A reader called the attached to my attention. It's a pretty well articulated viewpoint, it seems to me.
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I'm not claiming to understand the link to a high degree. I do know that the liberals absolutely would refute it as absurd. However, it just seems to make sense to me that an active and thriving economy (where people are relatively happy and feeling secure, by the way) would produce more tax revenue at lower tax rates, than a constrictive, sluggish one with more burdensome taxes.
I hear all this talk about how the wealthy escape taxes, etc; I just cannot believe that blanket statement is true across the boards. In any event, though, whether they pay their "fair share" or not, (and it seems like somewhere there should be irrefutable proof of what the wealthy people and companies pay the I.R.S.) I contend that any extra spending money those people/companies have, DOES benefit the economy and thus the tax revenues with their business expansions, jobs, consumption of products and services to grow their businesses, etc;..
THUS, I think they would call this the "trickle down" theory--which undeniably works in spite of such disdain some have for it. The term itself is expressed in a negative, condescending way. Perhaps it should be called the "I-didn't-end-up-on-top-but-I'm-glad-I-have-a-good-job-from-them" theory. (to make it simpler, it could be abbreviated: "IDEUOTBIGIHAGJFT".
This is among the most spirited, intelligent discussions one is apt to encounter on a forum of any sort. Issues, not name-calling. How very refreshing.
As for me, I tend to accept the theory of the Laffer curve. Almost no economic theory is proven beyond argument, after all. It is possible to find exception to supply and demand, is it not.
I do not disagree that a Laffer curve exists, although almost by definition no one knows what it looks like or where along it we are. Sure, a rate decrease may cause a short-term increase in revenue but I don't think as much as holding a higher rate steady for a long time (that would be an interesting study). However, in my opinion, maximizing revenue should not be the goal of taxation. I think we need to tax just enough to pay our bills and we aren't doing that now. We either need to cut our bills or increase our revenue (well both really).
Well articulated, maybe, but not well reasoned IMO. By the author's logic, tax receipts increase as the tax rate decreases. Thusly, the largest receipts will be had from a 0% or even negative tax rate (refunds for all!). There are more instances of misleading information and flawed reasoning (state tax evasion when discussing national taxes) but I'll reserve my comments for another time.
This is pretty basic stuff...
'Laffer Curve' - http://en.wikipedia.org/wiki/Laffer_curve
I don't know about basic...that wikipedia article highlights the many misuses and shortcomings of the Laffer curve - basically that no one has any clue what the curve actually looks like or where the revenue maximizing point exists. A few thoughts come to mind, though. One is whether maximizing revenue should be the goal of taxation. A more appropriate goal would be to maximize economic size relative to tax revenue which involves taxing at the lowest possible amount to sustain a given economic level - put another way, keep government expenses to a minimum. The second thought is that reducing wealth inequities is worth the loss of "maximum revenue". It concerns me that a great spread of wealth creates divisions in society which can only lead to turmoil. True or not, some economically disadvantaged people will use the image of greedy capitalists as reasoning for violence against property and person, even that unrelated to the their plight. The third thought is that a tax on one's inputs into the economy (income) is counterproductive. Instead, the tax should be on what one takes from the economy (sales). The final thought is that the mean maximum marginal tax rate over the past 98 years has been just under 60% (median just under 70%) but is currently at 35% (set to increase to a whopping 38.6%). I'd argue that we've had a pretty good run as an economy on average during that period and taxation played an minor role in that. If anything, the constant yo-yo'ing of rates creates minor blips on the tax roles but would quickly normalize if ever left alone long enough to allow for it.
Just my two cents/ramblings at this late hour so go easy on me :-)
The most terrible weapon I have to attack with on subjects like these where my arsenal is almost devoid of names, numbers, concepts, cases-in-point, etc; is: a wet noodle. So it is I who is a clay pigeon here...
That said, first thought: I agree with lowest taxes possible and gov. expenses at a minimum. (frankly I'd like Uncle Sam to chiefly be able to defend us adequately) I wiould toss in the obvious that to keep expenses at a min. it stands that the ever increasing size of the gov. needs some sort of checks..
Second: As poverty-stricken as I am considered, I do not begrudge the wealthy their assets and cannot ever believe there could be some arbitrary figure as the "maximum". Granted, I have greater respect and even admiration for the ways in which some of the wealth has been earned with perhaps genius, and that proverbial 99% perspiration. In short, the American Dream should have no caps. Sorry, we all do not contribute to our society in an equal way. Instead of jerking down the top "haves", let's teach the "have nots" to do better. Our standard of living in my 61 years has improved a lot, but don't try to convince young people of this.
Third: if you're talking of something like a national sales tax instead of an income tax, I'd give it a whirl if it were not "too high", like, would 10% on everything taxable do the trick? You know, people like me (along with about 57%? of wage earners) who do not qualify to file income tax would have our pockets dipped into since no one would escape a tax like that. So I don't know why I'd even back that other than it'd take away some of the scare of the I.R.S. But there'd be PLENTY of other taxes to have to account for, like the SS tax and whatever. (oh, and mandatory healthcare)
Fourth: I agree that keeping tax rates as constant as possible would be easier to plan for, but, not many would protest if the rates were lowered "too much". Now, if you are saying you'd be OK with returning to those days of much, much higher rates, remember thought #1, keeping rates as low as possible.
There. Was that nasty enough?
I appreciate the good spirited debate. That can be hard to come by on these forums.
I agree that there isn't an arbitrary maximum one should be allowed to earn. Rather, I would advocate for something like a 25% sales tax on all new B2C goods with a $300 per person per month rebate (more details at thechampaignlife.blogspot.com under "The (Modified) Fair Tax"). Based on some rough numbers, that should satisfy tax revenue requirements, keep the apparent maximum rate low, consolidate all federal personal taxes into one transparent number, and place a higher tax burden on the wealthy who are more likely to buy expensive new goods.
I do think excessive wealth accumulation is a moral issue in that there are only so many resources available to humanity and even on my moderate salary I feel partly responsible for some African child's death from hunger because I earn and spend more than I require, money that could have been more fairly distributed globally and perhaps have prevented that death. I recognize my moral dilemma is probably an extreme and excessive wealth is a subjective term but the basic concept that a handicapped person who struggles to earn meager wages to supplement disability income and lead an independent life should not be subjected to the same level of taxation as a corporate executive is, I believe, fairly universally accepted. The degree to which wealth is redistributed or, perhaps more to the heart of the matter, the programs by which tax dollars are spent is likely the sticking point. I agree that living standards today are much improved over past decades and that is not recognized enough. Even things as fundamental as electricity are in reality not a necessity to live. Last I checked, food, water, and health are the minimums with clothing and shelter close behind. Everything else the government spends money on is ancillary to or in support of those fundamentals and likely being grossly wasted.
Given that we're not likely to move to a sales tax anytime soon, I think moving towards those higher tax brackets is required, after reducing expenses and balancing the budget of course, in order to pay down our debt. So I guess I'd say that we're not taxing at the minimum required to sustain our given level of economic activity. We're taxing too little and that debt is burdening our economy, preventing it from being as successful as it could. Now of course my moral dilemma comes back into play when I consider maximizing our economy potentially at the expense of another's but that's another matter...
In regards to "So I guess I'd say that we're not taxing at the minimum required to sustain our given level of economic activity." How could having to pay more to the I.R.S. sustain our given level of economic activity? Could that be explained in simple terms?
In regards to "...excessive wealth accumulation is a moral issue..." if any money is acquired or earned in a *legal* manner, I cannot see any immorality involved or any extra tax burdens justified.
Let's say, though, that whatever is considered "excessive" does end up being taxed well above what it is now. Let's say an "excessively wealthy" business man selling, say, milk, is like most people, living up to his particular means. With the extra tax burden eating into more of his profit, he has difficulty paying his employees, his creditors, his vendors, his own life's expenses, esp. with rising prices in the economy he has no control over,,,,so,,,what does he do? He raises his price of milk. Now, doesn't that hurt the poor, almost starving people who have no extra resources to pay that higher price?
"The degree to which wealth is redistributed" (or "spreading the wealth around") should be a disturbing concept. To grant such a potential abuse and misuse of power should not be simply dismissed or ignored. There are those of us who are concerned what evil could therein lie.
Finally, if our government is indeed set up via the Constitution in some manner to treat us all (whether poor, wealthy, young, old, healthy, sick) in an equal and just manner, where is the equality and justice in demanding such an inequality in taxation? Now if that question suggests that I may be among the few to not support the so-called progressive tax concept (the more $$ the higher the tax rate) even though I benefit by it at my low income level, then I will quickly say yes and comment: the fairest income tax concept I can think of for anyone's honest money, no matter the amount, is a flat percentage rate, as in tithing.
A note: I've enjoyed the posts here to date as they (almost) all have maintained a high level of civility. If that is not a fluke, I shall be happy to participate in subjects I normally do not due to the potential of ill will and/or being attacked with name calling, etc; The other chief reason I shy away from political/historical/religious topics is I did not major in them, and am only "on the surface" at best. Thank you.
What I meant was that if the federal government is spending more than it takes in each year, we either have to reduce spending or increase taxation. Assuming we can't reduce spending enough to balance the budget by itself before voters demand more services (perhaps a false assumption), we're not taxing enough to sustain our level of government and, without a functioning government, our level of economic activity.
The wealth generation may not be immoral but the possession of excessive wealth is immoral in my opinion. I recognize most others don't feel this way and perhaps rightfully so. I just personally couldn't live with myself knowing I have millions at my disposal when I could have worked for less or sold my product for less and allowed others to use that money to pay for food, education, etc. I'm also thinking more globally than nationally. If I buy all the water rights in a Guatamalan village and charge them 10x market rates for their drinking water, it may not be illegal but is certainly immoral (at least in my opinion) when the villagers die from dehydration because of my greed. The devil's in the details, though, as there's no good answer for how much is excessive.
I would argue that the milk man needs to lower his standard of living if he falls into this excessive wealth category. I honestly can't say I'd feel sorry for someone who could no longer afford a Ferrari. If he makes $40M/yr now and pays $15M in taxes and we increase that to $25M, he could increase prices to generate $10M more per year but he'd pay $8M of that in taxes. So now he's making $50M/yr and paying $33M, still a net win for the consumer if that extra tax subsidizes milk for the poor. He could keep increasing I suppose but eventually he'll get competition which will force his prices lower (heck, I'd take 1/1000th of his salary for the same job...his job can't be 1000x harder than mine). Supply and demand economics. Also, in many cases, the excessive wealth is generated by non-basics necessities. Price increases at a Hilton aren't going to directly impact the poor.
If you're looking for the fairest tax policy (as opposed to the most just), that would be a flat dollar tax, not a percentage. The billionaire would pay his, say $40K and the preschool teacher also pays her $40K. Why should the billionaire have to pay more? Is he benefiting more from the roads or national defense? Obviously, that isn't feasible which is why we use a percentage based system to charge people based on their ability to pay. A progressive tax allows the first x dollars you earn to be fully yours to use towards basic living expenses (food, clothing, shelter, etc), the next x dollars are taxed at a low rate and used for go towards basic lifestyle expenses (utilities, transportation etc), the next x dollars are taxed at a higher rate and used for regular lifestyle expenses (entertainment, hobbies, etc), and the last x dollars are taxed at the highest rate and used for luxury expenses (vacations, yachts, etc). Now I actually prefer a flat rate sales tax with a flat dollar refund over any income tax but that's a different matter.
Kind of funny, just moved on to the Wall Street Journal and look who has written an editorial today...