Sunday, July 31, 2011

A Reply to "Facts on Taxes"

Over at The Constructive Curmudgeon, a highly tendentious post appeared in the last 24 hours entitled Facts on Taxes.

This is my rebuttal.

If the title of your post had been Opinions on Taxes, I would have not written this response. But you chose to call it Facts on Taxes. Can you please source the facts, with data and not the names of known partisans like Thomas Sowell?

I like to accompany the opinions I express on my blog with facts, as I did in a post called On The Fantasy That "Taxing Job Creators Is Wrong", which is my view on the myth that taxing "job creators" is wrong. Please read it, as it addressed the fallacies of your assumptions in this post.

Envy, by the way, has nothing to do with asking for the rich to pay a higher rate on some of their income. Progressive taxation is based on the assumption that it is fair for those who have more discretionary income to pay more than those whose income is barely sufficient to make ends meet. Not to mention the fact that the rich benefit more from public services and infrastructure more than low-income Americans, directly or indirectly.

Besides, for someone who believes in the "religion of the free-market", can't you see that a strong economy needs to leave more money in the pockets of those who are more likely to spend it--lower-income Americans--than in the pockets of those who are more likely to save it, or invest it--often outside of the United States?

Finally, if I hear one more time that "we do not have a revenue problem, we have a spending problem", I am going to throw up. It's just a talking point, a clever but mendacious one for the most part.

Of course we have a spending problem, mostly driven by elective wars and the greed of mega-corporations in the oil, banking, and health services industries. But we also have a revenue problem, created by George W. Bush tax cuts which were supposed to have "sunset" by now, and have been extended by the outrageously weak and inept President Obama. Or did you miss the news that revenues are at their lowest point in at least 50 years, if not since the Great Depression, and that top tax rates are at their lowest point since Eisenhower (with the exception of one of the Reagan Years)?

Ironically, remember, that President Obama was accused by his opponents of being the most liberal Senator when he was running, a lie easily born-out by his first 30 months in the White House. He is a centrist at heart, and has been governing from right of center. Of course, in a country where politics is dominated by right-wing extremists, governing from right-of-center still makes you look a liberal extremist, I guess. But compare Obama's policies with FDR's, Johnson's, and even Carter's, and you will see that he is a pro-business, pro-establishment politician. Far from being the socialist populist he has been depicted as by most of the media, he is a corporate socialist.

Peace out.

2 comments:

John Stockwell said...

Kennedy reduced the maximum individual tax bracket
rate from 91% to 70%, rates which were
draconian and were a tremendous incentive for rich people to move money out of the country. That is apples and
oranges compared to today's relatively
low maximum rate of 35%:

http://robertreich.org/post/257309173

Also a table of max and min tax rates
can be found here:

http://ntu.org/tax-basics/history-of-federal-individual-1.html

It was 50% in the Reagan years. Reagan reduced the maximum tax rate to 28%

So, yes, reducing taxes when they were exhorbitantly high was a boost to the economy, but we've "been there and done that" already.

The effect of a high rate of taxation is that people find ways of not paying the tax.

What would be better is to construct a way for corporations to come back from offshore and pay some modest tax, instead of nothing at all. Of course, corporations simply pass on taxes as costs to the consumer, so you really are taxing ordinary people in that situation.

My plan for that would be
1) make the US a tax haven
2) create some penalty for being
offshore
3) and once you have the corporations
back in the US, then slowly crank up
the tax, but again, don't get too greedy, because taxing corporations at too high a rate simply encourages them to subvert the system.

Sirfab said...

Hi John, good to have you back.

The problem with your reasoning is that the largest corporations already do not pay any taxes in the United States, thanks to all the loopholes in the tax code written to their advantage. So I am not sure that any significant amount of money would be repatriated. The U.S.A. is already a tax haven for large businesses.

The simplest way to help labor in the United States, in my opinion, would be to say: if you keep jobs in the United States, you can avail yourself of all the loopholes our crazy tax code allows. If you close a factory here to reopen it somewhere else, you lose access to all loopholes and you play a flat 35% tax on ALL of your revenues. Smells of protectionism, but it beats globalization in my book.

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