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 Diploid
Cuban
Registered: 01/09/03
Posts: 18,202
Loc: Rabbit Hole
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 The Buffet Rule 
#16101189 - 04/17/12 11:07 AM (1 year, 1 month ago) |
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First of all, I don't know shit about economics or tax theory, so I'm not taking sides (yet), but I'd like to hear some rational objections to the Buffet Rule.
In case you live under a rock, the Buffet Rule is a proposed change to the tax code enforcing a minimum 30% tax on the income of people making over $250,000 per year, which is about 200,000 people. The so-called one percent wealthiest Americans. These people often pay as little as ~15% of their total income in taxes while many middle-class pay upwards of 25%. The reason this happens is because income from wages (from a job) is taxed higher than income from other sources like capital gains, and wealthy people generally don't hold jobs. The disparity is putatively to encourage investment of that income that might otherwise not happen if it were taxed at a higher rate.
The arguments against I've heard so far mostly don't make sense to me.
One big argument against is that the extra tax revenue ($37B) will not even make a dent in the deficit. But that seems a spurious argument. If republicans are opposed on the grounds that the extra tax revenue generated would be financially inconsequential, then why are they opposed to the wasteful spending the GSA has been lavishing on Las Vegas parties which, after all, amount to less than a million dollars a year? It's insignificant compared to the deficit. It seems a double standard. The GSA spending should stop because it's not fair to the rest of us, not because it raises the deficit. It doesn't raise the deficit in any meaningful way. But no one argues that it should stop on fairness grounds. Perhaps the low tax rate for the very wealthy should stop too, and for the same reason.
Another argument I've heard is that the lower capital gains tax rate is to compensate for the risks taken by those who invest money and thus help the economy. This argument may have merit but it's tempered by the bail-out which effectively insulated many investors from the consequences of risk.
Anyway, like I said, I don't know anything about macro economic and taxation theory so set me straight if I'm off base here. I've yet to hear a convincing argument against this proposal, but the idea of equity among all of us, even if it has no practical deficit benefit, still seems like at least a first step in the doing the right thing.
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Wanna hear something depressing? One out of four Shroomerites wants to lock me in a government cage for using a substance they don't like.
Hard to believe, right? Read it for yourself:
http://www.shroomery.org/forums/showflat.php/Number/7874721#Post7874721
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 Me_Roy
Stranger
Registered: 07/30/02
Posts: 2,092
Loc: Berlin
Last seen: 1 day, 3 hours
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 Re: The Buffet Rule [Re: Diploid]
#16101283 - 04/17/12 11:32 AM (1 year, 1 month ago) |
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gub'mint...
tyranny...
abortion...yeah, ABORTION!
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A lotta cats a livin' in the neighborhood
Some are bandits,
Some are very, very good as I would tell it to ya'
- I-Roy
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 qman
Stranger
Registered: 12/07/06
Posts: 3,479
Last seen: 2 minutes, 18 seconds
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Re: The Buffet Rule [Re: Diploid]
#16101302 - 04/17/12 11:39 AM (1 year, 1 month ago) |
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What the liberals always fail to understand is, hiking tax rates does NOT bring in more tax revenue in the US economy. What happens when hike rates go higher? We slow the economy, which in turn creates less "rich" people, which in turn lowers the tax revenue.
A long term study found that regardless of the tax rate, the US economy only gets about 17% of GDP in tax revenue, and this has happened for the last 100 years.
This Buffet Rule is nothing more than a political joke, the tax revenue they "think" they will raise (it usually never workers) will be nothing more than a drop in a bucket. The wealthy in this county feel like they are under attack from the "have nots", and want to cool down the hate, it's almost a form of insurance in their minds.
In the next few years (2-3) this country is going to face a economic debt crisis, there is nothing that can stop it at this point, there is no solution. All the politicians can do is fake that they are trying to do something, no one wants to be accused of not trying after the shit hits the fan.
Edited by qman (04/17/12 11:41 AM)
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Diploid
Cuban
Registered: 01/09/03
Posts: 18,202
Loc: Rabbit Hole
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Re: The Buffet Rule [Re: qman]
#16101426 - 04/17/12 12:14 PM (1 year, 1 month ago) |
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hiking tax rates does NOT bring in more tax revenue in the US economy.
I agree. That's not in dispute. Read the OP.
But if you're going to use the argument that the Buffet Rule WILL NOT have any meaningful impact on the deficit, then why doesn't that argument hold for letting the GSA parties in Las Vegas continue because at less than a million dollars a year, the cost WILL NOT have a meaningful impact on the deficit either.
The argument is not about the deficit. It's about the right and wrong of a gazzilionair paying 15% and a carpenter paying 25%... or a GSA employee enjoying a party in Las Vegas while everyone else goes to work.
Again, I'm open to hearing a convincing rationale against the rule, but yours doesn't wash unless you also agree to let the GSA parties ride using the same "it's not enough money to make any difference" justification.
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Wanna hear something depressing? One out of four Shroomerites wants to lock me in a government cage for using a substance they don't like.
Hard to believe, right? Read it for yourself:
http://www.shroomery.org/forums/showflat.php/Number/7874721#Post7874721
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fireworks_god
SexyButt McDanger
Registered: 03/12/02
Posts: 24,189
Loc: Red Panda Village
Last seen: 7 hours, 8 minutes
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Re: The Buffet Rule [Re: qman]
#16101492 - 04/17/12 12:29 PM (1 year, 1 month ago) |
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Quote:
qman said:
What the liberals always fail to understand is, hiking tax rates does NOT bring in more tax revenue in the US economy.
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If I should die this very moment
I wouldn't fear
For I've never known completeness
Like being here
Wrapped in the warmth of you
Loving every breath of you
  
 
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Phred
Fred's son
Registered: 10/19/00
Posts: 12,646
Loc: Dominican Republic
Last seen: 29 minutes, 45 seconds
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Re: The Buffet Rule [Re: Diploid]
#16101509 - 04/17/12 12:34 PM (1 year, 1 month ago) |
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Quote:
But if you're going to use the argument that the Buffet Rule WILL NOT have any meaningful impact on the deficit, then why doesn't that argument hold for letting the GSA parties in Las Vegas continue because at less than a million dollars a year, the cost WILL NOT have a meaningful impact on the deficit either.
There is an enormous and fundamental difference between the two issues. The issue isn't "the deficit", the issue is what are the legitimate functions of government. It is not a legitimate function of government to throw lavish parties for its employees.
That is the essential difference between Libertarians and Tea Party supporters vs the Libbies, RINOs, and even many centrists: the former correctly point out that the deficit is where it is not because of a revenue problem, but because of a spending problem. Accordingly, the first thing to do is to eliminate spending on illegitimate stuff. Then - and only then - if the deficit continues to grow does it make sense to look at increasing revenues.
Phred
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qman
Stranger
Registered: 12/07/06
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Re: The Buffet Rule [Re: Diploid]
#16101533 - 04/17/12 12:42 PM (1 year, 1 month ago) |
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We are borrowing .50 cents for every $1 we spend now, and have debt to GDP at over 100% today, so in reality, it does not matter if the Buffet Rule exists or if the GSA has a few more Las Vegas parties. The time to get fiscally responsible has long passed, now nature is going to take its own coarse.
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Me_Roy
Stranger
Registered: 07/30/02
Posts: 2,092
Loc: Berlin
Last seen: 1 day, 3 hours
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Re: The Buffet Rule [Re: qman]
#16101644 - 04/17/12 01:13 PM (1 year, 1 month ago) |
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The Buffet Rule is a largely symbolic act meant to draw attention to general inequity in the tax code.
More money in the hands of the very, very rich has far less positive impact on the economy than does more money in the hands of the middle class and poor. Why? The people in the lower economic tiers will immediately go out and buy themselves better shit, whereas the very, very rich already have the best shit money can buy.
Trickle down economics didn't work for Reagan and they didn't work for Bush. It's time to stop pretending that a state-sponsored oligarchy does this country a bit of good.
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A lotta cats a livin' in the neighborhood
Some are bandits,
Some are very, very good as I would tell it to ya'
- I-Roy
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Diploid
Cuban
Registered: 01/09/03
Posts: 18,202
Loc: Rabbit Hole
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Re: The Buffet Rule [Re: Phred]
#16101688 - 04/17/12 01:32 PM (1 year, 1 month ago) |
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There is an enormous and fundamental difference between the two issues.
I agree. I bring it up only because, while what you say is true, the argument that we shouldn't change something because it will have no effect cuts both ways.
If we reject the the Buffet Rule because it will have no effect on the deficit (this is the specific counter-argument I'm addressing) then by that reasoning we shouldn't change anything at all if the change will have no effect on <whatever>. It reads like a specious rationale. Show me why it's not.
And the bigger point in any case is one of equity. Do you believe it is fair for someone making a million dollars to pay a smaller fraction of their income in tax than someone making $50k? From my cursory look at the issue it seems grossly unfair, but like I said, I know little about economics or taxation theory, so I'm open to someone showing me why it IS fair despite appearances.
the first thing to do is to eliminate spending on illegitimate stuff. Then - and only then - if the deficit continues to grow does it make sense to look at increasing revenues
Why can't we do more than one thing at a time; addressing both overspending AND what from all appearances is a grossly unfair tax framework?
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Wanna hear something depressing? One out of four Shroomerites wants to lock me in a government cage for using a substance they don't like.
Hard to believe, right? Read it for yourself:
http://www.shroomery.org/forums/showflat.php/Number/7874721#Post7874721
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Phred
Fred's son
Registered: 10/19/00
Posts: 12,646
Loc: Dominican Republic
Last seen: 29 minutes, 45 seconds
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Re: The Buffet Rule [Re: Diploid]
#16101786 - 04/17/12 02:06 PM (1 year, 1 month ago) |
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Quote:
And the bigger point in any case is one of equity. Do you believe it is fair for someone making a million dollars to pay a smaller fraction of their income in tax than someone making $50,000? From my cursory look at the issue it seems grossly unfair, but like I said, I know little about economics or taxation theory, so I'm open to someone showing me why it IS fair despite appearances.
What makes it seem unfair is that reporters presenting the issue are in almost every case either -
1) economically illiterate
or
2) so far in the tank for the Democrats they need to have their oxygen pumped in from the outside
or
3) a combination of 1) and 2).
Even assuming that people should be taxed at higher percentages of their income the more money they make (and there are very good arguments against this casually-accepted-by-Lefty/Libbie-types meme), the fact of the matter is that - contrary to the sloppy reporting on the issue - they actually are.
The only reason some people (far, far fewer than people assume, and even then usually just for a single exceptional year, not as a year-in year-out norm) with an income of, say, a million might pay income tax at a lower rate in a given year than someone else with an income of say $50k is because the majority of the income in that year was through capital gains. But the corporations sold in order to generate those capital gains were already themselves taxed - at the highest corporate tax rate in the world: 35%.
So, for example, you start a business, incorporate, run it for a few years, pay 35% business tax on the money it makes, then pay an additional 15% of the remaining 65% when you cash out and turn your property (the business) into cash.
What matters isn't whether your money taken by the federal government is subdivided into "income tax" and "business tax" and "tax on capital gains" and "AMT" and a myriad other things, what matters is how much in total did they take.
And the fact of the matter is that with very rare exceptions, people that make a lot of money typically pay a substantially higher percentage of it to the feds than do people around the median income.
Phred
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Phred
Fred's son
Registered: 10/19/00
Posts: 12,646
Loc: Dominican Republic
Last seen: 29 minutes, 45 seconds
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Re: The Buffet Rule [Re: Diploid]
#16101800 - 04/17/12 02:13 PM (1 year, 1 month ago) |
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Quote:
Why can't we do more than one thing at a time; addressing both overspending AND what from all appearances is a grossly unfair tax framework?
Oops. Missed this.
Because the income tax framework is already grossly unfair to the wealthy, not to the average Joe. Numerous studies have shown unequivocally that the US has by far the most progressive income tax system in the world. In this context, "progressive" means the more you earn, the higher the rate of income tax you are hit with. The numbers have been posted in this forum so often I won't bother linking to the sources, but at present just under half of income tax filers pay no federal income tax at all, while the top 1% pay just under 40% of all federal income taxes collected and the top 10% pay just over 70% of it.
I may be off by a percentage point or two here or there, and I can't be bothered to pin it down more precisely, but the point is there - virtually the entire financial burden of running the US federal government is born by people making more money than the median.
If that ain't unfair, I don't know what is.
Phred
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qman
Stranger
Registered: 12/07/06
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Re: The Buffet Rule [Re: Phred]
#16101825 - 04/17/12 02:29 PM (1 year, 1 month ago) |
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The tax code may be "unfair" or progressive, so the upper income do pay the majority of the taxes. But the sad fact also is, the rich have a disproportional amount of wealth.
In the last 30 years, the distribution of wealth has continued to move upward. So don't feel sorry for the wealthy paying more taxes, they have more of the wealth than ever before.
Even Fed chief Ben, said that the distribution of wealth was troubling, and there is no real way of fixing the problem.
How would anyone think that the middle and lower class could pay more in taxes, it's like getting blood from a stone.
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Diploid
Cuban
Registered: 01/09/03
Posts: 18,202
Loc: Rabbit Hole
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Re: The Buffet Rule [Re: Phred]
#16101831 - 04/17/12 02:31 PM (1 year, 1 month ago) |
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What makes it seem unfair is that reporters presenting the issue are in almost every case either
I think you're exaggerating a bit. Many respected economists in academia (presumably well educated despite idiot reporters) with no visible agenda make the same arguments in favor of raising taxes on the wealthy. I haven't seen a clear consensus emerge on either side of the argument.
Even assuming that people should be taxed at higher percentages of their income the more money they make (and there are very good arguments against this casually-accepted-by-Lefty/Libbie-types meme), the fact of the matter is that - contrary to the sloppy reporting on the issue - they actually are.
OK, so let's break this down into two parts.
First, should the tax rate change depending on your income? I dunno. Do you support a flat national sales tax kind of solution? Abolish the IRS and everyone pays exactly the same? Maybe that's a good idea.
But more importantly, your second point. I think taxes generally apply to the movement of wealth, whatever the reason for that movement. If it moves twice, it gets taxed twice. This is why when I buy a car, I pay sales tax, and when I sell that car, the new buyer ALSO pays sales tax. It's also why all of us are required to (but rarely do) pay tax on our garage sales and the junk we sell on eBay. In fact, I understand there is a move underway for PayPal to report to the IRS in order to start forcing us to pay tax when we sell our old iPod on eBay.
So couldn't I use your argument to avoid paying all taxes because, after all, SOMEWHERE along the chain every penny I get has already been taxed in some way or another? That doesn't seem sensible. What seems more sensible is to tax any MOVEMENT of wealth, like we do to an inheritance that was already taxed when the dead guy earned it, or when I sell my used car that was already taxed when I bought it new.
And the fact of the matter is that with very rare exceptions, people that make a lot of money typically pay a substantially higher percentage of it to the feds than do people around the median income.
I guess this is the crux of the debate. I've read credible people say this is true and others say it's not. But so far I haven't seen the definitive answer that would settle the matter in my mind.
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Wanna hear something depressing? One out of four Shroomerites wants to lock me in a government cage for using a substance they don't like.
Hard to believe, right? Read it for yourself:
http://www.shroomery.org/forums/showflat.php/Number/7874721#Post7874721
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Icelander
The Minstrel in the Gallery
Registered: 03/15/05
Posts: 79,813
Loc: underbelly
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Re: The Buffet Rule [Re: Diploid]
#16101869 - 04/17/12 02:43 PM (1 year, 1 month ago) |
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I heard that there was a time when the rich paid a huge amount more in taxes then now. So just out of curiosity I did a search to find out but ran across this. Just one opinion but I though I'd toss it out. I have no real opinion myself because I don't really know enough about it. http://www.sanders.senate.gov/newsroom/news/?id=7f68742b-ae1b-4705-8872-0c495b196e60
Plutocracy: If Corporations and the Rich Paid 1960s-Level Taxes, the Debt Would Vanish
Source:
Share This
By Sam Pizzigati
July 26, 2011
Once upon a time in America, back a century ago, our nation's rich paid virtually nothing in taxes to the federal government. And that same federal government did virtually nothing to better the lives of average Americans.
But those average Americans would do battle, over the next half century, to rein in the rich and the corporations that made them ever richer. And that struggle would prove remarkably successful. By the 1950s, America's rich and the corporations they ran were paying significant chunks of their annual incomes in taxes - and the federal projects and programs these taxes helped finance were actually improving average American lives.
America's wealthy, predictably, counterattacked - and, by the 1980s, they were scoring successes of their own.
Today, the rich and their corporations no longer bear anything close to their rightful share of the nation's tax burden. The federal government, given this revenue shortfall, is having a harder and harder time funding initiatives that help average working families. The result: a "debt crisis."
This "debt crisis" in no way had to happen. No natural disaster, no tsunami, has suddenly pounded the United States out of fiscal balance. We have simply suffered a colossal political failure. Our powers that be, by feeding the rich and their corporations one massive tax break after another, have thrown a monstrous monkey wrench into our national finances.
Some numbers - from an Institute for Policy Studies report released this past spring - can help us better visualize just how monumental this political failure has been.
If corporations and households taking in $1 million or more in income each year were now paying taxes at the same annual rates as they did back in 1961, the IPS researchers found, the federal treasury would be collecting an additional $716 billion a year.
In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally vanish over the next decade.
Similarly stunning numbers have come, earlier this month, from MIT economist Peter Diamond and the University of California's Emmanuel Saez, the world's top authority on the incomes of the ultra-rich. These two scholars have shared some fascinating "what ifs" that dramatize how spectacularly the incomes of our wealthiest have soared over recent decades.
In 2007, Diamond and Saez point out, taxpayers in the nation's top 1 percent actually paid, on average, 22.4 percent of their incomes in federal taxes. If that actual tax burden were to about double to 43.5 percent, the top 1 percenter share of our national after-tax income would still be twice as high as the top 1 percent's after-tax income share in 1970.
So why aren't we taxing the rich? Why are we now suffering such fearsome "debt crisis" angst? Why are our politicos so intent on shoving the "fiscal discipline" of layoffs and cutbacks - austerity - down the throats of average Americans?
No mystery here. Our political system is failing to tax the rich because the rich have fortunes large enough to buy off the political system. Again, some numbers can help us better visualize that plutocratic big picture.
In 2008, the IRS revealed this past May, 400 Americans reported at least $110 million in income on their federal tax returns. These 400 averaged $270.5 million each, the second-highest U.S. top 400 average income on record.
In 1955, by contrast, America's top 400 averaged - in 2008 dollars - a mere $13.3 million. In other words, the top 400 in 2008 reported incomes that, after taking inflation into account, amounted to more than 20 times the incomes of America's top 400 a half-century ago.
But 1955's top 400 didn't just make far less than 2008's top 400. The rich in 1955 paid far more of their income in taxes than today's rich. In 2008, the new IRS data show, the top 400 paid only 18.1 percent of their total incomes in federal income tax. The top 400 in 1955 paid 51.2 percent of their total incomes in tax.
The bottom line: After taxes, and after adjusting for inflation, 2008's top 400 had a staggering $38.5 billion more left in their pockets than 1955's most awesomely affluent.
Multiply that near $40 billion by the annual tax savings the rest of America's richest 1 percent have enjoyed over recent years and you have an enormous war chest for waging class war, billions upon billions of dollars available for bankrolling think tanks and candidates and right-wing media.
In the face of these billions, should the rest of us, America's vast non-rich majority, just toss in the towel? Our counterparts a century ago certainly didn't. They challenged their rich, on every battlefront imaginable. They eventually prevailed. They sheared their rich down to democratic size.
We can do the same.
Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.
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"Hang on tightly, let go lightly" -anonymous
“under the present brutal and primitive conditions on this planet, every person you meet should be regarded as one of the walking wounded. we have never seen a man or woman not slightly deranged by either anxiety or grief. we have never seen a totally sane human being.”
― Robert Anton Wilson
Edited by Icelander (04/17/12 02:44 PM)
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Phred
Fred's son
Registered: 10/19/00
Posts: 12,646
Loc: Dominican Republic
Last seen: 29 minutes, 45 seconds
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Re: The Buffet Rule [Re: Diploid]
#16101910 - 04/17/12 02:56 PM (1 year, 1 month ago) |
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Quote:
Do you support a flat national sales tax kind of solution? Abolish the IRS and everyone pays exactly the same?
That would definitely be preferable to the way it's done now, yes. Everyone would have some skin in the game, and there would therefore be far, far more pressure on the feds from the electorate to stop spending money on stuff they have no business spending money on. Right now, just barely more than half have any skin in the game. If Obama and his minions get their way, that will increase to over half, at which point game over.
Quote:
I think taxes generally apply to the movement of wealth, whatever the reason for that movement.
Yet another scam that is unquestioningly accepted by most people who have never bothered thinking it through all the way. Even if it is correct to do it this way (and that is a big if) then it penalizes the people who make their living through a more complex system of "movement" than simply punching a clock and cashing a paycheck. And those are the people who make it possible in the first place for the more simplistic punch-clock-cash-check mode of existence to even exist at all!
Finally, capital gains is a fundamentally different form of taxation than a graduated income tax in that the risk is huge. There is no guarantee that your capital will ever gain at all: quite the reverse, statistically speaking. Check the stats on how many startups crash and burn in the first few years, hemorrhaging money all the way, vs. how many even just barely survive, much less turn a decent profit. That is one of the reasons every country in the world taxes capital gains at a lower level than income tax in general - to encourage people to take those risks.
Quote:
I guess this is the crux of the debate. I've read credible people say this is true and others say it's not. But so far I haven't seen the definitive answer that would settle the matter in my mind.
Your "credible" people haven't bothered to inform themselves, then. There is no doubt whatsoever that "the rich" in general pay a higher percentage of their income than does the average Joe. The data is readily available and has been widely published in multiple credible media outlets from the Wall Street Journal to government websites themselves. Links to this info have appeared in this forum on multiple occasions. I can't be bothered combing through my enormous bookmark file right now to find a link to repost. Maybe one of the other regulars will make the effort, though.
Phred
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Diploid
Cuban
Registered: 01/09/03
Posts: 18,202
Loc: Rabbit Hole
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Re: The Buffet Rule [Re: Phred]
#16101946 - 04/17/12 03:10 PM (1 year, 1 month ago) |
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Finally, capital gains is a fundamentally different form of taxation than a graduated income tax in that the risk is huge.
I've heard this argument but it doesn't hold a lot of water if the wealthy get bailed out when their risk comes due.
Also, why didn't that argument apply a few decades ago when the wealthy had to pay well over 50%?
Your "credible" people haven't bothered to inform themselves
C'mon meng. These are prominent economists who know more about this than you, me, and everyone on Shroomery combined. I won't play the link game because for every link I give you, you'll give me one right back, and we'll be right where started. Namely, that I haven't seen a clear consensus from the people who study this for a living one way or the other. Only credible links one way, and just as many the other way.
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Wanna hear something depressing? One out of four Shroomerites wants to lock me in a government cage for using a substance they don't like.
Hard to believe, right? Read it for yourself:
http://www.shroomery.org/forums/showflat.php/Number/7874721#Post7874721
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Shins
Fun guy
Registered: 09/15/04
Posts: 11,290
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Re: The Buffet Rule [Re: Diploid]
#16102008 - 04/17/12 03:33 PM (1 year, 1 month ago) |
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Buffet us ultra-rich and this wont affect the ultra-rich much.
it WILL affect -new- entripenuers and new innovative challengers to the ultra rich.
the ultra rich can afford it, the newly rich cannot.
this is a trick for the ultra rich in order to keep down new emerging competition.
they hate young businessmen who challenge their own status an market share.
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Diploid
Cuban
Registered: 01/09/03
Posts: 18,202
Loc: Rabbit Hole
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Re: The Buffet Rule [Re: Diploid]
#16102163 - 04/17/12 04:23 PM (1 year, 1 month ago) |
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Not sure I agree with these two or not. I don't know enough to judge them. But they're clearly not just a pair of ill-informed hacks.
I also realize that it won't take a lot of googling to find another two, equality qualified, who disagree. Hence this thread. I'm not convinced by either side so far.
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WASHINGTON — High earners who are worried that this year’s Tax Day will be the last one before their rates rise have more than just the White House and Washington to blame. They can also look to two academically revered, if publicly obscure, left-leaning French economists whose work is the subtext for the battle over tax fairness.
Emmanuel Saez and Thomas Piketty have spent the last decade tracking the incomes of the poor, the middle class and the rich in countries across the world. More than anything else, their work shows that the top earners in the United States have taken a bigger and bigger share of overall income over the last three decades, with inequality nearly as acute as it was before the Great Depression.
Known in Washington and the economics profession by the of-course-you-know shorthand “Piketty-Saez,” the two have been denounced on the editorial page of The Wall Street Journal and won mention in White House budget documents.
Mr. Saez, a professor at the University of California, Berkeley, has won the John Bates Clark Medal, an economic laurel considered second only to the Nobel, as well as a MacArthur Fellowship grant. Mr. Piketty, 40, of the Paris School of Economics, has won Le Monde’s prize for best young economist, among other awards.
Both admire, even adore, the United States, they say, for its entrepreneurial drive, innovative spirit and, not least, its academic excellence: the two met while re-searchers in Cambridge, Mass. But both also express bewilderment over the current conversation about whether the wealthy, who have taken most of America’s income gains over the last 30 years, should be paying higher taxes.
“The United States is getting accustomed to a completely crazy level of inequality,” Mr. Piketty said, with a degree of wonder. “People say that reducing inequality is radical. I think that tolerating the level of inequality the United States tolerates is radical.”
As much as Mr. Piketty’s and Mr. Saez’s work has informed the national debate over earnings and fairness, their proposed corrective remains far outside the bounds of polite political conversation: much, much higher top marginal tax rates on the rich, up to 50 percent, or 70 percent or even 90 percent, from the current top rate of 35 percent.
The two economists argue that even Democrats’ boldest plan to increase taxes on the wealthy — the Buffett Rule, a 30 percent minimum tax on earnings over $1 million — would do little to reverse the rich’s gains. Many of the Republican tax proposals on the table might increase income inequality, at least in the short term, according to William G. Gale of the Tax Policy Center and many other left-leaning and centrist economists.
Conservatives respond that high tax rates would stifle economic growth, at a minimum, and cause some businesses and high-income workers to flee to other countries. When top American tax rates were much higher, from the 1940s through the 1970s, businesses could not relocate as easily as they can now, say critics of Mr. Piketty and Mr. Saez.
“I materially disagree with the idea you can raise a marginal tax rate to 70 percent and not have an impact on economic growth,” said Ike Brannon, an economist at the American Action Forum. “It’s absurd on its face.”
But Mr. Piketty and Mr. Saez argue that history is on their side: Many countries have higher tax rates — and the United States has had higher tax rates — without stifling growth or encouraging the concentration of income in the hands of the very rich.
“In a way, the United States is becoming like Old Europe, which is very strange in historical perspective,” Mr. Piketty said. “The United States used to be very egalitarian, not just in spirit but in actuality. Inequality of wealth and income used to be much larger in France. And very high taxes on the very rich — that was invented in the United States,” he said.
Mr. Saez added, “Absent drastic policy changes, I doubt that income inequality will decline on its own.”
It's long article, so I'm stopping here. Read the rest at NY Times.
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Wanna hear something depressing? One out of four Shroomerites wants to lock me in a government cage for using a substance they don't like.
Hard to believe, right? Read it for yourself:
http://www.shroomery.org/forums/showflat.php/Number/7874721#Post7874721
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Phred
Fred's son
Registered: 10/19/00
Posts: 12,646
Loc: Dominican Republic
Last seen: 29 minutes, 45 seconds
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Re: The Buffet Rule [Re: Diploid]
#16102499 - 04/17/12 05:49 PM (1 year, 1 month ago) |
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I've heard this argument but it doesn't hold a lot of water if the wealthy get bailed out when their risk comes due.
True, but the one issue has nothing to do with the other. And, of course, with the exception of the ill-advised bailout of Chrysler in the eighties, this most recent bailout was pretty much the first time it was ever done, and helped out just a tiny tiny fraction of "the wealthy".
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Also, why didn't that argument apply a few decades ago when the wealthy had to pay well over 50%?
Please provide a link to a credible source demonstrating the last time the capital gains rate was at 50%.
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These are prominent economists who know more about this than you, me, and everyone on Shroomery combined.
They are entitled to their own opinions and to their own theories. They aren't entitled to their own facts. The fact is that the average "rich" dude pays a higher percentage of his income in federal income taxes than does the average middle class dude. This is easily checkable on any of dozens of reputable sources. This isn't a big secret; all the data is by law available to anyone who bothers to look it up on the various government websites and has been for a very long time.
Is it possible under some sets of circumstances for a given "rich" person to end up paying a lower percentage of his annual income than his secretary for a single year every now and then? Sure. But every year? Nope. That kind of trick can be pulled off only by the very best and brightest (and luckiest) working in very small niche fields, and even then just for a short time.
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Namely, that I haven't seen a clear consensus from the people who study this for a living one way or the other.
This isn't a matter of consensus, but of fact. The IRS keeps records on this kind of thing, you know. Publishes, the data, too. It's not amenable to argumentation.
Phred
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Icelander
The Minstrel in the Gallery
Registered: 03/15/05
Posts: 79,813
Loc: underbelly
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Re: The Buffet Rule [Re: Phred]
#16102518 - 04/17/12 05:54 PM (1 year, 1 month ago) |
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Phred, considering your views that the rich are paying more than their fair share do you have an objection to a flat rate tax for all but the poor?
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"Hang on tightly, let go lightly" -anonymous
“under the present brutal and primitive conditions on this planet, every person you meet should be regarded as one of the walking wounded. we have never seen a man or woman not slightly deranged by either anxiety or grief. we have never seen a totally sane human being.”
― Robert Anton Wilson
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