Leo over at Opening Arguments cites a Wall Street Journal article warning against the horrors of increasing taxes on top levels of income.
Notably, however, the share of taxes paid by the top 1% has kept climbing this decade — to 39.4% in 2005, from 37.4% in 2000. The share paid by the top 5% has increased even more rapidly. In other words, despite the tax reductions of 2001 and 2003, the rich saw their share of taxes paid rise at a faster rate than their share of income.
Those poor abused rich people. The WSJ seems to make a big deal out of the steady climb of tax rates on the top 1% from 39.4% to 37.4%. Horrors! Except that’s a rounding error compared to the rates paid on high incomes between the Presidencies of Herbert Hoover and Ronald Reagan. From 70% on unearned income and 60% on earned income in 1970 down to 50% regardless of the income in 1982 down to 31% in 1992. If you recall, the Reagan/Bush I years were good for top income recipients but horrible for the National Debt.
Take a look at the top marginal tax rates over the past century.
Meanwhile, payroll taxes for social security are higher, but there’s a neat trick to that. Congress is borrowing money from Social Security to pay for general expenditures — in effect, using a more regressive tax to fund the government.
During the boom years of the 40s, 50s, and 60s, the top rates were at a stunning 80 and 90% for the upper reaches of income. Obviously there were other factors at play in the post-war world, but those numbers at least show that confiscatory tax rates at high levels of income are not necessarily damaging to the economy.
It seems to me that, where previous generations grew the economy, our current approach is to mine it.
I think in January we get some buckets and bells and stand outside store doors taking up collections for them. They are obviously hurting and in need. Somebody has to make life a little better for them.
And, don’t get me wrong, I understand that there is a fairness argument to be made. But, like I said in another topic recently, it was drilled into me that life isn’t fair. When a poor kid doesn’t get to go to as nice a school as a rich kid simply due to the poor kid’s poor choice in parents, I can agree that perhaps it’s unfair, but I mostly just shrug. Similarly, when discussing appropriate tax structures, fairness tends to only register dimly.
A better argument is that, if we make our tax structure too burdensome, the rich folks are just going to take their toys and leave. So, I figure as a matter of tax policy, we need to give them just enough tax incentive to keep them in the harness, working for our economy. Where is the sweet spot? I don’t know. But I suspect we’re selling ourselves short at 39%. By the same token, 90% is probably too high.
Let’s say you knew how to generate $10 billion in income. What percentage of that would you need to keep to make you bother with the effort? Would you even get out of bed in the morning for a measly $3 billion?
I still think the tax code is so complex that whatever you raise it to will be side-stepped by most, and unfairly high for those that don’t go out and do things to get around it (like buy a bunch of farmland and get a tax break for being a family farm).
Now, I think we could both get on board with a progressive system that could be designed without exemptions.
For example, the first $30k would be taxed at 0%, the next $50k would be taxed at 10%, the next $100k would be taxed at 25%, the next $200k would be taxed at 50%, and so on. I could buy into that.
Sounds plausible to me. Would we count inheritances as income to the recipient?
I hate it when Democrats bitch about Socialist Insecurity taxes.
Who exactly started that godawful program? Who has defended it tooth and nail over these 65 or 70 odd years of its existance.
If you have a problem with Social Security taxes, well, cut Social Security taxes. I’ll help.
But don’t use Social Security taxes as an excuse to raise income taxes. Or capital gains taxes. Or death taxes.
I wish that we lived in a country where no one could pay more than 25% of their income in federal, state, and local taxes of any kind, no matter how much you make.
Well now wait a second. Social Security is paying its way. The problem is going to hit at about 2020 when the bill from the Social Security fund to the general fund come due.
What happened is that in the 80s, a commission headed up by Greenspan recommended that we make Social Security solvent by jacking up the payroll taxes — taxes that are capped at 90k (or thereabouts) worth of income. You don’t pay these taxes on income in excess of $90k. This actually worked. Social Security took in a lot more than it put out — of course, that’s proper since it had to save to pay a lot of expenses down the road.
Unfortunately, Congress is using this Social Security money to pay for non-Social Security expenditures. The problem, Dear Brutus, is not with social security but with general expenditures and revenues. That’s where the crisis is. (Absent changes, the general fund house of cards come crashing down decades before the Social Security house of cards). But, for the Bush administration and its disciples (don’t know enough about you Buzzcut to know if you are one of them), the problem with talking about the general fund and regular taxes is that programs BushCo likes and taxes it doesn’t like might end up being cut and raised, respectively.
Social Security benefits and the $90k and less earning plebes aren’t of much concern to BushCo. So, messing around with it would have been win-win-win.
Again, Doug, if you have a problem with that, take it up with Democrats. They controlled Congress from ’83 to ’94, and have again since ’06. What have they done to fix the problem?
If it were up to me, I’d have privatized SS back in ’83, when we had the chance.
No matter what formula you use, no matter whose set of numbers you subscribe to, no one is addressing the societal change taking place.
The plain and simple fact is, when the government takes my money (by force) and gives it to someone else they deem worthy because they have less, it’s SOCIALISM. Taxes are a necessary evil for services (roads, police, fire etc) and ought not be used to redistribute wealth. Period
You know, my natural inclination is to believe that socialism is a bad thing, but I’m not sure I have a good reason for it. We’re willing to take money from people by force (i.e. “tax” them) for roads, police, military, courts, jails, sanitation, and some other stuff. So, it’s a line drawing issue — not a fundamental objection to taking money from people and using it for a societal good. (“We’ve established what you are ma’am, now we’re just haggling over the price.”)
What criteria should we use to distinguish permissible use of the money from impermissible socialism? And, at a more fundamental level, what is it about those criteria that necessarily create the distinction between permissible and impermissible?
Doug, I don’t mind in the least paying taxes for necessary services I directly use and need.
Of course, where the line has been stretched (beginning with FDR) is in “helping those less fortunate” i.e. welfare, medicare, medicaid, social security, health insurance etc etc etc.
Once the government started becoming the provider of all things, it just accelerated and expanded into a nanny-dom. 60 years of hand outs had to catch up sooner or later.
The criteria “line in the sand” should have been drawn 60 years ago. Now you can make a case it’s in our best interest to spend tax dollars on anything that will make someone somewhere feel better, eat better, look better or behave better because ultimately we’re all better off. It’s passed the point of reason and common sense, it’s ALL permissible.
There are self-preservation reasons to do stuff like welfare — society sort of breaks down when too many people are getting a raw deal. Courts and cops can only keep order to a relatively small degree. Citizens have to buy into the idea that obeying the law is, by and large, in their self-interest. If they don’t, they’ll just start taking stuff. Sixty years ago, things were breaking down in Europe and had broken down already in Russia. A little bit of socialism then arguably stopped a whole lot of socialism later.
since this is so close to x-mas, may I remind you all., liberal, and “conservative”( fascist-discatorauthoritarianreligiousfundamentalistextemists nutjobs)that Jesus was a liberal socialist. All the worlds problems are caused by greedd, and the miisuse of power. I think John Lennon said it best in “Imagine”
I dont hear anybody saying well, if property taxxes and other taxes are too high, and the economy is screwed up, then lets tax the rich. sky high! until they howl. that will get their attention. its called checks and balances. most ordinary working poor persons,( serfs, and economic slaves) are stuck with whatever system will feed their families, and put food on their tables. If they have to pay a wheel barrow of reichmarks to buy a loaf of bread, or fuel their SUV, they will elect anybody who will change that miserable condition for them( recall Nazis?)So by taxing the rich sky high, and jailing crooked govt officials( or something- you fill in the blank), the govt of, by, for, and answerable to the people will have the final say, as well we should. Once the rich start whining about how high their taxes, maybe they will get up off their greedy, fat. lazy, apathetic collective butts, and maybe change the laws, so we can all share in the slice of the pie. rather than fightein each other over the scraps from the tables of the rich.
class warfare? yes, shamelessly, and unabashedly. why? because they deserve it. when? now! who? US! SPARTACUS! SPARTACUS!
and remember: jesus was a liberal socialist.
merry x-mas!
please read my blog:
http://x-wire.blogspot.com
lets all re-engineer America, and fix whats broke.
thank you for the “soapbox”
Jesus was a liberal socialist. However, it was his idea that the people should do it on their own. The church should be doing those things.
So, if you are against government socalisim but are a Christian, then you should be working to make it such that the government would have nothing to do. Flood the market with care for everyone. Give up your wealth on your own instead of it being forced from you.
Now, if you really don’t care about Jesus, then I can understand why you would feel strongly that whatever YOU earned (after all, God had nothing to do with it) is YOURS.
Even if the above is true, the self-preservation issues Doug points out are also valid. A big part of the problem in places in the middle east is that there are two kinds of people; the EXTREMELY rich and the EXTREMELY poor. The poor really don’t have much to loose, so they are capable of doing some pretty extreme things and really don’t care too much what the rich tell them to do.
It seems to me that an economic system takes on the character of the type of government where it functions.Capitalism has worked well in USA mainly because we have had a democratic constitutional government with input from many sides,especially with a free press and separation of branches of government,and an indepeddant judiciary system.( in any totalitarian govt the main executive of the country appoints all the judges) Communist China by all estimates has functioning successful capitalism also,but they impose a totalitarian political regime. Capitalism itself is functioning well,but it’s a question who benefits . Nordic countries have a socialistic economic system,yet are democratically governed and socialism benefits people in a general way. .In Soviet Russia socialism was imposed by totatalitarian regime,so socialism served a select few of elite decision makers.
One current events example: It’s been politically expedient to immediately name Social Security ‘socialism’ and a problem,and then require the solution be cutting taxes,cutting benefits and privatization.Instead,we could look at redistribution of benefits and new ways of financing. Social Security has been a very successful program for a long time.Cutting benefits is already a failed solution in my estimation. Has anyone noticed less universal functioning of our own economic system over the last 8 yrs. or so as our federal government has become more closed and inefficient? Now we expect small towns of 5-10 thousands to undertake what the federal govt has been providing,but with no new financing.
Rather than bother pointing out again that you don’t advance an argument, let alone win one, by typing “socialism” in all caps, let’s just look at a couple of facts.
Before Social Security the vast majority of elderly people in this country lived in poverty.
Before Medicare, 60% did not have health insurance. That’s at 1960s prices.
It’s enough to note that anyone who argues that all he should pay for–or have “seized”, in the preferred hyperventilated fashion–are the roads he drives on and the police and firemen who protect him has expressly chosen to ignore–at best–the elderly, the sick, and the disabled. But we’re not required to argue about sentiment. He’s missed an entire chain of interrelationships that make a society a society, that care for people he cares for–if any–whether or not they see it or feel the need for it. The absence of lead from paint and gasoline, the removal of asbestos, clean drinking water (in fact, most any water at all west of Colorado, including that which irrigates the fields that produce a lot of your food), the safety of that food, your personal safety on the job, on public transportation, and in commercial properties, the insurance of your bank deposits, the vouch against securities fraud, disease and epidemic control, animal control and the prevention of cruelty, the merchantibility of the things you buy, the funding of the human genome project and basic research which may one day provide the solution to your spending your final years in a demented haze, assuming you’re still able to pay as you go, since you think the rest of us aren’t supposed to care. Just to offer a quick list.
Any or all of which might in fact save, or have already saved, the life of a child who will grow up to cure your cancer. Or pave that friggin’ street, if that’s more important to you.
Doghouse, forgive me for using all caps, it’s just that when I speak I use inflection to make certain points (as do most folks).
On what historical data do you base your statement that the vast majority of elderly lived in poverty before social security? One could make the argument social security was a gross over reaction to the depression.
Before medicare those 60% had no need for health insurance, as health care was as reasonable as any other service. Again a program created to fix a problem that wasn’t necessarily there.
As for the remainder of your post, I apologize for not going into the minute detail of each and every program I don’t mind paying for. You have proved the point that with enough minutia, everything and anything can be justified as “good for society in general”.
And, spare me the sanctimonius high brow analogies of paved streets and cancer cures, I’ll concede you are far more intelligent than I.
Feel better now?
The liberal wingnut Julian Simon wrote this in 2000:
The most impressive decline in poverty over the past half century has
been among senior citizens. About one-half of seniors were in poverty
in the early 1950s, compared with about 10 to 15 percent today.â€
As for the “I don’t use it so I shouldn’t pay for it” argument, if you don’t use, say, a prison, does that mean you shouldn’t pay for it? The problem is, too many relationships and items are interrelated to say, I’ll only pay for roads and fire and police protection. Like the argument about not paying for schools when your kids don’t go there. Doesn’t paying to ensure an educated workforce benefit you?
This is not to say there aren’t cogent arguments to be made about levels of funding, and what indeed benefits the local, state or national society as a whole. But the firm line in the sand of “I don’t use it” is never going to fly, because you would find out what you really “use” once it’s gone or cut back severely.
Oh, and there’s another argument for increasing the tax burden on the wealthy — they have more money, so you don’t have to raise taxes as much to increase your collections.
I still think people forget about the percentages, though. If I make $100,000, and someone else makes $1,000,000, and we both pay 37%, the other guy already pays 10x as much taxes as I do! By using percentages, we already (in theory) make people that have more pay more.
Once you get over the amount of money that it takes to live, everything after that is just a matter of quality. I think everything over that amount should be taxed the same, since that amount has nothing to do with what people need to live.
Jason sez: since that amount has nothing to do with what people need to live.
Well what I need to live and what you need to live are probably two entirely different things.
No offense, but I might not like to live like you live, ya know? That’s sorta why our country has been so popular to immigrants, here you get to create your level of wealth and lifestyle. (until you guys decide just how much is enough for us and everybody else)
I’m sure how I like to live and how you like to live are not the same.
What I need to live and what you need to live are not all that different, assuming we live in the same general area.
Doughouse- you might want to examine some of those programs you tout. For instance, the irrigation programs of the west are largely corporate welfare programs that are destroying, or have destroyed, significant parts of the western environment.
Is this what you are touting as the common good?
Besides- just because you see something as the common good, why is anyone else obliged to accept your ad homininem circumstantial argument that government programs are good because you say so?
Check out the late Earlham professor Marc Reisner’s great book “Cadillac Desert” for an appalling history of the irrigation, and thus sprawl generation, of the west.
Well, I have seen Chinatown, Mike.
The point wasn’t to tout any program–Social Security has its faults, too, like any human endeavor–but to point out the vast net of programs that are generally ignored in lists of programs “I” think benefit “me”, as well as noting the usual shortsighted notion of “benefit” that goes along with it.
I mention agriculture because it’s more readily recognized as a “benefit” and isn’t responded to with a “I don’t live in California”. I think at this point we need to keep the program in place, whether it got there by hook or crook, but I’ll be happy to help you track down all the corporate land and water thieves if you’d like.
The argument “You should pay for it because it benefits you” misses the point.
It’s my life; therefore, it’s for ME and ME ALONE to decide what benefits me. No one else gets to decide it for me, nor are they entitled to compel me to act in that manner.
I am not a slave to the collective. I exist solely for my own sake, and have no obligation whatsoever to provide for another.
And, if a group decides to kill you or decides to destroy your property, simply because they can, does the rest of the community have a duty to lift a finger to protect you?
Hobbes had something to say about the life of the solitary individual being nasty, brutish, and short.
No, of course they don’t.
If we had different politics in Washington,irrigation projects wouldn’t be ‘corporate welfare’ Isn’t just about anything passed now through Congress ‘corporate welfare’? We have a president eager to sign corporate welfare into law,’cause it helps the economy grow,and is good for all of us,especially when and if it begins to trickle down’. I know he has no chance but should someone like Edwards , along with those who think like him, get elected,they could greatly diminish corporate welfare,and make welfare more of an individual undertaking,according to need,as it should be and had been. The news item that he pays $400+ for a haircut( which his critics often bring up) is personal narcissism and is an unnecessary personal indulgence. I still remember the news where he made his plane wait for his haircut,and it bothers me. But like all political dirt, it may or may not be all true ,and probably is exaggerated.One really never knows. But still it makes me think he may be a little dense to the ‘big’ picture around him. This is the state of politics in the USA…Even my favorite candidate already has a cracked veneer,and it’s not going to get any better.
You’re consistent, at least.