Judging from the articles and columns popping up in my feed reader, it looks like the class war may be heating up a bit. I think it’s been going on for quite some time, just that most of us haven’t been particularly aware.
Probably the most significant article I’ve seen in the past few days is the New Yorker article on the billionaire Koch brothers and their war against progressivism.
But, this morning I was struck by the juxtaposition of two articles: one by Cal Thomas saying we should just lower our expectations, suck it up, and be happy being poor. Meanwhile, Les Leopold suggests that the super-rich are just getting richer in our billionaire bailout economy while we peons struggle and that we shouldn’t be afraid to soak them.
I’m going to guess that none of the Koch money is making its way to Leopold. Cal Thomas is probably another issue.
These lousy Koch Brothers. What kind of lifelong ‘libertarian’ billionaires give money to the not-libertarian right wing conservative groups, form the not-libertarian John Birch Society, and never a penny to the Libertarian Party?
I suspect it’s the kind whose political beliefs are less about core principles and more about trying to dress up their selfishness. Probably the only way we could know for sure is if they could somehow be dropped to the bottom of the socioeconomic scale and see if they, nonetheless, remained champions of the free market.
I have some experience with a not-for-profit foundation that Charles Koch has founded and funded, and it is decidedly libertarian, not “Republican.”
As a side note, why is it that people seem to immediately impute evil intent on those who disagree with them, rather than recognize that just maybe, these people have another way they think is better. I see this “rush to judgment” from both conservative and liberal publications and conservative and liberal friends. Frankly this antagonism towards people that disagree just sickens and disgusts me. It also might be fueling this culture/class war you mention.
If you are implying that the Cal Thomas call for lower expectations implicitly or explicitly endorsed the super-rich getting richer in our billionaire bailout economy, then you’re calumniating him. Nothing in his column was inconsistent with flogging billionaires who get bailed out.
I’m with Paul on this one. While you may not agree with the Koch brothers, they have a right to defend themselves an their interests in the court of public opinion as well as the court of law. Each of the extremes uses boogeymen to explain why their unpopular opinions are unpopular. We need the Koch brothers as much as we need Geoge Soros to keep the drama alive.
Remember that debate we were having about the Laffer curve? Someone was saying we tax the rich too much? See the Leopold article:
I’m certain, though, that they used that tax savings to create numerous jobs, so I’m very thankful for their reduced tax burden.
Jason: I was involved in the Laffer conversation, and do not recall myself (or anyone else) saying that the rich are “taxed too much.” However, you do make an underlying point I wish to briefly address with a couple points:
1) The richest 400 taxpayers are not exactly a representative sample of the top 1% (which makes up an additional 2,999,600 people).
2. I have no idea how that figure is calculated or what “took in” means. Is this how much their stock holdings went up? Or is this how much they actually “recognized” as taxable income?
3. The one thing the richest 400 will have in common is that they own companies and almost all of their revenues are from capital gains. Capital gains are currently taxed at 15% (going up to 20% next year).
The reason for the low capital gains tax rate is because capital gains are not income. “Income” means “consumption”, and if you sell an investment, you generally do not have any increase in your con sumption power, you have a transfer. You and I have covered this area before in previous threads, but generally, most tax experts, liberal and conservative alike, recognize that capital gains are technically not income. Thus the lower treatment.
Paul said:
And this is part of why our current system of taxation is broken. Most tax experts can still be wrong, just as most finance experts were wrong & put this whole country into a recession.
Regardless how I earn money, it is still money. It can still be spent, saved, and taxed.
Two people make $300k. One is in consulting, and is paid by the hour. The other is a real estate investor, and gets her money through selling land and houses for more than she paid for them.
I have yet to hear why the consultant should be taxed more than the investor. Does the investor somehow contribute more to the nation’s well-being?
Jason: ask and ye shall receive. I don’t necessarily agree with all of the author’s points/arguments, but they are decently persuasive.
http://marshallinside.usc.edu/joines/549/articles_pdf/wsj941121.txt.pdf
Thanks Paul, interesting points! I’d concede subtracting the known inflation rate off the top of gains, that is only fair. I don’t think retained earnings could come into it, though. In my example above, it doesn’t play into it at all.
I’d also call BS on the notion that if you discounted for those two things, there would be nothing to tax. If that were the case, being an investor would be a low-paying job. Last I checked, it wasn’t. There is still some net profit there that should be taxed at the same rate.
Jason: I am glad you liked the article. I understand your concern about the assertion that there is nothing to tax. I don’t buy it either.
Since you have conceded inflation, let’s make the issue a bit more complicated: (1) Let’s imagine the asset in question is a rental house. Let’s say inflation is 2%. Let’s also hypothecise that the housing market nationwide has increased at 4%, 2x the cost of inflation, (very common in the early part of the decade). Let’s also hypothecise that the local housing market is superheated, and has risen at 8%, which is 2x the rate of the national housing market. Therefore, a house someone bought ten years ago is now worth 2.15 times what they paid for it. Meanwhile, the amount of inflation is only 21% of the house value.
If the taxpayer sells the rental house they bought ten years ago, even if we exempt the inflation amount, the taxpayer will pay tax on approximately 80% of the sales price of the house. This means the taxpayer loses money if they decide to purchase a similar house in the same neighborhood a month later. Does this seem fair to you?
(Just to be clear, I am not actually suggesting we should eliminate capital gains taxation, but this scenario does make sense on why lower taxation is appropriate.)
I see where you are going there. I suppose I could concede keeping the capital gains exemption that currently exists for the home you live in. However, for any extra houses, you pay it as income. After all, if I had an apartment that whole time, the costs went up for me as well and I don’t get a tax break for it.