Do Taxes on the Rich Raise More Revenue?
Robert Frank in the WSJ:
"The debate over taxing the rich in the U.S. seems to center on “fairness” – who pays too much or too little. Yet there is little discussion about a more immediate question: Would it raise the expected revenue?
Great Britain’s recent experience may be instructive. The U.K. is imposing a new tax rate of 50% for those making £150,000 a year (about $236,000). There is a fierce battle between British Chancellor George Osborne, who wants to scrap the tax, and many Liberal Democrats, who want to preserve it.
The Chancellor has asked for a study to find out how much revenue the tax has raised, though hard numbers won’t be available until next year. It was expected to raise £2.7 billion a year.
"The debate over taxing the rich in the U.S. seems to center on “fairness” – who pays too much or too little. Yet there is little discussion about a more immediate question: Would it raise the expected revenue?
Great Britain’s recent experience may be instructive. The U.K. is imposing a new tax rate of 50% for those making £150,000 a year (about $236,000). There is a fierce battle between British Chancellor George Osborne, who wants to scrap the tax, and many Liberal Democrats, who want to preserve it.
The Chancellor has asked for a study to find out how much revenue the tax has raised, though hard numbers won’t be available until next year. It was expected to raise £2.7 billion a year.
A report from Britain’s Institute for Fiscal Studies said the tax is costing the treasury £500 million a year, instead of earning billions. The reason: High earners are simply finding ways to avoid the tax. Top earners are hiding income or moving their earnings offshore.
“It looks like the 50% rate may be too high and that it is possible it will reduce tax revenues,” Paul Johnson, director of the IFS, told the Telegraph."
MP: I think the answer is usually "No."
HT: Peter Parlapiano
“It looks like the 50% rate may be too high and that it is possible it will reduce tax revenues,” Paul Johnson, director of the IFS, told the Telegraph."
MP: I think the answer is usually "No."
HT: Peter Parlapiano
81 Comments:
I heard someone at work say too much overtime isn't worth it, because too much taxes are taken out.
Of course, if you love your work, you'll work for $1 a year, like Warren Buffett :)
Ya, Peak..
I've posted it on here before, but my sister actually quit her job because her combined income put her in a tax bracket that the take-home wasn't worth the pressure and time of the job.
Crazy if you think about it. Assuming (since she had the job) that she was the best candidate, the company had to downgrade its upper management because of the taxes.
It looks like the political compromise in the U.S. Congress is raising more revenue by decreasing personal tax deductions.
A big example is the mortgage interest deduction which greatly benefits the more affluent.
Buddy,
I wouldn't disagree that the mortgage deduction is one that $500,000+ home buyers need (at least in Texas..that wouldn't buy you a mansion in CA or NY) but, if you take that away, many folks like me would rent and put that money somewhere that is more likely to give me a less risky return (and a lot fewer pains in my a$$).
It'd be interesting to see how many home-related businesses would cease to exist without that incentive. I'm sure there'd be fewer school districts and less suburban government.
Tax the poor: they can't stop you.
Mike, yes, you are right it will probably be on homes priced at least 250 -> 500 k.
Buddy,
It's pretty hard to justify the subsidizing of a personal mansion. I just hope they'd take area home prices into consideration....wouldn't hurt us here, but it would be tough to be a first-time buyer on the coasts without that deduction....even in the range you describe
Tell them to talk to Bono.
WSJ: A report from Britain’s Institute for Fiscal Studies said the tax is costing the treasury £500 million a year, instead of earning billions.
That doesn't appear to be correct. From the report: "The £2.4 billion the government expects to raise from the 50% rate is very small compared to the £496 billion the government expects to raise in total this year." In other words, the increase tax will raise about £500 million, just not nearly as much as the government had projected.
By the way, the report indicates that "the current 40% rate is already generating the maximum government revenue." 40% is the peak of the Laffer Curve. Furthermore, the study suggests that if the government closes a couple of loopholes, then more money will be subject to the 50% rate and revenues will increase.
James Browne, Taxing the rich - can it raise any money for the government?, Economic Review 2010.
will taxing the poor raise more revenue?
the biggest tax reducer for the middle class is not mortgage loans but kids.
the vast majority of people who don't pay Federal Income taxes - do so because of exemptions, deductions and credits for kids.
if you take away those - you'll generate significant additional revenues.
each kid in the US costs taxpayers about 15-20K... if you count the exemptions, deductions, and credits along with the local and state school costs - and not including food stamps, subsidized lunches or MedicAid/SCHIPS.
so... people don't believe we can successfully tax the rich even as much as they were taxed under Clinton?
tax the rich or tax the kids..
take your choice...
Mike: I've posted it on here before, but my sister actually quit her job because her combined income put her in a tax bracket that the take-home wasn't worth the pressure and time of the job.
That wouldn't be correct in most countries. In the U.S., income taxes are based on marginal rates. The higher rate only applies to the additional income. If your gross is higher, then your net income after taxes will always be higher. It's possible her withholding was not done correctly, but that should have been rectified when she filed her taxes.
A big example is the mortgage interest deduction which greatly benefits the more affluent.
Right. Because the more affluent won't figure out that this is just an income tax and avoid taxable income by doing stuff like investing in municipal bonds instead of a start up or stocks.
It's pretty hard to justify the subsidizing of a personal mansion. I just hope they'd take area home prices into consideration
No harder than it is to justify subsidizing the purchase of any house.
BTW, I don't know why you think home businesses would stop. In fact, having a home business would still be great. The home office deduction remains. All you have to do is set up an LLC, pay off their non-deductable mortgage, take out a HELOC in the amount of the mortgage, invest that loan into your business and PRESTO, the interest is completely deductible because it's invested in your business.
In fact, since interest is deductible on only the first $1MM of your mortgage, the HELOC invested in your business is even better.
Also, the truly wealthy almost never take out mortgages. Most really expensive houses (in the $5MM and above range) are bought for cash.
So, as usual, this will ensnare the merely well to do and about average (depending on where you live).
And, Mike, you know they won't take cost of living into account. In NYC $250K doesn't even buy you an American middle class lifestyle, but they didn't that into account in the income tax code. Imagine the complexity of figuring out which area should get which tax rate.
No, my friend, it'll be a typical one size fits no-one government imposition.
How about 49%?
If the day still comes in negative, go to 48%, but lets do it with data to back up the next decision.
There must be some tax rate that maximizes revenue.
If you rent, your landlord will take the mortgage deduction.
"Right. Because the more affluent won't figure out that this is just an income tax and avoid taxable income by doing stuff like investing in municipal bonds instead of a start up or stocks."
Huh? A deduction loss becomes an income tax? Interesting.
Methinks @ 8:13
“take out a HELOC in the amount of the mortgage, invest that loan into your business and PRESTO, the interest is completely deductible because it's invested in your business”
You probably know more about this than I do, but I’m not sure that the interest would be completely deductible. I got this from the IRS website:
“Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses”
http://www.irs.gov/newsroom/article/0,,id=108138,00.html
So it may be that only a small portion of the total interest expense would be deductable.
^^^^^^^^^^^^^^^^^^^^
The home mortgage deduction will probably not be eliminated. But if it were, I’m sure that new loopholes would spring up somewhere else in the code.
Regarding M.J. Perry's issue about the extent to which raising the top marginal rate will increase total IRS revenue, I think that only a small fraction of the predicted revenue will ever materialize.
It's actually conceivable that Obama knows this (though unlikely). For Obama, I think it's actually far better to have this as an issue to get voters out to the polls, than to actually get the tax increase that he seeks. Once the higher rate is in place, everyone will then see how ineffective it is; better to just use it as an issue to get (dumb) voters out to the polls on election day.
I prefer a national sales tax of 10 percent, heavy gasoline taxes, and drop all other taxes.
Cut federal outlays to the amount raised (this excludes the awful payroll tax-Social Security-Medicare system which will have to be trimmed).
The defense-homeland security-VA hydra-headed monster is the big one to slay. Cut that to 1 percent of GDP, and shrink all other agencies in half.
"Tax the poor: they can't stop you."
That's right! And, they deserve to be punished for not being more productive. The rich, who have proven their value to society by providing a lot of benefit for the rest of us, deserve to be rewarded with lower tax rates.
It's the poor who aren't paying their fair share.
Buddy
"Mike, yes, you are right it will probably be on homes priced at least 250 -> 500 k."
Why would home value even matter, as the deduction is for mortgage interest? I suspect any changes will relate to that amount, not home value.
"tax the rich or tax the kids..
take your choice"...
Easy choice, tax the brats...
Zachriel:
I guess you do realise that the two statements below cannot be simultaneously true?
1) "In other words, the increase tax will raise about £500 million, just not nearly as much as the government had projected."
2) "the current 40% rate is already generating the maximum government revenue."
“Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses”
This refers only to businesses losing money and would has to do with expensing things like lawn care and maid service that you apportion to your business. Direct business expenses such as financing costs remain fully deductible. I remind that the HELOC must legitimately be invested in your business, which should ideally be an LLC.
The IRS wants to make sure you've not set up your LLC simply to shelter income and it will only take issue with it if it thinks it has a strong case. The IRS loses in court a lot and every time they do, they can interpret the rule in question less broadly. That reduces their power. They don't like that.
I still can't believe the IRS lost the Virgin Islands cases.
Emil: I guess you do realise that the two statements below cannot be simultaneously true?
You are right, and we had misread the report's statement. We were looking for the claim that the report stated that the increased tax resulted in lower revenues. Apparently, the WSJ was reading one of the charts, and the actual revenue depends on the elasticity. In addition, the report indicated that changes in loopholes could move the peak on the Laffer Curve. On the other hand, people may just move their operations to a tax friendly country. Here's a more relevant quote:
"Even if the government is right about the taxable income elasticity, if the very rich
reduce their expenditure by as much as their taxable income, the government will raise about
£0.9 billion; £1.5 billion less than they expect from this measure."
methinks: Direct business expenses such as financing costs remain fully deductible.
Still, borrowing against your primary residence for business purposes may not always be considered prudent. No one is omniscient about market conditions, though if the business is one of long-standing, or based on professional qualifications, it is will be less risky.
hasuer's law is called a law for a reason.
http://www.hoover.org/publications/hoover-digest/article/5728
there's a chart in the link.
when the top tax bracket jumped to 40% from 30%, federal tax revenue as a % of GDP did not go up.
all this "tax the rich more" policy is just nonsense. it does not create more revenue.
what does (very slightly) create more revenue as a % of GDP is economic growth.
it also makes it a % of a bigger number.
the answer is obvious: go for growth.
higher taxes are not the way to get there.
"If you rent, your landlord will take the mortgage deduction."
no, he won't.
that deduction applies only to your primary residence and to a second home that you use for more that 14 days a year.
do you let your landlord stay at your place 2 weeks a year?
morganovich: all this "tax the rich more" policy is just nonsense. it does not create more revenue.
The graph your source provides is not very clear. If you look at the Clinton tax rates, taxes as a percentage of GDP rose 3 points (from 17.5% in 1992 to 20.6% in 2000), which was significant enough to bring the budget into balance, with enough for the scheduled payments to Social Security. Today, at about 15% of GDP, taxes are at the lowest point in 60 years.
http://blogs.reuters.com/felix-salmon/files/2010/12/US_TAXGDP1210.gif
So, there are significant differences over time.
I agree - NO. Think of Warren Buffett - if taxes were raised, wouldn't he continue to pay his accountants significant funds to REDUCE his tax liability? YES he would. With increased tax rates, additional tax strategies become more efficient for him to employ.
The best solution is a simple flat tax across all people. Reduce complexity, and reduce government.
zach-
there was no jump when the taxes came into effect.
the 2000 peak had to do with capital gains etc from the internet bubble.
it dropped significantly in 2001 with the bust.
go back and look at the other changes.
big drops in the top rate did not reduce income either.
why would you suspect that drops would have no effect but that increases would?
the current rates are a bit of a departure, but most of that move is due to unprecedented cuts in fica piled on top of the typical decrease in a recession piled on top of the drops you get after any big market bust as loss carryforwards are worked off.
it has little to do with top marginal rates, which have been stable for a decade.
tom-
i agree that a flat tax with no special deductions is a better plan.
it's simple, and gives everyone skin in the game.
it's worth considering though that a flat tax is nothing like flat.
if i make 20X the average, i pay 20X that taxes for the same government.
no other good or service works that way.
if bill gates and i each buy the same hammer at home depot, we pay the same for it. that is flat.
people like to trot out this argument that the rich "get more" from government, but it's simply not true.
they get less.
they don't use social programs etc.
the argument that they got more benefit from laws etc because they made more money is easily shown to be ridiculous.
if i walk into a grocery store with mario battali, and we each buy the same ingredients to make linguine with clam sauce, and he makes a stunning dinner that sells for $35 and i make some mediocre fare that's worth $10, should he be charged 3.5X what i paid for the ingredients because he sued them better and created more value?
wouldn't that pretty much destroy incentive to create value?
why should government be treated differently?
this example gets even starker if we look at prices for consumption.
if you earn $100k and i earn $50k and we go to burger barn for dinner, if they charge us based on income (like a flat tax) i pay $5 and you pay $10.
thus, in real terms, all your extra skill, work, and income, are worth zero in real terms.
the logical thing for us both to do is work less, earn less, and enjoy the lower prices that gets us.
clearly, it's an absurd and counterproductive way to price goods.
so why does it suddenly makes sense to use such a pricing scheme for government?
a "flat" tax is better than what we have, but far from "fair" and nothing like flat.
Ron H.,
That's right! And, they deserve to be punished for not being more productive. The rich, who have proven their value to society by providing a lot of benefit for the rest of us, deserve to be rewarded with lower tax rates.
Social Darwinism at its finest.
Ron H, excuse me for not being more articulate. I meant mortgage loan size of 250 -> 500 K and not home value.
morganovich: the 2000 peak had to do with capital gains etc from the internet bubble.
Capital gains peaked at $120 billion out of a total federal tax revenue of $2 trillion. So, no.
May as well point out that the higher marginal rates did not unduly inhibit growth, and the expansion was broad-based.
zach-
but unemployment also dropped to 4% and average incomes spiked, so yes, it was the boom.
it had nothing to do with tax rates, which had been stable for a decade.
why would an increase in tax rates take 7 years to increase revenue?
you'd expect the opposite as people reacted to it and sheltered more/worked less.
it had everyhting to do with the boom, and nothing to do with the tax rate.
as you can see from your own chart, tax receipts were in decline years before any tax cuts.
they then bounced back as the economy stabilized/recovered, but were headed up for the first several years of the bush tax cuts.
they then fell again in the next downturn.
there is absolutely no correlation between top tax rates and fed ervs as a % of gdp.
the r squared is near zero.
the correlation with GDP is much higher.
Still, borrowing against your primary residence for business purposes may not always be considered prudent. No one is omniscient about market conditions, though if the business is one of long-standing, or based on professional qualifications, it is will be less risky.
If you have a mortgage, you are effectively doing the same thing - taking out loan with the expectation of paying it back from future income. There's no additional risk switching out a loan called a "mortgage" for a loan called a "HELOC". There's no economic difference, just an accounting difference.
"May as well point out that the higher marginal rates did not unduly inhibit growth, and the expansion was broad-based."
what's your evidence for that?
growth would have been higher with lower taxes.
you can say, well, leaving the window open did not make it unduly cold in here because we had a huge fire in the fireplace, but that hardly demonstrates that open windows do not cool rooms.
the technology/internet boom of the late 90's was one of the great economic phenomena of the post ware era.
it was an engine so strong it could mask a multitude of policy sins.
lance Armstrong can ride a bike quite rapidly, even with the brake rubbing the wheel, but to argue that he would not go faster if it wasn't is absurd.
can you seriously believe that taxes do not inhibit economic activity? that lower ROIC's drive investment? that lower wages make you more anxious to work and that lower take home pay increases consumption, savings, and investment?
the only way that could work is if government were better and spending and allocating money that individuals.
i am unaware of any evidence to that effect, and of piles showing it to be far worse.
methinks is correct on helocs.
homes turn out to be terrible investments for most people.
you pay mortgage interest, taxes, upkeep etc. when you add ti all together, most people lose money on their homes, even in the really long run.
perhaps the greatest real estate purchase of all time was manhattan island.
they paid $24 and it turned into one of the most valuable pieces of real estate in the world.
the problem is, relative to bonds, they lose money.
it's been 385 years since 1626.
bonds have averaged 7% ish since then.
this means $24 would be worth 4,931,347,992,000.
i doubt manhattan is worth $5 trillion.
add in the money spent on the improvements, taxes, upkeep, etc and you have really lost your shirt.
if you pay 5% interest on a mortgage and another 1% in tax + 1% in insurance and upkeep, you are 7% behind every year.
thus, if your house doesn't double in value every 10 years, you are losing money.
if homes doubled in value every year, then a 25k (which was the average) home in 1970 would be worth around $500k today.
the current figure is $175k.
even at the peak, were were not at half of 500k.
I'm surprised that the disussion here has not turned to Obama's "jobs plan". In this plan, we will cut taxes on the steepest part of the Laffer curve and raise taxes where the curve has likely turned down. In other words, we lose revenue on both ends.
Exactly, Morganovich.
That's precisely why I've always considered my house an expense and why people are foolish in thinking they are "throwing money away" by renting.
So, Junkyard, we're getting #@$#@ from both ends.
methinks-
though, you can look at it the other way as well.
i bought my house for cash (and at a very low price) so it will likely make money.
however, i then realized that there was a great rate arbitrage. i took out a $417k mortgage at 2.7%.
if i can beat that return investing, then it's a good source of funds.
with rates at 7%, i'm not sure it would be that attractive, but a cost of capital in the 2% range makes for many more attractive strategies.
even if i just bought 30 year US treasuries and levered them up 3:1, i'd be getting about a 7% spread on the carry and getting to write off the interest in the meantime which takes it to closer to 9% after tax with the added bonus of duration mismatch. (write off now, pay tax in 30 years)
BY LEE DAVIDSON
The Salt Lake Tribune
First published Sep 14 2011 06:13PM
Updated Sep 14, 2011 11:52PM
Back in 1997, Bill Clinton began his second term as president. The first Harry Potter novel appeared. Gasoline cost $1.30 a gallon. The median household income in Utah was $57,938 in 2010 dollars.
Now, 14 years later, Utah’s median income has dropped below that level. In 2010, it was $56,787, or $1,151 lower than in 1997, according to census data released this week.
---30---
So even in rosy-cheeked Utah, where there are no lazy inner-city baggy-panters, median income is falling.
Can't say we should tax the middle-class any more.
It may be the upper-upper class has reached the backward-bending part of the work and investment curve. They are so rich they don't really need to hustle anymore. Like the ballplayer who just inked a $200 million contract. You think he is going to slide hard into second and break up the double-lay?
morganovich: but unemployment also dropped to 4% and average incomes spiked, so yes, it was the boom.
Of course it was a boom. And though there was some overvaluation, most of the increase in GDP and incomes was based on real innovation and economic growth.
morganovich: it had nothing to do with tax rates, which had been stable for a decade.
Well, in 1993, the Clinton Administration said that raising taxes a bit would reduce the deficit and that this would free up capital for investment. Meanwhile, Gore had completed a long process of privitizing the information superhighway. Republicans nearly all said raising taxes would crash the economy and not one voted for the bill. What resulted was the longest peacetime expansion in history.
morganovich: as you can see from your own chart, tax receipts were in decline years before any tax cuts.
The tax cuts were immediate to 2001. Revenues peaked in 2000. (A small temporary tax cut as a stimulus would have been appropriate.)
morganovich: they then bounced back as the economy stabilized/recovered, but were headed up for the first several years of the bush tax cuts.
Yes, the housing boom which led to catastrophe.
Methinks: There's no additional risk switching out a loan called a "mortgage" for a loan called a "HELOC".
The risk is borrowing additional sums against your primary residence.
morganovich: growth would have been higher with lower taxes.
That's right. The economy would have overheated more than it already did. If anything, the markets needed to be tempered somewhat.
Top earners are hiding income or moving their earnings offshore.
And if the US & EU flexes its military and foreign intelligence muscle to pursue/capture/repatriate such, no place becomes safe.
I'd imagine you'd get plenty of that 15 million unemployed working to help with bringing that back.
sethstorm,
"hiding income" and "moving earnings offshore" are two vastly different issues. One is legal, and one is not.
The higher marginal tax rates go, the more confident I will be that loopholes in the tax code will flourish.
If tax cuts are wanted, have some strings attached:
* Require hiring be done for US citizens on a more permanent basis. Temporary labor costs multiply per level of indirection - three levels of subcontracting mean 3x liabilities that cannot be passed to the worker. Direct, FT, non-temporary labor incurs a large tax cut.
* Ban the discrimination against the long-term unemployed, with a very low bar of proof.
* Remove all the regulation that allows the immigration of H1-b's/L-1's/etc. It only encourages fraud by business and does not create US jobs.
* Require the early, public, and widespread disclosure of any plans/drafts/actions to go offshore/to use offshore labor for any size organization.
* Nullify any tax credits for going offshore, and remaining assets must remain in the US under a wholly US-controlled entity if a complete move offshore.
* Allow for the pursuit, capture, and automatic RICO classification of those who do not go by the above.
Businesses want everyone else to do the sacrifices. If they want a tax cut, they have to be willing to follow through with jobs instead of just taking it offshore and wanting more.
Morganovich,
if i can beat that return investing, then it's a good source of funds.
Exactly why I did the same. If ever my rate of return falls to my borrowing rate or below, then I'll pay back the loan.
The risk is borrowing additional sums against your primary residence.
Do you not understand what switching one type of loan for another means, Zack?
The higher marginal tax rates go, the more confident I will be that loopholes in the tax code will flourish.
Then expect loopholes to be used both ways - as a weapon against such evasion. My whole idea is that the tax cuts must come with an ironclad agreement to do as promised.
And if the US & EU flexes its military and foreign intelligence muscle to pursue/capture/repatriate such, no place becomes safe.
You mean every place will be safer than the United States as the U.S. will be more like the USSR and companies and people will flee. Force doesn't work well.
So, Sethstorm, when are you going to stop bitching about how other people conduct business and show them how to do it right?
When are you going to start a business and employ the long term unemployed? When are YOU going to stop being the problem - destroying the economy by not hiring anyone?
When will that happen, you dumb hypocrite?
zach-
"Well, in 1993, the Clinton Administration said that raising taxes a bit would reduce the deficit and that this would free up capital for investment. Meanwhile, Gore had completed a long process of privitizing the information superhighway. Republicans nearly all said raising taxes would crash the economy and not one voted for the bill. What resulted was the longest peacetime expansion in history."
the key to that is the word "privatization"
higher tax rates did not do anything for revenues.
it was the internet boom.
look back at all the tax cuts that did not decrease revenues as a %. there are 4 or 5.
the drop in 2001 was from the bust, just as in every other recession. tax revs quickly recovered.
there is simply no correlation between top marginal rates and revenues.
it's all GDP and employment.
arguing that federal deficits are an issue may well be so, but the answer is lower spending, not more taxes.
"Yes, the housing boom which led to catastrophe. "
this is a non sequitor. that was caused by wildly loose fed policy colliding with irresponsible federal programs (like CRA and freddy and fannie) it has nothing to to with tax rates.
"That's right. The economy would have overheated more than it already did. If anything, the markets needed to be tempered somewhat."
that is not the case.
lower taxes would have favored income and sustainable consumption as opposed to investment. tax rates are not a good instrument to try to temper the business cycle. that is the job of interest rates (if it's anyone's job at all).
upping the marginal tax rate just favors investment by increasing the tax spread. it makes a bubble more likely, not less.
"So, Sethstorm, when are you going to stop bitching about how other people conduct business and show them how to do it right?"
never.
seth is an entitled fascist leech.
his answer is always "force others to do things that benefit me."
"Can't say we should tax the middle-class any more."
bunny-
we're barely taxing them at all as it is.
10 years ago, 24% of americans paid no net federal income tax. it's now 51%.
that's an enormous drop in tax burden and the major source of revenue problems.
it's this obsession with "tax cuts for the middle class" that's creating deficits. the median income tax is now ZERO.
there is no cutting from there.
cuts to fica have driven all the programs deep into the red.
how can you possibly describe the middle class as under taxed when the median are paying no federal income tax?
Morganovich,
"higher tax rates did not do anything for revenues.
it was the internet boom."
I've long thought Y2K was a major culprit for the bust that happened pretty much right after Jan 1, 2000. In the late 90's, pretty much every company on the planet was furiously upgrading hardware,software, and hiring tech workers to head off what they thought was electronic armageddon. And tech companies couldn't fill orders fast enough.
All that came to an abrupt end in Jan 2000, and so the mass layoffs began as business was all caught up, no need to buy any more equipment from Cisco, Dell, Microsoft, etc....
You mean every place will be safer than the United States as the U.S. will be more like the USSR and companies and people will flee. Force doesn't work well.
Stop giving reasons for bureaucrats to act. If anything, we're more likely to be like the post-Soviet Russians - where freedom is a function of your bank account.
Unlike the USSR, the USA knows no bounds. No Iron Curtain of any kind exists, for it is all around the world.
Methinks: Do you not understand what switching one type of loan for another means,
Yes, but we may be confused on what you advocate. You seem to be referring to a home business and a home with a mortgage. You pay this off, set up an LLC which then borrows the same amount against the home. Is that correct?
morganovich: the key to that is the word "privatization"
Yes, privatization was an important component of Gore's advocacy.
morganovich: higher tax rates did not do anything for revenues.
Earlier you said it was due to capital gains. Did you abandon that position, or are we left to guess?
that is not the case.
Okay, one musician makes $40 an hour, and the other makes $100,000 an hour.
Which musician is likely to work 2000 hours a year?
The rich musician indeed has reached into the backward bending part of the supply curve. He will work less hours than the bang-it-out guy.
That is where America's richest people are today. They no longer have to hustle.
Maybe we should declare a one-time "tax it all away day" from the wealthy, while the rest of us enjoy a year-long tax holiday.
Start fresh from there.
"Maybe we should declare a one-time "tax it all away day" from the wealthy, while the rest of us enjoy a year-long tax holiday."
Right. Just like your hero Milton Friedman would advocate.
Jackass.
Yes, but we may be confused on what you advocate.
Is that a royal "we" or are you more than one person?
Paul-
Just a one-time shot. Wipe out the national debt, start fresh.
""tax the rich or tax the kids..
take your choice"...
Easy choice, tax the brats..."
Or tax the rich kids. They don't deserve to keep all that money for themselves.
"If you rent, your landlord will take the mortgage deduction."
no, he won't."
Yes he will. Mortgage interest is a legitimate business expense.
Sean
"Social Darwinism at its finest."
Thanks. Sometimes I get so tired of hearing "Tax The Rich!" I just can't help myself. :)
Methinks, morganovich
I hope you recognize that sethstorm has threatened to come after you with an army of 15 million unemployed zombies, if you renounce US citizenship.
There will be nowhere to hide.
I can't be 100% sure, you understand, due to the muddled thinking and writing by the author of the threat, but I would take it seriously if I were you.
I am visualizing scenes from "Night of the Living Dead".
Please be careful.
"Is that a royal "we" or are you more than one person?"
If I remember correctly, Zach has a mouse in his pocket, which he consults before responding to difficult questions.
Ron H.,
If I was not scared of the Soviets, who viewed their population as disposable, an army of idiots isn't going to scare me.
Besides, I'm a very good shot and so is my husband. The Sethstorm army is likely to point the gun the wrong way when they shoot.
"If I was not scared of the Soviets, who viewed their population as disposable, an army of idiots isn't going to scare me.
Besides, I'm a very good shot and so is my husband. The Sethstorm army is likely to point the gun the wrong way when they shoot."
Thank goodness. It sounds like you will be OK then.
Remember, if you see any of them, try to act stupid so they'll think you're with them.
And, shoot them in the head. It's the only way to stop a zombie.
I don't know what sethstorm looks like, but I imagine he'll be leading the charge.
Ron H.,
Thanks. Sometimes I get so tired of hearing "Tax The Rich!" I just can't help myself. :)
Ha! :) I get that, I guess. I just happen to believe the correlation between amassed wealth and value given to society is a little looser than you do, I guess. And the more we idolize wealth in abstract, the looser the correlation gets.
Indira Gandhi: "My grandfather once told me that there were two kinds of people: those who do the work and those who take the credit. He told me to try to be in the first group; there was much less competition."
I happen to believe there's a similar relation between work and money.
Sean
"I just happen to believe the correlation between amassed wealth and value given to society is a little looser than you do, I guess. "
Allow me to re-word that slightly, and tell me if you agree with the slight difference I think it makes:
"I just happen to believe the correlation between amassed wealth and giving society what it values is a little looser than you do, I guess."
The difference, if there is any, is that individuals in society can determine on a case by case basis what that value is, rather than society as a collective applying a predetermined scale to measure that value.
While I would never argue that life is fair, I do believe that wealth is created by those people who provide something to others that they value more than something they already have. In the process, those people are rewarded with a portion of that wealth.
The more that thing is valued by society, the wealthier the provider becomes.
The word "amassed" is also a little tricky. I picture someone having a large safe stuffed with $100 bills. In reality, whatever someone amasses is also a result of others providing value, and being rewarded for it.
That $10mn ocean view property provided a lot of benefit for material suppliers, builders, and many others.
The notion that wealth is unfairly distributed, and that something should be done to correct that injustice is BS. Pure class envy. "That's not fair, he has a cookie, and I didn't get one."
Most of the injustice, in my view, result from unentended consequences caused by misguided attempts to correct perceived inequality through use of the force of government.
Ron H.,
Allow me to re-word that slightly, and tell me if you agree with the slight difference I think it makes:
I think both versions are true. It's true people look at NBA players' salaries and just go "What???!". The same is true about hedge fund managers. But I'm referring more to things like I see in my own company, where the path to a manager's success can be to gut your team to save costs, over-promise, under-deliver, blame others, ask for help, take the credit for someone else's "save", and move on before the team burns out leaves, or just fails.
I can find analogs to this behavior in every company, on every stage, in every profession, at every level of abstraction: individual, company, division, government: take your pick.
The idea that wealth "must be redistributed to be more fair" is categorically wrong. But the idea that "I deserve what I have because I have it" is even more ludicrous. It's as bad a justification for capitalism as it was for the justification of an Emperor's rule.
Using one's "success" as a means to look down upon others just bugs the hell out of me, because it's not only wrong but corrosive to Integrity and Honor: the real building blocks of civilization without which no contracts can be made, no property can exist, and free markets are a joke.
Methinks said...
"If I was not scared of the Soviets, who viewed their population as disposable"
I just don't care for the business world to take that view. With the way offshoring and calls for business friendliness are being done, the private sector's goal is a disposable workforce - in ways that are not far from the Soviet interpretation.
Would you want a private sector that does the same thing the Soviets did? You only need to look at China and like Third World countries where the nominally private sector has that exact setup.
Freedom isn't something you give out just to "job creators" - it is something given to "job performers" and "job seekers" as well.
Sean
I;m sorry to hear the world you live in is inhabited by so many assholes. :)
It sounds like an unpleasant place.
I don't know that there's much I can say that would be helpful in that area.
But I can address this part:
" But the idea that "I deserve what I have because I have it" is even more ludicrous. It's as bad a justification for capitalism as it was for the justification of an Emperor's rule."
I don't know how many people say they deserve what they have because they have it, but I, among others, would say that I deserve what I have made, and it can't legitimately be taken from me.
If I make a net to catch fish, it is my property. If I trade my labor for a piece of paper that certifies that I have labored, it is mine, and I can then trade it for other things I want, and they are mine.
Others may have more or less than I do, but I don't owe any of what I have to those who have less.
Hopefully you don't object to that.
"A report from Britain’s Institute for Fiscal Studies said the tax is costing the treasury £500 million a year, instead of earning billions. The reason: High earners are simply finding ways to avoid the tax. Top earners are hiding income or moving their earnings offshore."
**********************
We need tougher sentencing laws for these criminals who don't pay their taxes. The death penalty perhaps?
Ron H.,
I'm sorry to hear the world you live in is inhabited by so many assholes. :)
There are many good and bad people everywhere. If you're confident and secure, you can notice the good. If you're a natural idealist with a desire to please, a tendency to over-responsibility, not a lot of social common sense, and were indoctrinated early by Church high moral standards, you'll likely be more painfully aware of just how prevalent petty cruelty can be after years of blaming yourself for all the crap people dump on you. Trust is absolutely necessary, but if you trust anyone, you will be taken advantage of. I'm not whining: it's just one of those things.
If I make a net to catch fish, it is my property. If I trade my labor for a piece of paper that certifies that I have labored, it is mine, and I can then trade it for other things I want, and they are mine.
I am thankful to live in a society where we honor that principle, at the first level of approximation. I've worked hard to get the things I have. But the idea that I "deserve" it, in the most complete sense...? I didn't earn my talent. No one owed me my scholarships, or even my elementary school education, or my speech therapy when I was younger. My parents didn't have to pay for my college, and the things they've given me they didn't owe me. My friend didn't have to help me get my job. I am successful at work partially because of the time, effort, and integrity of others, and they partially because of me. Since full attribution is a fool's game, "I deserve what I have" has a weak basis in every case I've examined.
And if you haven't worked with people who don't deserve their pay, you haven't paid attention.
Respect for boundaries, for contract, and for property is extremely useful, but the pride and indignation that tend to go with it are just vanity.
Sean: ... Respect for boundaries, for contract, and for property is extremely useful, but the pride and indignation that tend to go with it are just vanity.
Well said.
Sean
"I am thankful to live in a society where we honor that principle, at the first level of approximation. I've worked hard to get the things I have. But the idea that I "deserve" it, in the most complete sense...? I didn't earn my talent. No one owed me my scholarships, or even my elementary school education, or my speech therapy when I was younger. "
Nor did you ask for those things.
"My parents didn't have to pay for my college, and the things they've given me they didn't owe me. My friend didn't have to help me get my job. "
You are taking my position that people are generous, and are willing to help others when they see the need, and that government involvement isn't necessary. Parents, especially, help their children become successful and self sufficient adults. This is the role of a parent. A responsibility they accept gladly when they decide to become parents. Well - most parent do anyway.
Many children appreciate this love and selfishness and return it in later years when roles become reversed, and the parents are the ones needing help. This system has worked throughout human history, and still would if allowed to, but the recent developement of government intrusion into family life has nearly destroyed it.
To feel gratitude to parents, friends, and others is normal and natural, but to thank faceless others who have been forced to help you without wanting to, or even knowing who you are isn't necessary. You haven't asked them to do it, and you don't owe them anything. Someone else has decided on that arrangement for you.
"And if you haven't worked with people who don't deserve their pay, you haven't paid attention."
I have often done so, but that's just my opinion. The fact that they remain employed, means that my appraisal of them isn't the one that matters.
"Respect for boundaries, for contract, and for property is extremely useful, but the pride and indignation that tend to go with it are just vanity."
Not only usefull, but necessary for a free and prosperous society.
The indignation results not from the notion that others shouldn't be helped, but from the notion that what they have earned can be taken from them by force and used in ways they haven't chosen, for purposes they haven't chosen, and for the benefit of people they don't know exist, or may not wish to help.
The difference is choice.
In my opinion, government involvement in the welfare of individuals has caused them more harm than good.
Walter Williams has this to say about government "help":
"Even in the antebellum era, when slaves often weren’t permitted to wed, most black children lived with a biological mother and father. During Reconstruction and up until the 1940s, 75% to 85% of black children lived in two-parent families. Today, more than 70% of black children are born to single women. “The welfare state has done to black Americans what slavery couldn’t do, what Jim Crow couldn’t do, what the harshest racism couldn’t do,” Mr. Williams says. “And that is to destroy the black family."
Tax the poor: they can't stop you.
I would settle for making them pay their fair share for the resources that they use up.
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