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Hey, Why Not?
Friday, March 27th, 2009Just when you think the right has out-dumbed itself, someone on the left writes something like this.
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2009: A 95% tax on incomes over 10 million? That sounds great.
2010: A 95% tax on incomes over 09 million? That sounds great.
2011: A 95% tax on incomes over 08 million? That sounds great.
2012: A 95% tax on incomes over 07 million? That sounds great.
2013: A 95% tax on incomes over 06 million? That sounds great.
2014: A 95% tax on incomes over 05 million? That sounds great.
2015: A 95% tax on incomes over 04 million? That sounds great.
2016: A 95% tax on incomes over 03 million? That sounds great.
2017: A 95% tax on incomes over 02 million? That sounds great.
2018: A 95% tax on incomes over 01 million? That sounds great.
2019: A 95% tax on incomes over 00 million? That sounds great…
Or, we can just keep it at 10 million. By 2018, todays 10 mil will be worth 1 mil anyway.
Tried that. Didn’t work.
http://www.truthandpolitics.org/top-rates.php?print=yes
Those that know not the past are doomed to repeat it.
Because we’re all equal, everyone should be paid the same! YES! That makes perfect sense. Or just tax it so high that it’s one step shy of slavery — work for peanuts. Great way to give people incentive.
What an idiot. Sounds angry and jealous at those that worked harder or were born into more wealth. That’s just the way it goes in life — always has been and always will be.
You’re all congratulating yourself on being clever and economically literate, unlike that stupid liberal. You’re not.
Honestly, just when I think that at least *some* conservatives are intelligent, along comes some evidence that while they may not be stupid, they still tend to be invested in a lot of ideological dogma without empirical proof. Sort of like communists, really.
Recent research in behavioral economics tends to show that beyond a certain defined level of income (chiefly dependent on peer group) people tend to work for status, not money. Reducing incomes, as long as the reduction is above that level, would not significantly alter incentives to produce, as long as status is unaffected.
….drink deep, or taste not the pierian(sp?) spring.
The left thinks people have the right to butt-fuck, but not to earn a $10,000,001st dollar. And the right thinks the opposite. And they think they’re way different from each other.
We’re doomed!
/Dr. Smith
What’s stupid about it? Moynihan asks “why, since 1980, has every country with a functioning economy lowered top marginal tax rates if there are no negative effects of massive government wealth distribution?”
Well, the answer seems obvious – the wealthy enjoy disproportionate political power in every country with a functioning economy. Ergo they succeed in crafting tax policy that benefits them. That’s a lot more reasonable than the boogyman idea that a huge top marginal tax rate heralds some kind of economic collapse. Yglesias makes a pretty good point, in the post, that the compensation of the top paid world CEO’s has nothing to do with the relative success of their company and everything to do with the tax policy in the country in which they’re paid.
I mean between Moynihan and Yglesias, it’s Moynihan who comes out looking like an idiot in this one. Does it really make sense to say that obscene compensation packages for CEO’s is so good for our economy that the rest of us have to bear the burden? Sounds pretty stupid to me.
Keeping enough of the population defending the rich is what keeps the rich….well…rich. You all seem to be taking on that duty quite nicely, under the guise of anti-taxes, of course. Keep in mind, the top 20% of income-earners own 84% of the wealth in this country. That leaves 16% for the other 80% (odds are, you). I’m not screaming that the government should take it, but if you think that that top 20% all got rich by creating companies like Google or Microsoft, then you are sadly mistaken.
Yglesias sometimes has interesting stuff to say, but that was one of the dumbest things I’ve read in a while.
#5, you’re right that it’s not going to cause CEOs to stop working, but that’s not really the point. Should the government be in the business of taxing everyone as much as possible without making them quit?
Cross-posted from the Reason thread:
A couple of posters have alluded to the rich going elsewhere if their taxes are too high.
It does happen.
Even the modest – modest in Yglesias’ terms – differential in taxes in the upper range between Canada and the United States has produced a huge flight of capital and talent from Canada to the US.
Whenever I question my left-leaning acquaintances “Would you rather receive (in taxes) 30% of $1 million or 40% of nothing?” the usual response is “nobody should make that much.” In their minds, being wealthy is equated with being evil.
…the wealthy enjoy disproportionate political power in every country with a functioning economy. Ergo they succeed in crafting tax policy that benefits them.
Do you see what you did there? Hint: It has to do with the link between successful economies their production of wealthy people.
Does it really make sense to say that obscene compensation packages for CEO’s is so good for our economy that the rest of us have to bear the burden? Sounds pretty stupid to me.
How exactly do you bear the burden of obscene compensation packages for CEOs? When companies are bailed out by taxpayers? Sure. Moynihan (and I) think bailouts are an awful idea.
I’d like a policy that disfigured the most beautiful among us.
I’ll bet the most beautiful people would welcome a scar, or a shaved head, or a broken nose. Then they would not have all the pressure of wondering if they are more beautiful than everyone one.
I don’t care if you put your $15 million in a pipe and smoke it. Just don’t let the government have it. Nothing is worse than giving it to government.
I’ve worked for bad CEOs. I’d gladly pay ten million to work for a good one.
This is always the most moronic issue lefties try to defend.
Harrison Bergeron.
The biggest problem is that the tax would really only affect those people who realize $10Million/year one time as a result of cashing a lifetime of work. The really rich people (as #8 alludes to) can afford to pay people to find ways to twist the system so they do not “earn” the money for tax purposes.
If a company is paying someone $50Million/year that person is probably making at least $500Million/year for the company so if we posit a successful salary cap (that somehow doesn’t result in talent flight or Galtism or people just not working as hard), it would result in more inequality due to exploitation of underpaid top talent.
I don’t mind honest socialism with high taxes and effective services. But the one thing that bound together successful socialist states like Denmark, Israel in the 70s’, etc etc is a social contract built on social cohesion: the idea that we are one nation and have obligations to one another. I don’t see a whole lot of that in the USA in 2009. Without that it’s not socialism: its vindictiveness disguised as righteousness.
I don’t follow. If it was possible to tax the rich so punitively that they simply abandoned the country – went Galt – they wouldn’t be there to skew tax policy back in their favor.
The fact that Moynihan is able to point out that tax policy invariably swings back to favor the rich would seem to indicate that the rich simply aren’t going anywhere.
All sorts of ways. I bear the burden of a government that’s always in their interests and never mine. I bear the burden of an increase in the price of goods to fund their lavish compensation. I bear the burden of corporations – some I depend on for services or goods – going under as the pirates at the top raid the portfolios and head for the escape hatches. I bear the burden of markets distorted by their absurd buying power. I bear the burden of their disproportionate use of public resources and their disproportionate gain from increases in the GDP.
It’s not just bailouts. Bailouts aren’t even the beginning of how the rich mooch off the rest of us.
If a company is paying someone $50Million/year that person is probably making at least $500Million/year for the company
Why on Earth would we think that’s true? And what kind of idiot would only take as compensation ten percent of his value to the company?
I don’t have a problem with Steve Jobs, for instance, getting millions. He did, after all, create a company that hires thousands and makes products I like. But somebody like Gil Amelio comes in and does nothing but lose the company money.
But the end result is that Amelio is compensated with millions and Steve Jobs works for a dollar a year. Does that really seem right to anybody? That the guys who come in after the fact and ruin an established business get paid better than the people who created the company? Let’s reward our titans of industry, by all means. Why do we have to reward the corporate pirates, too?
Two points: 1.) Matt Yglesias is certainly a pretty bright guy, but as far as I can tell, he went straight from Harvard to opinion journalism. To me, this makes his opinion a lot less valuable. I remember my overestimation of how well I understood “how things really work” after coming out of college and chuckle now, but he has never had these kind of experiences you get at early career jobs. This proposal is exactly the kind of thing you’d expect from someone lacking those experiences.
He casually throws off an exodus of baseball talent as a trivial consequence of this tax. But even if this alone were to happen, rendering Japan the #1 baseball league: the MLB would lose hundreds of millions, so would the TV networks, the stadiums and teams, cities that rely on stadium revenue…etc. It would be a Big Deal. That’s just baseball. Imagine the nationwide repercussions. Doesn’t he realize that people who make that kind of money are the most mobile people in the world? How can an a smart person think this is a good idea? Easy, he’s young, an “egalitarian,” and is trying to work backwards from what he wants to be true – whether that vision is attainable or not. It makes him hard to take seriously.
2.) Chet, I can agree that some CEOs get paid far too much even while performing terribly. There’s an issue where CEOs and boards of directors run in some of the same circles and know that what goes around comes around. Still, there’s no remedy I can think of that doesn’t risk drastic unintended consequences and, more to the point, would involve extremely intrusive government measures, ripe for abuse. also,
“The fact that Moynihan is able to point out that tax policy invariably swings back to favor the rich would seem to indicate that the rich simply aren’t going anywhere.”
There are no tribe of people born as The Rich. Maybe these policies are making more people rich.
re: #20
Ah, so if come CEo is perceived as being bad then it is OK to tax them at a confiscatory rate.
We can argue about what Amelio was worth to Apple, but one has to factor in that when he took over as CEO Apple was hemorrhaging money AND had not future prospects while when he was booted Apple was positioned to partner with Microsoft despite still losing money. Amelio wasn’t hired to make Apple profitable overnight (and wouldn’t have taken the job) but was hired to restructure a failing company which he did.
Also if we only are talking about nominal salaries (Steve Jobs’ $1) then Amelio didn’t make millions, his made about $1.4Million in salary for a year and a half. To get to millions you have to include stock grants and options and planes in which case Jobs makes about half again per year what Amelio made in his year and a half.
I have nothing against Jobs and think he is an excellent buy at $20+Million/year. I do realize that Apple fanatics worship Steve Jobs (did he put subliminals into OS X?) however I ask that you not use Apple as an example, there is too much emotion on the part of Apple users about Apple for rational discourse. Sorry if I offend the religious/Apple worshipers, but.it has to be said
Yglesias is obviously brilliant, and that goes against the egalitarian ideal. He should report immediately for a lobotomy.
Cities don’t rely on stadium income. Stadiums only move economic activity around in cities, they don’t increase it. I’ll find a source for this and post it in the morning.
#21, Chris D: “Matt Yglesias is certainly a pretty bright guy, but as far as I can tell, he went straight from Harvard to opinion journalism.”
There’s a recent bloggingheads with Mark Shmitt (who I generally like) and Matt Yglesias (who I like more than most know-it-all 20 something bloggers). Matt makes the point that insiders/experts in a field often try to dismiss others with overly technical questions. While viewing this segment, I initially liked Matt’s point, but as it continued it seemed like a caricature of a young liberal blogger. I’m an expert in several aspects of utility energy, and I’ve never read an article/paper from any thinktanks from Greenpeace to AEI that weren’t laughably ignorant and useless. I don’t know if that’s what’s happening here, but it’s hard to take anything these guys say seriously when it goes beyond broad philosophy (suggesting DeLong as the most qualified to talk him out of this seems to confirm the pessimistic viewpoint).
To the specific question . . . I’m about half libertarian and half conservative. My libertarian side tells me that government intrusion almost never justifies itself. My conservative side says that giant corporations are a product of American law and tax structure, so why not discourage the most odious good-ole-boy behavior?
#24, qwints: “Cities don’t rely on stadium income. Stadiums only move economic activity around in cities, they don’t increase it. I’ll find a source for this and post it in the morning.”
I’m pretty sure stadiums increase economic activity in cities, but the increased tax revenue is rarely enough to justify the subsidies. Either way, I’m interested in your links.
I was terribly worried about all the marijuana questions the President got the other day. If we legalize pot it will harm the economy because pot robs people of ambition. The last thing we need is more folks sitting around the apartment not doing anything. We need people to get out become industrious!
“I’m pretty sure stadiums increase economic activity in cities…”
The term “cities” is irrelevent and should be replaced with the term “regions”. Stadiums are only a wealth transfer agent, not a wealth (or economic activity) creation agent.
For example: I represent a family of 4 with yearly recreation budget of $6,000. A stadium is built and now I have a budget of $8,000? Of course not.
“…money spent on this type of entertainment at this location would likely have been spent on some other form of entertainment if the stadium were not built. ”
http://www.swlearning.com/economics/policy_debates/stadiums.html
“If we legalize pot it will harm the economy because pot robs people of ambition.”
You mean like Michael Phelps? He smokes and doesn’t accomplish anything does he? Your argument is full of holes…you must not smoke pot.
There are a few hundred million other examples if Phelps doesn’t flip your skirt.
Or, you can take the argument that denying me a Constitutional freedom isn’t justified because the state wants to keep the economy humming.
This is #5 again. Reading this thread has not improved my view of libertarians. So if you all agree that CEO’s are not going to resign en masse over this (i.e. no or at least minimal negative economic effects) what’s the rationale against it?
You may not like it, but I’m not hearing a convincing non-ideological (positive, not normative) argument against it. “Government action is almost never justified” is not an argument. Outside of the Reason-Kool-Aid drinking circles, at least.
Have you considered that there might be a *reason* that most professional economists scorn the Austrian school?
The Yglesias article seems perfectly reasonable to me.
Yes, it is speculative “what if” piece. And that involves a certain amount of ass-talking by its very nature. But the reaction here seems churlish when he states in the post that he would welcome a rational argument to show how he is wrong. Instead, all I see is “Hurr, stupid liberal!”.
He isn’t even saying that a 90% top marginal rate is the best policy, as far as I can tell. Just that, even if it caused everyone who hit it to “Go Galt”, the economy would still do just fine in the long run.
90% is extreme. But in the context of debating going from 25% to 35%, it is useful to think about what happens at the extremes.
My conservative side says that giant corporations are a product of American law and tax structure, so why not discourage the most odious good-ole-boy behavior?
That’s odd–I have the same thought, but I always credit it to my liberal side.
Then I submit you’re not thinking hard enough. Here’s a remedy with no dramatic unintended consequences: Let’s add a bunch of new brackets to the top of the tax structure: $250,000-750,000 @ 40%, 750,000-1.5mil @ 45%, 1.5-3mil @ 50%, 3-5mil@60%, 5-10mil@70%, and so on.
That’s stupid. They’re called “white people”, who start with ten times the accumulated generation wealth on average as everybody else. Paris Hilton was definitely “born as The Rich.”
Part of the reason conservativism cannot adequately grapple with these economic disparities is because conservativism refuses to see how they come to be in place. In the conservative mythology, everyone who has wealth is a self-starting titan of industry who created new products, built new businesses, all while starting from zero and the most humble beginnings. That’s not economic reality; that’s wealth-worshipping hagiography. The truth is most of our nation’s rich are people connected to the ol-boy network who sup from a rotating buffet of corporate largesse while providing nothing in return. There’s a social class of parasitic CEO’s.
It’s interesting when you get a post like this here, to see the cross-section of readers at Radley’s site. It’s a healthy thing, I’m pretty sure, to have so many leftish readers participating at a libertarian blog like this; but it does show the weakness of any possible left/libertarian alliance when fundamental economic policy is discussed. *cough* i’m looking at you will wilkinson and co….
What I find depressing though, is that what brings together this mash of people is Radley’s focus and admirable work on criminal justice policy/drug war..etc, and in that area there is a solid consensus between (some not all) conservatives, liberals and libertarians — but yet not too much progress is made.
“I was terribly worried about all the marijuana questions the President got the other day. If we legalize pot it will harm the economy because pot robs people of ambition. The last thing we need is more folks sitting around the apartment not doing anything. We need people to get out become industrious!”
I can’t tell James Brown is being serious. It’s terrifying that there a large amount of people out there who feel this way.
Stacy you have to admit, chronic pot smokers are lazy. I’m sure you can point to someone that smokes pot and works hard (Phleps), but for every Phelps there are 15 slackers trying to figure out how to beat the piss test so they can get a job…