Thursday, July 23, 2009

You're On, Balko

The Agitator's Radley Balko has a post up at Reason's Hit & Run blog challenging left-leaning bloggers to "state your limits." That is, Radley asks a series of questions about government spending, taxation, and the deficit and asks liberals to state, essentially, when taxation or government spending has gone too far. I don't write a lot about economic issues on this blog, and I'll freely admit that my understanding of economics is well below what it should be. Nevertheless, I'll take a crack at Balko's questions and see where it leads...

Progressive Taxation

Balko wonders why the richest 1% makes 19% of the income and pays 37% of the taxes. (My numbers say 31%, but that's probably because I'm including payroll taxes and Balko isn't.) He then asks what our limit to progressivity is. Well, for one, I don't think we've reached it yet. Right now the richest 1% still makes $1 million-plus after federal taxes, so pardon me if I'm not particularly worried about their financial health. Furthermore, state taxes tend to be somewhat regressive, since most states, as far as I know, balance a not-particularly-progressive income tax with a highly regressive sales tax. I don't think the 90% rate we had during the '50s is reasonable, but then, our economy seemed to chug along quite nicely even with that tax rate. I'd have more sympathy for the rich if they were paying 75%+ in taxes. Right now, with the federal top-bracket rate at 35%, I'd say we've got nothing to worry about by making things more progressive.

Inflation

Again, I know next to nothing about inflation, but I do know we shouldn't be printing money to get ourselves out of debt. Inflation as a normal economic phenomenon is okay as long as the average investment still gains money compared to it. Government shouldn't be artificially inflating the currency in order to get out of debt, though. That's all I got.

National Debt as Percentage of GDP

Balko asks what percentage of GDP can the debt reach before it becomes excessive. We're at 80% by Balko's numbers - I have 73.2% from the OECD. That sounds bad, but comparatively speaking it's not awful. Canada's in the mid-60s, as is Germany; France is in our neighborhood; Italy and Japan make us look like we're spending chump change. We'll be adding significantly to that debt in the next few years as the costs of the bailout and porkulus stimulus get factored in. I, personally, don't like carrying around debt, especially as a country because it can mess with your foreign policy something severe (how much more would we be pressuring China on human rights if they didn't hold a crapload of our debt?). So while zero debt is ideal, I'll use 60% as my limit, since that's what the EU uses to judge whether a country is ready to join.

Federal Spending as Percentage of GDP

Radley asks us to put limits on spending as percentage of GDP - currently 26% and more if health care reform gets done - and on the deficit, currently 7%. I'll be simple on the deficit - my limit is 0. I guess I differ from other liberals in that I'm something of a deficit hawk. But spending? It's tempting to put a number down here, but I don't think I can. There's a lot of spending that could do some good, but there's a hell of a lot of waste too. I'd like to see the waste (coughfarmsubsidiescough) go away and have us spend well on anti-poverty programs that work, as well as on infrastructure and science. I think by the time we get all the waste out and spend wisely, we'll be somewhere in the low 20s. We should spend whatever's necessary... but we should tax at a level that reflects that spending. If people want a government service, they've gotta pay for it.

A caveat - a little deficit is okay every now and then, as long as there's a promise that we'll be back in the black soon. It's just like running a business, in that regard.

Unfunded Liability of Entitlement Programs

The dirty little secret of the entitlement programs - Social Security, Medicare, and Medicaid - is that they work pretty well. They're just not funded well. Again, if we want a service we should pay for it. A few simple tweaks - raising the payroll tax ceiling, limiting benefits to rich seniors who don't need them, raising the retirement age - can fix our problems. No need to panic here.

Income Equality

Again, I'll differ from my fellow liberals in saying that I don't care about income inequality. As The Economist once said, a long ladder is okay, but it must have rungs. The real problem is the lack of upward mobility - we're on a par with class-obsessed Britain in that regard right now. Government spending should be targeted in a way that increases upward mobility, and we shouldn't be concerned about inequality.

Individual Tax Rates

Balko asks about the highest total tax burden on the super-rich we should tolerate. He says that this will reach 60% if Obamacare passes. I'm not worried about this number, economically speaking - as I mentioned earlier, our economy got along just fine with a much higher tax rate. We're talking moral imperatives now: how much of that hard-earned money should a rich man be able to keep? Remember, though, that most super-rich aren't really making that much off their income. Rather, the increase in value in their investments and property would keep them high on the hog even if we took much more of their income. I'll throw out that 75% number again, but that's really just chosen at random.

Average Tax Burden

How high should the average corporate tax burden climb, asks Balko, citing a World Bank report that places taxation at 46.2% of total profits. This number seems fishy to me, considering the U.S. only collects 2.2% of GDP in corporate taxes (compared to over 3% for other industrial nations). I think it's because the World Bank report doesn't take into account tax sheltering, which puts most American profits on overseas books. So while our 35% corporate tax rate is high, it's there because the profits companies make don't often make it onto their taxable books here. If we end tax sheltering, then we'll definitely have to drop the corporate tax rate. Until then, we could raise the corporate tax rate into the 60s and see little to no effect on corporate profitability.

I'll be interested to see if Balko actually responds to this. It was certainly interesting to write.

Update 7/24/09: Welcome Agitator readers, and thanks for your comments. I haven't been able to respond to all the comments yet because I went home from work sick yesterday and I don't have Internet access at home. I'm probably not going to be able to respond individually, unfortunately, though I'll give it a crack. First, though, thanks for the corrections on the history. I tried to correct some of that in the early going. Second, there's a lot of talk about the screw job our government pulls on small businesses. That's an issue that warrants its own post, and I'll hopefully have that up by the end of the day today. Finally, an anonymous commenter pointed me towards essays by Frederic Bastiat and Henry Hazelitt. I'll try to read those and get a response up next week (like I said, no Internet at home so no weekend blogging).

36 comments:

Gabriel said...

Jeff, good post- I don't agree with a lot of what you say, but I can see how you got there. I will take issue with one point, though.

A caveat - a little deficit is okay every now and then, as long as there's a promise that we'll be back in the black soon. It's just like running a business, in that regard.

There is an important ethical difference between corporate loans and government bonds. A business will pay back its loans using the income from consensual commerce. However, a government pays back its loans with taxes collected partly from people who voted against the bond issue, or even from those who were not yet able to vote when it was issued.

Some libertarians would argue that a government bond issue is more similar to a mobster asking for an advance on next week's protection money, than it is to a corporate loan.

A much more tolerable solution from a libertarian standpoint would be for individuals who support an unfundable government project to take out personal loans to pay for it, rather than assessing taxes on those who oppose it or on the children will be forced to pay for it later.

elemental said...

All that seems indispensible in stating the account between the dead and the living, is to see that the debts against the latter do not exceed the advances made by the former.

James Madison

Anonymous said...

I linked to this blog from Radley Balko's Blog, "The Agitator." There he describes it as a "more thoughtful stab" at his challenge, and I have to agree.

I'll leave libertarian v. liberal/progressive disagreement to the bloggers and other readers. It is worth pointing out that, however much I may disagree with the points made, this was a well reasoned, articulate, and respectful response to the challenge. Contrast that with another response to Balko's challenge at http://46degreesnorth.blogspot.com/2009/07/economy-feeling-our-way.html

Again, good job for making debate interesting and well informed, rather that a knee-jerk reaction based in an us-versus-them mentality.

Jeff said...

Thanks for the comments, I definitely appreciate it. I figure Radley at least deserves a respectful response... I'm somewhat disappointed that none of the more trafficked blogs have picked this up, since it could lead to an honest, interesting debate on economic policy. Which doesn't happen very often.

Gabriel, to answer your concern - yeah, I thought about that, but I guess I have a little bit more of a social-contract view of taxation. If you live here, you're bound somewhat by the will of the majority, and if the majority wants to deficit spend a little temporarily, you should pay the taxes to support it. This will-of-the-majority stuff is a dangerous road to tread, of course, but I'd hope a broad enough reading of the Constitution provides protection against tyrannies of the majority. (We'll temporarily overlook the fact that the last few Presidential administrations have been busy making the Constitution obsolete.)

There's another argument against any deficit spending, too: while the profit motive pushes corporations out of deficit mode quickly, it's a lot harder to stop a government's deficit spending once it starts. No one ever lost an election on lower taxes and higher spending on their district. (And it's rare that someone wins an election on the obverse.)

Anonymous said...

The US had two severe recessions in the 1950s, within 4 years of each other. Don't get your history from Happy Days.

http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/index.cfm

Aquaman said...

"If people want a government service, they've gotta pay for it."

I agree completely. But will you agree that the opposite should be true? That is, 'If I don't want a government service, I don't have to pay for it.'

Jeff said...

Anonymous - it's true the economy went into recession twice in the mid-'50s, thanks for the correction. Looks like from that link, there were a couple of lengthy periods of prosperity - one for most of the '60s and '70s (punctuated by a minor recession in '69) and one from about the mid-'80s to '01 (again, minor recession in '90). The top marginal tax rates for these eras were staggeringly different. For the former era, the rate hovered around 70% (the top bracket, 91% on $400,000-plus income, was eliminated in 1965, it appears). For the latter era, the top rate went from 50% to 28% to the Clinton-era 39.6%. My point, I guess, is that it doesn't appear that top marginal tax rate has a whole lot of effect on economic health as a whole. The '50s were a bad example of that, sorry.

Anonymous said...

Good post. I came here from Radley's link, and will come back to read more of your stuff.
I would like to point out one thing about tax rates in the 1950s you seem to have overlooked: the Reagan era tax reforms not only lowered rates, they got rid of a lot of deductions. Thus, direct comparisons of the top rates are deceiving: back then there was much more difference between gross income and the adjusted gross that's actually taxable than there is now. And of course there's the Alternative Minimum Tax, which didn't exist then.
I'd be interested in knowing if, after accounting for these changes and finding the actual rates paid, your analysis would stay the same.

Unknown said...

Well put.

Jeff said...

Aquaman - I understand. But as I was telling Gabriel, paying taxes is part of the social contract you're in by living here. If you don't want to have the government offer a service, fine, but if a majority of your fellow citizens do want that service offered, you're bound to pay for it by that contract. By instituting a government, we've agreed to fund our collective endeavors. It's up to the voters and their representatives to figure out what, exactly, those endeavors are.

Steve said...

I disagree with Balko calling this post thoughtful. You even admit to ignorance on a number of topics.

Unfortunately, you don't even know you're ignorant on the matter of taxes. Your class envy is evident. What you don't seem to realize is that small business owners (who provide the majority of jobs in the US) are required by law to include their business revenue on their personal income tax. So dismissing the impact on someone making over $1 million completely overlooks the problem that most business owners roll that income back into the company. Try to stick it to them, out of class envy, and you end up hurting their employees (or would-be employees).

Jeff said...

Anonymous, regarding actual effective tax rates: looks like when you put all the taxes paid (income, corporate, sales, social security) together and calculate an effective tax rate, it does even out somewhat. This CBO report (pdf) crunches the numbers starting in 1979, and the change in total effective tax rate becomes far less dramatic - 32% to 28% and back to 32%, roughly. Not sure what the numbers would be for the '60s, though, since CBO didn't go back that far.

Gabriel said...

Jeff- yes, that social contract business is one of the fundamental differences between modern liberal and libertarian thought. The idea that simply by being born I am assenting to the right of others to pick my pocket for whatever purposes they think noble, is just something I've never been able to get my head around. I'm with Lysander Spooner on this one:

"The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves; a contest, that --- however bloody --- can, in the nature of things, never be finally closed, so long as man refuses to be a slave."

Steve said...

Hallelujah, Gabriel!

I fear this conflict is going to eventually get bloody, especially if Democrats get their way with deforming health care and setting off the Cap & Trade device (like tossing a nuclear bomb into the economy). Democrats were much safer when they took incremental pieces of our freedoms away. Their radical changes are going to provoke strong opposition. Americans aren't like Russians or Germans. They are well-armed and anti-authoritarian. The collectivists cannot get their way by passing a few laws. There will be a huge backlash.

I'm not making any threats. I just have a keen sense of the mood of people who are about to get screwed and I don't think you leftists are wise to assume they are cowards like you.

Anonymous said...

Jeff,
You might consider reading Frederic Bastiat's essay "That Which Is Seen and That Which Is Unseen" and Henry Hazelitt's Economics in One Lesson (both of which are free online). I think you're greatly underestimating the damage that high taxes have on an economy and how we are all poorer (though we may not realize it) for it.

Rhayader said...

I'll start by echoing the sentiment that this was as good a response to Radley's challenge as we've seen so far. Measured, rational, and specific. Good work.

I do have to agree with Gabriel on the whole "social contract" thing though. The only contract to which I consent is a promise not to do active harm to another person (or to that person's property); in exchange for that promise, I get my freedom. That's all the contract we need.

Mike said...

Actually, you've got your history wrong on the economy during the time we had a 90% tax. JFK ran on a successful platform to improve the economy by reducing the tax rates, and it was under his administration that the economy truly started to recover, not Eisenhower or Truman's administrations.

It would be more accurate to say that the 90% tax rate we had at the end of World War II through the start of JFK's administration did not choke our economy to death, rather than make it sound like things went swimmingly.

You also forget too that in this day and age, the US must remain competitive with all of the smaller countries with lower taxes and fewer regulations. Today, it is ridiculously easy for companies to move abroad compared to 50 years ago.

Fred Mangels said...

Well written post. I came here from Radley's blog, too.

I put a quiz up on my blog asking how much government we should have. Feel free to take part.

And, hey, your blog uses the same template and colors mine does. We're almost twins!

Billy Beck said...

"Gabriel, to answer your concern - yeah, I thought about that, but I guess I have a little bit more of a social-contract view of taxation."

There is nothing to talk about here, and Balko is a fool.

Rhayader said...

@Billy Beck: Care to elaborate a little? I'm not sure how the quote you selected relates at all to your claim that there's nothing to talk about, and that Radley is a fool. Just wondering where you're coming from.

Anonymous said...

I'll explain what Billy's talking about. It's theft. It's about not taking things that don't belong to you. The fact that you numb-skulls can't even comprehend basic principles like that invalidates all this cotton-mouthed blathering about just how much you're going to steal.

HPT said...

As one of Radley's readers, I want to thank you for your post. I don't particularly agree with your conclusions, but I appreciate that you took the time to give a thoughtful response. The people criticizing your post have, I think, completely missed the point of the exercise; it's not about coming to an agreement, it's coming to all understand what our actual disagreements are.

Rhayader said...

Umm, OK Anonymous, that lent exactly zero insight. Who are "you numb-skulls", and how did I end up in that group? What exactly has been stolen?

For the record I am a small-government libertarian type of guy, so if the "theft" you're talking about is excessive taxation, I can't for the life of me figure out why you're directing that comment at me.

Billy called Balko a "fool", when Radley was challenging liberals to define their limits; in effect he wanted to call attention to the very theft that I think you are describing. That tells me that Billy lumps himself in with the big-government, spend-happy crowd. Neither of you made yourselves clear though, so I have this lingering feeling that I'm missing something.

Let's cool off with the invective here, I was just looking for a little clarification for Bob's sake.

Gabriel said...

The only plausible reading I've been able to ome up with for Billy Beck's post is that the liberals and libertarians don't have enough common ground to have any meaningful discussion, and that Radley was a fool for attempting to engage them in conversation at all.

Which seems like a pretty counterproductive stance. If we're not willing to engage the majority who disagree with us, we're doomed to remain a minority. No matter how different our premises are, we can find language to explore those differences from a mutually consultative stance if we work hard enough at it.

Anonymous said...

" I'd have more sympathy for the rich if they were paying 75%+ in taxes. Right now, with the federal top-bracket rate at 35%, I'd say we've got nothing to worry about by making things more progressive."

I'm in the 15% category. Add up all my taxes and I'm probably paying at least 25-30+% or more, which is an awful lot for a part time coffeeshop employee living in Silicon Valley to pay.

I have more than one business I wish to start. Why should I undertake all of the risks and work of a business while adding the incredible risk and work added by the government? If I were to become as wealthy as I would like, and spend my money as I would like, I might have to pay 90% or more in taxes - and that's about to go up at every level of government.

I'm a natural born businessman. I can deal with the risks, the work, even failure and loss. It's all part of business. Dealing with govt regulations that are impossible to understand let alone to follow, or reading the thousands of pages of tax code, or having to work 2, 3, 4, or more times as hard to get to my desired level of wealth is not the way to encourage me to start and run a business.

Another question on this topic: if taxes rise at the same rate they have been for the last few decades (and all evidence shows they will increase much faster), it is within 30 years or so that we'll have 100% taxation. As a modern liberal supporter of government and taxation, what is your proposed solution(s) to prevent or react to this inevitable reality?

Anonymous said...

"
The dirty little secret of the entitlement programs - Social Security, Medicare, and Medicaid - is that they work pretty well. They're just not funded well. Again, if we want a service we should pay for it. A few simple tweaks - raising the payroll tax ceiling, limiting benefits to rich seniors who don't need them, raising the retirement age - can fix our problems. No need to panic here."

Sir, you are woefully misinformed and well intentioned. Social Security is an absolute failure. Talk to some old people who are trying to live on it. In addition it's always (from the very beginning) been a pyramid scheme and a slush fund. Investigate it's history and structure (Frank Chodorov did some great writing on it) and you'll be disgusted at the enormity of it's evil.

Medicare and Medicaid are failures.

The total amount of national debt now is over 11.6 TRILLION dollars, and these entitlement programs total to over 100 TRILLION dollars by 2050 per CBO estimates. That's a total of over 330,000 per citizen. Add in the fact that about half of people don't pay taxes at the federal level, that's over 666,000 per federal taxpayer. That doesn't count future wars or massive entitlement programs such as more health care nightmares.

A conservative and reasonable estimate then is that the average citizen must pay more in taxes than they'll earn on average in their whole lives.

Anonymous said...

"Again, I know next to nothing about inflation"

Inflation explained in one sentence:

Inflation is the printing of money created not out of "thin air" but instead rather from the value of existing money in order to, over time, transfer the value of all existing money into the hands of the central bankers and their government cronies in order to give them enormous sums of profit and power.

For a slightly longer explanation:

Inflation in One Page
by Henry Hazlitt

1. Inflation is an increase in the quantity of money and credit. Its chief consequence is soaring prices. Therefore inflation—if we misuse the term to mean the rising prices themselves—is caused solely by printing more money. For this the government’s monetary policies are entirely responsible.

2. The most frequent reason for printing more money is the existence of an unbalanced budget. Unbalanced budgets are caused by extravagant expenditures which the government is unwilling or unable to pay for by raising corresponding tax revenues. The excessive expenditures are mainly the
result of government efforts to redistribute wealth and income—in short, to force the productive to support the unproductive. This erodes the working incentives of both the productive and the unproductive.

3. The causes of inflation are not, as so often said, “multiple and complex,” but simply the result of printing too much money. There is no such thing as “cost-push” inflation. If, without an increase in the stock of money, wages or other costs are forced up, and producers try to pass these costs along
by raising their selling prices, most of them will merely sell fewer goods. The result will be reduced output and loss of jobs. Higher costs can only be passed along in higher selling prices when consumers have more money to pay the higher prices.

4. Price controls cannot stop or slowdown inflation. They always do harm. Price controls simply squeeze or wipe out profit margins, disrupt production, and lead to bottle-necks and shortages. All government price and wage control, or even “monitoring,” is merely an attempt by the politicians to shift
the blame for inflation on to producers and sellers instead of their own monetary policies.

5. Prolonged inflation never “stimulates” the economy. On the contrary, it unbalances, disrupts, and misdirects production and employment. Unemployment is mainly caused by excessive wage rates in some industries, brought about either by extortionate union demands, by minimum-wage laws (which keep teenagers and the unskilled out of jobs), or by prolonged and overgenerous unemployment insurance.

6. To avoid irreparable damage, the budget must be balanced at the earliest possible moment, and not in some sweet by-and-by. Balance must be brought about by slashing reckless spending, and not by increasing the tax burden that is already undermining incentives and production.

This is reprinted from The Freeman, May 1978

Steve said...

The only plausible reading I've been able to ome up with for Billy Beck's post is that the liberals and libertarians don't have enough common ground to have any meaningful discussion, and that Radley was a fool for attempting to engage them in conversation at all.

Except Billy Beck does engage in political discussions all the time, so I still don't see why he has a problem with The Agitator on this one.

Mr. Beck, as an anarchist, likely considers any sort of pragmatism, libertarian-flavored or otherwise, to be foolish.

But this one article? Just from today, I'd say the article on Radley's plans for voting for governor as a more obvious target.

Which seems like a pretty counterproductive stance. If we're not willing to engage the majority who disagree with us, we're doomed to remain a minority.

Every individual is a majority of one. In other words, morality is not determined by votes or polls. If that were the case, there could be circumstances in which sacrificing healthy babies in pits of fire would be moral--just get enough people to say so.

No matter how different our premises are, we can find language to explore those differences from a mutually consultative stance if we work hard enough at it.

You're falling into the trap which I think Billy Beck falsely assumes Radley Balko is falling into. My guess is that Balko is drawing leftists out to establish who they are, so we know the enemies' boundaries.

How can you find anything mutual with anyone whose core principle is that your life is not your own? If that is your intent, then Beck is right that there is nothing to talk about.

Anonymous said...

'So while our 35% corporate tax rate is high, it's there because the profits companies make don't often make it onto their taxable books here.'

I see it from another angle... because our corporate tax rate is so high, corporations actively look for ways to hide money from taxation which usually means keeping it overseas. if that rate were more reasonable, american corporations would not be so inclined to avoid those taxes. the higher taxes get, for both individuals and business, the more people look for any possible loophole or opportunity to prevent the government from taxing that income.

Aquaman said...

Jeff, I appreciate the personal response...and your willingness to respond to Radley's request.

I have not signed nor have I agreed to any social contract. At this risk of sounding "Randian", I cannot comprehend the moral basis for such a contract. I seek nothing other than to provide for myself and my family, and my employees (I own a small business). I work daily to provide for all. The pressure is enormous. The risk is enormous. I am willing accept both because I have confidence and have demonstrated that I can provide that security for both my employees and for my family. Am I wrong expect that the rewards should be worth the sleepless nights and the risks to my family's future well-being? Do you claim a right to assess the value of that reward? Tomorrow, I can easily get a position at a large firm for $100K less and relieve the pressure and risk. But what about the 13 family's who count on the jobs I provide? In the current political atmosphere, we are getting dangerously close to me forgoing the $100K and relieveing the risk and stress. The voters can extract from me what they will, but soon my motivation will be gone. The government's loss of my $35K and the loss of the $150K+ of my employees taxes may not seem to matter much to you, but I am certain that there are others who are re-evaluating their risk/stress:reward ratio. Even I am not pessimistic enough to think that "the voters" can enslave me.

Please, tell me what you think I should do.

anarchocapitalist Mike said...

Thanks Jeff, you did a nice job for the most part. Be careful about looking at the 50's and 60's regarding economics. These postWWII decades were truly distorted due to the virtual elimination of global competition. Japan, trashed, Germany, trashed, Britain, trashed, France, trashed. This is what led to the viability of unionism in the US and the production of such crappy cars which culminated in the 70's.

neroden@gmail said...

Responding to 7:46 PM:
"Why should I undertake all of the risks and work of a business while adding the incredible risk and work added by the government?"

Here's a hint: income taxes are your friend. You are making an argument against tax *complexity* and against *regressive taxes* and most of all against *regulations*.

Income taxes only tax you if you're making profits -- if your business is successful. In essence, they *do not add risk to the business*.

In contrast, sales taxes tax you if you sell anything (so you have to raise your prices). Mandatory worker's comp insurance is just a fee you have to pay; payroll tax is a penalty for employing workers (so you have to pay them less). And tax complexity requires that you pay accountants (I should know, I do some accounting). There is no logical reason to have to file separate state & federal unemployment tax, payroll tax, income tax, sales tax, et cetera.

The regulations are even worse: I counted a dozen signs which must legally be posted in every workplace in this state (!)

I found that the sheer paperwork costs of employing a single person legally were in the thousands of dollars, and that makes no sense at all. Compared to that, I'd happily pay a higher rate of income tax -- after all, I only pay it when the business *profits*.

"If I were to become as wealthy as I would like, and spend my money as I would like, I might have to pay 90% or more in taxes"

Not a problem if it's income tax. If you're really "as wealthy as you like", just make ten times as much. ;-)

"I'm a natural born businessman. I can deal with the risks, the work, even failure and loss. It's all part of business. Dealing with govt regulations that are impossible to understand let alone to follow, or reading the thousands of pages of tax code...."

Yes. This is the problem. And here's a nasty little hint: the people who talk about "cutting taxes" tend to make the tax code *more complicated*; "limitations" on deductions are the worst. I'd be all for a vast simplification of the tax code -- perhaps total elimination of a bunch of the smaller and more bizarre taxes -- combined with increased income tax rates.

"if taxes rise at the same rate they have been for the last few decades (and all evidence shows they will increase much faster), it is within 30 years or so that we'll have 100% taxation."

Complete arrant nonsense, partly because extrapolation does not work.

But more importantly, your facts are wrong. *Income* tax rates have done nothing but drop in my lifetime. *Fees* and *regressive tax rates* have increased, however, thanks to the Republicans....

Income taxes are one of the better ways of funding government. User fees on desirable services (parks, medicine) are one of the worst. Sales taxes are pretty awful too. The absolute best is fees on something with negative externalities in economic terms (like the burning of fossil fuels). Forcing people to pay the true costs of their actions, rather than dumping the costs of pollution on "other people" is clearly, morally, the best form of taxation.

Property taxes do that to some extent when they pay for the costs of transportation (police, fire, road, sewer, and water) services to a house, but not when they pay for things not related to the land.

John said...

Jeff, good job for being the first liberal to step up and answer completely honestly. I don't agree with everything you say, nor do I disagree with everything that you say, but kudos for being brave enough to stick some real figures on your answers and hang your neck out.

Commufascist Pig said...

I guess what Steve is saying is that trying to "engage" people and convince them is fruitless. Revolution is the only way forward. To the barricades (individualistically)! Anarchists of the world unite (in a non-collective way)!

Charles Johnson (Rad Geek) said...

Jeff: I have a little bit more of a social-contract view of taxation. If you live here, you're bound somewhat by the will of the majority, and if the majority wants to deficit spend a little temporarily, you should pay the taxes to support it. This will-of-the-majority stuff is a dangerous road to tread, of course, but I'd hope a broad enough reading of the Constitution provides protection against tyrannies of the majority.

Well, since this conversation has been about setting out limits, what I'd be interested to hear from you is how far the suppression of minority preferences by the majority would have to go before you considered it "tyranny." How gravely do my wishes have to be violated in order to satisfy the wishes of the majority, before I count as being tyrannized?

For example, do profound violations of conscience count? I ask because one of the things the Constitution clearly has not protected me from, and could not plausibly be expected to protect me from (given the basic list of enumerated powers) is being forced, by the will of the majority, to provide taxes that materially support the U.S. government's wars and occupations in Afghanistan and Iraq. I am forced to cover the costs of these wars even though I oppose them as a matter of conscience; even though I consider what is being done with my money nothing short of an act of mass murder being carried out against innocent people. Set aside for the moment the question of whether or not you agree with me on the wars -- I'm new to your blog so I wouldn't know. But given that I believe what I believe does the fact that majoritarian politics has forced me to pay for acts that so fundamentally violate my conscience that I would die before committing or facilitating them voluntarily -- from Bagram to Fallujah to Abu Ghraib -- does that rise to the level of being tyrannized? If not, what would?

Jeff: ... paying taxes is part of the social contract you're in by living here. If you don't want to have the government offer a service, fine, but if a majority of your fellow citizens do want that service offered, you're bound to pay for it by that contract. By instituting a government, we've agreed to fund our collective endeavors. It's up to the voters and their representatives to figure out what, exactly, those endeavors are.

Well, wait. Who's the "we" here? I didn't institute a government; I was never asked, and if asked, I would have declined. So if I'm not part of the "we" who instituted the government, how did I end up part of the "we" who allegedly agreed to the taxes and spending?

Steve said...

Commufascist Pig said I guess what Steve is saying is that trying to "engage" people and convince them is fruitless.

No. The best way to interact with most people is to reason with them. However, it is a waste of time trying to convince people who base their political positions on the proposition that your life is not your own, that it ultimately belongs to the collective.

Revolution is the only way forward.

There doesn't need to be any violence. Unfortunately, when you push people into a corner and give them no peaceful way to live their lives on their own terms, you increase the probability of revolutionary violence.

I wouldn't do that to you.