Raising Taxes

[NobleSavage]

It is longer than a Facebook meme, but worth the read.

Thom Hartmann | Roll Back the Reagan Tax Cuts

So we have to help Americans realize that “no new taxes” is a mantra that is meaningful to the very rich but largely hurts average working people.
Only when the current generation relearns the economic and tax lessons well known by the generation (now dying off) that came of age in the 1930s through the 1960s will this become politically possible. Americans need to learn what Europeans know about income taxes—that they really matter only to the rich.

We need to remind people that it was not that long ago when we had the rich paying top marginal tax rates of 70 percent (at the start of the Reagan years); and if we want to go further back, we used to have top marginal tax rates above 90 percent in the Eisenhower years. Our current tax rates and the antitax fever are the result of relentless right-wing propaganda that began during the so-called Reagan revolution and has continued ever since.

If we really want our country to recover its financial footing, we must roll back the Reagan tax cuts that took the top marginal rate from above 70 percent down into the 30 percent range. To stop the “casino economy” that always emerges when the very highest-income people are allowed to keep whatever they can get, regardless of how they got it (so long as it’s legal), there has to be a collective notion of “how rich is too rich for society to afford” and income above that rate is taxed at the old 70 to 90 percent rate.

In addition to rolling back the Reagan tax cuts so that millionaires and billionaires have little incentive to plunder their companies and slash (or export) their workforces, we must also ban the use of stock options as a form of compensation for top corporate executives. This will shift the focus of CEOs and senior managers from stock price and dividends (a focus that has destroyed numerous companies, from Enron to Lehman Brothers to BP) to the long-term health of the company itself.

If we want to keep the stock options as compensation, we must at the least tax those stock options at the same top marginal tax rates as the salaries of the rich by considering capital gains as ordinary income.

We have a lot of educating to do. And so long as the rightwing machine of the über-rich continues to “lose” (i.e., “invest”) millions of dollars a year in their ongoing disinformation campaign, it’s going to require all of us reciting the mantra: “Roll back the Reagan tax cuts!”

Yeah, don't forget that Reagan and the Democratic congress also cut out a metric ton of loopholes.

 

[Axulus]

It is longer than a Facebook meme, but worth the read.

Thom Hartmann | Roll Back the Reagan Tax Cuts

Yeah, don't forget that Reagan and the Democratic congress also cut out a metric ton of loopholes.

Yep. There really was very little difference in revenues as a percent of GDP. Her goal is just to soak the rich regardless of whether it actually helps raise much more revenue and helps the country.

 

[Loren Pechtel]

What part of "already taxed" do you not get?

The part where it is relevant. Lots of sources of income are taxed more than once. There is nothing sacrosanct about taxing a dollar of income once.

Look at the tax code--it's usually very careful to tax a dollar only once.

 

[Loren Pechtel]

.......and poor Jane has not had a beer in 15 years, or a hobby, or a vacation, or any education or anything else that costs money for those same fifteen years. Neither one of these people could live on their take home pay. To make matters worse, she has invested it all in oil stocks and lost most of her savings. You assume that her savings has helped her, but it has instead locked her into a form of self denial for the paltry sum of $18,000. Your scenario is based on false parameters...go ahead and have a beer my friend.

That's her decision to make.

Just because you can't save for the future doesn't mean you have the right to deny that option to the rest of us.

 

[bilby]

The part where it is relevant. Lots of sources of income are taxed more than once. There is nothing sacrosanct about taxing a dollar of income once.

Look at the tax code--it's usually very careful to tax a dollar only once.

So what?

Was the tax code handed down on tablets of stone?

All you are demonstrating by this statement is that the people who wrote the tax code agreed with your position. That tells us nothing at all about whether they were right to do so.

There are good reasons not to tax a dollar more than once, but "the tax code is written that way" isn't one of them.

By presenting abysmally bad arguments to support a position, you weaken the argument. If you can't work out a good argument for your position, it is generally better to remain silent.

Reaching the right conclusion by the wrong means is just dumb luck.

 

[Loren Pechtel]

It is longer than a Facebook meme, but worth the read.

Thom Hartmann | Roll Back the Reagan Tax Cuts

So we have to help Americans realize that “no new taxes” is a mantra that is meaningful to the very rich but largely hurts average working people.
Only when the current generation relearns the economic and tax lessons well known by the generation (now dying off) that came of age in the 1930s through the 1960s will this become politically possible. Americans need to learn what Europeans know about income taxes—that they really matter only to the rich.

We need to remind people that it was not that long ago when we had the rich paying top marginal tax rates of 70 percent (at the start of the Reagan years); and if we want to go further back, we used to have top marginal tax rates above 90 percent in the Eisenhower years. Our current tax rates and the antitax fever are the result of relentless right-wing propaganda that began during the so-called Reagan revolution and has continued ever since.

If we really want our country to recover its financial footing, we must roll back the Reagan tax cuts that took the top marginal rate from above 70 percent down into the 30 percent range. To stop the “casino economy” that always emerges when the very highest-income people are allowed to keep whatever they can get, regardless of how they got it (so long as it’s legal), there has to be a collective notion of “how rich is too rich for society to afford” and income above that rate is taxed at the old 70 to 90 percent rate.

In addition to rolling back the Reagan tax cuts so that millionaires and billionaires have little incentive to plunder their companies and slash (or export) their workforces, we must also ban the use of stock options as a form of compensation for top corporate executives. This will shift the focus of CEOs and senior managers from stock price and dividends (a focus that has destroyed numerous companies, from Enron to Lehman Brothers to BP) to the long-term health of the company itself.

If we want to keep the stock options as compensation, we must at the least tax those stock options at the same top marginal tax rates as the salaries of the rich by considering capital gains as ordinary income.

We have a lot of educating to do. And so long as the rightwing machine of the über-rich continues to “lose” (i.e., “invest”) millions of dollars a year in their ongoing disinformation campaign, it’s going to require all of us reciting the mantra: “Roll back the Reagan tax cuts!”

This whole argument is based on a false premise--that people actually paid those rates. The old code was full of loopholes, Reagan closed a good portion of them. To describe it as a "tax cut" is a great oversimplification.

 

[arkirk]

Yeah, don't forget that Reagan and the Democratic congress also cut out a metric ton of loopholes.

Yep. There really was very little difference in revenues as a percent of GDP. Her goal is just to soak the rich regardless of whether it actually helps raise much more revenue and helps the country.

I have NEVER HEARD OF AN INSTANCE WHERE THE RICH WERE SOAKED WITH TAXES THAT MADE THE POOR MORE HUNGRY OR POORER. Also you never hear of the rich starving because they have to pay more taxes. Your priorities are misguided. You seem to think if you provide a graph, we will accept your discarding social responsibility in favor of Randian economics.

 

[laughing dog]

The part where it is relevant. Lots of sources of income are taxed more than once. There is nothing sacrosanct about taxing a dollar of income once.

Look at the tax code--it's usually very careful to tax a dollar only once.

Not true. Most labor income is taxed twice - Social security and income. I repeat - there is nothing sacrosanct about taxing a dolar of income once. Moreover any capital gain that is inherited has not been taxed at all. so it is inaccurate to claim that inheritance taxes are taxing income more than once.

 

[Valjean]

It was my understanding that taxes came into play when money moved, that a dollar is taxed each time it's exchanged.

 

[Medicine Man]

Medicine Man, if you said anything important I wouldn't know.​

Gee....whatta shame. you'll be the only one, here, who won't know all the whining-and-crying about federal taxes & redistribution-of-wealth is reheated-rhetoric that's nearly....​

...150 YEARS OLD!!!!
November 15, 2014​

 

[arkirk]

.......and poor Jane has not had a beer in 15 years, or a hobby, or a vacation, or any education or anything else that costs money for those same fifteen years. Neither one of these people could live on their take home pay. To make matters worse, she has invested it all in oil stocks and lost most of her savings. You assume that her savings has helped her, but it has instead locked her into a form of self denial for the paltry sum of $18,000. Your scenario is based on false parameters...go ahead and have a beer my friend.

That's her decision to make.

Just because you can't save for the future doesn't mean you have the right to deny that option to the rest of us.

It is a fairy story, Loren and you KNOW IT. I find it hard to believe you believe the thing you post here. You seem to actualy reflect 19th century values while you fly around the world on 21st century jets.

 

[arkirk]

The part where it is relevant. Lots of sources of income are taxed more than once. There is nothing sacrosanct about taxing a dollar of income once.

Look at the tax code--it's usually very careful to tax a dollar only once.

This is pure bunk. Show me how it is even possible when even public agencies pay various taxes. Anyway, the federal tax code also assures that taxes are not paid on a great many of those dollars.

 

[Loren Pechtel]

Look at the tax code--it's usually very careful to tax a dollar only once.

So what?

Was the tax code handed down on tablets of stone?

All you are demonstrating by this statement is that the people who wrote the tax code agreed with your position. That tells us nothing at all about whether they were right to do so.

There are good reasons not to tax a dollar more than once, but "the tax code is written that way" isn't one of them.

By presenting abysmally bad arguments to support a position, you weaken the argument. If you can't work out a good argument for your position, it is generally better to remain silent.

Reaching the right conclusion by the wrong means is just dumb luck.

It's so extensively through the tax code that I think it must be a guiding principle in designing it. The only substantial violation of this was dividends and that has been changed.

- - - Updated - - -

Yep. There really was very little difference in revenues as a percent of GDP. Her goal is just to soak the rich regardless of whether it actually helps raise much more revenue and helps the country.

I have NEVER HEARD OF AN INSTANCE WHERE THE RICH WERE SOAKED WITH TAXES THAT MADE THE POOR MORE HUNGRY OR POORER. Also you never hear of the rich starving because they have to pay more taxes. Your priorities are misguided. You seem to think if you provide a graph, we will accept your discarding social responsibility in favor of Randian economics.

Tax the rich too much and you wreck the economy and people starve.

Look at Venezuela.

- - - Updated - - -

That's her decision to make.

Just because you can't save for the future doesn't mean you have the right to deny that option to the rest of us.

It is a fairy story, Loren and you KNOW IT. I find it hard to believe you believe the thing you post here. You seem to actualy reflect 19th century values while you fly around the world on 21st century jets.

19th century values? You think being prudent is old fashioned??

 

[Loren Pechtel]

Look at the tax code--it's usually very careful to tax a dollar only once.

This is pure bunk. Show me how it is even possible when even public agencies pay various taxes. Anyway, the federal tax code also assures that taxes are not paid on a great many of those dollars.

Dollars that are not taxed fall into three basic categories:

1) Dollars that are not actually income--business expenses, investment expenses and the like.

2) Dollars which you spend large amounts of merely to maintain the status quo, you don't actually benefit from. The two main categories are medical expenses and losses due crime. (The medical losses have a 10% of AGI threshold before you can start to claim them and then only if you itemize. I don't know the rules on the others.)

3) Dollars spent on something the government wishes to encourage. The big example for the average person is the mortgage interest deduction. (The government is actually trying to encourage home ownership, not mortgages.)

 

[laughing dog]

It's so extensively through the tax code that I think it must be a guiding principle in designing it. The only substantial violation of this was dividends and that has been changed.

Sorry, but dividends are still taxed twice. As is labor income. Your argument is based on ignorance of the facts.

Tax the rich too much and you wreck the economy and people starve.

That didn't happen in the Nordic countries or England in the 1960s.

 

[arkirk]

So what?

Was the tax code handed down on tablets of stone?

All you are demonstrating by this statement is that the people who wrote the tax code agreed with your position. That tells us nothing at all about whether they were right to do so.

There are good reasons not to tax a dollar more than once, but "the tax code is written that way" isn't one of them.

By presenting abysmally bad arguments to support a position, you weaken the argument. If you can't work out a good argument for your position, it is generally better to remain silent.

Reaching the right conclusion by the wrong means is just dumb luck.

It's so extensively through the tax code that I think it must be a guiding principle in designing it. The only substantial violation of this was dividends and that has been changed.

- - - Updated - - -

Yep. There really was very little difference in revenues as a percent of GDP. Her goal is just to soak the rich regardless of whether it actually helps raise much more revenue and helps the country.

I have NEVER HEARD OF AN INSTANCE WHERE THE RICH WERE SOAKED WITH TAXES THAT MADE THE POOR MORE HUNGRY OR POORER. Also you never hear of the rich starving because they have to pay more taxes. Your priorities are misguided. You seem to think if you provide a graph, we will accept your discarding social responsibility in favor of Randian economics.

Tax the rich too much and you wreck the economy and people starve.

Look at Venezuela.

- - - Updated - - -

That's her decision to make.

Just because you can't save for the future doesn't mean you have the right to deny that option to the rest of us.

It is a fairy story, Loren and you KNOW IT. I find it hard to believe you believe the thing you post here. You seem to actualy reflect 19th century values while you fly around the world on 21st century jets.

19th century values? You think being prudent is old fashioned??

I am not arguing against "prudence" Loren. I am arguing against the notion your story relates to prudence at all. You just tell that story to keep the stiffs working and sober. Too much work makes Jack a dull boy....like needing to work 15 years to accrue $18,000. That is a pretty dull and dry idea, then you and Max complain this person has no sophistication. I am warning everybody...pay no attention to this story. It is inaccurate and brings early 20th century figures to the table.

 

[NobleSavage]

Look at the tax code--it's usually very careful to tax a dollar only once.

This is pure bunk. Show me how it is even possible when even public agencies pay various taxes. Anyway, the federal tax code also assures that taxes are not paid on a great many of those dollars.

Ah, you are aware of the earned income tax credit. Those fuckers make money just by filing their taxes. Oh, wait a minute, who gets EITC?

 

[Alcoholic Actuary]

Well, any cutoff point is arbitrary, so...

The point I think you are missing, is why should an investor earn the same number, or greater widgets than the laborer (whose labor is also directly contributing to the investor's purchasing power)? If anything, he ought to be earning less (but only does so over a short timeframe). We can play games all day with the parameters of the mathematical model you are using. Eventually, the compounding of returns and deferral of tax payment will always eclipse simple interest (which is what annual taxes amount to).

aa

One the shortcomings of discussing a highly simplified example is that only addresses a few factors, and as such can be misleading. Let's try...

Suppose we have two individuals: Joe Six Pack and Jane Frugal. Joe and Jane work at the same sweat shop, and make 10,000 a year doing the same work for the same hours. After taxes it leaves them with 8,500 (they pay 1500 a year in taxes, a 15% rate).

Joe spends 100 percent of his income. He could save 10% of his take home pay and invest 850 a year in a lump, but he would have to give up his beer and Cable TV. He is not willing to cut back forgo the entertianment, so he consumes it every day for 15 years.

Jane is willing to give up beer and cable TV for 15 years, she will drink water and listen to her table clock-radio. She invests 850 a year for the next 15 years.

Fifteen years later Joe has spent a total of 11,900 and Jane has save 11,900. And she "rented" her 15 years of sacrificed consumption and earned 6% per year (rolling it over). Now she has $18,934.

Now she can spend the whole amount and buy 50% more beer and cable entertainment than Joe already spent. Is that fair? Yes.

First, Jane is being paid for waiting for 15 years. She sacrificed current consumption for added future consumption. Present consumption, for the same dollar spent, is more valuable than future consumption. However, the offset is that the future value will be and should be higher to compensate for 15 years of lost consumption.

Second, Jane worked as hard and paid as much in income tax as Joe at the same job. Why, after sacrificing her well being in beer and cable TV for 15 years, should she be expected to pay more in total taxes than Joe? Her capital and dividend gains are her reward for 15 years of making do.

So no, not all income is the same NOR should they be taxed the same.

Well she's only being taxed on the $7,034 that she earned over and above what Joe earned and spent. Yes, she should pay tax on that. Even after the $1000 in taxes, she still has 50% more beer and cable entertainment to enjoy.

I'm confounded by logic that says 'I better not earn an extra $0.85 in income because I had to give $0.15 to the government' (regardless how it is earned).

aa

 

[maxparrish]

One the shortcomings of discussing a highly simplified example is that only addresses a few factors, and as such can be misleading. Let's try...

Suppose we have two individuals: Joe Six Pack and Jane Frugal. Joe and Jane work at the same sweat shop, and make 10,000 a year doing the same work for the same hours. After taxes it leaves them with 8,500 (they pay 1500 a year in taxes, a 15% rate).

Joe spends 100 percent of his income. He could save 10% of his take home pay and invest 850 a year in a lump, but he would have to give up his beer and Cable TV. He is not willing to cut back forgo the entertianment, so he consumes it every day for 15 years.

Jane is willing to give up beer and cable TV for 15 years, she will drink water and listen to her table clock-radio. She invests 850 a year for the next 15 years.

Fifteen years later Joe has spent a total of 11,900 and Jane has save 11,900. And she "rented" her 15 years of sacrificed consumption and earned 6% per year (rolling it over). Now she has $18,934.

Now she can spend the whole amount and buy 50% more beer and cable entertainment than Joe already spent. Is that fair? Yes.

First, Jane is being paid for waiting for 15 years. She sacrificed current consumption for added future consumption. Present consumption, for the same dollar spent, is more valuable than future consumption. However, the offset is that the future value will be and should be higher to compensate for 15 years of lost consumption.

Second, Jane worked as hard and paid as much in income tax as Joe at the same job. Why, after sacrificing her well being in beer and cable TV for 15 years, should she be expected to pay more in total taxes than Joe? Her capital and dividend gains are her reward for 15 years of making do.

So no, not all income is the same NOR should they be taxed the same.

Well she's only being taxed on the $7,034 that she earned over and above what Joe earned and spent. Yes, she should pay tax on that. Even after the $1000 in taxes, she still has 50% more beer and cable entertainment to enjoy.

I'm confounded by logic that says 'I better not earn an extra $0.85 in income because I had to give $0.15 to the government' (regardless how it is earned).

Your question and point was: "...is why should an investor earn the same number, or greater widgets than the laborer (whose labor is also directly contributing to the investor's purchasing power)? If anything, he ought to be earning less (but only does so over a short timeframe)."

I considered asking you, but did not, if your question was one of fairness, tax logic, or economics? I should have. Assuming it was one of fairness:

First, Jane should be paid more in widgets as compensation for her sacrificed consumption (time preference).

Second. when the investment amount is the sacrificed consumption of what remains of the fruit of Jane's labor (having already been taxed once) then why shouldn't Jane (that investor) earn "greater widgets" equal to her sacrifice? She has already paid taxes equal to Joe. And why, other than "the tax logic" should she be penalized $1,000 in more taxes for not consuming beer and cable, when she could have (like Joe did)?

Granted, once you accept the 'tax logic' of extracting a 'cut' from any transaction stream (someone or somethings income) then you would tax Jane on income the same. But that does not answer the question of fairness or economic sensibility.

 

[maxparrish]

19th century values? You think being prudent is old fashioned??

I am not arguing against "prudence" Loren. I am arguing against the notion your story relates to prudence at all. You just tell that story to keep the stiffs working and sober. Too much work makes Jack a dull boy....like needing to work 15 years to accrue $18,000. That is a pretty dull and dry idea, then you and Max complain this person has no sophistication. I am warning everybody...pay no attention to this story. It is inaccurate and brings early 20th century figures to the table.

What is likely evident to most who read the post, and paid minimal attention to the thread, is "slap your mother" obvious it was not intended to represent any historical era - it was, like the prior widgets example, a heuristic. It was a simplified thought experiment using two fictional individuals. Rather than a simplified example using 100 dollars, I used 10,000 dollars. Rather than widgets, I used beer and Cable TV.

Does it intend to represent 21st century average earnings, of course not (and I am more than a little stunned that you think it so).