains in wealth that have taken place in the USA in recent times have been in the top .1% of the population, which is to say the gains have been made by a very small number of people earning absolutely incredible amounts of money. At that level, I believe your model breaks down.

    Under your system, that saved wealth would be passed on tax-free to the next generation, and all they have to do is not screw up in order to be powerful. There is no check on this in your system, except to hope that some of these later generations manage to spend the family fortune. I don’t think that’s realistic (in general) because if you don’t tax income, you don’t tax capital gains, and you don’t tax inheritance the bar for pissing away the family fortune is set somewhere around “you have to be dumber than a box of rocks.” Human nature being what it is, you will indeed get some of that, but not nearly enough. I think what you will get is aristocracy.

    I’m not trying to create utopia. I am, however, attempting to avoid creating a disaster. I think allowing the runaway accumulation of wealth in the hands of a very few is dangerous. As I noted before, we’re already on that path, but we still have some barriers (weak ones) left. You would do away with those barriers. I think you mean well but the consequences of your proposal would be, on balance, negative.

    Like or Dislike: Thumb up 0 Thumb down 0

  79. James Joyner says:

    @Rob in CT: But the ultra-rich can pass on their wealth to their kids under the current system. Even in the days of very high estate taxes, the only ones getting hammered were the ones too careless to put money into trusts.

    Further, under an income tax system Paris Hilton doesn’t pay squat for money that comes to her from Daddy. Even if we had 100 percent death taxes and did away with trust funds entirely, she would live a life of luxury because he’s loaded and likely will for some time since he’s still a young man of 55. Under my system, she’d at least pay lots of money in taxes on her lavish lifestyle.

    Like or Dislike: Thumb up 0 Thumb down 0

  80. tyndon clusters says:

    Mr. Joyner, are you philosophically against a progressive tax? Because otherwise your ideas on a consumption tax are specious at best

    And what happens if Mr. Buffett is a teetotaler who drives a 20 year old car and lives in the same house that he grew up in and has a vegetable garden and flies commercial? Then what are his taxes?

    Mike Reynolds and I agree that the fundamental problem with the right is to have to CONSTANTLY drag their dead intellectual carcass around as we fight battles waged decades and in some cases centuries ago.

    Universal public education, minimum wage laws, estate taxes, financial regulation, separation of church and state etc. issues which were long settled are now up for “debate”.

    As I have said in previous posts, look at the U.S. 30 years after the New Deal and look at the U.S. 30 years after the Reagan Revolution and ask yourself how the middle class is doing vis-a-vis the ruling rich elite.

    If anyone can honestly gainsay that the vast majority of the workers and middle class were much better off under New Deal type policies vis-a-vis the Reagan approach then you are an infant.

    And to me, this is truly the crux of the matter. The right has tried for two generations now to kill the one thing that stopped them from destroying this country…and that was the strong bulwark of reform contained in Glass Steagall, the NLRB, the SEC, FDIC etc.

    Those of us on the left have witnessed the senseless carnage of moronic right wing economic policy which has been foisted upon us for the last 30 years. And the proof is in the pudding. Just look at the ruins before us. Own up to the miserable miscalculations of supply side.

    And now for such an educated, learned man such as yourself Mr. Joyner to fall captive to such thinking is incredulous to me.

    Like or Dislike: Thumb up 0 Thumb down 0

  81. resound says:

    @jukeboxgrad: I appreciate your pragmatic responses. It’s refreshing to read ideas based on practicality instead of impulse or dogma.

    Like or Dislike: Thumb up 1 Thumb down 0

  82. Rob in CT says:

    @James Joyner:

    It is true that great wealth is passed on in our current system, except I think your proposed reforms would make something that is already bad even worse. I think our current system needs reform, certainly, but I support a progressive income tax + a stronger estate tax (where “stronger” doesn’t just mean the rate). Ideally, I’d want such a tax to be levied on inheritance (so if you split a large estate 10 ways the tax hit is lower than if you hand it all to 1 heir) so as to incentivize spreadin’ the wealth around.

    Re: Paris Hilton… Under my system, Daddy would be dealing with higher (income/cap gains) taxes and she would be staring down a future where she only (yeah, I know, “only”) would inherit $X tax-free (after which I’d have it ramp up progressively, topping out at levels that would probably give you an apopletic fit). You’d be taxing purchases she made with daddy’s money. Either way, Daddy’s rich so she’d live large. That is what it is. Neither of us is trying to do away with wealth – though I’m more concerned with the concentration of it.

    Like or Dislike: Thumb up 0 Thumb down 0

  83. Rob in CT says:

    Shorter me: consumption taxation isn’t going to deal with the problem I’m pointing out. It’s unclear to me that you even agree that it’s a problem, so that may be the disconnect between us.

    Like or Dislike: Thumb up 0 Thumb down 0

  84. James Joyner says:

    @tyndon clusters: Taxing consumption, especially while exempting basic needs, would be wildly progressive. I’m not in the least concerned about the fictional case of billionaires who live as though they were paupers.

    Like or Dislike: Thumb up 0 Thumb down 0

  85. Steve Verdon says:

    @Ben Wolf:

    You are an idiot. Did you not see my post? Can’t you read? A standard deduction would mean that a large chunk of consumption spending is NOT taxed.

    The goal is to stimulate new economic activity not push it further toward deflation, which is exactly what your suggestion would do.

    You have no clue what you are talking about. Deflation?

    JP,

    How on earth do you pay bills with a tax that is zero for most people?

    The current federal income tax is effectively zero or even negative for the bottom half of the income distribution. Clearly that scheme raises revenues, not enough, but it does raise revenue. So if this is some sort of obtuse objection to a consumption tax, please think again.

    Rob in CT,

    So you support consumption taxation that almost certainly would fail to be progressive….

    I don’t think you know what that word means. A progressive tax is a tax where both the marginal and average effective tax rates increase as the monetary amount that is taxed increases. If we have a consumption tax of 10% and a $25,000 standard deduction, then the average tax rate at $25,000 consumption spending is zero and rises to 7.5% as consumption spending goes to $100,000. The tax is progressive in the average effective tax rate. The marginal rate is flat at 10%, with makes the tax neither progressive nor regressive.

    The progressive nature of our current system is very hard to determine in general. Sure, the income tax is progressive in both marginal rates and in average rates, but add on the payroll tax (another federal tax) and it becomes quite regressive. Factor in corporate taxes and then you have to make a determination to the extent that the tax burden is shifted. And you have to try and account for the full tax burden for many who tax advantage of various municipal bonds that are tax exempt.

    Moreover, we already have elements of our tax code that are like a consumption tax. The deferred tax investments like 401ks make our system really a hybrid system where the income deposited into a 401k (savings) are only taxed at the time of withdrawal–i.e. a consumption tax.

    Finally, consider the Hall and Rabushka Flat tax, it works off of income, but has a large standard deduction and the way it works would make it very much like a VAT–i.e. a consumption tax.

    Like or Dislike: Thumb up 0 Thumb down 0

  86. Steve Verdon says:

    @tyndon clusters:

    And to me, this is truly the crux of the matter. The right has tried for two generations now to kill the one thing that stopped them from destroying this country…and that was the strong bulwark of reform contained in Glass Steagall, the NLRB, the SEC, FDIC etc.

    Those of us on the left have witnessed the senseless carnage of moronic right wing economic policy which has been foisted upon us for the last 30 years. And the proof is in the pudding. Just look at the ruins before us. Own up to the miserable miscalculations of supply side.

    Wow are you a moron, a partisan blithering and totally blinkered moron. Glass-Steagall was repealed by a two bills largely a party line vote in the Senate, but bipartisan in the House. The resulting bill that came out of conference, went to the Senate and was voted on 90 -8 and 362 – 57 in the House. Then the legislation was signed by a Democratic President.

    If anyone can honestly gainsay that the vast majority of the workers and middle class were much better off under New Deal type policies vis-a-vis the Reagan approach then you are an infant.

    The New Deal ended at the beginning of WWII. And the impact of the New Deal was likely one of the reasons why growth during the 1930’s was below potential and why unemployment remained stubbornly high for more than a decade after the economy started growing again. The biggest factor that likely got us out of the economic down turn in the early 1930s was going off the gold standard which allowed the Fed to engage in an expansionist monetary policy.

    And what happens if Mr. Buffett is a teetotaler who drives a 20 year old car and lives in the same house that he grew up in and has a vegetable garden and flies commercial? Then what are his taxes?

    Depends on how the consumption tax works, if it is the Hall and Rabushka method it would be vastly higher than yours.

    Is there any other reason to read your insipid tripe than the comedy value?

    Like or Dislike: Thumb up 0 Thumb down 0

  87. tyndon clusters says:

    Mr. Verdon, look assssshole, this myth that 50% don’t pay taxes is only partially true. The revenue for the federal budget is made up of approximately 45% INCOME tax and about 40% PAYROLL tax you unctuous twatt….the rest is corporate tax, excise taxes etc .

    Workers which constitute the bottom 90% of the income quintiles, have only 23% of the total wealth but are in effect paying well over 50% of ALL federal taxes.

    Our poor wealthy top 10% which pay about a quarter of all federal taxes control 70% of all wealth, so according to you they are suffering from a progressive tax?

    As far as the Democrats are concerned, they are almost as bad as the Repubs and I won’t go into detail about Rubin becoming head of then Citicorp and who orchestrated the mess of repeal.

    And your moronic tripe about the New Deal ending at the beginning of World War 2 is too stupid to even bother commenting on as is your rant about growth being below potential which is impossible to prove, like the fact that if you farted gold dust you’d be rich.

    Perhaps you missed this “The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.

    BTW unemployment peaked around 25% in 1933, but by the end of 1940 it was at 9%

    Only in your close minded insane bizzarro libertarian world that you inhabit could an idiot like you opine :”unemployment remained stubbornly high for more than a decade after the economy started growing again”

    And you are criticizing FDR for reducing unemployment by 64%?

    You remind me of the old lady who, when asked about the food at the restaurant replied “oh it was terrible and such small portions.”

    Go stick Atlas Shrugged up you a$$$ will ya.

    Like or Dislike: Thumb up 0 Thumb down 0

  88. tyndon clusters says:

    Sorry, but Mr. Verdon’s remarkably idiotic statement that the “New Deal ended before World War 2″ just keeps lingering….

    I guess in 1941, we got rid of that stupid Social Security Act, the Wagner Act, the FDIC, the ban on child labor, repeal of minimum wage and overtime laws, the Fair Labor Standards Act, the FHA, the TVA, etc.

    And since you are a Bruin, you probably were kissing the balls of Profs. Coles and Ohanian who first came up with the crackpot theory you mentioned and have been roundly rebuked for their flawed methodology and flawed conclusions.

    Like or Dislike: Thumb up 0 Thumb down 0

  89. jukeboxgrad says:

    resound, thanks.

    Like or Dislike: Thumb up 0 Thumb down 0

  90. Rob in CT says:

    @Steve Verdon:

    It’s progressive to a certain point, after which it’s essentially flat. Someone who spends $25k/year pays nothing. Someone who spends $100k/yr pays 7.5%. In this range the tax is highly progressive, which I applaud.

    Someone who spends $1MM/yr pays 9.75%. Yup, still progressive, though less so. Still with you.

    Someone who spends $10MM/yr pays 9.975%. Technically still progressive, yes, in the same way that 96 degrees is hotter than 94. What this means is that it treats someone who spends $1MM/yr almost exactly the same as someone who spends $10MM/yr or more. This is rich versus mindbogglingly wealthy, to be sure. But I think it matters.

    I think this system breaks down badly at the tippy top (as does our current system, certainly!), and I think that if it’s not coupled w/an estate tax it’s actually worse than the status quo.

    Seems to me the inevitable result of this is an elite that consists mostly of people who inherited vast fortunes. An aristocracy of inherited wealth, if not title. Which is to say it’s like what we have now, but worse.

    Pair this consumption tax with a strong inheritance tax (or if you can design a better method of preventing runaway concentration of wealth, I’m interested) and I’m with you. Leave it out, and I’m against.

    Like or Dislike: Thumb up 0 Thumb down 0

  91. Rob in CT says:

    I should mention the reason I think the concentration of vast fortunes in the hands of a few is bad.

    Wealth is power.

    Even if we applied this consumption tax to political contributions (would you, Steve? James?), the wealthy would still have massive advantages. Only the rich have the disposable income available to personally buy politicians (regular folks can make contributions, of course, but only if they band together in very large numbers can they possibly compete with someone who can write a check for millions and not really miss it). The same goes for buying political ads (would contributions to groups that buy ads be taxed?).

    Then there’s the ‘ole revolving door between public service and the corporate world. Politician gets elected, helps pass laws beneficial to a business, ends up with a lucrative position on the board of said business. News at 11.

    So yeah, wealth = power. Great wealth = great power. I think it’s bad for heredity to determine (not wholly, but to a significant degree) who has great power. Don’t you?

    Like or Dislike: Thumb up 0 Thumb down 0

  92. Rob in CT says:

    Having said all that, I’m now interested in the “Hall and Rabushka Flat tax” and will look it up.

    Like or Dislike: Thumb up 0 Thumb down 0

  93. jukeboxgrad says:

    I think a good place to read about it is here.

    I think the big problem is that it’s a flat, regressive income tax masquerading as a consumption tax. Here’s the key concept:

    Consumption is income less savings. Thus, the only difference in principle between a consumption tax and an income tax is the treatment of the savings. An income tax taxes savings both when the money is earned and again when the savings earn interest. A consumption tax taxes saving only once: either when the funds are withdrawn and used for consumption or when the funds are first earned.

    Based on that analysis, Hall-Rabushka is often described as a consumption tax. The problem is that this perspective makes no distinction between these two scenarios:

    A) I earn a billion dollars. I put most of it in the bank and live on a pittance. My heirs also do this, in perpetuity.

    B) I earn a billion dollars and spend it promptly on stupid bling.

    In order to encourage savings, we need to impose a tax “when the funds are withdrawn and used for consumption,” instead of taxing “when the funds are first earned.” The people who describe Hall-Rabushka as a consumption tax are pretending that distinction doesn’t matter, but of course it matters a great deal.

    Not all savings end up getting spent. And even if they do eventually get spent, there’s a big difference between saving my money for a day and then spending it all, as compared with saving it for 200 years and then spending it all.

    So people routinely describe Hall-Rabushka as a consumption tax, even though it does nothing to encourage savings, which is the important issue that James raised.

    Like or Dislike: Thumb up 0 Thumb down 0

  94. Rob in CT says:

    My preference remains to take our current graduated income tax, rip out most of the deductions, rebalance the rates to ensure progressivity (that continues all the way up, not progressivity that starts out steep and flattens out) and tax inflation-adjusted capital gains as normal income, and keep the estate tax (which I would also reform to include marginal rates).

    Like or Dislike: Thumb up 1 Thumb down 0

  95. Rob in CT says:

    Thanks, Juke.

    Like or Dislike: Thumb up 0 Thumb down 0

  96. jukeboxgrad says:

    Even though I like James’ idea about encouraging savings by taxing consumption, I also like what you described. And you said something especially important:

    rebalance the rates to ensure progressivity (that continues all the way up, not progressivity that starts out steep and flattens out)

    Currently you reach the top bracket if you have an income of $379K. In 1953 you hit the top rate (of 92%!) if your income was $200K. In current dollars, that $1.6 million. So this illustrates how far we’ve gone in creating a system of “progressivity that starts out steep and flattens out.” The rates should be progressive at much higher levels. It’s absurd that people earning $400 thousand pay the same top rate as people earning $4 million, or $40 million, or $400 million.

    This is how we end up with a system where the 400 richest Americans have an effective federal tax rate of only 18.1% (pdf).

    And this is a stunning fact: “these 400 taxpayers collected more than 10 percent of the total preferential-rate capital gains and dividends in the nation in 2008.” Even though they are roughly just a millionth of the population.

    Capital gains per person if you’re an average American (excluding the top 400): $1,705. Capital gains per person if you’re in the top 400: $153.5 million. That ratio is 90,000 to 1. Each person in that group collected (on average) the same amount of capital gains as 90,000 average Americans. This underscores the fact that a very small number of people own a very big chunk of the country. And of course what they own includes a large portion of the government.

    Like or Dislike: Thumb up 0 Thumb down 0

  97. Steve Verdon says:

    @Rob in CT:

    I think, after reading your comment, that your issue is more with the estate tax. I think an estate tax that allows a certain amount to go untaxed is good and here’s why…

    Suppose you have a family, husband, wife, and 2 kids. Husband dies. He was making $75K/year and he died at the age of 45 (i.e. he would have worked for another 20 years). The present value of that income stream is around $1.125 million (assuming I did my math right). If this guy had a life insurance policy of $1 million, I’d be fine letting the family keep that payout. After all they are not bereft of the husband’s income. Of course if he had a $10 million dollar policy, then that is another story. Maybe exempt the first $1.125 million and tax the rest at some rate.

    Not everyone that dies and leaves money to their family is filthy rich and the kids are not going to grow up never having to work a day in their lives. In the above case, I’m pretty sure the family will always consider themselves worse off even if they get to keep all of the $1 million insurance payout. And in terms of leaving family wealth to relatives, I’d take the same overall approach, leaving some amount is definitely reasonable.

    Hall and Rabushka have an extensive write up of their tax plan, its a bit out of date, so keep that in mind when reading it. I think the current standard deduction for a family of 4 is $25,500 which is probably too low for today. They also are only looking at the income tax and replacing it with a flat/consumption tax, they don’t consider the estate tax.

    Wealth is power.

    Even if we applied this consumption tax to political contributions (would you, Steve? James?), the wealthy would still have massive advantages.

    Absolutely agree here and this is why I think there is a problem with income inequality. However, another side to this issue is that having an activist government that has wide ranging discretionary power is the other part of what makes the above true. Remove the latter and income inequality is much less of an issue, IMO.

    You could argue that we should simply address the issue of income inequality, but I think that argument is weak. Everyone wants more income, generally speaking. Even politicians and high level bureaucrats. Look at the relationship between any administration and Wall Street. I like to describe that relationship as incestuous (you can check the archives here or check with my co-blogger Dave Schuler, Hell even John Persona will likely recall my use of that term). Then there are problems with regulatory capture, rent seeking, and so forth. It makes keeping the activist government and keeping the influence of those with wealth out an almost impossible task (if it isn’t outright impossible at all). This is one of the main reasons I favor a more limited government or one with less discretionary power.

    This is why guys like tyndon clusters (and to a lesser extent Michael Reynolds) piss me off so much. They just think I hold my views because it is a case of “I want to get as much money as I can, and keep your grubbing hands off it.” If they knew me IRL they’d know I have no such drive. Sure I like money, but at the same time I’m not driven like others to acquire as much as I possibly can (in fact, Michael Reynolds has acquired far more money than I have so this view is more appropriately applied to him, which I find most amusing). Second of all, I’ve given this a great deal of thought and I think the problem stems more from having an activist government with wide discretionary powers than simply money. There have been very rich people in this country through out its history. But only until after WWII have you seen the kind of business/corporate relationships that many like Michael Reynolds (and myself) worry about. Was Standard Oil the recipient of various government handouts? No. If it had gotten into financial trouble would the government have bailed it out? Probably not.

    tyndon clusters,

    Mr. Verdon, look assssshole, this myth that 50% don’t pay taxes is only partially true. The revenue for the federal budget is made up of approximately 45% INCOME tax and about 40% PAYROLL tax you unctuous twatt….the rest is corporate tax, excise taxes etc .

    Wow, given this response I can only guess I was quite right in that you have a completely partisan and blinkered view. Care to respond to my claim that about your errors and ignorance of the facts?

    Sorry, but Mr. Verdon’s remarkably idiotic statement that the “New Deal ended before World War 2″ just keeps lingering….

    I guess in 1941, we got rid of that stupid Social Security Act, the Wagner Act, the FDIC, the ban on child labor, repeal of minimum wage and overtime laws, the Fair Labor Standards Act, the FHA, the TVA, etc.

    How wonderfully obtuse. Of course not, but at the beginning of WWII we stopped with things like the WPA, the AAA and many other policies that were part of the New Deal. In fact, Roosevelt actually had a difficult time getting businesses to get involved in the war effort since he had just got done spending several years bad mouthing and threatening them. He had to implement all sorts of sweetheart deals and throw almost all the New Dealers out of his cabinet.

    As for the efficacy of the New Deal, it is a fact that while GDP did start growing again and unemployment dropped, unemployment remained stubbornly high throughout the 1930s, well above levels prior to and after that period. As far as policy goes it was weak at best, possibly counter productive at worst.

    Like or Dislike: Thumb up 0 Thumb down 0

  98. jukeboxgrad says:

    Maybe exempt the first $1.125 million and tax the rest at some rate.

    I don’t have a problem if estates up to, say, $5-10 million are fully exempt from estate tax. But over, say, $50 million, the rate should be very high.

    Like or Dislike: Thumb up 0 Thumb down 0

  99. James Joyner says:

    @Rob in CT: I’m not sure how one would treat charitable contributions under a consumption tax. Certainly, though, media buys and other things done with that money would be subject to taxation.

    I want a tax system that 1) pays for the cost of the government we agree to buy, 2) is easy to administer, 3) is hard to escape, and 4) is reasonably fair.

    I’m not particularly interested in it leveling the playing field, which I don’t think is a function of government. It needs to be progressive because we can’t achieve goal 1) without taxing the rich at a higher rate and because 4) requires some recognition that meeting basic needs has higher priority than luxury consumption. So, I’m perfectly happy with a system where the very poor pay next to nothing, the modest middle class pays a higher rate, and the upper middle class and the obscenely wealthy pay essentially the same rate. I just don’t much care that Bill Gates pays essentially the same rate of tax as I do, so long as he pays tax on all his consumption.

    Yes, I have some concerns about the inequality that comes from wealth and connections. But I have greater concerns about what has to be done to eliminate that inequality.

    Like or Dislike: Thumb up 0 Thumb down 0

  100. Steve Verdon says:

    And since you are a Bruin, you probably were kissing the balls of Profs. Coles and Ohanian who first came up with the crackpot theory you mentioned and have been roundly rebuked for their flawed methodology and flawed conclusions.

    It wasn’t just them. Lucas and Rapping also were puzzled by the delay in an economic recovery. Their analysis of the monetary expansion indicated the economy should have fully recovered by 1935, but it had not. Prof. James Hamilton also expressed doubts about some of the more dubious aspects of New Deal as well. As did Robert Higgs.

    Like or Dislike: Thumb up 0 Thumb down 0

  101. Rob in CT says:

    Steve, thanks for that response. You are correct that, given my concern about concentration of great wealth, the estate tax is actually a (much) bigger issue for me than the flattening of progressivity at the upper end of a consumption tax w/exemption. No question about it. Your proposed consumption tax is solidly progressive for most people.

    I’ve given this a great deal of thought and I think the problem stems more from having an activist government with wide discretionary powers than simply money. There have been very rich people in this country through out its history. But only until after WWII have you seen the kind of business/corporate relationships that many like Michael Reynolds (and myself) worry about. Was Standard Oil the recipient of various government handouts? No. If it had gotten into financial trouble would the government have bailed it out? Probably not.

    This is the thinking libertarian’s argument for small government. My problem with it is that I don’t believe that in the days of smaller government, things really worked out the way you believe they would/should (this is my read of history, YMMV). Indeed, my impression is that things were as corrupt or *more* corrupt in the 19th century than today. There were incestuous business/government relationships, rent-seeking behavior and whatnot back then too. Basically, it’s been that way since the industrial revolution got going (which takes us back nearly to the founding anyway). The history of railroading in the US illustrates this.

    So, while I am also very concerned about rent-seeking, regulatory capture, and the incest between our “public servants” and the private sector, I don’t think that dramatically reducing the scope of government will actually do what you think it will do. I think there will still be rent-seeking (and in some cases it may even be easier), if not regulatory capture (can’t capture it if it’s not there!). Wealth will still buy power, perhaps in different ways (if we got rid of OSHA, what would happen? I’m not sure, but I’m not eager to find out).

    For instance, let’s say we get rid of the EPA. The libertarian policy for environmental protection, if memory serves, is that it should be done via the enforcement of property rights via the courts. In other words, you have to sue polluters. Of course, we all know that in a battle between a rich person or corporation and an average Joe, the average Joe is at a serious disadvantage. The polluter will simply be able to bring so much more firepower to the table (better lawyers, better environmental experts, and of course the ability to spend huge sums litigating). Not only that – sometimes the polluter isn’t rich, and that’s even more of a problem! Because they can’t pay for the cleanup if they haven’t any money. How many times have I seen a site that’s a mess but the company that made the mess has been out of business for 10, 20, 30 years? What’s the recourse then?

    I think, therefore, that libertarian-style environmental protection tilts the playing field away from the public, with potentially terrible consequences. The average Joe isn’t going to win enough cases, IMO, to keep things reasonably clean (the only way it works is if they do win enough that companies figure it’s cheaper to prevent pollution and/or clean it up than it is to pollute & have to pay the occasional adverse judgment).

    It’s not that I think the EPA is wonderful in all respects, mind you. I’m personally aware of a site out in OK that they’ve screwed up almost beyond belief. I have no doubt the EPA’s performance could be improved.

    So that’s one example of “activist” government that I think needs to stay, even with its faults. I propably agree with you generally about subsidies that shouldn’t exist, the moral hazard of “too big to fail” (though I bet we disagree on what exactly should have been done in 2008) and bailouts in general (I was against the auto bailouts, btw, though only mildly so), and many other things. But I still think the government, for all of its manifest faults, is a net positive in leveling the playing field between the little guy and the powerful who would otherwise run roughshod over him. Yes, influence is bought and shady deals are done and all the rest. I hate all that. But I see the libertarian ideal as even less workable.

    Like or Dislike: Thumb up 0 Thumb down 0

  102. tyndon clusters says:

    Mr. Verdon,

    Again your prattling on about gainsaying the success of the New Deal by referencing a minority view of growth potential studies which have been discredited (two studies) ignores and cheapens the drastic effects that the previous repub admins had on the economy. It was after all called the GREAT DEPRESSION, so any comparisons with previous markets is absurd. Also, thank you for backing down from your moronic the “new Deal was dead before WW2″ blather. No shiite the WPA, CCC were curtailed, but the overall big gubmint footprint that conservatives HATE was FDR’s legacy until the great ronald ended it.

    As far as the repeal of Glass Steagall et al…hows that change working for ya to quote the great Palin? Shame on the dems and clinton. I referenced my disgust, you ignored it.

    Let me admit something and explain why i think your viewpoint needs to be debunked and destroyed…I went to UCLA in the late 70s and early 80s and would constantly argue with the Friedman influened Chicago school Econ profs who held sway there to no end. This would be Bill Allen, Tom Sowell, Arm Alchian et. al.

    All the bullshit you throw around is old failed talking points to me. ..30 years ago it was a nice intellectual debate and nobody got hurt …I remember clearly stating to them that these conservative polices if implemented under Reagan would begin the destruction of the middle class, take us back to pre New Deal wealth inequality, strengthen corporate power and divide the country. Lets see, did I miss something.

    Mr. Verdon, why I get so exasperated with the likes of you is because we tried these things and they DIDN”T work and yet, you aholes constantly come up with excuses or bullshit dreck (hey tyndon a bipartisan vote on Glass steagall bla bla) which absolves your side of any ill effects of bad policy decisions.

    I am not saying as perhaps Mr. Reynolds has insinuated that you worship money.

    You’re worse than a money grubbing investment banker.. You’re a HACK who regurgitates nice studies but completely ignores reality – just like those demented Chicago school dipshiits with Ph.Ds that I used to scream at.

    So to read your pablum justifying these policies in light of 30 years of empirical data frustrates me to no end.

    Liberals have been responsible for a lot of the shiite too, but no where near the problem of the right.

    My point is that all these tax schemes, be they the flat tax, consumption tax, fair tax…whatever are all just wolves in sheep’s clothing to further reduce the tax liabilities of the rich.

    From 1980 – 2000 40 million jobs were created in the U.S. with far higher tax rates on the rich.

    From 2000 – 2008 with far lower taxes on the wealthy, job growth was ZERO you twit.

    Those are facts. My point was and is simple. FDR’s legacy of tight regulation of finance, tough anti trust enforcement, regular raises in the min. wage greatly moved forward the middle class.

    The Reagan legacy of smaller gubmint regulation, unfettered deregulated financial capitialism, tax cuts to the wealthiest, has led us to the brink of destruction, just as I predicted in 1981.

    To have an unctuous, pedantic ass such as yourself keep exhorting failed policies and accuse ME of being an idiot moron is beyond credulity.

    Like or Dislike: Thumb up 0 Thumb down 0

  103. Drew says:

    After reading this thread I don’t know whether to laugh or cry. No understanding of investment thinking. With the exception of Verdon, none. Zip. Zero……..

    Clownish…………

    Like or Dislike: Thumb up 0 Thumb down 1

  104. Eric Florack says:

    Well, look, Gang…. An inconvenient fact that tax-and-spend liberals desperately want to avoid is:

    “A report from the Internal Revenue Service found that the rich — 8,274 people with incomes of $10 million per year or more — earned a total of $240 billion in 2009.

    Even if you confiscated every dime they earned, you would barely have enough money to cover government spending for 24 days. and remember, you only get one shot at that.

    That’s step one.

    Step two is even easier to understand, when you look at the activity of Buffet and his lawyers. Lawyers whose job it is to get around tax law. Their job is make sure that he pays the lowest amount of taxes possible no matter what the tax rates are.

    So not only is the call to “tax the rich” hypocritical, when it comes out of Warren Buffett’s mouth, it wouldn’t even solve the problem that Obama is supposedly trying to solve.

    This is little more, in the end, than Warren Buffett, playing up to the current administration, trying to get the best deal possible , so that he can protect is money. Don’t believe for a minute, that his cozying up to this white house, is not without its ramifications on his pocketbook. And, ours.

    Like or Dislike: Thumb up 1 Thumb down 0

  105. jukeboxgrad says:

    A report from the Internal Revenue Service found that the rich — 8,274 people with incomes of $10 million per year or more — earned a total of $240 billion in 2009. Even if you confiscated every dime they earned, you would barely have enough money to cover government spending for 24 days. and remember, you only get one shot at that

    You’re regurgitating a right-wing talking point that’s currently making the rounds. It started with Don Surber, but Rush gave it a big boost on 8/5/11, when he ran a show with this title:

    There Aren’t Enough “Rich” to Tax

    Actually, there are enough rich to tax (I’ll show some proof in a moment). Rush’s bogus talking point relies on using a highly distorted and bizarre definition of “rich.” Notice these important words:

    the rich — 8,274 people with incomes of $10 million per year or more

    How does that make sense? Only 8,274 households in the US are properly described as “rich?” (And the statistic is for households, not “people.” That’s Surber and Rush making an error.) What utter nonsense. Households making ‘only’ 9 million a year, or 5 million, or 1 million, are not properly described as “rich?” Of course those households are “rich.”

    Only a Republican could dare to claim that “the rich” is properly defined as “people with incomes of $10 million per year or more.” But that’s what Surber and Rush and you (and lots of other people) are doing. This reminds me of when McCain famously said “he would define the income level that divides the middle class from the rich as $5 million.” But of course what Rush et al are now trying to do is even more absurd and extreme.

    According to Rush’s definition of “rich,” only the top 0.01% is “rich.” The other 99.99% are not rich. Here’s another way to say it: according to Rush, only one household out of 14,000 is “rich.” Yes, if you adopt such an extreme definition of “rich,” then it makes sense to claim “There Aren’t Enough ‘Rich’ to Tax.” But if you adopt a more reasonable definition, then there are enough rich to tax.

    Let’s look at the top 1% of households. If being richer than 99% of the country isn’t considered “rich,” then the word has no meaning. These households have income of at least $353K per year. Aggregate household income of this group is $2.2T. An income tax surcharge on this group could raise about a trillion dollars a year. That would be enough to completely eliminate the deficit within about two years. Compare that to the Ryan plan, which keeps running deficits for the next 50 years.

    Like or Dislike: Thumb up 1 Thumb down 1

  106. jukeboxgrad says:

    More details about those numbers can be found here.

    Like or Dislike: Thumb up 0 Thumb down 0