Taxation as Confiscation

An English instructor commenting at Balloon Juice takes issue with my characterization of taxation as "confiscating" income.

A Balloon Juice commenter would like to pleasure me in an unnatural way for my referring to taxation as “confiscation” in my posting “Taxing the Successful.”

The commenter links his profile to the blog of Brian Spears, a poet who’s an adjunct writing instructor at Florida Atlantic University.  This puzzles me, in that one would presume Spears is well acquainted with the English language and the meaning of confiscate is not controversial.  Merriam-Webster defines it thusly:

1 : to seize as forfeited to the public treasury
2 : to seize by or as if by authority

Surely, when the government takes my money from me on the threat of civil and/or criminal action for non-compliance, it qualifies a confiscation.   That it thinks it has better use for it than I do doesn’t change that.   Nor, even, does the necessity of the services for which the funds are expropriated.

Now, if I’d equated taxation with theft, as some do, I’d see the reason for irritation.  But that taxation is a confiscation of resources should be obvious.

FILED UNDER: General
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. mannning says:

    I would say that taxation for the purpose of redistribution of wealth is not only confiscation but also theft by the government.

  2. Andy says:

    @James,

    It’s a question of connotation. People seem to make the distinction between a “confiscatory” tax rate, which is supposedly set towards the redistribution of wealth for its own sake, and a more normal rate which is set according to paying the bills with the least amount of pain for society at large. The former is out of fashion in polite society these days.

    Therefore the connotation of calling taxation in general “confiscation” is not much different than calling it “theft”.

  3. Elvis Elvisberg says:

    It seems a rather strange and unpatriotic resentment of your government to dig up the saddest-sounding word you can find to describe the cost of maintaining the country.

    It’s also rather creepy that this sadness about having to pay taxes is becoming such a popular passtime just as “The U.S. tax burden has shrunk to its lowest level in 60 years, the Bureau of Economic Analysis said.” http://www.upi.com/Business_News/2010/05/11/US-tax-burden-at-lowest-point-in-years/UPI-74091273594893/ And the top rates are half what they were under Eisenhower!

    It just doesn’t seem that there’s an empirical reason to feel so sad about today’s tax rates. It must be rooted in something cultural or psychological, and I can’t guess at just what it might be.

    “Confiscation” seems to me to refer to what the gov’t does to your stuff after you fail to pay taxes for a few years, rather than taxation.

  4. Boyd says:

    I’m not sure how I feel about your link to the comment in question, James. “Civil discussion” it ain’t.

  5. cleek says:

    “Surely, when the government takes my money from me on the threat of civil and/or criminal action for non-compliance, it qualifies a confiscation.”

    When you use a word, it means exactly what you want it to mean: nothing more, nothing less. Any connotations which you didn’t intend are the reader’s problem.

    @1

    If it’s “theft”, then you should take your complaint to your local police department. People there have been specifically trained to handle cases of theft. If they refuse to help you, perhaps you should consider moving to another country – one where the government does not steal your property ?

  6. sam says:

    ” But that taxation is a confiscation of resources should be obvious.”

    Sure, but some folks speak of “confiscatory taxes”, and are, if you’re correct, oblivious to the redundancy. But they use ‘confiscatory’ in the sense of thievery…as Manning does (but you know, all forms of taxation are redistributionist in that money to take from Peter and given to, say, Pauline — who happens to own an aircraft factory turning out F-22s.)

  7. Alex Knapp says:

    Yes, because the wealthy in this country did everything themselves. They don’t get subsidized by government. They aren’t allowed to form rent-seeking guilds. They go to work in buildings that were totally developed without any TIFs on land that was purchased from the legal owners without any use of eminent domain. They get to that work by driving on private roads, which are totally paid for. On the rare occasion they join the plebes and use public roads, the gas tax they pay completely pays for the cost of the road without any subsidies from other revenue sources. They live in neighborhoods without zoning or enforcement of covenants, allowing for economic diversity of residents because mansions can be located next to high-density housing. Those who earn their money from exploitation of natural resources on public land certainly don’t get any breaks on their leases or have anything as crazy as being table to take mineral and fossil fuel resources tax and royalty-free. For those who wish to earn money by investing in businesses, the government holds them fully responsible for the actions of the companies they invest in, insuring that they keep a close eye on the day-to-day activities of the businesses they have partial ownership in, lest they commit acts of criminality or gross negligence…

    Yes sir, the wealthy in this country don’t rely on government for ANYTHING.

  8. Tano says:

    Actually I do think that “confiscate” is wrongly used here.

    The meaning seems to connote two separate entities – the government, and the people, or the particular person in question. But we have a democratic form of government. The government is a manifestation of the will of the people. You have either voted for the lawmakers, or voted against them, or at least have had the right to do so – you are, in other words, an inherent part of the system of which the actual government is simply the outcome.

    So you are fully culpable for the existence of taxes – you either indirectly voted for them, or at least you participated (or have standing) in a system which, under its rules, emerged with those taxes.

    In that context, it is somewhat misleading to portray the government as some independent entity – an authority that is completely distinct from you – coming into your life and taking some of your wealth. That is what “confiscate” seems to imply to me, and it is simply not accurate.

  9. mantis says:

    Confiscation? It’s called investment. All those wealthy people–the ones who earned it, as you describe–who need “acknowledgment of the sacrifice” of paying their taxes would not have made all that money if those taxes weren’t collected. Roads, schools, hospitals, electrical infrastructure, the internet, satellite technology, social security, and much more would not exist were it not for the taxes paid by those wealthy kings of industry, and they never would have become wealthy if they didn’t.

    It’s rather ridiculous that you assert wealthy people need the government to assuage their delicate feelings which are bruised by the need to contribute to the nation without which they would have no wealth, yet at the same time use emotionally loaded words to describe taxation. Why not just call it money rape and call it a day? Personally, I don’t care what you call it, but you probably shouldn’t whine about the plight of the poor downtrodden billionaires while you do it.. It’s unseemly.

  10. flavortext says:

    Wow. Can you honestly not understand why anyone would object to your use of the word “confiscate” to describe taxation? “Confiscate” has connotations of seizure as a penalty: if you bring a knife to school, it gets confiscated by the authorities. If you bring a gallon of gasoline to the airport, the TSA will confiscate it. So when you whine about the government “confiscating” your income, you are implying that IRS is penalizing high-earners.

    Which is your point, I guess, but you seem to be completely oblivious of how elitist it sounds. Many people work very hard just to maintain an income barely over the poverty line. Some of them are even called “laborers”. Why shouldn’t their sacrifice be acknowledged? Why should we worry more about resentment from high-earners? Isn’t the fact that high-earners earn more money acknowledgment enough of their success? Isn’t asking to be praised and acknowledged for their success before being taxed seriously childish and narcissistic?

  11. Brummagem Joe says:

    mannning says:
    Monday, October 18, 2010 at 14:27
    “I would say that taxation for the purpose of redistribution of wealth is not only confiscation but also theft by the government.”

    Well that’s one of the purposes of a progressive taxation system. The alternatives are oligarchical societies with vast wealth differences between rich and poor. Such societies are for the most part penurious and largely dysfunctional but I’m sure you’d prefer to live in one. Paraguay during the long reign of General Alfredo Stroessner would have suited you down to the ground I can see.

  12. MstrB says:

    I recall when Chris Rock pointed out that taxes were less of a payment and more of a jack, since your check shows up and the money is already gone depriving one of the opportunity to actually pay.

  13. Brummagem Joe says:

    Are there any numbers out there which demonstrate when you move from being a net recipient of fiscal flows to a net contributor. For example would the possessor of an income of say 300k be noticeably better off if he or as a member of group of people with like incomes had to buidl their own roads, have their personal guards, buy all their own healthcare, pay for their own educations, etc etc.

  14. mattt says:

    To label all taxes as confiscation seems about on par with labeling all labor for wages as exploitation.

  15. PD Shaw says:

    Not particularly a fan of the use of the word “confiscation” here since it tends to reduce some real distinctions between taxation and forfeitures, such as eminent domain, confiscation of weapons, shampoo bottles, nail clippers. Taxation in our system is by representation, the confiscation by police power (including eminent domain authorities) is different.

  16. Brummagem Joe says:

    “Taxation in our system is by representation, the confiscation by police power (including eminent domain authorities) is different.”

    For once I agree with you. Something must be wrong!

  17. James Joyner says:

    @boyd: “I’m not sure how I feel about your link to the comment in question, James. “Civil discussion” it ain’t.”

    Yeah, that’s for sure. The etiquette of political blogging requires linkage.

    @Alex Knapp: “Yes, because the wealthy in this country did everything themselves.”

    I’m not sure who is making this argument.

    @Tano and PD Shaw: “The meaning seems to connote two separate entities – the government, and the people, or the particular person in question. But we have a democratic form of government. ” and “Taxation in our system is by representation, the confiscation by police power (including eminent domain authorities) is different.”

    Fair enough to a point. If we had flat tax rates, I’d see it as a function of representation. Instead, we have a system where the majority can band together and vote them a share of the wealthy minority’s earnings. That’s confiscation even though I agree that there are good reasons, practical and moral, for those of us who have been successful to pay a larger share.

  18. polyorchnid octopunch says:

    Yep, you apologists for the 1 percenters should just keep it going. Can’t help you just trolled the thread and then ran, either.

  19. john personna says:

    Again, I can’t help but see this in sharp and ironic contrast to Fiorina thread, where after faulting her on not naming cuts, no one (but me) was willing to either.

    I’d hope James that you are aware of your own obvious motivations … it is just so much easier to talk about how mean the tax man is, than what else we can do about it!

  20. Steve Verdon says:

    I’m probably the most libertarian of the writers on this blog. I describe myself as a minarchist with strong leanings towards anarcho-capitalism. Yet, I realize we’ve also dug ourselves into quite a pickle here. We are facing growing growing government debt for the foreseeable future and raising taxes just isn’t going to work as a permanent solution to the problem. When GDP and the tax base are growing at a rate 2-3 percentage points behind the growth in government debt that isn’t going to be solved by letting the Bush tax cuts expire. You can’t balance the budget on the backs of the rich…even if they were glad to pay such taxes because eventually you get to a point where there would be nothing left to tax in such a scenario.

    So to start excoriating people about something as banal (and correct, taxes are not voluntary by any stretch of the word) as using the word confiscation in relation to paying taxes is…really, really stupid. It completely misses the real problem.

  21. john personna says:

    So Steve, back up and explain to me why historic American tax rates don’t work anymore?

  22. john personna says:

    (Or of course, you can also name cuts to work, really work, with current tax rates.)

  23. Elvis Elvisberg says:

    “Instead, we have a system where the majority can band together and vote them a share of the wealthy minority’s earnings. That’s confiscation…”

    That assertion is so untethered to historical or empirical fact that it reminds me of, “the contradictions inherent in the system can only be resolved with proletariat ownership of the means of production.”

    Why did Eisenhower preside over a confiscatory government? Was it all that time he spent in France that turned him into a socialist?

    Remember, we’ve never paid less in taxes; social mobility has declined and economic stratification has worsened in the US in the past few decades; with the tax rates of the 1990s that we are contemplating reverting to, we were prosperous and at peace. Yet we’re hearing dark talk of communism and confiscation. There’s a strange pathology on the loose in this country right now.

  24. john personna says:

    “There’s a strange pathology on the loose in this country right now.”

    They’ve discovered that any accounting argument doesn’t work for them right now, so they are going for scare words, like “confiscation.”

    Taxes were collected at sword-point long before they were collected at gun-point. Talk about something too ancient for the “film at 11” metaphor!

    “if you don’t pay your taxes, someone will come to see you … scrolls at 11”

  25. James Joyner says:

    polyorchnid octopunch:

    Yep, you apologists for the 1 percenters should just keep it going. Can’t help you just trolled the thread and then ran, either.

    Dude, I left a comment for the top level poster explaining that his take on what I was writing was inaccurate. That doesn’t obligate me to stay around endlessly debating the bozos who show up to comment.

  26. Brummagem Joe says:

    “You can’t balance the budget on the backs of the rich…even if they were glad to pay such taxes because eventually you get to a point where there would be nothing left to tax in such a scenario.”

    A top marginal rate of 40% is hardly going to take you to that point…So whose backs do you suggest it’s balanced on?…or perhaps in a roughly $3.3 Trillion annual budget Republicans are going to magically cut $1trillion out and voila the deficit disappears.

  27. john personna says:

    “A top marginal rate of 40% is hardly going to take you to that point…So whose backs do you suggest it’s balanced on?…or perhaps in a roughly $3.3 Trillion annual budget Republicans are going to magically cut $1trillion out and voila the deficit disappears.”

    Silly Democrat, with your numbers. I bet you think the earth is millions of years old, too!

  28. Steve Verdon says:

    John,

    WTFAYTA? I thought it was abundantly clear that I think taxes need to go up. However, that wont solve the fiscal problems we face. We’d need taxes to be ever increasing and after a certain point that simply wont work anymore.

    Elvis,

    Remember, we’ve never paid less in taxes; social mobility has declined and economic stratification has worsened in the US in the past few decades; with the tax rates of the 1990s that we are contemplating reverting to, we were prosperous and at peace. Yet we’re hearing dark talk of communism and confiscation. There’s a strange pathology on the loose in this country right now.

    This is stupid stupid stupid. You really think we were prosperous during the 1990s because of the tax rate? Seriously? Or was it a host of other things that were driving economic growth….like high productivity growth, the end of the last vestiges of the cold war, technological advancements, and so forth?

    Just to be clear here.

    1. Lowering taxes will not increase tax revenues. We are almost surely on the left hand side of the Laffer curve (i.e. cutting taxes lowers tax revenues).

    2. Our fiscal situation is becoming precarious. We are starting to approach levels of debt-to-GDP ratios where a fiscal crisis could ensue.

    3. Given 1 & 2 above we need to address our fiscal situation and that pretty much means taxes will have to go up.

    Now there is a problem with that. Economic growth right now is at best described as tepid. Unemployment is still very high and likely will remain so for quite sometime if the last two recessions are any indicator. So raising taxes could slow growth even more. And on top of it, raising taxes wont solve our fiscal problems, it will help but it wont solve them. As such serious cuts need to be made. The place to start is health care costs. Much of our government spending in the future will be health care related. Politically though that is going to be almost impossible.

  29. Tano says:

    “… If we had flat tax rates, I’d see it as a function of representation”

    I don’t understand your point. Why does the rate that is agreed to, by the duly elected representatives of the people, change the justification for the tax?

    Why take a stand on flat rates? Why not on a flat assessment – the same amount per person? With a flat rate, the rich pay more in actual dollars, so why isn’t that confiscation too?

    It isn’t. Neither is. The only purpose of using the term is to establish some artificial distinction between the people and their democratic government. A distinction that you would be less inclined to make if more people happened to agree with your politics, and thus more of your preferred policies would be enacted.
    Democratic governments do not lose their legitimacy because some people disagree with the policies enacted.

  30. Elvis Elvisberg says:

    “You really think we were prosperous during the 1990s because of the tax rate? Seriously?”

    I hope for your sake that you’re just pretending to be this obtuse.

    The point, which anyone with a fourth-grade education should have been able to discern without confusion, was that raising taxes a few percentage points doesn’t kill the economy.

  31. Tano says:

    “You really think we were prosperous during the 1990s because of the tax rate? ”

    I will let the gentleman defend himself, but I think it clear that the argument is that tax rates of the 1990’s are perfectly compatible with robust economic growth. To twist the argument to claim that anyone is arguing that the prosperity was specifically caused by the tax rate just strikes me as stupid, stupid stupid (to coin a phrase).

  32. john personna says:

    This is what I read, Steve:

    We are facing growing growing government debt for the foreseeable future and raising taxes just isn’t going to work as a permanent solution to the problem. When GDP and the tax base are growing at a rate 2-3 percentage points behind the growth in government debt that isn’t going to be solved by letting the Bush tax cuts expire. You can’t balance the budget on the backs of the rich…even if they were glad to pay such taxes because eventually you get to a point where there would be nothing left to tax in such a scenario.

    I squinted, and read it carefully to be sure, but I didn’t see “let’s raise taxes” in there.

  33. john personna says:

    “You really think we were prosperous during the 1990s because of the tax rate?”

    Why would anyone demand that causality? That isn’t the point.

    The point is we grew our economy and paid our bills at the same time.

    I’d call that success.

  34. Steve Verdon says:

    Tano & Elvis,

    I have actually seen people make precisely that argument (over at Democratic Underground) in the past. Sorry, but that is what is looked like to me.

  35. Drew says:

    So much ignorance……..

    1. When marginal tax rates were high, so were deductions. So stop citing Eisenhower etc. You folks show yourselves to be fools when you do so. Look at taxes as a pct of GDP if you want to understand the overall taxation take.

    2. The fraction of total taxes has gradually migrated more and more toward the high income earners. After adjusting for income distribution this factoid still pertains. Hence, the tax system has grown more progressive over the last 30 years. The left advocates an even more progressive system. And how has that prescription been working?

    3. No sensible person would argue that the country does not need a reasonable tax base to support the greater societal good: defense, infrastructure, the truley disadvantaged. Of course no sensible person would argue for the scope of government now budgeted……except for the left. But I did say sensible, now didn’t I?.

    4. Different folks will have different views about what is an appropriate size and scope of government, and the tax base required to support it. But we pretty much have answered for quite some time the tax question: after all, we borrow to make up the spending gap. And as someone who spends his working hours in the private equity world: read – investing for growth – I can tell you unequivocally that the proposed taxation scheme is retarding invstment and growth. You leftists can deny it if you like, but only at the peril of the less well off.

  36. Elvis Elvisberg says:

    “Sorry, but that is what is looked like to me.”

    Then you are stupid, stupid, stupid.

    Sorry, that’s just how it is.

    http://comics.com/pearls_before_swine/2010-10-06

  37. Tano says:

    Wow, what does that say about you, Steve? Instead of understanding the plain meaning of words in front of your face, your brain instantly transfigures them into some bizarre argument you read at some point in your life at some nutty website.

    I guess it is an instinct to construct strawmen to argue against. Is this how you think as well as write? Maybe that is why you find it so hard to emerge from your rut…

  38. john personna says:

    Drew, re. item 1, I don’t see it as a percentage of GDP either:

    http://jessescrossroadscafe.blogspot.com/2010/08/us-taxes-as-percent-of-gdp.html

    I see a historic low.

  39. Drew says:

    Oh, I forgot…..

    Alex – take a deep breath and a slug of some of that fine Scotch, and get off the straw man. (New baby causing loss of sleep? ;-> )

    As James noted, I don’t know anyone advocating the points you made, or abuses of government subsidy. In fact, its a prime argument against a larger government. The potential for abuse simply is magnified.

  40. Brummagem Joe says:

    Drew says:
    Monday, October 18, 2010 at 16:53

    “So much ignorance……..The fraction of total taxes has gradually migrated more and more toward the high income earners.”

    Indeed.

    This is not unconnected with the fact that in the Eisenhower era these folks were corralling about 8% of income and now it’s 23%

    “After adjusting for income distribution this factoid still pertains.”

    Would you like to demonstrate this Mr Drew?

  41. Steve Verdon says:

    Drew, re. item 1, I don’t see it as a percentage of GDP either:

    I don’t know, I look at that graph and I see that while tax revenues have fallen since about 2000 they haven’t moved around all that much even though the top marginal tax rate has. As such, I think Drew is largely correct in 1 that while marginal tax rates were higher back during the 1950s and such the deductions allowed people to keep from paying considerably more.

    Creating tax loopholes, deductions, and what not was, I understand, a pretty decent industry in and around DC.

  42. Alex Knapp says:

    @Drew – Just pointing out the myriad of ways in which the government redistributes wealth the poorer to the wealthier, which has a tendency to get ignored. Of course, many successful people succeed on their own, and I am personally a big fan of self-employment an entrepeneurship.

    But the fact remains that a lot of other wealthy folks game the system with rent seeking, subsidies, policies that encourage monopolization, outright bribery, etc.

  43. Drew says:

    http://www.usgovernmentrevenue.com/downchart_gr.php?year=1950_2015&view=1&expand=&units=p&fy=fy11&chart=10-total&bar=1&stack=1&size=m&title=&state=US&color=c&local=s

    Let’s keep it honest, eh John?

    If the link doesn’t transfer properly, plug in 1950 (post war) and then have some fun with various measures: income taxes, Fed income taxes, state, and local etc.

  44. Brummagem Joe says:

    “We’d need taxes to be ever increasing and after a certain point that simply wont work anymore.”

    Er no. I’m not disputing we need to make real efforts to contain spending but at best this is only going to represent around 10% of currrent expenditure of $3.5 trillion. The resultant remaining budget gap of say $750 billion assuming we want to run a modest deficit is going to have to come out of greater tax receipts resulting from taking rates back to Clinton levels and GDP growth.

  45. Brummagem Joe says:

    “As such, I think Drew is largely correct in 1 that while marginal tax rates were higher back during the 1950s and such the deductions allowed people to keep from paying considerably more.”

    The current tax take from the top 1% of income earners is around 16% (principally because of the CG cuts) would you like to tell us SV or Drew what the take from the top 1% was in the Eisenhower era?

  46. Drew says:

    Various:

    1. What has happened is that total taxes have (with some volatility) have bobbled around some sort of politically or economically driven equilibrium. At the same time their has been a rotation of who pays them – much more progressive. And the goose is starting to choke.

    2. Income equality is not caused by tax policy. Bumbo-jumbo: if you have an answer for income disparity please share it, and then go claim your Nobel Prize in economics. But trying to take it away and give it to others through the tax code is folly. I don’t know how long you’ve been around here, but this topic is well worn. Data has been produced. Do a historical search or wallow in your ignorance.

    3.. Alex – as I said, no sensible person would advocate “corporate welfare,” and its an argument for limited government. But if you look at govt receipts and expenditures you really don’t want to make the argument that the poor are being taxed to finance the rich. Right? The numbers make the assertion absurd.

    BTW – hows the bambino?

  47. Brummagem Joe says:

    Drew says:
    Monday, October 18, 2010 at 17:18

    “Various:”

    I noticed you didn’t answer my couple of very modest questions. And yeah I know income disparity is not the consequence of tax policy.

  48. Alex Knapp says:

    @Drew –

    Heh, no, not accusing you of supporting corporate welfare. I’m definitely not making the argument that the poor are being taxed to finance the rich. Rather, I’m pointing out that government policies help the rich stay rich and make it harder for the poor and middle class to compete. That’s true even for entrepeneurs who manage to jump those hurdles. Once they make it to rich, the government makes it easier for them to stay that way. A minor uptick in the marginal tax rates isn’t going to change that.

    Bambino’s doing great. Growing like a weed and already ahead of the curve in health, awareness, responsiveness, etc.

  49. Drew says:

    BJ –

    Because when I saw your post I knew you had no clue what you were talking about. Check this out and then get back to us. Also, do a search on the tax load accounting for payroll taxes and get back to us. You do not know what you are talking about.

    http://www.taxfoundation.org/news/show/250.html

  50. john personna says:

    Steve, Drew,

    I did a quick graphs-search for “taxes as a percentage of gdp” and picked one.

    It is pretty similar to the one at Drews link, if we run “to 2010.”

    Now this is “as a percentage of gdp”. A recession will hit it somewhat, as people fall out of tax brackets, and of course as capital gains fall.

    But … weren’t you trying to show me that this wasn’t low? Honest? Have you shown me that they are in any sense high?

  51. Mnemosyne says:

    Instead, we have a system where the majority can band together and vote them a share of the wealthy minority’s earnings.

    I do love the assumption that no one who makes under $1 million a year pays taxes. I guess I’m supposed to be exempt from sales taxes, gas taxes, property taxes and — oh yeah — income taxes. Unfortunately for me, no one told the IRS I should be exempt since I make a mere $40K a year and they just keep taking that money out of my paycheck.

    So where is my “share” of those rich people’s taxes? Is it that they generously allow me to drive on the public streets that my tax money also paid for? I get to check books out of the public library that my tax money supports, except that they paid more than I did, so I should thank them every time for allowing me to pay my share?

    Why do I have a feeling that a lot of these tax protesters are the ones who go out to dinner, order the $50 lobster while I order the $15 salad, and then insist on splitting the check 50/50 because “it’s only fair”?

  52. Drew says:

    Alex –

    Glad to hear about the young’n.

    I once didn’t have the proverbial pot to piss in. Now I’m “rich.” Can you tell me how government is going to keep me that way, as you assert?:

    Once they make it to rich, the government makes it easier for them to stay that way.

  53. Steve Verdon says:

    Er no. I’m not disputing we need to make real efforts to contain spending but at best this is only going to represent around 10% of currrent expenditure of $3.5 trillion. The resultant remaining budget gap of say $750 billion assuming we want to run a modest deficit is going to have to come out of greater tax receipts resulting from taking rates back to Clinton levels and GDP growth.

    Sorry, but this $3.5 trillion you are talking about is way to small. The fiscal imbalance due to things like Social Security, Medicare and existing debt will be in the tens of trillions.

    The current tax take from the top 1% of income earners is around 16% (principally because of the CG cuts) would you like to tell us SV or Drew what the take from the top 1% was in the Eisenhower era?

    I don’t see the point. Drew was arguing that while the top marginal tax rate was high under Eisenhower, the taxes that were paid were pretty comparable to what we’ve seen all along and that part of the reason were the deductions/loopholes that were around. Closing loopholes can allow for similar amounts of revenue to be raised while also lowering rates. The benefit being a lower deadweight loss.

    John,

    But … weren’t you trying to show me that this wasn’t low? Honest? Have you shown me that they are in any sense high?

    I thought the claim was that tax revenues were roughly the same back then as now. As a percentage of GDP that looks to be the case.

  54. Mnemosyne says:

    As such, I think Drew is largely correct in 1 that while marginal tax rates were higher back during the 1950s and such the deductions allowed people to keep from paying considerably more.

    Actually, the deductions as they were set up encouraged people to invest in actual things — like factories and other infrastructure — to get their tax break rather than the system we have now that encourages people to invest in complicated financial products to maximize their profits on paper.

    I think getting rid of the deductions that encouraged people to invest in capital projects rather than finance hurt us even more than we realize.

  55. John O says:

    I’ve been lurking and posting at both Balloon Juice and now here, and the absence of any serious discussion about WHAT we’re going to cut is funny, and the absence of any mention of defense spending is actually noteworthy. Of course, for most sane people, the need to reign in our defense budget is sort of self-evident. My grandfather’s conservatism didn’t require much in the way of imperial action.

    But the post by Mr. Joyner about the rich still stands as some epic wanking in blogohistory. It’s AMAZING how many people in this country (mostly drop-cases in red states) have been convinced that they, too, can and will be rich one day if we could just keep those top marginal tax rates down.

  56. Drew says:

    JP –

    I agree that there are always blips up and down for various reasons. All I’m pointing out, and the data just doesn’t seem to be deniable, that over the post war period the tax take increased, and then met with resistance that exists until today.

    To raise taxes in line with prospective expenditures is simply going to uncharted territory. Dangerous territory.

    As I’ve said so many times before. I’ve got my stash. I’m arguing on behalf of the Average Joe. Because notions that AJ will not also be opened up to higher taxation are absurd on their face. And second, the “rich” have, and will, pull in their horns, to the detriment of the AJ’s of the world. Remember the yacht luxury tax? Brilliant. No, cruel……..

  57. Steve Verdon says:

    I’ve been lurking and posting at both Balloon Juice and now here, and the absence of any serious discussion about WHAT we’re going to cut is funny, and the absence of any mention of defense spending is actually noteworthy. Of course, for most sane people, the need to reign in our defense budget is sort of self-evident.

    The real problem is Medicare and health care costs in general.

  58. James Joyner says:

    @John O

    I’ve been lurking and posting at both Balloon Juice and now here, and the absence of any serious discussion about WHAT we’re going to cut is funny, and the absence of any mention of defense spending is actually noteworthy.

    Blog posts, at least good ones, are about one thing, not an attempt to encapsulate every single conceivable related policy debate into a single thread.

    Beyond that, I’ve actually mentioned defense cuts twice in this particular comment thread.

  59. Drew says:

    Mnemosyne –

    “to get their tax break rather than the system we have now that encourages people to invest in complicated financial products to maximize their profits on paper.”

    Can you give me an example? I know of no tax break that encourages me to invest in “complicated financial products.” Not one. In fact, my entire business is predicated on investing in “factories” etc.

  60. Mnemosyne says:

    And second, the “rich” have, and will, pull in their horns, to the detriment of the AJ’s of the world. Remember the yacht luxury tax? Brilliant. No, cruel……..

    So because the rich will lie, cheat and steal to avoid paying taxes, that means we should let them off the hook? Sounds like advocating that we stop prosecuting murder because, hey, the laws against it hasn’t stopped murder in its tracks so clearly it’s useless to pass laws against killing other people.

  61. John O says:

    And there it is: Who will build the rich’s yachts? LOL.

    Anecdote does not equal data. Average Joe has been reamed for 30 years, and all meaningful stats support it; increased productivity with declining real wages, large widening of the wealth gap, et al.

    Why so many people want to live in a plutocracy is beyond me. Hungry, poor, sick people don’t care about your sensibilities, and if there are enough of them, and they’re angry enough, all the money in the world isn’t going to help you if you leave your gilded palace.

  62. Mnemosyne says:

    I know of no tax break that encourages me to invest in “complicated financial products.” Not one.

    I guess mortgage-backed securities are a figment of my imagination and didn’t just bring down the whole damn economy. Silly me.

  63. john personna says:

    I thought the claim was that tax revenues were roughly the same back then as now. As a percentage of GDP that looks to be the case.

    I think you are relying a lot on “roughly” and the muddying effect of the current recession. Rather than say taxes are high, we say “pretty comparable”, etc.

    Look, I’m one of the few that named spending cuts I’d be willing to do. I’d probably accept most spending cuts thrown around here.

    What sets me apart I think is my moderate’s pragmatism that I actually want us to make it work. If we can’t make those cuts, then we have to increase revenues. (Perhaps Dave is in this camp also.)

    I’m frustrated that “tax the successful” and “confiscation” arguments are all about turning this emotional, and forgetting the accounting.

  64. Drew says:

    Defense spending, as a percent of GDP, has fallen from the high single digits in the 60’s………to the mid single digits in the eighties (despite the so called “massive Reagan defense build up) to the 3-4% region in the 90’s and today. In fact, the so called Clinton balanced budget was due to this reduction.

    I have no idea what the “correct” defense budget is. I’ll leave that to people like Bernard F or James who have far more facility with those things. But I do know that the defense turnip, when juxtaposed against the SS, Medicare, Medicare stats as a pct of GDP, has been squeezed pretty dry as a budget fix.

  65. John O says:

    Understood, Mr. Joyner, and kudos on you for mentioning defense. I confess to not reading every comment as thoroughly as I should.

    Good luck convincing your intellectual brethren on defense cuts!

  66. Drew says:

    “I guess mortgage-backed securities are a figment of my imagination and didn’t just bring down the whole damn economy. Silly me.”

    You show yourself to be a fool. Individual investors did not buy these as tax shelters, and certainly not at the expense of business investment. Yes. Silly you.

  67. john personna says:

    Defense spending, as a percent of GDP, has fallen from the high single digits in the 60′s………to the mid single digits in the eighties (despite the so called “massive Reagan defense build up) to the 3-4% region in the 90′s and today. In fact, the so called Clinton balanced budget was due to this reduction.

    That’s with wars off-budget, right?

    What about military pension and health care, in or out?

  68. Brummagem Joe says:

    Drew says:
    Monday, October 18, 2010 at 17:29
    ” You do not know what you are talking about.”

    I’m not particularly interested in links to some advocacy group. Instead of dodging just answer my simple questions.

    1) The top 1% of income earners today are corralling about 23% of income versus around 8% in the Eisenhower era…True or false?
    2) Demonstrate how there tax burden as a share of the total has grown.
    3) The current tax take from the top 1% is roughly 16% of their income…True or false
    4) What was tax take from the top 1% in the Eisenhower era?

    These are such simple questions to answer so why don’t you actually demonstrate I don’t know what I’m talkiing about.

  69. Drew says:

    C’mon. JP –

    “I think you are relying a lot on “roughly” and the muddying effect of the current recession. Rather than say taxes are high, we say “pretty comparable”, etc.”

    60 years of data shows the volatility. Current conditions fall within the ebb and flow. Prospective deficits and proposed taxation fall way outside the historical band.

  70. Dave Schuler says:

    Drew, actually I think there’s plenty of space for reductions in the defense budget while maintaining national security if we cut down on our commitments. No more nation-building. Participate in fewer international peacekeeping missions. Reduce the size of the standing army.

    However, as I pointed out in the other post today on taxation, we can’t get down into the range of fiscal sanity on the basis of cuts in defense spending alone. We can’t even get down into the range of fiscal sanity by increasing taxes within the range that’s being discussed and cutting defense spending in any way that’s really foreseeable.

    That means that spending cuts in entitlements, particularly Medicare have got to be thought of, along with small tax increases and reductions in defense spending, as part of the way we get our fiscal house in order.

  71. John O says:

    Talking about defense cuts or spending without the context of what we spend relative to the rest of the world is jerk off.

  72. Drew says:

    C’mon, JP II –

    Cut the data any way you want; anyway that makes you feel better. The 50 year trend is undeniable. And, interestingly, one of the few government enterprises to show “scale economies.”

    Even if your worldview was that defense could be cut by 50% it is dwarfed by Great Society programs, and now ObamaCare.

  73. Steve Verdon says:

    So because the rich will lie, cheat and steal to avoid paying taxes, that means we should let them off the hook? Sounds like advocating that we stop prosecuting murder because, hey, the laws against it hasn’t stopped murder in its tracks so clearly it’s useless to pass laws against killing other people.

    No he means they’ll take their ball and go home–i.e. they wont invest, expand, hire new people, make stuff, etc. They’ll think, “Hey, I’m doing okay, and why bother if some of that hard work is going to be taxed away?” Now its debatable how much of that would happen, but there would likely be some of that going on.

    I guess mortgage-backed securities are a figment of my imagination and didn’t just bring down the whole damn economy. Silly me.

    Securitization of mortgages has been going on for like 40 years.

    I think you are relying a lot on “roughly” and the muddying effect of the current recession. Rather than say taxes are high, we say “pretty comparable”, etc.

    Not rally, I took the 1950-1959 data an 2000-2009 data and the match up in terms of pct of GDP was shockingly close. Here are the numbers, first column is the 1950s second is 2000s (not I re-arranged years from lowest to highest tax revenues as a pct of GDP):

    9.4 9.61
    11 10.38
    11.26 10.51
    11.71 11.63
    12.32 11.8
    12.69 12.55
    12.91 12.83
    13.81 13.38
    13.95 13.68
    14.23 14.67

  74. john personna says:

    Well, one thing is for certain. Those income tax graphs don’t show a historic high … on the other hand debt and deficit are going to the top of the charts. With a bullet, as the disk jockeys used to say.

    Man, I can only laugh sadly. You’d think historically high debt and anything other than historically high tax rates would lead you to an answer.

    Now, if you want to break from American tradition, and fix that debt a new way … you better friggin’ get some spending cuts on line now.

    Which political party is supposed to be doing that?

  75. john personna says:

    I posted that at the same time as Steve. Where do those numbers come from?

  76. Drew says:

    Dave –

    I think that has to be correct. And so I’d say I’ll leave it to people with far more experience and insights than I to decide what commitments to reduce. But its a minority piece (but not necessarily insignificant) of the overall solution.

  77. Elvis Elvisberg says:

    The OECD average of taxation as a percentage of GDP is 36.0, and we’re at 28.3. Source: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

    Here’s a sliver of the story about income distribution in the US: http://en.wikipedia.org/wiki/File:Share_top_1%25.jpg

    The rest of the planet spends $500 billion on military spending; we spend $623 billion. Source: http://www.globalsecurity.org/military/world/spending.htm

    For 2007, the US spent $7,290 per capita on health care, nearly two and a half times above the OECD average of $2,986. Source: http://blogs.ngm.com/blog_central/2009/12/the-cost-of-care.html

    Neither party shows any inclination of wanting to rationalize war spending.

    Once upon a time both parties had ideas about health care reform; today the Democrats have the ideas the GOP espoused until a few years ago, and the GOP professes to believe that health insurance reform is fascism. I think we’re in for a bumpy ride.

  78. Brummagem Joe says:

    Steve Verdon says:
    Monday, October 18, 2010 at 17:32

    “Sorry, but this $3.5 trillion you are talking about is way to small. ”

    The current federal budget for 2010 is NOT around 3.5 trillion? I think you need to check your numbers my friend.

    “‘I don’t see the point. Drew was arguing that while the top marginal tax rate was high under Eisenhower, the taxes that were paid were pretty comparable to what we’ve seen all along and that part of the reason were the deductions/loopholes that were around. Closing loopholes can allow for similar amounts of revenue to be raised while also lowering rates. The benefit being a lower deadweight loss.”

    The top 1% of income earners are corralling 23% of income versus around 8% in the Eisenhower and facing a tax bite of 16% versus a rather larger number in the 50’s which Drew is struggling to avoid telling us.(but I’ll give you a clue it was a bit larger) and you “don’t see the point”…And it has nothing to do with loopholes were talking absolute tax bites.

  79. john personna says:

    I found some nice tables:

    http://www.cbpp.org/cms/index.cfm?fa=view&id=1324

    They only run through 2003, but the news then was:

    The final budget figures for fiscal year 2003 were released on October 20 by the Treasury Department. They indicate that income tax receipts (including receipts from both the individual and corporate income tax) equaled just 8.6 percent of the Gross Domestic Product. This is the lowest level of income tax collections, as a share of the economy, since 1942.

    I’d say that the boom bust cycle makes this too hard to figure in fine detail. It is true that 2000 had record-high tax receipts, but 3 years later we had record-low.

    The 1960’s were remarkably steady, with income tax mostly 11 percent of GDP.

    The 1990’s were remarkably steady, with income tax mostly 9 and 10 percent of GDP.

    Drew, I think your 50 year trend is a little inaccurate, and given the Bush tax cuts, more than a little stale.

  80. Brummagem Joe says:

    SV and Drew:

    And don’t bore me with smoke and mirrors its so silly. I DO KNOW that the richest 1% are paying a large share of total taxes but that’s not the true measure of the burden they are carrying. It’s their taxes as a percentage of total income geniuses which is why Warren Buffett famously commented his secretary was paying a larger share of her income in taxes than he was. Compris?

  81. Brummagem Joe says:

    Steve Verdon says:
    Monday, October 18, 2010 at 17:32

    “Sorry, but this $3.5 trillion you are talking about is way to small. ”

    Here’s a summary of the budget for 2010!!

    http://en.wikipedia.org/wiki/2010_United_States_federal_budget

  82. Steve Verdon says:

    I posted that at the same time as Steve. Where do those numbers come from?

    Drew’s link. Yeah the recession would have an impact, but there were 2 recessions in the 1950s. I don’t think either was as severe as the one we just had, so a more careful analysis might widen the gap a bit.

    Regarding defense spending, while we can probably get a bit more out of that turnip, I still maintain that health care is where the real money is. I don’t think we can solve the fiscal issue without addressing health care…although reducing defense spending and maybe dealing with the fiscal issues associated with Social Security could help make the health care issue easier to deal with.

    The current federal budget for 2010 is NOT around 3.5 trillion? I think you need to check your numbers my friend.

    I’m not talking about our current budget, I’m talking about our level of debt. It is far, far larger than that. Focusing on just one year is the wrong frame of reference.

    The top 1% of income earners are corralling 23% of income versus around 8% in the Eisenhower and facing a tax bite of 16% versus a rather larger number in the 50′s which Drew is struggling to avoid telling us.

    Again, Drew’s first claim was that taxes as a percent of GDP hasn’t changed all that much. If anything it has gone up as taxes have gone down when just eyeballing the graph. In looking at the 1950s to the 2000s his claim seems valid. Who gets what share of the economic pie was not part of Drew’s first claim.

    Your implicit assumption here is that if a rich guy earns more money you must earn less. However that doesn’t have to be the case. It is quite possible that those at the top and bottom of the income distribution make more while the increases at the top have been larger. For example, if the economic pie in 1950 is $100 in real terms and the top 1% take 8% of that they get $8 while the bottom 99% gets $92. If the economic pie then triples over time (in real terms) and the top 1% takes 23% the break down is $69 and $231. For the bottom 99% that is a 2.5x increase (assuming no population growth).

  83. Dave Schuler says:

    I’m not talking about our current budget, I’m talking about our level of debt.

    I don’t think that “debt” is the word you’re looking for here. Rather than “level of debt” I think you mean to say “liabilities”.

  84. Brummagem Joe says:

    SV and Drew:

    “Again, Drew’s first claim was that taxes as a percent of GDP hasn’t changed all that much. ”

    I don’t disagree that taxes as a share of GDP since the fifties have been reasonably constant between 14 and 20% but what’s this got to do with how the the tax burden is shared? Basically the wealthiest 1% have seen their total share of national income triple.

  85. PD Shaw says:

    Re defense, if we use the Clinton golden age as the gauge, then defense spending can drop a bit, which would be from 4.0% GDP (2007) to an average of 3.3% of GDP (1995-1999). All of which is historically down for the U.S., which was at 6.0% GDP at the end of the Cold War.

    The problems are that we are already committed to wars and alliances that would take time to remove ourselves from, we nag our NATO and other allies to keep up defense spending, and the alternatives to many of our current defense problems also have price tags.

  86. Brummagem Joe says:

    Obviously Drew and SV aren’t going to tell you so I will. In round terms

    In 1953 the top 1% had 8-9% of national income and paid 35% of it in taxes

    In 2009 the top 1% have about 23% of income and pay 16% of it in taxes.

  87. Steve Verdon says:

    Dave,

    Yeah liabilities is the better word.

    Joe,

    Drew wrote:

    1. When marginal tax rates were high, so were deductions. So stop citing Eisenhower etc. You folks show yourselves to be fools when you do so. Look at taxes as a pct of GDP if you want to understand the overall taxation take.

    In looking at the data this appears very much to be true. Maybe a more careful analysis would show its not, but you are going in a totally different direction. That’s fine, but stop harping on it when the claim at issue was something completely different and appears to be true.

    Basically the wealthiest 1% have seen their total share of national income triple.

    Yeah, and GDP has gone up by over 6x. Also, the wealthiest have seen their responsibility for taxes go up 2x since 1980 (although there are some issues of comparability between 1980 and years after 1986 when the definition of Adjusted Gross Income changed).

  88. Brummagem Joe says:

    ‘Re defense, if we use the Clinton golden age as the gauge, then defense spending can drop a bit, which would be from 4.0% GDP (2007) to an average of 3.3% of GDP (1995-1999).”

    This would save the 100 million I believe is required. The current defense budget is around 675 billion.

  89. Steve Verdon says:

    Quick Joe! What time is it in Reykjavik?!?! What you refuse to answer! Well clearly you don’t anything about the price of tea in china!

  90. Brummagem Joe says:

    Steve Verdon says:
    Monday, October 18, 2010 at 18:44

    “Yeah, and GDP has gone up by over 6x. Also, the wealthiest have seen their responsibility for taxes go up 2x since 1980”

    I thought the issue was confiscatory tax rates? How much GDP has grown by is totally irrelevant to the % of income being taken by the top 1%. They are now taking 23% of income versus 8% but only paying effective taxes on it of 16% versus the mid 30’s back then.

  91. Brummagem Joe says:

    Steve Verdon says:
    Monday, October 18, 2010 at 18:49
    “Quick Joe! What time is it in Reykjavik?!?! What you refuse to answer! Well clearly you don’t anything about the price of tea in china!”

    Oh…I thought I was talking to someone who was serious…pardon my mistake.

  92. Brummagem Joe says:

    Bottom line before I depart. Since the early 80’s the share of national income taken by the top 1% has risen dramatically. The last time it was this high was 1928. At the same time their tax bite has basically halved. It needed to fall but it’s gone too far and it largely accounts for the growth of the deficit certainly up to 2008 and to a lesser degrree since as the recession has reduced tax receipts also. Getting the overall tax take from the current roughly 19% of all income to the low to mid 20’s which is where it’s been most of the time since the war is inevitable. And then it’s hardly confiscatory by European standards.

  93. Steve Verdon says:

    Joe,

    The point of my last comment was that you have been going on about this non-sequitur of yours for…what 6 or 7 posts? And it ends with you admitting Drew’s claim was true and then you huffily answer your own non-sequitur.

    See Joe, here is what your wrote:

    “As such, I think Drew is largely correct in 1 that while marginal tax rates were higher back during the 1950s and such the deductions allowed people to keep from paying considerably more.”

    The current tax take from the top 1% of income earners is around 16% (principally because of the CG cuts) would you like to tell us SV or Drew what the take from the top 1% was in the Eisenhower era?

    WTF are you asking me? Keep in mind all I did was indicate that Drew appears to be correct which nobody here seems to disagree with….not even you. I’ve also indicated that some form of tax increase is probably necessary.

    BTW don’t bother answering, my question is mostly rhetorical and I don’t care what the answer is.

  94. Brummagem Joe says:

    Steve Verdon says:
    Monday, October 18, 2010 at 19:11
    Joe,

    See Joe, here is what your wrote:

    “As such, I think Drew is largely correct in 1 that while marginal tax rates were higher back during the 1950s and such the deductions allowed people to keep from paying considerably more.”

    Sorry Buddy I never wrote the above.you’ve got me mixed up with someone else. I did however write this which Drew claimed was bs. It’s not and it’s central to the entire issue of tax fairness which you clearly don’t get but he probably does which is why he’s never given a straight answer to my questions and preferred to waffle about the share of total taxes being paid by the wealthy or taxes as a % of GDP.

    The current tax take from the top 1% of income earners is around 16% (principally because of the CG cuts) would you like to tell us SV or Drew what the take from the top 1% was in the Eisenhower era?

  95. Brummagem Joe says:

    ‘BTW don’t bother answering, my question is mostly rhetorical and I don’t care what the answer is.”

    Like I said I thought I was talking to a serious person…pardon the mistake.

  96. Andy says:

    Ok, a couple of things here:

    First, here’s some actual data (Excel file) from the CBO showing various measures of taxation by quintile from 1979 -2005. It should be instructive – ie. marginal tax rates don’t mean as much as most people think.

    BJ,

    The 16% rate for the top 1%, if that’s accurate (could you provide a citation please?), is about 1/2 of what they pay in a more normal year. The reality is that revenue from the top 1% is highly variable depending on economic conditions and because of the way most of them earn income. There is a danger there, that if too much of your tax revenue is dependent upon those very wealthy people, then that variability produces negative effects.

    For example, the top 0.1% amount to about 140,000 tax returns out of almost 140 million total returns. They provided, in 2008, about 18 percent of federal income tax revenue. Why is that important? Well, changing fortunes among those few tax filers have a huge impact on revenues. Take a look, for instance, at California where increased revenues in the late 1990’s, fueled largely by those high income earners (benefiting from the tech bubble) allowed the state government to increase spending by almost 50%. When the bubbles burst, California and other states who are dependent on revenue from rich people received a double-whammy as revenues from the wealthy nosedived from boom to bust. To the very wealthy, income dropping from 6 million a year to three million is not something for us to cry about, but we sure can cry about it’s effects on tax revenues.

    In short there’s a danger in too much progressiveness in the tax system and tying revenues too much to the fortunes of the rich. Although the tax burden for the wealthiest has declined over the years, the burden has also declined for everyone else. Simply increasing rates on the rich, instead of taxes across the board, is only going to make government revenue even more dependent on a small and income-volatile segment of the population. Personally, I don’t think that’s sound tax policy if we want a stable and predictable revenue stream to fund necessary government functions.

    Secondly, as I think you said, the problem of increased income disparity is not directly related to tax rates. They do affect each other, however, but bringing them up together can confuse the picture unless thoroughly analyzed. For example, let’s assume for a minute that the income disparity we have today returned to the levels seen in the 1950’s or 1960’s. What would that do to tax revenues? Revenues would go down because income would be shifted to those with lower effective tax rates. That’s an effect of a progressive tax system. So if we can, through some kind of government policy, reduce the income disparity (and I am quite skeptical that government can do that except over very long time frames), we’ll have to raise tax rates to keep revenues from falling.

    In short, my position is that I think we’re at the point where the only solutions to our unsustainable finances are significant tax increases to most Americans along with significant cuts in spending and entitlement programs. Focusing tax increases on the rich only will not only be insufficient, but will exacerbate the problems described above. The current “debate,” such as it is, between various partisans using well-worn arguments are, in my judgment, pretty much pointless. Neither side has a solution that will solve our fiscal problems – they only offer solutions that satisfy ideological predilections consistent with maximizing their chances of winning elections. Meanwhile, the cliff is dead ahead and approaching. I only hope enough people notice in time to prevent us from going over the edge.

  97. Drew says:

    Steve V –

    My apologies for getting you into any sort of debate with BJ. The guy is obviously a mindless troll.

    I swore off OTB for awhile, because of these guys. I should probably stick to my guns.

  98. anjin-san says:

    > Surely, when the government takes my money from me on the threat of civil and/or criminal action for non-compliance, it qualifies a confiscation.

    Message to the GOP. I would like to pay less taxes too. On the other hand, unless you are ready to stop using public roads, refuse police and fire protection, disconnect your home from the sewer system, watch Aunt Sophie die because she did not get a test she needed, and so on many dozens/hundreds of times over – stop whining.

    We have more money than most folks. We benefit the most from the status quo. So we pay more. I personally do not want to see people dying/starving in the streets. There is enough human misery in this fabulously wealthy country turning up the thermostat.

    I don’t want poor folks who feel they have nothing to lose and are so angry about it that they start gunning for the haves. That sort of thing can take all the joy out of having a nice home, a cool car & a stylish wardrobe.

    Welcome to grown up land.

  99. mannning says:

    In Holland some years ago, I believe it was in 1976, the unions demanded that the government exercise a leveling of all incomes such that there would be only a 3 to 1 difference between the CEO’s income and the janitors income..This is the kind of redistribution that I call thievery. Of course, the ten largest firms in Holland got together and wrote to the government that if they did pass such a law all of them would pull up stakes and move to a more hospitable country, leaving a large percentage of Dutch workers in the lurch, and a drastically reduced revenue for the government to play with. The effort was effectively quashed.

    Obviously we need to redistribute some money to buy the necessities of the nation through taxation, but to take money from wealthy men to give it to less wealthy men simply to level their incomes is theft.

  100. Lynne says:

    Our household falls in to the new definition of “rich”, i.e., taxable income over 250K. I’d love to know how we can pay an effective tax rate of only 16%, because it would save us a whole lot of money. Instead, given that our income is wage income, we fall into the 33% marginal bracket and our federal income tax bill for 2009 was 21.77% of AGI.

    I agree that taxes are going to have to go up, combined with pretty serious cuts in government spending, if we are ever going to dig ourselves out of the hole we presently find ourselves in. However, when you have approximately 40% of all workers paying absolutely no federal income taxes, something is seriously wrong.

    Do I expect them to pay the same percentage of income that I do? No, I don’t have a complaint about the progressiveness of our tax code and acknowledge that those that make more are more financially able to pay a higher percentage. But, I do expect every one that works to pay something. Their children are educated in the same schools as my children, they drive on the same roads I do, they are protected by the same military that I am and they receive the same police and fire protection that I do, to name just a few of the things that tax dollars pay for. Why, just because they earn less, should they get a free ride? And no, the fact that they pay into Social Security or pay sales taxes does not count. Those taxes are not the same as federal income taxes and don’t pay for the same government expenditures.

    What Andy said, above, is pretty accurate. Those in higher income brackets can be subject to some pretty drastic income fluctuations in an economic downturn. As small business owners that provide component parts to manufacturers, our income dropped by almost $100K from 2008 to 2009, resulting in a federal income tax bill that was over 30K less than the bill for the previous year. Hopefully, if the economy ever turns around, I’ll get lucky and have to pay more in taxes than I did for 2009. However, I sure would like to see some of the people that currently pay nothing joining me in sending money to Washington.

  101. michael reynolds says:

    Anjin:

    Succinct and incapable of improvement.

  102. steve says:

    “Obviously we need to redistribute some money to buy the necessities of the nation through taxation, but to take money from wealthy men to give it to less wealthy men simply to level their incomes is theft.”

    What I did not see anyone say is that our wealth redistribution is mostly from the young to the old. Medicare and Social Security.

    Steve

  103. mannning says:

    Given that we will have Medicare or Obamacare and Medicaid and SS for the foreseeable future there is little sense in condemning them, for they are designed to aid the sick and old, This form of redistribution of wealth is a good thing, but it is not what I am incensed about , although they have a shrinking base of payers that will trouble us greatly. The best description of what I am against is the arbitrary leveling of incomes by fiat, an act that has already been perpetrated by this administration.

  104. Brummagem Joe says:

    Lynne says:
    Tuesday, October 19, 2010 at 01:22

    “Our household falls in to the new definition of “rich”, i.e., taxable income over 250K. I’d love to know how we can pay an effective tax rate of only 16%, because it would save us a whole lot of money.”

    Well this would be because you’re NOT rich but merely upper middle class. The top 1% of income earners starts at around $1.25 million. The main reason their burden is so low is because so much of their income is Capital Gain driven. Since you are also self employed and perhaps organized as an S corp or LLC you have to be aware that the opportunities for tax mitigation are somewhat larger than they would be for a conventionally employed person. The rate of IRS reporting btw from S corps, LLC’s is around 70% whereas it’s virtually 100% for the conventionally employed.

    Andy says:
    Tuesday, October 19, 2010 at 00:03

    I agree the tax bite from the top 1% fluctuates because so much of it is driven by CG’s and obviously they didn’t do too well in 2008/2009. The silver lining of course is that they have piled up losses they can use as offsets in later year (How do I know? Because I’m doing it!).
    It’s 16% trust me and that percentage doesn’t fluctuate very much although obviously the revenue from it can if there are stock market crashes. And how you can say the system is too progressive when Lynne above as a member of the upper middle classes is probably seeing a tax bite of around 30% while Steve Schwartzman is probably paying around 16% escapes me. The OECD publishes a table of personal tax bites and as best I recall ours is around 28% when you roll in Fica and state taxes whereas in Europe the figure is in the low 40’s. For most of the period since the war “federal” taxes have accounted for 22 -25% of income whereas the current figure is around 19% so we need to get back to these levels.

    Btw the CA example of over dependance income taxes from the rich causing problems in a recession is is rather misleading. CA’s problem is over dependence on income taxes… Period…regardless of whether the come from the rich or middle classes. It wasn’t just taxes from the rich that financed the overspending binge. California need to rebalance its revenue sources so it doesn’t have a budget crisis every time there’s a recession.

  105. Brummagem Joe says:

    Drew says:
    Tuesday, October 19, 2010 at 00:31
    Steve V –

    “My apologies for getting you into any sort of debate with BJ. The guy is obviously a mindless troll.”

    Why not drop the ad homs which seem to be all you do, and answer the couple of basic questions I posed instead running of and hiding.

  106. Stan says:

    Lynne, the reason so many people pay no federal income tax is that the US has chosen to aid the poor through use of the tax code rather than social welfare payments. This policy is a traditional Republican aim. Ronald Reagan was a particularly strong supporter, and the scope of the program was increased during his administration.

    Its aim is to relieve economic distress among the working poor without increasing the number of public employees and without rewarding people who don’t work. The alternative is either to increase transfer payments like Aid to Dependent Children or to accept increasing misery of our low income population. Which do you prefer?

  107. Brummagem Joe says:

    mannning says:
    Tuesday, October 19, 2010 at 05:02

    “The best description of what I am against is the arbitrary leveling of incomes by fiat, an act that has already been perpetrated by this administration.”

    Well you see Mr Manning you have to be concerned about how income is distributed when you have an economy that depends on consumer spending for 70% of GDP generation. For the past 30 years the real incomes of 90% of the country have been flat or declining apart from a brief uptick in the Clinton years. Over the same period there has been a huge increase in productivity but most of the benefits flowed upwards. The 91-99 percentile did quite well but the people who really made out were the top 1% (1- 2 million people) who now gather as much income as the entire bottom 50% of income earners (roughly 100 million people). The impact of these inequalities (which aren’t the direct result of tax policy) was papered over for a while by the uptick in the 90’s and the borrowing splurge in the 2000’s and this kept growth going but in the long run you can’t run a 14 trillion economy which depends for 70% of its growth on consumer spending while reducing the real purchasing power of 90% of the population. It don’t compute.

  108. Brummagem Joe says:

    Stan says:
    Tuesday, October 19, 2010 at 07:39
    “Lynne, the reason so many people pay no federal income tax is that the US has chosen to aid the poor through use of the tax code rather than social welfare payments.”

    Correct. Hence the Repubican obsession with giving tax credit s as means of purchasing health insurance.

  109. john personna says:

    I’m disappointed, not because anyone made the case that we could have “fiscal sanity” at these tax levels, but because in the end that didn’t matter.

    The “low tax” folks kept the eye on the way taxes feel, not how the numbers add up.

  110. Brummagem Joe says:

    john personna says:
    Tuesday, October 19, 2010 at 08:01
    “The “low tax” folks kept the eye on the way taxes feel, not how the numbers add up.”

    JP: we agree this will never do. It’s all emotion mind you there’s a bit of emotion on the other side too.

  111. Andy says:

    BJ,

    Take a look at the CBO data I linked to above. It only goes to 2005, but during the period covered it has never been close to 16%, even when FICA, CG and excise taxes are removed. If it really is 16% today, then that’s a historical aberration which only underscores my earlier points.

    As for too progressive, I have the typical family – I’m married with three kids, renting a house, do not itemize deductions and am filing jointly with my spouse. Our gross income last year was about $90k dollars – what I consider upper-middle class. That income puts us at the border between the two highest quintiles (again, see the link). At the end of the day our effective income tax rate was 3% last year. Add in FICA and our total effective rate was around 7 or 8%. Last year, however, was a bit of an aberration for us because of some unique circumstances (namely we took a huge loss selling a house), normally we’re closer to a 5%/11% effective tax rate.

    In short, it wasn’t just the rich that got tax cuts over the past several decades – it’s now to the point where half of tax filers don’t pay anything at all, which reduces the diversity of the tax base and subjects revenue streams to unnecessary variability.

    The point being, simply raising taxes on the rich is not sufficient. It won’t generate the revenue required, it will exacerbate all the negative effects of a narrow tax base already described, and I personally don’t want to live in a republic where government is funded primarily by a small percentage of the population for a whole nest of reasons. I want a progressive system of taxes, but putting most of the country close to zero taxes is overdoing it IMO. Effective tax rates need to go up across the board, not just on the rich.

  112. john personna says:

    “It’s all emotion mind you there’s a bit of emotion on the other side too.”

    On the “can’t cut costs” side? It isn’t so much that we have these obvious distractions on that side. Everyone is happy to ignore it. Distractions not required..

  113. sam says:

    @Manning

    “The best description of what I am against is the arbitrary leveling of incomes by fiat, an act that has already been perpetrated by this administration.”

    I wonder if Manning is one of those who do not know that a large portion of the stimulus was in the form of tax cuts?

    From Obama, the Tax Cut Nobody Heard Of

    HUNTERSVILLE, N.C. — What if a president cut Americans’ income taxes by $116 billion and nobody noticed?

    It is not a rhetorical question. At Pig Pickin’ and Politickin’, a barbecue-fed rally organized here last week by a Republican women’s club, a half-dozen guests were asked by a reporter what had happened to their taxes since President Obama took office.

    “Federal and state have both gone up,” said Bob Paratore, 59, from nearby Charlotte, echoing the comments of others.

    After further prodding — including a reminder that a provision of the stimulus bill had cut taxes for 95 percent of working families by changing withholding rates — Mr. Paratore’s memory was jogged.

    “You’re right, you’re right,” he said. “I’ll be honest with you: it was so subtle that personally, I didn’t notice it.”

    Few people apparently did.

    Actually, according the story, about one third of the stimulus was in the form of tax cuts. How does this constitute “the arbitrary leveling of incomes by fiat”? Actually, a better question is, what does that mean?

  114. john personna says:

    I’m not sure anyone is engaging with this “leveling of income” thing on a rational level.

    Taxing deeper pockets to pay essential services is not leveling income. You have to squint, cover one eye, and hum, to see it that way. It’s really just paying the bills.

    Now, we do have those crazy high statistics of people on public assistance right now, but those are not driven by a “transfer” architecture either. They triggered by “poverty” boundaries.

    I’d be fine with people examining those boundaries, and moving them down if it is reasonable.

    As I said here a long time ago, I hope the millions of people on food stamps don’t really need them, because if they do, things are seriously messed up. If they need them, we aren’t off in liberal “redistribution land,” we are propping up something broken.

  115. Brummagem Joe says:

    Andy says:
    Tuesday, October 19, 2010 at 08:16

    Andy I didn’t take a look at the data but I will. I do have easy access to data but it’s behind a firewall and I’m too lazy/busy to go scratching around trying to find published data but it’s out there. I wouldn’t consider someone earning 90k as upper middle class although you’re probably in the top 10 percentile of earners; and I don’t include FICA and excise as part of federal taxes although CG’s are certainly part of income.

    ” In short, it wasn’t just the rich that got tax cuts over the past several decades – it’s now to the point where half of tax filers don’t pay anything at all,”

    I don’t recall ever claiming that only the rich had been the beneficiaries of the last 30 years of tax cuts, but they have benefitted disproportionately. As best I recall about 40% of filers pay no tax and much of this is for the reasons suggested above by Stan.

    I’m a retired businessman who when working was probably close to the top of the upper middle class but am now a retired rentier with a much smaller but still fairly substantial income. Because much of my income is either CG or derived from “consultancy” work there is plenty of opportunity for offsets and deductions so my tax bill (in which I’m intensely interested btw) is suprisingly low. But your and my anecdotes don’t really change the broad picture. I don’t disagree that there need to be some modest upticks across the board but inevitably it has to be graduated towards the wealthiest because they’re taking the income. As I observed on another thread, the top 1% of income earner (1-2 million people) have as much income as the entire bottom 50% of earners (100 million people)

  116. Brummagem Joe says:

    “As I said here a long time ago, I hope the millions of people on food stamps don’t really need them, because if they do, things are seriously messed up.”

    Alas they do JP. We have a lady who helps with the cleaning. I don’t know why as my wife is always dusting after her. But this woman (two kids, single parent) couldn’t survive without them.

  117. Brummagem Joe says:

    “Actually, according the story, about one third of the stimulus was in the form of tax cuts.”

    About 250 billion out of the 820 billion. Infrastructure was 375. The balance was transfer payments to the states.

  118. Brummagem Joe says:

    Andy says:
    Tuesday, October 19, 2010 at 08:16
    BJ,

    “Take a look at the CBO data I linked to above. ”

    Andy I couldn’t open this and have had a quick scratch around for some refs but can’t find any and my old lady is on my case to get moving so I’ll see if I can find something later and will psot if I do.

  119. john personna says:
  120. Andy says:
  121. Brummagem Joe says:

    Andy says:
    Tuesday, October 19, 2010 at 09:44

    I took a quick look at these numbers and it says the top effective individual rate for the top 1 percentile in 2006 was 19%. Not too far from 16% and this was at the height of the boom. I didn’t have time to get into the weeds but this data is notional I think rather than actual but I could be wrong. The other interesting number in there is the total effective tax rate which was under 21% at the height of the boom when we should have been saving for the lean years. It’s now running at around 19% which is not exactly confiscatory. This needs to get back to the 23 area as soon as general economic conditions allow. The bottom line in all this is we need to focus on the tax burden NOT the share of taxes paid which is what people like the Tax Foundation and their stooges like to focus upon because it’s a totally specious measure of the fairness of the tax system. Btw I agree with you conceptually that it’s dangerous to have an over reliance on a narrow tax base of the very rich…but which is the chicken and which is the egg?

  122. Ken Adler says:

    Andrew: “And I find the rhetoric demonizing the “rich” to be counter-productive, uncivil, and revealing a mindset of envy not pragmatism.”

    Here we have the truth, Andrew and the rest of the intellectual right serve the sole purpose of defending the rich. Uncivil? Really?

  123. mannning says:

    I went through this once before in Holland. In order to maintain their social benefits to all residents, my tax rate was 62% of my salary. On top of that there was a VAT consumption tax of 18% on all purchases, dining out, travel, etc. The poverty level was such that I figured I was supporting three families on the dole plus the government’s needs. This situation could not and did not last, but the relief changes, such as they were, came long after I returned to the US. The socialist state that was Holland then had a womb to tomb philosophy for its 16 million citizens, and it included guest workers such as myself and about 200,000 Turks, 40,000 Indonesians and Surinamers, half of whom were on the dole for years and years at 70% of their last wage.

    The parallels to this state of affairs appear to be emerging in the US: 1) huge roles of unemployed persons ending up drawing a fairly comfortable “living” salary from the government well above the poverty level; 2) high earners forced to support the non-working class, including foreign national guest workers (and illegals with amnesty?); 3) forced payment of medical insurance by deduction from salary (over and above that of the income tax); and 4) provision of holiday and vacation funds to the unemployed paid out of general revenues, among a bunch of other highly irksome provisions I do not recall at the moment.

    62% of salary plus, medical insurance, plus a VAT of 18% left me with less than about 20% of my ostensible salary to maintain family and home, autos, vacations, and what not. After a few years of this I came back to the US and a far better economic situation. It is a terrible thought that we are headed in this socialistic direction now in America. I do not want to find myself once again being forced to support three guest worker families and paying ~80% taxes.

    All I can think is that we are headed for very, very hard times, especially for our children and grandchildren, and this spendthrift government must go—right now!

  124. john personna says:

    First of all Manning, I don’t think you can group emergency unemployment extensions with permanent European ones. Second, I don’t think those extensions represent any significant fraction of government spending (seventy billion is 2 percent of the annual budget) … or if we were actually paying it … any significant fraction of our taxes.

    Why did say “spendthrift government must go?”

    Partisan lately?

    This is a bipartisan budget with big ticket items from both parties. The Republican wars in particular are notably absent from your comment, rank quite a bit higher in costs.

  125. john personna says:
  126. mannning says:

    Of course, today, the emergency extensions are not the same as a permanent unemployment fund. But, if you believe as I do that things are going to get a lot worse in the US over the next few years, the emergency extensions may well become much more permanent, however it is disguised to make it more palatable, and the size of the benefits may rise significantly as well for a host of reasons.

    It is apparent that we cannot afford the military adventures we have undertaken and the worldwide basing we currently maintain in this economic crisis. So we will be forced to downsize the military once again and turn those discharged into the job-seeker pools and the emergency income sources, which seems to be merely shifting the personnel burden from one line item to another, while increasing the pressure for a more generous level of benefits.
    I suppose reducing the weapons production element will result in some savings, except for the numbers of unemployed that will result in the defense industry. As sure as rain these savings will be overspent by Congress by a factor of two or more as they did during the Clinton era so-called Peace Dividend.

    What this reduction in the military will do for us, I believe, is to virtually guarantee another significant conflict arising for us to simply have join within, say, five to ten years, with the necessity to rebuild what we cut, to invent as rapidly as possible other new weapons, and to reopen old production lines for the necessities of war. Unless, of course, one believes that war has been abolished worldwide (if so, stop reading here!).. So we save a bit today, only to spend maniacally a few years later, and struggle to fill out the ranks of experienced non-coms and officers yet again by callups, and to train a new wave of soldiers. I avoided this subject for these reasons–it is penny-wise and pound foolish. Is there an historical precedent or five for my opinion here? You bet!

    The other problem with this yo-yo effect on the military is the time constant involved. We may well not have the time to resurrect a sufficient force to forestall significant gains by the enemy of tomorrow, which then brings up the possibility of using our nuclear capabilities to halt the enemy, as was planned, for instance, in the Cold War. If our aggressor is also nuclear capable, and the list of nations reaching that position is growing, we either accept the losses or go nuclear, where no one wins. The most likely outcome, then, from our weakening military posture, is some significant losses of territory in our spheres of influence from lack of sufficient forces to do anything about it.. Try South Korea, for instance, or Iraq, or perhaps a ‘stan or two, among quite a number of possibles.

    On the subject of leveling, how should we think of the government forcing heavy cuts in executive salaries by czarist fiat? Seems like forced leveling to me!

  127. john personna says:

    Of course, today, the emergency extensions are not the same as a permanent unemployment fund. But, if you believe as I do that things are going to get a lot worse in the US over the next few years, the emergency extensions may well become much more permanent, however it is disguised to make it more palatable, and the size of the benefits may rise significantly as well for a host of reasons.

    There is a thing called counter-cyclical spending. It has two components: automatic increases as more people hit “needs” thresholds, and special components created in response to downturns.

    What I don’t like about some on the right is that they play a tin ear to that reality, and pretend that any increase can only be a Trojan horse for global socialism.

    Heh, maybe it’s because they played the “temporary tax cuts” game themselves? And are shocked that some people believed the temporary part?

    It is apparent that we cannot afford the military adventures we have undertaken and the worldwide basing we currently maintain in this economic crisis. So we will be forced to downsize the military once again and turn those discharged into the job-seeker pools and the emergency income sources, which seems to be merely shifting the personnel burden from one line item to another, while increasing the pressure for a more generous level of benefits.

    If were serious about budgets we wouldn’t have funded those current adventures totally from future receipts. They were 100% additive to the deficit. That same deficit that now has people on the streets.

    The suggestion 5 years ago that wars be paid for with tax was treated as a liberal canard. How dare they put up roadblocks!

    Now, if we were serious about budget, we’d put on some war tax, or get out.

    On you future wars, do you plan to finance them as well? Pawn the crown jewels? It worked (sometimes) for Kings. And sometimes it became a debt crisis.

  128. mannning says:

    Since they aren’t “my” future wars and since the circumstances that would pertain at that time are totally unknown, any answer I would give to this hypothetical would quite possibly be written on sand. And, since the current wars have not been conducted or financed in a manner that I approve, I bear no responsibility for the outcome; merely the burden of helping to reduce the debt while I live. That said, I do believe we should come as close to a pay-as-you-go scheme as possible for any future wars. Such an approach dovetails nicely with maintaining a properly sized standing force acting as a sinking fund as it were for future wars.

    I have written before that I do not believe we should get into funding nation-building along with serious combat expenditures, especially when the base economy and social tribalism of our “client” argues for a far greater effort in social and educational evolution, time and resources than we can realistically afford, and such an assessment had been available going in for both Iraq and Afghanistan..Had we worked that way, untold billions of our dollars would have been saved.

    Better still, don’t go in feet first at all; but, rather, use more covert resources and indigenous people to attempt to decapitate and destabilize the enemy if possible. Some 20 thousand men would most likely not be casualties today had we operated this way, along with tens of thousands of Iraqis, and with a bit of luck thrown in, the chief bad guys would all be dead at trivial cost. Were WMD existence stories to be confirmed, however, that opens up an entirely different ball-game. We must respond to existential threats.

  129. john personna says:

    OK, I won’t call them “your” wars. And if we agree on pay as you go, we’ve got what I consider the main issued covered.

  130. Steve Verdon says:

    Joe,

    See Joe, here is what your wrote:

    “As such, I think Drew is largely correct in 1 that while marginal tax rates were higher back during the 1950s and such the deductions allowed people to keep from paying considerably more.”

    Sorry Buddy I never wrote the above.you’ve got me mixed up with someone else.

    Idiot. I quoted me followed immediately by your response to give the context you moron. That quote is in one of your comments dope. Follow that link, bone head, and read what you wrote. Note the quotations you put around what I wrote.

    Like I said I thought I was talking to a serious person…pardon the mistake.

    Please, just STFU and GTFO. You make every thread worse with your presence. Just leave.

    Message to the GOP. I would like to pay less taxes too. On the other hand, unless you are ready to stop using public roads, refuse police and fire protection, disconnect your home from the sewer system, watch Aunt Sophie die because she did not get a test she needed, and so on many dozens/hundreds of times over – stop whining.

    We have more money than most folks. We benefit the most from the status quo. So we pay more. I personally do not want to see people dying/starving in the streets. There is enough human misery in this fabulously wealthy country turning up the thermostat.

    I don’t want poor folks who feel they have nothing to lose and are so angry about it that they start gunning for the haves. That sort of thing can take all the joy out of having a nice home, a cool car & a stylish wardrobe.

    Welcome to grown up land.

    While there is quite a bit of truth in the above, it does negate the fact that taxes are collected via force and coercion, even if it is implied. They are not “prices” in that prices are paid for commodities and services in voluntary transactions. Taxes are not voluntary.