The right book for varusFollow

Sorry, sorry, I'm a REALLY slow poster in reply. [quote+Gbaji]I'm just trying to get folks to stop parroting this bizarre notion that since the top marginal tax rate was 70% in the 60s and 90% in the 50s that this magically means that we're paying on total less taxes today than ever in history.

Okie doke. Look at Australia, whose tax revenue is 27.1% of GDP, and the USA, whose tax revenue is 24% of GDP. There are two main sources of tax in Australia. A flat Goods and Services tax of 10% that has never been raised. and Income Tax like so:

Taxable income 
0 - $6,000 
Nil 
 
$6,001 - $37,000 
15c for each $1 over $6,000 
 
$37,001 - $80,000 
$4,650 plus 30c for each $1 over $37,000 
 
$80,001 - $180,000 
$17,550 plus 37c for each $1 over $80,000 
 
$180,001 and over 
$54,550 plus 45c for each $1 over $180,000

That's SORT of 0% for $6,000, 30% for $37,000, 37% for %80,000 and 45% for $180,000. Except it equalises things so for example if you earn $200,000 you pay nothing on the first $6000, 15% on $6k to $37k; 30% on $37k to $80k; 37% on $80k to 180k, and only 45% on the the $20k between 180k to 200k.

And in reality anyone with $180k can afford to fiddle it down with tax rebates, allowances, Family Trusts and flat out pretending to be a Company and mostly paying Company tax rates. Not over $180k does the last, but it is done.

Ok, so Australia manages to rake in 27.1 of GDP in taxes with the highest tax BELOW 50%. Nilati has since found us this: From Nilatai's quote, it looks like for 100 years the top tax rate in the USA has been OVER 50% longer than it has been UNDER 50%. By my reckoning you don't have to go NEAR your record top marginal highs to cover 24% of your GDP, if Australia is at 27% with a top rate of 45% A rough guesstimate would be 39%. Even one percentage point successfully taxed more on the super-rich would rake in obscene amounts of money. You'd probably rake in HEAPS just by funding the Revenue department twice as much, to audit more citizens and corporations. Another example of spending that reaps more than it costs.





Edited, Aug 15th 2011 11:53pm by Aripyanfar

I suddenly realized why I don't read your posts. This one sleezed by only cause it was actually short. It, shows, though, that you actually don't need large sums of words to demonstrate how little you know of...well...anything.

Which is sad considering that I'm pretty mediocre in this department (politics and detailed economics).

Gbaji has this arbitrary distinction that freedom cannot be given, it can only be taken or not taken away. I'm also not sure whether he said it explicitly, but it is largely implied that only governments can take away freedom. He faults the individual for circumstances beyond her control unless that circumstance is government, in which case it is no fault of the individual and solely on the government.

I think it's not that trickle down isn't a real phenomenon. It's that it's a totally hit or miss phenomenon that in the end acts almost utterly via luck. The "virtuous poor" CANNOT guarantee that they will be the beneficiaries of Trickle Down, as long as they work hard, or work smart. This is where the tax system steps in to smooth out and rationalise where the Trickle Down missed. Badly. We've HAD Trickle-Down systems and they were HORRIBLE, unless you were born wealthy. And even then your life expectancy wasn't much good. And it's not the case that modern technology would cure all the ills of a Trickle Down mainly system. High Tech, High Productivity, High Commerce societies HAVE to have high infrastructure and highly educated, healthy workforces to function. And Private enterprises are lousy at setting aside money for and foreseeing the fundamentally necessary but outlying physical and human infrastructure it needs. Distant roads? Educated jobseekers? Clean air and water? "Growth" style investing in share speculation ensures every future need is cut to the bone, damaging the company long-term, in order to increase short term profits.

I think you're missing an important point. While the richest aren't affected by paying high taxes, or moderate taxes, the nation, the army, all your favourite services and public assets, and the rest of the population is MASSIVELY positively affected by the richest paying those taxes. And I think it's a fallacy that higher rates on the top margin keep everyone else down. That's what a progressive income tax system is FOR. Everyone NOT rich has lower tax rates, and GETS TO KEEP MUCH MORE OF THEIR EARNINGS. Buffet MAY have come to his breezy opinion on tax rates for the rich once it didn't matter to him. But there's nothing in what he says that's going to stop others catching up. In fact, he's very generous and free with explanations about how he got to where he is, and how to do it too. I'll tell you his lessons, if you life.

If you lower tax rates, and all else remains equal, revenue drops.You know what I'm going to say: increase the scope of services, and public spending costs more.True to an extent. The PUBLIC gap during this recession was greater than it might have been. But that public expenditure on social services, while providing services that would have long term returns, ALSO had a secondary and very useful function as direct stimulus. The new public servants were directly hired in a recession, a time of rising unemployment. The difference in pay between their new wages and unemployment probably mostly went straight back into the private economy (easing the recession) except for the part of their pay that went to taxes (easing the deficit). While it looked bad in the short term, This spending was probably a solid long-term bet, returning more over-all than it cost. But you have to wait for the benefits to ... Trickle Through! (I would expect some social services to be paying dividends in 20 years time) Well, the debt increase due to increased social services was completely and utterly dwarfed by the bank bail-outs, mortgage buy-outs, Car company (bail-outs? buy-outs?) and direct economic stimulous to counter a looming Depression. As I said before, that wasn't to buy a benefit so much as to prevent a hideous alternative, much worse than having to pay back the HUGE DEBT. (The mortgage buy outs will actually pay for themselves in the long run, defaults being covered by interest paid on others)

I agree with you that the HUGE DEFICIT is a ************* HUGE problem, and it is going to hurt for years. As I said in previous posts, and just before, the lion's share of the deficit was unavoidable in the event of the 2009 GFC. It coul.dn't have been avoided. Your most favouritist politician or economist, or group of them, in the world, couldn't have avoided the vast bulk of it. So Business hesitation in these years after the GFC was unavoidable. Just a matter of fact of life that has to be lived with by all. The relatively tiny proportion of the deficit created by new social services comes down to a matter of opinion. Will the long term returns cover or exceed the short term costs? There are plenty of businesses that want the government to look after community problems, to create a peaceful, law-abiding pool of customers for them.

Recent science says that there is a correlation between people with large, fast responding Fear areas in their brains and hormonal systems and people who have conservative beliefs. Correspondingly, people with smaller, less responsive Fear areas are more likely to be progressives. "Fears of rising taxes". Just so. The whole Australian community chucked a fit when the 10% GST was proposed, then voted in. It wasn't community requested. Economists and Brainiacs in our conservative political party came up with it, campaigned hard for it to a sceptical public, and won office despite it being a policy. And guess what happened after the first three months of its introduction? Nothing. Nobody noticed it after businesses wrangled with changing their till invoices and filling out their first quarterly GST Return. The poorer had received compensation via higher incomes, and the richer didn't notice the vaguely higher prices. (other sales and payroll taxes had been cut, but not enough to overcome the entire price of the GST).

It's a funny thing to know something but not believe it. Not matter how large your text Ari, you know arguing this point with Gbaji is fruitless, but it's just so hard to believe.

+1

Also I'm having fun. I took an overdose of antioxidants, and I'm on a roll.

Edited, Aug 16th 2011 3:02am by Aripyanfar

I love how Gbaji's understanding of the catalysts of the Revolution boil down to a wordier version of the grade school version: They Were All Meanie Heads.

Public school indoctrination in action!

Ok, I've lost my steam for the moment. In answer to some of Gbaji's later posts:

"we" want rights, liberties, and responsibilities. The right to life comes with the concomitant responsibility not to take life (when angry, or in revenge). The responsibility not to take life gives us the right to life and the liberty to enjoy it.

The right to outside support in an emergency comes with concomitant responsibilities not to rort the system, not to waste the opportunities the support provides to get out of the emergency situation, and the responsibility to provide support to other people when they hit emergencies.

"we" don't have Totalitarian dictatorships imposing their will on the people, taking us to Communism bit by bit. The free market and capitalism operates just as vigorously as elsewhere with different social policies. We don't have a Benevolent state providing free meals, free houses, free healthcare and free education to everyone! with an enthralled population of dependants (slaves).

The personal pride and accomplishment that comes from having social programs is that we voted them in, can vote them out. It comes from making our own personal wealth and educating ourselves, and the pride and accomplishment of putting into the communal kitty, so that 1. If we have a downturn in our personal economic cycles, we're covered, 2. We cover other people who go into a downturn in their personal economic cycles, and 3. we take pride that ourselves and others are provided minimal necessary tools to better our/their circumstances so that no-one has to be caught in a catch=22 situation where they can't get out of a disaster.

Despite what I said earlier about the inevitable pool of never employed, most people pass in and out of unemployment, they pass in and out of paid work/business ownership/home-making/child raising. "we" like to either own our own homes, or rent and accumulate investments. "we" like to work, make our own money, accumulate personal possessions, afford to have children. The vast majority of "we" are in private housing, afford our own meals, co-pay for education in some systems, or retroactively pay for education either personally and directly back to the common kitty, or indirectly as higher-paid, higher educated workers and employers later. There are varied healthcare systems, many of which are paid wholly privately, but regulated by the state for universal coverage, or have parallel private and public options, or is majority publicaly owned and run, at a lower cost than the US system, with the same healthcare outcomes. And again, we know it's not "free". "We" individuals fund it by steadily paid taxes that match what we can afford at the time, in return for total coverage without going bankrupt when we need it ourselves.

Do you realise that the average American hospital only recovers/receives 5% of the money that it bills in the end? That's nuts. That doesn't happen elsewhere in the developed world.

"we" take pride in our civilised, functional societies that run on parallel private and public systems, that "we" authorised and built, where social services function as human resource asset building, and as safety nets.

Angry noises.

Hey, as a liberal, I'm perfectly willing to concede that we need spending reductions. But I also recognize that we need tax increases. The problem is this:

No politician wants to run on 1) increased taxes or 2) cutting programs. It's not a politically smart thing to do-- it gives fuel for your opponents to slam you.

So what ends up happening is that legislators "compromise" by saying, "Hokay, you can have your spending increases if we can have our tax cuts! It's a win-win!" And then we end up with a huge fucking deficit, obviously.

That's where we are now. So, any legislator who could put politics aside for two seconds can see that we need to increase taxes and reduce spending to address the deficit. It's time for legislators to be leaders and not just representatives of their whiny, ignorant constituents. It's time to make the hard choices and compromise the other way-- the one where everybody loses something so the country can gain.

Guess which party is mostly willing to do that, and which party is making a policy of not doing that under any circumstances? Why, it's none other than the very party who in the most recent primary debate, every single would-be president indicated that they would refuse even a single dollar in tax increases for any amount in spending reduction, even in 1:10. Any grade-schooler could tell you that this position is a thousand times more stubborn than sensible.

And that's why the conservatives only have themselves to blame.