TheAgitator.com
Ezra Klein, Supply Sider?
Thursday, August 21st, 2008Ezra Klein points out one of the biggest advantages of growing income inequality:
I’ve argued often on this blog that given how much income is concentrated in the hands of the rich, you can cut taxes for the majority of the country, raise taxes on a small slice of wealthy Americans, and raise revenue, even as the average American’s tax bill goes down. As Leonhardt argues, the relentless march of wealth accumulation — the rich getting much richer, year by year — made this truer in 2008 then it was in 2007, truer in 2007 then in 2006, and a helluva lot truer in 2006 then it was in 1993.
He’s exactly right. To put this slightly differently: the explosion of wealth at the top of the income distribution has made the overall pie larger, allowing more revenue to be raised for a given tax rate. Indeed, one way to view the Bush tax cuts is as an investment in future tax revenues. By cutting taxes in 2001 and allowing the wealthy to amass larger fortunes, he put his successor in a position where relatively modest tax increases can generate more revenue than they would have if tax rates had stayed at their higher 2000 level over the last 8 years (to say nothing of the astronomical pre-Reagan levels).
It seems to me that this is a pretty good argument against hand-wringing about growing inequality. Liberals especially should be concerned about the long-run growth of government revenues, and a good way for the government to have larger revenues is for there to be more rich people to tax. If it’s true that tax cuts allow the rich to get astronomically wealthy, that’s an argument in favor of tax cuts, even if you don’t care at all about the wellbeing of rich people.
Except, of course, for the problems of regulatory capture. Concentrated wealth makes it easy to buy the regulators.
So the plan is, make it much easier to tax just a few people very heavily, because there’s fewer people to tax, and more people who want their money, i.e. two wolves and a sheep voting about what’s for dinner?
This whole thing just sounds like bullshit. We’re talking about using the government to direct capital into the hands of the few so we can take that money from those few and use it for everybody? This sounds like all the things I normally hate about taxes, with the added kick to the crotch that we’re going to make it official policy to enrich a small number of people.
One small prob with your diahrea trinkle-down explosion of wealth fantasy. It is a fantasy. GNP is down and continues to go down, like capitalist apologists on their lords and masters.
Kelly Taylor
U City, Mo.
Taxed economies are predicated upon the wealth of the those who create it. Those who lose wealth are, by definition, a burden on the economy. Making it harder for those who create wealth do so hinders the economy. Sadly, it would seem that a tremendous portion of the population still adheres to Mercantilism. Bitch and moan all you like about growing illiteracy and plummeting math acumen. Basic economics is the most important skill of any society. Ours is plummeting because our populace does know a damn thing about economics.
*sigh* That’ll learn me to proofread. Radley, can we have an edit feature?
This assumes that the very rich manage to not avoid the taxes in the first place through shelters and other methods.
The people who create this economy are the people who do the work- not the people who convince other people that their money is not at risk and they (the client) are going to get rich. So who’s a burden on whom? How many houses have you built, Bub? I don’t mean financed or cajoled, I mean, built. Knew how and fucking did it. It ain’t over ’til it’s over.
Since when does the product of a business owner’s work and innovation ever become yours? Because obviously, you think you’re entitled to it and if you don’t get to take as much, they are stealing from you.
Your thinking is completely backwards, based upon the wretchedly immoral class envy. Taxes are theft. Always. So long as the rich person isn’t buying government influence, she is entitled to every single penny she earns and you should be ashamed of yourself to think that any of it–WHICH YOU DID NOTHING TO CREATE–belongs to you (or to the people you think are more “deserving.”
A government funded on “user fees” is far worse. It’d be everything you hate about insurance companies, with the power to arrest you and declare war on you.
Elliot,
So long as the rich person isn’t buying government influence
Which every rich person does, in this country. At the very least they all have lawyers to influence the government for them.
Yeah, so when your little neocon and neolib buddies collapse the banking system, are you gonna fuck or suck for a loaf of bread?
Oh for crying out loud…I don’t always agree with Radley but this being posted on Ag? Augh. No tax is best, if we must be pragmatic in philosophy about it (as this post most horribly is), then flat tax is far better.
T
Er, so what about the argument to make Bush’s tax cuts permanent, as Bush and others (McCain) would like to do. How does that help us collect more money in the future?
The problem with letting the rich get rich and taxing them on it later is that, once they begin to get taxed, their incomes will certainly “fall” unexpectedly and you’re left collecting even less money. It’s an argument akin to Communism in so far as it sounds good in theory but it will just never work.
Actually cutting the tax rates increases revenue not the other way around.
“Liberals especially should be concerned about the long-run growth of government revenues, and a good way for the government to have larger revenues is for there to be more rich people to tax.”
This is based on the batty assumption that what liberals care about is high tax revenue period. But those are a means to an end, not an end in and of themselves. High degrees of inequality, especially when it involves stagnating real wages for most everyone else, is a bad long term structural trend that no amount of tax revenue can make up for.
Assuming that ‘enlightened self-interest’ would prevent market manipulation, leading to further capital being amassed amongst fewer and fewer people, is rather naive given the economic history of this country.
‘Panics’ and ‘crashes’ have usually resulted from those manipulations…and were ostensibly the rationale for regulation of banking…which in turn led to the formulation of the Federal Reserve (comprised of private banks). Which did nothing at all to prevent the Great Depression, and may very well cause an even Greater Depression with it’s monetary policies…which you’d think bankers might have known better than to do…and perhaps they did.
“Quis custodiet ipsos custodes?” In this case, “Who regulates the regulators?” When the corporate watchdogs are subsumed by the very wolves they are meant to guard against, what hope do the sheep have?
It would further promote “economic justice” to increase taxes on the upper 50% so that the revenue could be used to enhance the lives of the lower half.
Who wrote this dumbass post? B. Obama?
I don’t know about you, but I don’t think Bush was intending for the rich to get richer so he could tax them later and make even more money. He passed all those tax cuts for the rich so that the rich would have more money, and anybody who thinks this was some ‘clever’ plan to invest in future revenue is deluded.
People who buy government influence are only able to buy government influence because lackwits like Mark Z. and H. Kelly Taylor vote for the people being bought.
#18 I have to agree with you there, pretty silly argument.
Moreover, continued growth in the inequity of Rich v. Everyone Else is probably not a good thing. Money is political power. A privileged few lording over the rest is not democracy in any form.
Last, in practical terms an increase in taxes to the upper X% may or may not be a real increase since there are loopholes and those who can afford better taxpayers find more loopholes.
better tax preparers..
(+1 for edit button
)
“People who buy government influence are only able to buy government influence because lackwits like Mark Z. and H. Kelly Taylor vote for the people being bought.”
somehow I don’t get from either of their comments that they support the friends of Abramoff, in fact from your statement it sounds like you’re the one supporting those guys, no?
> Actually cutting the tax rates increases revenue not the
> other way around.
If the tax rate was 95%, that’d probably be true.
If the tax rate was 5%, that’d probably be false.
Mojotron3000, do you honestly propose that Congress at large isn’t corrupt? Do you honestly suggest that it’s only a distinct subset of politicians in America that are bought by lobbyists? Are you really going to try to convince me that there’s some significant component of our government that has integrity?
I singled out Mark Z. and H. Kelley Taylor because their comments were the most asinine. The reality is that we are all responsible for the government we have, because we, collectively, put them in office. Moreover, we, collectively, created the political environment that made their ilk the only candidates available to vote for. Whether they support Abramoff or not, they gave Abramoff the ability to do what he did by being ignorant fools.
False. Many, many small business owners, for example, work their assess off and don’t lobby for special favors (like big corporations often do, since they can afford to fund lobbyists). In fact, the work ethic of many “go getters” I know make them despise the government interfering in private business–not just in taxes, but in all the red tape anyone who wants to conduct business must go through. All the permits, licenses, and other fees or taxes which government collects are basically extortion. Those people in government aren’t producing a god damned thing, but just taking away from those who are, as a matter of exercising their power to do so. And millions of fools who vote or otherwise support the government, think this is a “good thing” because they refuse to look at the basic ethical principles underneath all the rhetoric (much of which is, quite sadly, being regurgitated in these comments).
You people who cry about “income disparity” are willfully overlooking two things: (1) in this country, when the rich get richer, the poor also get richer (i.e., the zero-sum lie is told to get poor people whipped up for elections, and you stupidly buy into that), and (2) so long as the rich are getting richer honestly (i.e., not gaining special advantage by buying government influence), then not a one of you has any moral claim on a penny they earn, because you did nothing for it.
I will remind the more left-leaning among you that these taxes you so earnestly are defending are used to pay for wars, corporate subsidies, the DEA, and all the other examples of “morality police”. It is an abomination for any of us who oppose all of those things to be forced to fund them. Instead of falling for the class warfare (which half the people stupidly have), we should start agreeing on the fundamental principle of liberty. If someone wants to open up a store in my city and they end up getting rich, what the hell have I or the mayor done to justify having any say in the mutual, consensual transactions between private parties? NOTHING.
So, just mind your own damned business and stop interfering with the liberty of others.
False, false, false. I didn’t put them in office because I didn’t vote on principle.
The collective argument is a logical fallacy. Each individual has his or her own mind and is only responsible for the choices he or she makes.
See Lysander Spooner, William Lloyd Garrison, Henry David Thoreau, et al.. If I don’t explicitly agree to the Constitution and don’t vote, anyone who claims that I have made any agreement or share in some collective responsibility, duty, blame, or original sin, is completely wrong.
To be clear: I didn’t put them in office because I didn’t vote. My choice not to vote is based upon the principle that I have no moral authority to dictate to you how to run your life.
Mr. Lee.
I see you tried to redeem yourself with that last italicized phrase. Too little, too late. It’s one of the more appalling things I’ve ever read on this blog. You may be talking to your liberal buddies here, but still, for a vampire to fatten up his intended victims so that he has to bite fewer of them does not strike me as benevolence.
“1) in this country, when the rich get richer, the poor also get richer”
That does not appear to be generally true.
http://www.u.arizona.edu/~lkenwor/inequalitygraph.pdf
The poor do get richer and they live much, much better lives than even the rich did 100 years ago. Duh!
http://www.coyoteblog.com/coyote_blog/2008/08/not-the-best-of.html
Incidentally, the guy who runs Coyote Blog, Warren, is a business owner who produces things that others value, and who pays for his own website. The graph cited by Rob is hosted on a state school website.
I’d wager that Warren knows more about how business works and how government hurts those who are honestly trying to make money. He definitely has a good handle on the underlying ethics involved.
I’ve read him for years and have found him to be quite honest and fair at examining data. I’ve never seen him massaging the numbers to show something as obviously contrived as the cited graph.
I’m sure it’s indisputable that the poor are generally very much better off than they were 100 years ago. Of course 100 years ago, the income tax rate was zero. I wonder how much of the improvement in the circumstances of the poor can be tied to the institution of the income tax.
I don’t know how obviously contrived the graph is. Is anyone here disputing the idea that in the last 30 years, the rich have gotten very much richer? If not, I can’t see how there is much dispute about the top line of graph from UA. And the numbers of the 10th percentile appear to be consistent with what I have seen in many other places. (Very little growth in the last 30 years.)
I wondering how you all feel about inheritance taxes. Are dynasties a good thing? None of our business?
Is this what the Agitator’s comments have come to? “You can’t trust that data, it comes from a University with pointy-headed perfessers!” University professors produce something that others value as well, which is why people go to school to get MBAs. Basically you’d lose that “wager” of yours, and badly.
Elliot,
Taxes exist and are legitimate. Yes, it’s the government taking money from its citizenry at the point of a gun, and yes that’s a delicate thing. But the richest Americans are those who benefit the most from the fruits of taxation - they are the ones who most need the highways for their business expansion, they are the ones who most need courts since they are more likely to engage in lawsuits, etc.
I don’t think that the “benefits of taxation” slope is linear, either - I think that a person who is ten times richer than I am is receiving more than ten times more benefit from the government existing. There is a lot of overlap here, surely, because I’m benefiting from the fruits of these rich people’s labors by buying products that wouldn’t be available to me without them. This goes both ways, however - a police force paid for by taxes creates local security that encourages economic growth, enabling me to buy those products. But I don’t think offsets all the little things, such as if a draft were re-instituted, I would be drafted, and a rich person’s son would not be; I don’t know the congressperson of my district, so I will not be able to have an internship in D.C., whereas the rich son will, etc. These are all benefits of government that, while not admirable, DO EXIST and therefore MUST BE INCLUDED in the analysis until they can be reliably eliminated.
But it’s like I started with - taxes exist and are legitimate. Which means, yes, I implicitly am entitled to a certain amount of money that other people make, and they are entitled to some of my money. Noody has to like it, but that’s the legitimate situation.
Wow.
Unreal.
Rob said, “I’m sure it’s indisputable that the poor are generally very much better off than they were 100 years ago. Of course 100 years ago, the income tax rate was zero. I wonder how much of the improvement in the circumstances of the poor can be tied to the institution of the income tax.”
http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation
Can you explain to me how using force to take from people who produce, frittering away the bulk of it on bureaucracy, and offering bits of “free cheese” had anything to do with the invention of the light bulb, refrigerator, automobile, television, computer, etc.? Allow me to steal billions and sure, I can make a net “benefit” in at least 2% of the things in which I involve myself. You’re overlooking the other 98% of the time when the dreams and aspirations of people were quashed by not allowing them the liberty to be as productive as they could have been.
“I don’t know how obviously contrived the graph is.”
From a mathematical point of view, what jumps out right away is the fact that one is comparing apples to oranges. The mean for a 1% slice and the mean for a 40% or 60% slice are not comparable. Furthermore, you can’t even make a valid comparison between the left side and the right, as the advent of technology has made a far greater difference than dollars.
The bare fact is that poor people in this country have been getting richer, both in absolute dollar amounts as well as in the accouterments of modern life. Asserting that the cited graph means that is “generally not true” is just flat wrong.
“I wondering how you all feel about inheritance taxes. Are dynasties a good thing? None of our business?”
None of our business. If someone builds a fortune honestly, he gets to do with it as he wishes. Inheritance taxes (like all taxes) are nothing but people who don’t do anything to produce the values forcibly taking them away.
Mojo said, “University professors produce something that others value as well….”
I didn’t say anything about professors. I only made a remark about who was paying for the website. I know quite a bit about Warren and I admire what he’s done. He provides services to people who voluntarily pay him. As far as I know, none of them are forced, under threat of confiscation, to give him any money. That makes me respect his opinions and insight quite a bit. I don’t know anything about the guy at ASU (who may or may not be faculty), but I’d still take the wager. You’re silly to declare an end to it, with no evidence in hand, too.
But since you brought up the professors, I’ll bite. When you throw in tax subsidies, government grants for research, government-backed student loans, and the rest, how do you measure how much value, and to whom, these professors provide? Put them in a free market and see how much their expertise is worth.
Slavery existed and was legitimate. Slavery was an immoral abomination.
If the law is wrong, no one has any obligation to obey it.
I have no problem whatsoever with someone freeing slaves, not paying taxes, smoking marijuana, crossing a line on a map, or anything else which hurts no one else.
If you think you’re entitled to what someone else produces–something you took no part in producing–then I recommend you go get it yourself, rather than sending your proxies to do your dirty work. Something tells me that facing the possibility of getting shot as a burglar might make you reevaluate your argument.
Elliot your arguments are fallacious and have no value except to your fringe ideology. In the spirit of that ideology, you can keep the full value of your weak ass arguments.
gl
So you assert. Feel free to be more specific. Need help?
http://www.nizkor.org/features/fallacies/
http://www.infidels.org/library/modern/mathew/logic.html
http://rous.redbarn.org/objectivism/Writing/DavidKing/GuideToObjectivism/FALLACYS.HTM
http://en.wikipedia.org/wiki/List_of_fallacies
I’ve seen your type of arguments for years. I probably made many of the same quips you have, until I realized there is no justification to force people to do something they never agreed to do, so long as they aren’t hurting anyone else. It would have been easier for me not to be among the “fringe” by not being honest about that. Really, who wants to be marginalized? But if you’ll look at those lists of fallacies, you’ll see that argumentum ad populum is there, which means your “fringe” crack has no bearing on the truth.
“Fallacious” indeed!
> Rob said, “I’m sure it’s indisputable that the poor are generally
> very much better off than they were 100 years ago. Of course
> 100 years ago, the income tax rate was zero. I wonder how
> much of the improvement in the circumstances of the poor
> can be tied to the institution of the income tax.”
> http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation
I believe correlation implies the possibility of causation.
In this case, we’ve not only got correlation, we have a mechanism.
The government takes money from most of us and redistributes
some of it to the very poor.
> Can you explain to me how using force to take from people who produce,
Think of taxes as a service charge. If you don’t like the service
here, you can take your business elsewhere. Somalia, for instance.
Go there. I’m pretty sure they don’t have a lot of annoying government
regulation and very probably no income tax.
> frittering away the bulk of it on bureaucracy, and offering bits of “free
> cheese”
Yes. Most of what the government offers is sort of like “free cheese.”
Well, that and roads, schools, and a few other things too trivial to
mention.
Did you know that the internet originated as a government project?
I was a student back then. Didn’t have much income, but even so,
some of my tax dollars went towards that project. Money well spent,
I think.
> had anything to do with the invention of the light bulb, refrigerator,
> automobile, television, computer, etc.?
Generally, inventors benefit very much from the infrastructure
and services provided by the government.
My grandfather for instance, was a cowboy all his life. My father
would likely have followed in his footsteps but for WWII and the
subsequent GI bill. He ended up inventing for GE. I’m pretty
sure he has paid very much more in taxes than was spent to
put him through school.
> Allow me to steal billions and sure, I can make a net “benefit” in at
> least 2% of the things in which I involve myself.
I agree that if we put someone, who doesn’t believe in
government, in charge of the government, the odds are fairly good
that he would not do a very good job. And if he happened to be
dishonest as well as disinterested and incompetent, he might
try to steal vast sums.
Come to think of it, that pretty well describes the last 8 years.
> You’re overlooking the other 98% of the time when the dreams
> and aspirations of people were quashed by not allowing them the
> liberty to be as productive as they could have been.
98% eh?
I would have guessed that most dream quashing is self inflicted.
> “I don’t know how obviously contrived the graph is.”
> From a mathematical point of view, what jumps out right away is the fact
> that one is comparing apples to oranges. The mean for a 1% slice and the > mean for a 40% or 60% slice are not comparable.
What 40% or 50% slices are you talking about?
Why are means for different slices not comparable? Feel free to get
technical. (My math degree was achieved a very long time ago, but
I expect I can follow along.)
> Furthermore, you can’t even
> make a valid comparison between the left side and the right, as the advent
> of technology has made a far greater difference than dollars.
The “technology” the poor make most use of involves food,
clothing, housing, and transportation and I don’t see much change
in that in the last 30 years.
> The bare fact is that poor people in this country have been getting richer, both in
> absolute dollar amounts
That is in no way a “bare fact”. Indeed, it appears to take a great deal of
hand waving to get there.
> as well as in the accouterments of modern life.
In the last thirty years, I suppose their TVs have gotten bigger. They’ve
got microwaves. They’ve got crummy cell phones. And some of them
have ancient computers where before they had none. I’m not sure that
that’s much of an improvement, but what the hell, maybe they think it is.
> Asserting that the cited graph means that is “generally not true” is just
> flat wrong.
>> “I wondering how you all feel about inheritance taxes. Are
>> dynasties a good thing? None of our business?”
> None of our business. If someone builds a fortune honestly, he gets to do > with it as he wishes.
Let’s suppose that after he’s dead, he’s past wishing.
In any event, who determines whether or not someone builds a fortune
honestly? The government that you don’t trust to do anything right?
What makes you think the rich guy won’t try to subvert the process (He’s
certainly got a lot more ability to do it than does the average joe.)
> Inheritance taxes (like all taxes) are nothing but people who don’t do
> anything to produce the values forcibly taking them away.
The originator is dead, so it’s just one group of non-producers taking something from another group of non-producers. What’s the big deal? (I’m kind of kidding on the square here.)
The only argument I’ve made is at #20. Nothing in that argument is incorrect. You may not like it, but that doesn’t mean it’s wrong.
You don’t vote because of your principles. You don’t want to tell other people what they can and can’t do. Please. It’s a shame that principle doesn’t extend to the internet. I have more respect for the evangelical wing of the republican party. At least they are in the game. If you don’t vote or take part in the system, nobody cares. That’s not coming from me. That’s coming from every political party. Nobody has time for people who don’t participate.
Now start hitting the negative button Mr. I Don’t Vote.
I will not think of taxes as something they are not. I never agreed to the “service” of tearing apart Iraq, of locking up hundreds of thousands of people who have done no harm (drug war), of murdering family pets as policy, of a pyramid scheme “retirement fund” which is set to devastate our economy and leave my children and grandchildren stranded, etc., etc., ad nauseum.
I don’t have time to properly Fisk your remarks in defense of theft. I’ll just point out that I would never force you to do something you never agreed to do, so long as you’re not hurting anyone. I wish you’d give everyone else the same respect.
That is manifestly untrue. Ask those Americans who have tried to get away from the insanity of government, to live their life on their own terms, neither taking from others what they didn’t earn, nor giving up what they earn to pay for things they don’t want or need. Living “off the grid” is increasingly difficult because the government is increasingly bent on making sure you can’t.
Pay attention. I don’t vote in political elections. I wouldn’t go into your house and take away part of your wealth to pay for things I think are important. I don’t have the moral authority to do so. Hence, I can’t grant such an authority to any “representative,” either. I respect your rights too much to vote.
If I register my opinion on a private website, which has no power to force you to do anything, that has nothing in common with a political election.
Try using reason to distinguish the essentials, would ya?
>> Think of taxes as a service charge
> I will not think of taxes as something
> they are not. I never agreed to the
> “service” of tearing apart Iraq, of
> locking up hundreds of thousands of
> people who have done no harm (drug
> war), of murdering family pets as
> policy,
I’m frequently pissed off about stuff
like that. So pissed off that I
send money I really should be saving to
various organizations that are I think
are trying to change things for the better.
I really doubt that we will ever have a
system where we can direct our taxes
only towards those things we want to
pay for. Indeed, it seems quite
unworkable. Suppose, for example, you
decide you don’t want to pay for roads,
but you still want to use them.
>> of a pyramid scheme “retirement
>> fund” which is set to devastate our
>> economy and leave my children and
>> grandchildren stranded, etc., etc., ad
>> nauseum.
I presume you are referring to Social
Security. It started out as a pay-as-we-go
scheme and the fact that the number of
workers increased each year meant that
there was something of the aspect of a
pyramid to it. That’s no longer the case
though. In 1983, workers were asked to
start paying extra so that the generation
following the boomers wouldn’t be
overburdened. As the economy grows at
least 2.2% per year(low by historical
standards), the trust fund will remain
solvent indefinitely.
Here’s how I see it:
We boomers happily helped pay for the
generations that came before us and then
chipped in an extra 30% to help pay for
our own SS. And just as we boomers
approach retirement, you want stop
paying the social security tax.
>> I don’t have time to properly Fisk your
>> remarks in defense of theft.
Some Libertarians think that Taxes
are Theft. Some Marxists think
that Property is Theft. Just
different types of utopians whose
plans(if they were ever put into
effect) would generally increase
the level of misery in the world.
>> I’ll just point out that I would
>> never force you to do something
>> you never agreed to do, so long as
>> you’re not hurting anyone.
I don’t enforce any of the rules. I just
point out the windmills as you tilt at’em.
>> I wish you’d give everyone else the
>> same respect.
Don’t go all maudlin on me.
Just noticed that my comment concerning
the shape of the Laffer curve
>> Actually cutting the tax rates increases revenue not the
>> other way around.
> If the tax rate was 95%, that’d probably be true.
> If the tax rate was 5%, that’d probably be false.
has been down rated to -6.
Do lots of people here think that cutting the Federal tax rate by two thirds would probably result in the GDP rising by more than 300%?
GDP GNP whatever.
Elliot,
You are right. Some people you know do care. However, the Voters, of which I count myself, do not care. Moreover, I think you are self absorbed. When I filter out your rhetoric, you an I share some common concerns; living off the grid vs. RFID chips in paper money. But other than screaming into the wind, you won’t stand up and DO anything. So OUR common goal is weakened by one vote.
You probably take pride in viewing yourself as “uncompromising” and believe you have principles. Unfortunately, compromise is necessary for the function of society. The “end game” for your philosophy seems to be anarchy. Good luck with that.
I’m perplexed at my currently -10 downvotes. Regulatory capture is a standard libertarian response as to why government regulation tends not to work as expected/desired/claimed by those who want regulation. Saying that harnessing it for liberal redistribution in this case is suddenly anti-libertarian? Sheesh.