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Should poor people be allowed to vote on tax policy?
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2018 Mar 28, 4:33pm 21,206 views 90 comments
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81
HappyGilmore
2018 Mar 30, 8:43am
Sniper says
I know--none of the Trump supporters ever provide data.. It is humorous.
Ha Ha Ha, providing "data"..
that's awesome.
I know--none of the Trump supporters ever provide data.. It is humorous.
82
MrMagic
2018 Mar 30, 8:45am
MrMagic
2018 Mar 30, 8:45am
HappyGilmore says
Sniper says
Ha Ha Ha, providing "data"..
that's awesome.
I know--none of the Trump supporters ever provide data.. It is humorous.
83
Reality
2018 Mar 30, 9:45am
HappyGilmore says
I wasn't the one moving the goal posts. I was pointing out that higher top marginal tax rate doesn't translate to more taxes collected. Here is a more detailed article on this topic:
https://mises.org/library/good-ol-days-when-tax-rates-were-90-percent
When top brackets had exorbitantly high rates, people simply sought different ways of compensating their most talented employees and/or recognized income differently. Only a tiny number of people (not top 1% but more like 0.001% of the population) ever paid those top brackets in each of those years when top brackets were close to 90%.
On top of that, the idea that taxing the top 20% to 1% more would make the economy and society better is simply wrong! The top 1% is 3,000,000+ people in the US. That's $3,000,000+ possible employers deploying their own earned money in market competition. Compared to that, the Congress has only about 500 people, plus a dozen cabinet-level officers in the White House, plus a few thousand staffers and a few tens of thousands of lobbyists surrounding them. That's two orders of magnitude (100x) more concentration of power! compared to the original 3,000,000+ people that make up the top 1%. Increasing taxation is essentially ripping off the top 20% to top 1% and concentrate the power and resources to the top 0.01%! It should be little wonder that the economy has stagnated as the government spending as percentage of GDP grew in the past half century compared to earlier times.
It is interesting that you picked 1948 as your starting year (or more precisely, the talking points brainwashing the public that you have been reading start with that year). Just before that, 1946-47 saw a severe recession. 1946 saw an 11% decline in GDP, almost as drastic as at the depth of the Great Depression (1932, 12% decline). Before the introduction of Keynesianism, dating back to at least the beginning of the Bank of England, circa 1700, every major war was followed by monetary contraction in order to soak up the excessive liquidity/inflation during the wars. The so-called "trend" you see after Keynesianism was perpetual war-footing; Paul Krugman hinted at the scheme when he advocated an imaginary war against Martians at the end of the Great Recession nearly a decade ago. The Cold War launched in 1948 was that "imaginary war" implemented on planet earth. By 1973, the perpetual war footing had resulted in run-away inflation and the near-collapse of the economy. That's why Nixon's first priority was "Detente" with major Cold War rivals.
You can look up the growth of federal government spending during 1948-1973. The annual growth rate was around 6% annual rate (a little more than 4x over 25 years), while the GDP (combining both the real economy and the government waste) only grew at about 2.8% annually. That's why, despite your love for those years that you never lived personally, the cumulative effect of those 25 years was the US government having to default on the obligations of the post-WWII world financial system (Bretton Woods) and the Americans on the verge of facing run-away inflation and stagnation.
Reality saysNo, there isn't such a correlation.
Yes, there is. Despite your efforts to distract and move the goalposts, the 1% paid a higher % of their income as taxes when rates were 90% then they do now. There is a correlation between one's tax rate and how much tax he pays.
I wasn't the one moving the goal posts. I was pointing out that higher top marginal tax rate doesn't translate to more taxes collected. Here is a more detailed article on this topic:
https://mises.org/library/good-ol-days-when-tax-rates-were-90-percent
When top brackets had exorbitantly high rates, people simply sought different ways of compensating their most talented employees and/or recognized income differently. Only a tiny number of people (not top 1% but more like 0.001% of the population) ever paid those top brackets in each of those years when top brackets were close to 90%.
On top of that, the idea that taxing the top 20% to 1% more would make the economy and society better is simply wrong! The top 1% is 3,000,000+ people in the US. That's $3,000,000+ possible employers deploying their own earned money in market competition. Compared to that, the Congress has only about 500 people, plus a dozen cabinet-level officers in the White House, plus a few thousand staffers and a few tens of thousands of lobbyists surrounding them. That's two orders of magnitude (100x) more concentration of power! compared to the original 3,000,000+ people that make up the top 1%. Increasing taxation is essentially ripping off the top 20% to top 1% and concentrate the power and resources to the top 0.01%! It should be little wonder that the economy has stagnated as the government spending as percentage of GDP grew in the past half century compared to earlier times.
Government spending in the 50s and 60s increased at the same rate as usual. The trend line is not sharper during those decades.
It is interesting that you picked 1948 as your starting year (or more precisely, the talking points brainwashing the public that you have been reading start with that year). Just before that, 1946-47 saw a severe recession. 1946 saw an 11% decline in GDP, almost as drastic as at the depth of the Great Depression (1932, 12% decline). Before the introduction of Keynesianism, dating back to at least the beginning of the Bank of England, circa 1700, every major war was followed by monetary contraction in order to soak up the excessive liquidity/inflation during the wars. The so-called "trend" you see after Keynesianism was perpetual war-footing; Paul Krugman hinted at the scheme when he advocated an imaginary war against Martians at the end of the Great Recession nearly a decade ago. The Cold War launched in 1948 was that "imaginary war" implemented on planet earth. By 1973, the perpetual war footing had resulted in run-away inflation and the near-collapse of the economy. That's why Nixon's first priority was "Detente" with major Cold War rivals.
Reality saysGDP growth is a bad thing when it is due to government spending and central planning
Good--since that wasn't the case in the years with high top tax rates and high GDP, then my point stands.
You can look up the growth of federal government spending during 1948-1973. The annual growth rate was around 6% annual rate (a little more than 4x over 25 years), while the GDP (combining both the real economy and the government waste) only grew at about 2.8% annually. That's why, despite your love for those years that you never lived personally, the cumulative effect of those 25 years was the US government having to default on the obligations of the post-WWII world financial system (Bretton Woods) and the Americans on the verge of facing run-away inflation and stagnation.
84
Reality
2018 Mar 30, 9:54am
HappyGilmore says
My apologies for assuming the relevant data is at the finger tip of anyone bothering to look up. I was pointing out the far more important aspect about how to interpret the data in your cited GDP statistic. GDP statistic includes both real economy and government waste (simply because GDP was designed as measure of debt service capacity; government being the enforcer of debt contracts get to issue new chips for cancelling existing debt; so both new economic/productivity growth and government printing can serve to zero out debts). Since the rich individuals and corporations tend to take on far more debts than the poor who simply don't have the credit worthiness to get as much loans to begin with, those newly issued chips through government spending benefit the rich and well-connected. GDP statistic is just a mind-game to fool the bottom 90% in intelligence.
When you look up government spending in 1948 vs. 1973, you'd notice that the latter is more than 4x more than the former, so the annual growth rate was about 6% (use Rule-of-72 or use a scientific calculator capable of exponentiation), contrasting with what you cited as 2.8% annual GDP growth during those 25 years. Let's not forget the 2.8% number includes that 6% cancerous growth, so the real economy grew at much lower rate.
The rot was already started in 1948. The degeneration accelerated in 1973 when the money became pure fiat after closing of the "Gold Exchange Window." Concentration of power through government taxation and government spending is the fundamental problem.
Reality saysThe 1948-73 real economic growth was much less than the cited 2.8% when we subtract the rapidly expanding government spending. That's explains why the US government had to default on the "Gold Window" by 1973, despite the fraudulent GDP print that you cited.
OK then--I've shown data to support my point. You've shown nothing. How about providing some data showing the "true" growth.
Especially considering that government spending was increasing at the same rate back then as it is now.
My apologies for assuming the relevant data is at the finger tip of anyone bothering to look up. I was pointing out the far more important aspect about how to interpret the data in your cited GDP statistic. GDP statistic includes both real economy and government waste (simply because GDP was designed as measure of debt service capacity; government being the enforcer of debt contracts get to issue new chips for cancelling existing debt; so both new economic/productivity growth and government printing can serve to zero out debts). Since the rich individuals and corporations tend to take on far more debts than the poor who simply don't have the credit worthiness to get as much loans to begin with, those newly issued chips through government spending benefit the rich and well-connected. GDP statistic is just a mind-game to fool the bottom 90% in intelligence.
When you look up government spending in 1948 vs. 1973, you'd notice that the latter is more than 4x more than the former, so the annual growth rate was about 6% (use Rule-of-72 or use a scientific calculator capable of exponentiation), contrasting with what you cited as 2.8% annual GDP growth during those 25 years. Let's not forget the 2.8% number includes that 6% cancerous growth, so the real economy grew at much lower rate.
The rot was already started in 1948. The degeneration accelerated in 1973 when the money became pure fiat after closing of the "Gold Exchange Window." Concentration of power through government taxation and government spending is the fundamental problem.
85
HappyGilmore
2018 Mar 30, 10:24am
Reality says
If it's so easily obtained, why would you not post it? Are your fingertips too busy?
Reality says
Yes, I'm aware of what you were saying. Rather than restating it again, most people would have actually provided the backup data to support their point. The fact that you didn't is quite telling.
My apologies for assuming the relevant data is at the finger tip of anyone bothering to look up.
If it's so easily obtained, why would you not post it? Are your fingertips too busy?
Reality says
I was pointing out
Yes, I'm aware of what you were saying. Rather than restating it again, most people would have actually provided the backup data to support their point. The fact that you didn't is quite telling.
86
HappyGilmore
2018 Mar 30, 10:30am
Reality says
Nope--it's correct. It is easily seen in the decline in money velocity as more and more money is hoarded at the top. Wealth inequality is the biggest problem in the US economy by a wide margin.
Reality says
OK--still waiting for your charts and graphs that strip away the government spending and show the "true" growth so we can compare those numbers. Otherwise my data stands unopposed. And the correlation between high top tax rate and GDP growth remains quite strong.
On top of that, the idea that taxing the top 20% to 1% more would make the economy and society better is simply wrong!
Nope--it's correct. It is easily seen in the decline in money velocity as more and more money is hoarded at the top. Wealth inequality is the biggest problem in the US economy by a wide margin.
Reality says
You can look up the growth of federal government spending during 1948-1973. The annual growth rate was around 6% annual rate (a little more than 4x over 25 years), while the GDP (combining both the real economy and the government waste) only grew at about 2.8% annually. That's why, despite your love for those years that you never lived personally, the cumulative effect of those 25 years was the US government having to default on the obligations of the post-WWII world financial system (Bretton Woods) and the Americans on the verge of facing run-away inflation and stagnation
OK--still waiting for your charts and graphs that strip away the government spending and show the "true" growth so we can compare those numbers. Otherwise my data stands unopposed. And the correlation between high top tax rate and GDP growth remains quite strong.
87
Reality
2018 Mar 30, 10:53am
HappyGilmore says
Fine, if you insist, here are the details. Please keep in mind several issues when reading the numbers:
1. GDP statistics are not generated by counting good and services directly, but by cumulative chain growth over the years each year (i.e. growth or negative growth compared to previous year, then compounding over many years), so there can be significantly amplified distortions over long time period.
2. The dollar unit of count changes over time; be very careful when looking up numbers from different sources as they can be using different vintages of the dollar unit. Price inflation is another unreliable animal coming out government statistical bureaus, and the federal government itself has re-caliberated several times in the last couple decades alone how inflation statistics is calculated. So take all "deflators" with a grain of salt.
Here is a link to the federal 1948 spending budget, measured in 2009 dollars:
http://federal-budget.insidegov.com/l/50/1948
As you can see, the total spending was $224B (in 2009 dollars); surplus 88.6B amounting to 4.5% of GDP, so GDP was approximately 1.97T (in 2009 dollars). Total spending not counting Social Security liability accrued or government employee pension liability or asset depreciation was 11.4% of GDP.
Here is a link to the federal spending budget for 1971, once again measured in 2009 dollars:
http://federal-budget.insidegov.com/l/73/1971
As you can see, the total spending was $897B (in 2009 dollars); deficit 98.3B amounting to -2.1% of GDP, GDP approximately 4.78T. Total spending not counting Social Security liability, Medicare/Medicaid liability (new accounting trick introduced in the late 1960's), GSE liability (like Fannie, Freddie, etc.; also taken off the book by Johnson administration), government employee pension liability or asset depreciation was 18.8% of GDP.
On the same page, you can also see the numbers for 1973 in the lower right. but you have to deduce the total GDP yourself instead having it given to you on the page.
As you can see, government waste was growing at double the growth rate of GDP (real economy + government waste); that's before counting the off-book and liability items that are not directly counted in current year spending at that time but accrue as liabilities as a result of new forms of taxation invented during the years in between.
The conclusion: despite much higher top tax bracket nominal tax rate, the actual federal government spending as a percentage of the real economy was much much smaller in the 50's than in the 1970's (and later). Concentration of wealth and power is the result of government spending; comes to think of it, that should be obvious: North Korea and Venezuela have much higher percentage of government intervention in the economy, resulting in much greater wealth polarization between the billionaire leaders (in USD terms despite being in those poor socialist countries) vs. the actually starving-to-death poor.
If it's so easily obtained, why would you not post it? Are your fingertips too busy?
Fine, if you insist, here are the details. Please keep in mind several issues when reading the numbers:
1. GDP statistics are not generated by counting good and services directly, but by cumulative chain growth over the years each year (i.e. growth or negative growth compared to previous year, then compounding over many years), so there can be significantly amplified distortions over long time period.
2. The dollar unit of count changes over time; be very careful when looking up numbers from different sources as they can be using different vintages of the dollar unit. Price inflation is another unreliable animal coming out government statistical bureaus, and the federal government itself has re-caliberated several times in the last couple decades alone how inflation statistics is calculated. So take all "deflators" with a grain of salt.
Here is a link to the federal 1948 spending budget, measured in 2009 dollars:
http://federal-budget.insidegov.com/l/50/1948
As you can see, the total spending was $224B (in 2009 dollars); surplus 88.6B amounting to 4.5% of GDP, so GDP was approximately 1.97T (in 2009 dollars). Total spending not counting Social Security liability accrued or government employee pension liability or asset depreciation was 11.4% of GDP.
Here is a link to the federal spending budget for 1971, once again measured in 2009 dollars:
http://federal-budget.insidegov.com/l/73/1971
As you can see, the total spending was $897B (in 2009 dollars); deficit 98.3B amounting to -2.1% of GDP, GDP approximately 4.78T. Total spending not counting Social Security liability, Medicare/Medicaid liability (new accounting trick introduced in the late 1960's), GSE liability (like Fannie, Freddie, etc.; also taken off the book by Johnson administration), government employee pension liability or asset depreciation was 18.8% of GDP.
On the same page, you can also see the numbers for 1973 in the lower right. but you have to deduce the total GDP yourself instead having it given to you on the page.
As you can see, government waste was growing at double the growth rate of GDP (real economy + government waste); that's before counting the off-book and liability items that are not directly counted in current year spending at that time but accrue as liabilities as a result of new forms of taxation invented during the years in between.
The conclusion: despite much higher top tax bracket nominal tax rate, the actual federal government spending as a percentage of the real economy was much much smaller in the 50's than in the 1970's (and later). Concentration of wealth and power is the result of government spending; comes to think of it, that should be obvious: North Korea and Venezuela have much higher percentage of government intervention in the economy, resulting in much greater wealth polarization between the billionaire leaders (in USD terms despite being in those poor socialist countries) vs. the actually starving-to-death poor.
88
HappyGilmore
2018 Mar 30, 11:59am
HappyGilmore says
Poor conclusion. Governmental waste is higher now than in either 1950 or 1970 and GDP is much lower. This is because of wealth inequality.
Bottom line: High top tax rate had an effect on inequality which can lead to better economic performance.
The conclusion: despite much higher top tax bracket nominal tax rate, the actual federal government spending as a percentage of the real economy was much much smaller in the 50's than in the 1970's (and later). Concentration of wealth and power is the result of government spending; comes to think of it, that should be obvious: North Korea and Venezuela have much greater government intervention in the economy, resulting in much greater wealth polarization between the billionaire leaders (in USD terms despite being in those poor socialist countries) vs. the actually starving-to-death poor.
Poor conclusion. Governmental waste is higher now than in either 1950 or 1970 and GDP is much lower. This is because of wealth inequality.
Bottom line: High top tax rate had an effect on inequality which can lead to better economic performance.
89
Reality
2018 Mar 30, 12:03pm
HappyGilmore says
What do you think taxing the top 20% to 1% does? transferring money from the middle class and upper class to the very top 0.01%!
The concept of "hoarding wealth" is silly (who wouldn't invest if there is good prospect of return on capital; over-leverage not hoarding is usually the reason behind slow down in investment) ; letting the poor spending the economy into prosperity is another non-starter: why don't we encourage people to rob and steal? Wouldn't that "jump-start" the economy? Of course not.
The so-called money velocity problem is simply the result of uncertainty and lack of investment opportunity, thanks to previous and pending government interventions in the economy. The Keynesian "multiplier effect" requires positive returns on investment to work; robbing the competent who can make positive returns and giving the resources to the incompetent who have a track record of spending themselves into poverty obviously would turn the multiplier into something less than 1, which is exactly what has happened in recent decades.
What's needed to help the poor are private entrepreneurs who can discover what each poor person is good at, then giving the latter the opportunity to undertake endeavors that can generate greater return than the individual person's cost of living. That's how the real "multiplier effect" can be started in the real economy. A political system that allows the less efficient to vote their own cost of living higher and higher (the effect of "free-housing," "free-food," "free-education," "free-medicine") while robbing resources from the more efficient is only going to bankrupt itself. The cost of "free" on items that have to be produced by someone else, is infinite!
On top of that, the idea that taxing the top 20% to 1% more would make the economy and society better is simply wrong!
Nope--it's correct. It is easily seen in the decline in money velocity as more and more money is hoarded at the top. Wealth inequality is the biggest problem in the US economy by a wide margin.
What do you think taxing the top 20% to 1% does? transferring money from the middle class and upper class to the very top 0.01%!
The concept of "hoarding wealth" is silly (who wouldn't invest if there is good prospect of return on capital; over-leverage not hoarding is usually the reason behind slow down in investment) ; letting the poor spending the economy into prosperity is another non-starter: why don't we encourage people to rob and steal? Wouldn't that "jump-start" the economy? Of course not.
The so-called money velocity problem is simply the result of uncertainty and lack of investment opportunity, thanks to previous and pending government interventions in the economy. The Keynesian "multiplier effect" requires positive returns on investment to work; robbing the competent who can make positive returns and giving the resources to the incompetent who have a track record of spending themselves into poverty obviously would turn the multiplier into something less than 1, which is exactly what has happened in recent decades.
What's needed to help the poor are private entrepreneurs who can discover what each poor person is good at, then giving the latter the opportunity to undertake endeavors that can generate greater return than the individual person's cost of living. That's how the real "multiplier effect" can be started in the real economy. A political system that allows the less efficient to vote their own cost of living higher and higher (the effect of "free-housing," "free-food," "free-education," "free-medicine") while robbing resources from the more efficient is only going to bankrupt itself. The cost of "free" on items that have to be produced by someone else, is infinite!
90
Reality
2018 Mar 30, 12:23pm
HappyGilmore says
Glad you are coming around to the view that government spending is higher (as a percentage of GDP, or as a percentage of real economy = GDP - government spending) in the past decade than in either 1950's or in the 1970's . . . resulting in much slower growth of the real economy (despite positive GDP prints, as government spending=waste takes up more and more of the GDP, resulting in shrinking real economy despite positive GDP growth). Concentration of wealth/power resulting from government spend=waste is exacerbating wealth inequality.
Do you know how many people actually paid the top tax rate each year when top rate was close to 90%? According to this link, hardly anyone did:
http://memepoliceman.com/examining-the-90-tax-rate/
"In 1958, out of 45.6 million tax filers, only about 10,000 reported incomes subject to the 81% rate or above. This means only .02% of filers had any income taxed at the 81% rate, let alone the 91% rate!"
In fact, if you read the rest of the article in detail, you'd notice that the top 3% in the US paid less taxes proportionally back then than now!
It should be obvious that income tax rates have little to do with wealth disparity. Almost none of the billionaires get where they are by income, but by asset appreciation, which is not taxable by any income tax rate! simply because they haven't sold. Bezos and Gates obviously never traded much around their core holdings. Even Warren Buffet, the one with the highest turn-over among the top billionaires, do you think he got his $60B or so by earning $1B a year subject to income tax? Of course not. his annual income in his 60+ year career were mostly between $30,000 and $30M! Even at $30M a year, it would take 2000 years to add up to $60B! He is old, but not 2000 years old! Most of his wealth came from capital appreciation. Talking about income tax rate is utter nonsense if your beef is with wealth concentration.
Wealth disparity/concentration is the result of excessive government spending/intervention and monetary policies. Taxing more money from the top 60,000,000 Americans (top 20%) or the top 3,000,000 (top 1%) and give it to the top 0.01% (about 30,000 politicians, lobbyists and the ultra wealthy they serve) would only make the situation worse.
Poor conclusion. Governmental waste is higher now than in either 1950 or 1970 and GDP is much lower. This is because of wealth inequality.
Glad you are coming around to the view that government spending is higher (as a percentage of GDP, or as a percentage of real economy = GDP - government spending) in the past decade than in either 1950's or in the 1970's . . . resulting in much slower growth of the real economy (despite positive GDP prints, as government spending=waste takes up more and more of the GDP, resulting in shrinking real economy despite positive GDP growth). Concentration of wealth/power resulting from government spend=waste is exacerbating wealth inequality.
Bottom line: High top tax rate had an effect on inequality which can lead to better economic performance.
Do you know how many people actually paid the top tax rate each year when top rate was close to 90%? According to this link, hardly anyone did:
http://memepoliceman.com/examining-the-90-tax-rate/
"In 1958, out of 45.6 million tax filers, only about 10,000 reported incomes subject to the 81% rate or above. This means only .02% of filers had any income taxed at the 81% rate, let alone the 91% rate!"
In fact, if you read the rest of the article in detail, you'd notice that the top 3% in the US paid less taxes proportionally back then than now!
It should be obvious that income tax rates have little to do with wealth disparity. Almost none of the billionaires get where they are by income, but by asset appreciation, which is not taxable by any income tax rate! simply because they haven't sold. Bezos and Gates obviously never traded much around their core holdings. Even Warren Buffet, the one with the highest turn-over among the top billionaires, do you think he got his $60B or so by earning $1B a year subject to income tax? Of course not. his annual income in his 60+ year career were mostly between $30,000 and $30M! Even at $30M a year, it would take 2000 years to add up to $60B! He is old, but not 2000 years old! Most of his wealth came from capital appreciation. Talking about income tax rate is utter nonsense if your beef is with wealth concentration.
Wealth disparity/concentration is the result of excessive government spending/intervention and monetary policies. Taxing more money from the top 60,000,000 Americans (top 20%) or the top 3,000,000 (top 1%) and give it to the top 0.01% (about 30,000 politicians, lobbyists and the ultra wealthy they serve) would only make the situation worse.
« First « Previous Comments 81 - 90 of 90 Search these comments
The top 20% of income earners pay 95% of the tax burden in the United States. Poor people overwhelmingly take back from the tax system in terms of benefits (they are not a net contributor to the system). Middle class people tend to wash when it comes contributions vs taking.
My question, is this fair? It seems to me the most fair system would be a simple flat tax across the board with no modifications up or down based on income level.
Should the poor be allowed to vote other people's money to themselves via the government? For instance support for universal health care according to Pew Research was nearly 100% for income levels below $50,000, but only enjoyed a 40% favor with income levels above $200,000. That makes sense, but is it fair?