patrick.net

Please don't confuse the ideologues with facts.

Lemme just say here that I think this analysis is missing the fact that rents and land values are still highly inflated, for everyone from Section 8 people to millionaires.

A 3BD in the East Bay costs $1500/mo to rent. That's the going rate so that's the money we gotta pay.

That's $18,000 per year.

What would happen to that rent if taxes were bumped up say +$9000? Wouldn't rents fall $9000?

I know expound on this theory that rents and taxes are a zero sum thing a lot but it perplexes me why no one else sees this.

Do we really spend that much more now then historically, as a % of GDP? On "defense"?

I heard that shlep sean hannity before pump his sizzle chest to the tune of "to those based on their needs, from those who have" or some line of 'marxist' babbling. And I wonder what his answer would be if you asked him how the Revolutionary war that birthed this great country, was funded,,,,,,,(because I drempt up some wacko idea that the original settlers/land speculators, funded the war proportionate to what the wealthiest could afford to give)

Do we really spend that much more now then historically, as a % of GDP? On “defense”?

Yes. Pull out defense spending from the current economy and much of the country would just implode economically.

$900B/yr is a lot of monies -- 10 million $90,000 jobs. Cut spending in half and see UE double from 15M to 30M, lol, as the System collapses on itself (5M thrown out of work incurring ~10M follow-on layoffs as entire communities retrench thanks to the lost gummint spending).

In GDP terms it's not quite as bad as the Raygun days, but so much of our present GDP is funded by trade deficits and borrowing, so that's kinda deceptive IMO. The debt held by the public has expanded from $5.8T to $9T over the past two years, that's $1.6T/yr of "stimulus".

Looking at real GDP:

http://research.stlouisfed.org/fred2/series/GDPCA

I think if you back out all the BS we've really got an ~$11T GDP, putting the ~$1.0T national security establishment at 9%, matching the 1950s and 60s ~10% of GDP.

errc says

Do we really spend that much more now then historically, as a % of GDP? On “defense”?

We spent more during WWII, and shortly thereafter, but that's about it. We had tax rates as high as 90% then.

Like I said, you can't have the big military without progressive taxation.

Really, military spending has remained at war time levels since WWII, and it's the primary reason why tax rates have been as high as they had been.

Want to know why all those northern European countries can afford to provide education, health care, and all sorts of other benefits to their citizens, and yet their budget problems aren't any worse than ours? It's because they don't spend ten percent of their GDP fighting boogeymen in the desert (or the arctic, or the jungle).

Taxes should IMHO fund things that the private sector either can't make money on or things for the general well-being of the country. The military falls into both of these categories. You can debate all day how much we should spend as a percentage of this or that, but the bottom line is we need to defend our country and our interests abroad.

I'm not so sure I oppose progressive taxation - but I do oppose the current tax system. It seems to me that people at the lower end are paying a higher percentage of their individual income in taxes. There are too many deductions, loopholes, special deductions for this that and the other - with a lot of these benefiting those in the top tier. A punitive progressive tax will just force the "haves" to seek more creative ways to hide their income.

If everyone paid the same amount, that would be fair. It would be, however, unkind to take a high percentage of one groups income than another. A straight percentage on all income would be more realistic. No taxes on money under the "poverty" line (our kindness is reserved for those in most need) and everything over that - let's say - 20% or whatever it would take. Roll SS, Medicrap, and federal taxes into a single entry. Stop subsidizing housing, the latest fads (i.e. lobbyists pet issues), child care (there are consequences to the behavior that leads to children!), etc. End the social engineering - The government doesn't make good choices and is so unpredictable as the political climates swings left and right. Capture the taxes in a straight-up way from the bottom to the top - no special deals. You get a similar effect to a progressive tax (capturing the high-end wage earners money) - the tax code as it exists is a whack-a-mole of incentives and penalties with some winners that have "friends" writing the tax code and some "losers" that don't have the right friends. You can't fix the inequity in our system with the current tax code/structure. You'll just force people to run to the existing (and future) tax havens. Of course this method will never pass through congress - it takes one of their most powerful means of controlling the masses.

You want more jobs and manufacturing in this country? End the corporate tax. I'm sure that idea will be really popular around here ;)

EightBall says

I’m not so sure I oppose progressive taxation

Apparently you do.

EightBall says

f everyone paid the same amount, that would be fair. It would be, however, unkind to take a high percentage of one groups income than another.

Unkind ?

What's to stop the wealthy from hiding their income under a flat tax, as you say they would with a more progressive tax ?

I agree with Kevin.

It's going to be interesting to see if the republicans can hold the Bush cuts for the rich that are expiring. If they do, given current circumstances, we will know that our country's democracy is completely over.

How would they hide their wealth under a flat-no-deduction taxation system? I don't think a progressive tax with a million deductions works. The net effect is that those with increasing incomes get penalized while those at the top hold steady. I'm all for the tax system taking progressively more money as the incomes rise but I don't think punitive tax rates work in the current system of penalties and freebies is workable. Let's call a spade a spade and get to something more simple, predictable, and sane.

With limited or no deductions on the high end (and taxing all income no matter how it is achieved the same), how do you think they will be able to hide their income? With an ever-changing tax system, how is one to plan for the future - on either end of the spectrum - when the whims of whoever happens to be in charge dictate what will happen in the next year? The electorate is fickle and whether you like it or not the political disposition of the "majority" swings left and right over time and the swiss-cheese style rules will ultimately favor those that can game the system with the ones in the middle taking the hit.

As far as the "unkind" comment, I'm trying to not be inflammatory. If you want to say it is a travesty that lower-income workers pay a higher percentage of their income to the government, fine.

If you want to get partisan and talk about "Bush cuts", you are pretty clueless. Increasing the rate at the high end will just force the "haves" to modify their tactics. You won't increase the revenues to the treasury. You'll just make the accountants and tax attorneys more money and things won't change much (if at all). Many people decry the movement of money offshore - don't you think this may increase that phenomenon?

What's the point of a "progressive" tax system with increased PERCENTAGE RATES anyway? Why do you think it will work any better at 40% or even 60% on the high end when it obviously doesn't work at the current percentages? What percentage on the high end is enough for you? The only thing that it does is make people feel better that they are penalizing those (to paraphrase Dick Gephart) who "Benefit from life's lottery". Repeating the same actions and expecting different results is insanity.

The best argument for a progressive tax structure has nothing to do with fairness or penalizing rich people. It's among the best ways to maintain a healthy, vibrant economy over time by offsetting the tendency of wealth to concentrate at the top of society. Extreme wealth inequality will doom a society...

I agree with your comment about extreme wealth inequality - I just don't think the current tax structure is capable of achieving that goal. It is more of a carrot-and-stick system and the fact that the rate structure is progressive has little to do with reality - has it ever come close to achieving that goal OR is it the reason we haven't been able to get there?

Regardless of your argument/view, it is most often presented as a punish-the-haves in a class warfare fashion designed to garner votes. Inherent to your argument is a "spread the wealth" mentality that makes many people cringe even though it may be in there best interest depending on where they are in the food chain.

So if it is "among the best ways to maintain a healthy, vibrant economy" - what are some of the other " best ways"? Perhaps it is time to try something different?

Bring back the 70% - 94% top marginal tax rate like before the Reagan era. Those in the lowest income bracket are currentlly paying proportionately more taxes than those in the top income bracket than any period since 1917.

EightBall says

If you want to get partisan and talk about “Bush cuts”, you are pretty clueless. Increasing the rate at the high end will just force the “haves” to modify their tactics. You won’t increase the revenues to the treasury. You’ll just make the accountants and tax attorneys more money and things won’t change much (if at all). Many people decry the movement of money offshore - don’t you think this may increase that phenomenon?

If the part of the Bush cuts for the rich expire, then the top (marginal) rate goes from 35% to 39%. Is this the magic level where all the rich go out trying to figure out how to not pay that 4%, even though they know our government is in financial trouble ? No, I don't think so. Most of the rich (even the republicans) aren't that greedy and selfish.

(that 4% is for income over 210,000)

I think they are trying to extend the cuts for all the other brackets.

rentalinvestor says

Why is extreme wealth disparity so bad for society?

Kinda makes me wish that reincarnation were true, and that you get born into serfdom in some third world country for a few lives, and then come back and weigh in. Such a stupid question.

But the answer you might appreciate (and must know) is that the extremely poor don't consume beyond their survival needs(OR LESS). And a high percentage of our countries economy is based on sales of consumer goods domestically.

This is partly why many on this site are always talking about the importance of the existence of a healthy middle class.

rentalinvestor says

It’s funny that the people I see doing this in the wealthy communities around me are illegal mexicans who provide services for their wealthy neighbors. The poor whites and blacks just rely on taxes or union jobs.

Let me guess... trust fund ? Inheritance ?

Why did you post 5 times ? You can go into edit and delete, if you wish to be polite.

marcus says

Such a stupid question.

Not really. The amount of money Bill Gates has or had doesn't affect me in the slightest.

Wealth disparity isn't the core problem, it's just a symptom.

The core problem is rentierism, especially rentierism in real estate. Everybody's so happy about all the free money they're making in real estate income properties again, yet housing is every poor person's #1 life expense.

These two things are deeply related. Everywhere a poor person turns he's getting rented. By the landlord, the telecom companies, the corner market.

EightBall says

The military falls into both of these categories. You can debate all day how much we should spend as a percentage of this or that, but the bottom line is we need to defend our country and our interests abroad.

I have to believe that spending more than the rest of the world put together is probably beyond debate as being a little more than we need. That is only using the "official" defense spending number, not even including a lot of defense spending that is tucked away in other parts of the budget without being counted as defense.