Forum Post: Tax The RIch
Posted 12 years ago on Oct. 6, 2011, 4:38 p.m. EST by jato
(3)
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Yesterday I saw union delegates chanting. "Tax the rich." While some people may think this in its self to be large piece of the solution. I'm going to explain why in my opinion its not the greatest of ideas.
The 99% are the working hands, indentured to wages, fueling the stock market production and prices . As the 99% we lack the one privilege the 1% has. This is simply mobility. If a tax burden becomes to great then the 1% has the option to simply move elsewhere.
If we are to ask for tax system restructure we need to look at the situation from as many perspectives as possible. We need to find and use historical context. In the words of Winston Churchill ""the further back you look the further ahead you will see."
So in response for a taxation of the rich. I simply suggest that we think this over with a little historical context. Contemplate the consequences, then offer suggestions for change.
We are more than just a mob and, for us to be taken seriously. We need to be able to articulate our thoughts clearly.
How bout since our economy is set up to be a free market system that there should not even be a minimum wage. Minimum wage systems might work state to state if they so choose. But to federalize a minimum wage is unconstitutional. In a free market society, if businesses want to pay someone more 5$ an hour, then no one will want to work for that company. Its called competition between the companies that should naturally exist. Companies can destroy themselves by being cheap. If you compete against salaries, the better companies will have higher salaries which will lead for better work and better products. In a free market, you will have the best of everything because of competition that is created. The problem of exporting jobs to other countries is the problem. And that can be the fault of the US government by regulation and taxes on american companies and small businesses. Then they reward the businesses on wall street by bailing out failing companies like GM and numerous financial instituitions. The financial institutions though fell from the bad mortgages the US government forced banks to make to people who had no businesses getting the credit they were given. This attack on wallstreet is ridiculous. I am a 25 year old working in the healthcare industry. These people have no clue and just continue to spit anti american socialistic principles. Go read up on the constitution and what free trade is. If you dont like. Go live in a European Union and see how much better your life is. Oh yea. they are doing the same thing we are. Its socialism
how about reform the social welfare program? eliminate all the fraud? Also time to get you deadbeat boyfriends or father to pay up for your kids that I am supporting your baby mama!
Taxing the rich is not the same as taxing corporations. Personal Income Tax and Corporate tax are not morally equivalent.
That being said, corporations are not paying the 35% tax anyhow. They are avoiding it by having their tax homes abroad.
I find your perspective on the situation problematic in that you seem to assume the 99% should be the "working hands, indentured to wages, fueling the stock market production." For me, that is the very attitude this movement to Occupy Wall Street (aka the stock market) is protesting. 99% of the population shouldn't be at the mercy of the other one percent's fun and games. Furthermore, you seem to imply that the 99% have no choice in the matter. Even if fate plays a large role in people's lives, many people choose a job for the good of humanity or the love of a certain vocation, and not to make a buck. But that doesn't mean a teacher, a nurse or a carpenter should struggle to pay for health insurance, their children's education, etc. etc. Personally, I would be ASHAMED to be a stock market broker and refuse to be their indentured servent.
I did not imply that they should be I implied that they are.
There is a excess of labor and a shortage of jobs. So choices of vocation are limited, choices of employer are limited. Survival in America today comes at a cost of capital. Without money most people begin to increase their debt. Increasing a persons debt ceiling has a direct effect which does feed back to Wallstreet and the banks issuing credit. Ie. student loans, mortgages, credit cards, personal loans, pay day loans, etc etc.
The option of choice is there but still plays a role in the market. The market is infused in everything we do. If you choose not to buy a car then you dont feed the auto stocks. Ok that sounds good... Mass transit is out because mass transit is usually supported by municipal bonds. Buying a bike is out because the manufacturer and retailer both have vital ties to wall street. So your left with walking around, more than likely the shoes your wearing are from a corporation. That has common stock or has gained production capital from the issue of bonds or a private bridge loan from a larger institution.
Even the option to go the route of entrepreneurial endeavors has ties to wallstreet. Utility companies, leasing property from REIT's, computers, wholesale products, the list goes on.
Either directly or indirectly we work for the large corporations. Either as a labor or a unit of consumption. There is no choice about it.
Sure, you are correct about the current state of affaires, but that does not mean we have to lie down and accept that - that is why people are protesting. The 99% should not be at the mercy of corporations' and brokers' gambling and extravagance. Corporations and bankers should be held accountable for the losses, regulated and required to pay when they blow it. If they want to go gambling with the 99% retirement funds, jobs, etc. then they should pay a little more in taxes to cover the losses. Finally, while you are right about the fact that most consumer goods are tied to the stock market, consumers still have a choice to buy or not to buy and to buy from whom. If you buy a used bike from an individual today, it's not going to fund Wall Street unless the individual decides to invest that money into the market.
The real rich own the private Federal Reserve and pass their stocks/property through the generations in offshore trusts that pay no tax, inheritance or otherwise.
Income tax is not the problem people. The hijacking of the money power by European financiers (and some seditious Americans like the Rockefeller family) is where we need to be looking.
Another funny thing was a guy added up all the wealth the rich have accumulated (and the Fortune 500 companies). He points out that if we seized it all, everyone else would still have to pitch in just to pay for 1 year of Obama/Bush budgets ($3+Trillion). Just one. There would also be no businesses left and horrified business people large and small terrified that everything they have will be seized next year . . . So instead of tyring to just stick it to richie and the corporations (which those crony corporations have lots to answer for), we relly need to actually reign in Washington.
I wish people would look at the % of GDP taxes have brought in over the last 60+ years. In that time rates have been low like right now. They have also be upwards of 90% on some income brackets. Yet, the % of GDP collected has always stayed in the 18% range. Taxing the rich doesn't actually accomplish the great revenue-reaping liberal, Progressive, and Democratic leaders want us to believe. But hey, that's just proven historical fact. What does it know.
First of all, based on your graphs, the % of GDP that taxes have brought in over the year does fluctuate: a 5% decrease from 2000 to 2010 is a significant amount of money, especially when you consider that the government increased spending significantly because of the two wars it started. You can't just analyze the % of GDP when examining the historical tax data; you also have to look at the context, the economy, the ACTUAL GDP, and the government's financial obligations at any given moment. Your graphs are pretty useless because they don't provide any real numbers. In fact, one could even use your graphs in SUPPORT of tax increases saying that higher taxes are not a real strain on GDP...
Drawing on historical data, we could also point out that the economy was soaring, the government had a surplus and the rich people were doing just fine BEFORE the Bush tax cuts.
You should take your own advice.
If the economy is soaring, tax collection goes up. If the economy is tanking, tax collect goes down. The government spending is a factor in GDP calculation, but one that doesn't generate back tax to collect. So in a recession if the private economy is shrinking, tax collection does too. If the government spending goes out of control at the same time, the shrink is even more exaggerated.
Additionally, if you look at the graph you'll see the % of GDP collected is rebounding toward the historical average even though the Bush cuts are still in place and we are still in recession.
And we were collecting the same percent of the GDP during Carter's administration (and recession) when high income tax rates were TWICE AS HIGH than they are now ...
Tax the rich isn't a solution - it's a political ploy.
I'll admit that it's been awhile since my last Econ class, but I still don't think your graphs, or your argument for that matter, provide us with enough tangible information - that is real numbers - to make educated decisions. A percentage of GDP is a relative number... And, your point about the % of GDP collected rebounding isn't a good argument because our GDP hasn't increased like it would in time of growth. Finally, the government needs more money to pay for medicare, medicaid and social security (not to mention our expensive wars which are bringing home many injured soldiers) at a time when the impoverished class is growing, healthcare costs are rising and Babyboomers are retiring - you can't compare the 2011 budget with the 1979 one. Since Carter's reign, not only have the taxes been cut, but the rich have gotten richer and the poor poorer - there is a correlation!
The rich getting richer is not a part of this discussion at all. It truly isn't corrolary to tax rate. What my argument is here is simply that history proves you do not collect a significant amount more money by raising income taxes on the wealthy. If you did, the Carter years would have had a much higher % than in boom years because the recession draws down the GDP and high tax rate would draw up the % collected. A small GDP vs a high tax collection = high percentage. Instead we had a suffering economy (GDP) with 70% income taxes, but low % collection.
That's only true of income taxes. Not true of estate taxes or property taxes. Ad valorem tax revenue for the federal government was significantly higher before Reagan's 1981 reforms.
Wrong. The income taxes despite rate changes have netted an average of around 8.3% and it fluctuates about 1.5% throughout history. The TOTAL tax revenues have stayed around 18% with more of a 2% flux.
http://www.heritage.org/budgetchartbook/income-tax-receipts http://www.heritage.org/budgetchartbook/current-tax-receipts#
The estate tax has been gutted over the past decade. It's only 35% now, for the amount in the estate over $5 million. Let's make our country a bit more of a meritocracy. The estate tax rate was 70% or higher from 1935 to 1981, and somehow we had rich people living in the US that whole time. Let's bring back the 70% estate tax for the amount inherited over $5 million!
Taxation is another reason why many businesses in the united states incorporate in Delaware. Which is one of the state that are a lil more relaxed on taxing businesses. If the states had to follow a uniform code of taxation to effectively level the playing field. Some corporations and wealthy persons may choose to simply move their base of operations. Which reduces taxes, drops labor costs, while gaining a warmer latitude.
They won't move. They didn't move in the 50s and 60s when the top tax rate was 90%. They certainly won't move now.
They don't have to physically move. I know corporations physically located in the US that are incorporated overseas. Legal, legitimate, and allows them to employ more people. I also know of companies located in one state but incorporated in Nevada or Delaware. Cheap to do and helps you pay the bills.
I mean, we can always tax imports on foreign companies to adjust for them using cheap labor. They'll either have to raise their labor standards, work inside the U.S.,or pay the tax. Simple as that. And they'll HAVE to do it because the U.S. is a huge market that they can't afford to ignore.
We already do that. We would have to raise the tariffs to about 600% to shut off the flow - and accept that in the short run (or forever) we have just starved to death a million Chinese, Indonesians, Veitnamese, Nicaraguans, etc by cutting off trade. Do you accept that responsibility? Isolationism sucks.
Isolationism is the only solution I can think of that allows one country to give its workers a respectable, living wage and where businesses clean up after their pollution when other countries in the marketplace refuse to.
Name an isolationist country that does this.
Okay, there's one more option. IF a country has a more technologically advanced economy (better universities, better R&D programs, etc.) then the standards of life might also be able to be maintained.
I don't know why you want an example of a country that does this, since I'm suggesting that's what we should do, not that it's what is currently done.
I ask for an example of proof that it would work as you asserted 4 minutes ago. That's why I ask. You want it and assert it would be awesome . . . Based on ? ???
How else do you think we should safeguard the environment and American's quality of life in a global environment? Do you have a better idea, or do you just not care about those two goals?
I do have a system that too has never been tried in full. Many have started with it as the stated goal but let corrupt politicians sully the waters and impliment protections for donors and friends and worse.
The solution is a true Free Market system.
Now, before you throw on your blinders and comment blithely that it doesn't work, exploits the poor, kills owls, or whathaveyou; understand that you do not have actual evidence that it will not work. Just as you have no evidence that isolationism would. BECAUSE IT HAS NEVER BEEN FULLY IMPLEMENTED.
The worst you can say with actual data is that it is easily corruptable and leads to what we all know and grumble about. And that is sadly true. It is easily corruptable. However, with a truly limited government as intended by the Founders - maybe it would work. A corrupted version helped the US become the #1 economy in history . . . so it leads to say that perhaps an uncorrupted one leads us further!
Lastly, I cannot do justice on a little forum like this to a full and true description of how an actually free market system would safeguard the environement and quality of life despite cheap labor abroad. It is a thick textbook of facts and historical discussion. If you want to intelligently begin to understand free markets I would recommend thefreemanonline.org.
Or you can shout ignorantly about it.
I am researching isolationism to find if there is value or not. I come from the position of "not" but I am willing to change my opinion if the logic is more sound than my current beliefs. I encourage the same willingness in you.
But their investments sure will move. Away.
They didn't in the 50s and 60s. Actually investment in America has decreased rapidly since the 1980s since profit margins can be increased simply by going to lower-labor cost countries.
And if you tighten the vise some more, that will be the end of any investment here.
Labor cost is not the driving factor in producing something. Total cost is. How do you think it is that all that growth happened here and all the while there were poor people all over the world that would be more than happy to work for any improvement in their lives? The difference was productivity. No mud-hut dweller could compete with economy of scale in capital-intensive heavy industry. We destroyed all that. It's now cheaper to make something and ship it around the world than to make it here in a lot of cases. And now those regions have what we used to have -- the infrastructure, the skilled people, reliable power, and all the rest. Now there is lower taxes and fewer regulations in communist countries than there is here. For most products, even if you erase the labor cost, it still applies. From a former employer. One time in order to put a sign in front of our little building I had to wait two weeks for the hole inspector to come by and sign off. On the hole. Really. I don't expect anyone to understand any more. Let them have what they want. They want to destroy people, destroy property rights, stop the people from creating jobs? They will get what they want. Good and hard.
I say "let them move!", maybe itll be a hit to the economy in the short term but it'll bring a more stable humanized economy in its wake.
I mean, that's also true. I'm just saying that they won't move, so it doesn't need to be considered.
I am sure that's exactly what the folks at Halliburton thought when they moved their headquarters to dubai.
Goodbye... and don't let the door hit you in the ass.
The tax won't just move... there is still lots of profit to be made in our nation.
The idea that they can just move their business elsewhere is just silly. Businesses exist to make money. Not to lose money.
Never would an investor turn down a sound and good investment just because of a large tax. Never. Everyone wants to make easy and safe money.
End the Fed, then the 1% will only be people who legitimately earned their wealth, therefore no need for hatred and envy.