On Thu, 27 Jul 2000, Doug Henwood wrote:
> There's a Luxembourg Income Study working paper - sorry I don't have
> the ref handy - that argues that countries with progressive tax
> systems don't have a more egalitarian post-fisc (i.e., post-tax,
> post-transfer) distribution of income. What matters for income
> distribution is spending much more than taxation.
Doug, this last statement is ridiculous. If all or most taxes come from the poor and working class, there can be no net redistribution between rich and poor. Because of the particular political constraints in each of the countries in the Luxembourg Survey, the trend you mention may exist, but that says little about the issue at hand, whether taxing the rich in the US is possible.
But you get to the key point next:
> The post-federal tax (including *all* federal taxes, not only the
> income taxes that Nathan wants to focus on) distribution of income
> has gotten more unequal during the Clinton years.
This is because, as I have acknowledged repeatedly, because the pre-tax income inequality has grow. But unless you want to argue that federal taxes increased the pre-tax inequality, it is irrelevant to whether the 1993 tax bill led to more taxes by the wealthy being paid.
As I noted in my last post to Max, fighting pre-tax inequality is as important as restributing through tax policy, although as I also noted, I am unimpressed by the "equality" of European social democracy given the global inequality it is based upon. But however fixated you may be on Clinton as the source of all that is bad in macroeconomic conditions (while mysteriously denying him any agency in the results that are good), I tend to see the rising inequality as a more structural problem of global corporations disempowering both state actors and working class unions.
Which is one reason I spend my days on labor work building up the power of workers to fight expropriation by multinationals at the means of production. Ultimately, fighting at the point before the powerful appropriate their unequal earnings in the first place is more important than the post-fisc battle.
And if we discussed trade legislation that Clinton has supported, we could highlight the ways he has contributed to that expropriation by the powerful. Or we can discuss his labor policies where in many cases he has supported unions in resisting that expropriation. All good discussions that we have had.
But throwing all that in just seems at times in the discussion of the 1993 tax bill as a way to avoid the basic issues of tax policy, whether taxing the rich can usefully add to the receipts of government. I know you were once a fan of Jerry Brown's flat tax proposal (although I thought you had repudiated that enthusiasm) but I do find it disturbing that you and Max seem to be rushing to give ideological comfort to the conservatives who deny that taxing the rich will generate any serious revenue.
To state the bottom-line once again-
the richest 1% of taxpayers right now, with all the loopholes available, pay $300 billion per year in income taxes. If their tax burden was doubled, that would generate another $300 billion per year.
Why should we even think about taxing working class folks when there is that much potential revenue from those riding high on the economy?
-- Nathan Newman