--- ken hanly <northsunm at yahoo.com> wrote: "How on earth is the flat tax supposed to help reduce income inequality? It does the opposite by doing away with a progressive tax system"
As I understand it, we already have a regressive tax system (you and I paying 35% while capital gains are only taxed at 15%.) A flat tax could be an improvement on that. Further there are so many loopholes, write-offs and deductions in what's left of the "progressive" system, the net effect of it may be nil.
The serpent in the flat tax system may be that they want it AND the write-offs and deductions too!
BobW
>
> This guy is a Harvard economist. Does he belong to
> the
> flat earth society as well as the flat tax society?
> As China illustrates opening markets far from
> solving the inequality of wealth distribution in
> China
> has made it much worse, so much according to the
> article that inequality is greater in China than the
> US.
> How on earth is the flat tax supposed to help
> reduce
> income inequality? It does the opposite by doing
> away
> with a progressive tax system..
> The URL is...
>
http://commentisfree.guardian.co.uk/kenneth_rogoff/2007/11/to_have_and_to_have_not.html
>
> Cheers, Ken Hanly
>
>
> To have and to have not
> Fundamental tax reforms and open markets are needed
> to
> balance the global distribution of wealth. It
> doesn't
> look likely in our lifetime.
> Kenneth Rogoff
>
> Lately, I have been trying to explain to my
> 11-year-old son Gabriel the astronomical differences
> between people's income.
>
> Microsoft founder Bill Gates first penetrated
> Gabriel's consciousness a couple of years ago, when
> his father served as a warm-up act to Gates at a
> large
> conference sponsored by the Danish government. Ever
> since, Gabriel has been fascinated by the seemingly
> infinite possibilities of having $60bn.
>
> For example, whenever I tell Gabriel that something
> is
> unbelievably valuable (even, say, a great painting
> in
> a museum), he invariably says, "But Bill Gates could
> buy it, right?" Yes, Gates could buy the whole
> museum.
> But then he would just turn around and give it back
> so
> everyone else can see it, so there is no point.
> Gabriel is not entirely convinced.
>
> Gabriel has decided that if he can't become a
> professional basketball player when he grows up,
> then
> he'd like to buy a team. As an economics professor,
> I
> cannot help but ask him if he knows that it costs
> $300-500m to buy a National Basketball Association
> team. "But Bill Gates could do it. He could buy all
> the teams in the league, right?" Yes, I say. But if
> Bill Gates were to own the entire NBA, how would he
> decide which team to root for? Gabriel concedes the
> point, but I can tell that again he is not
> convinced.
>
> Gates is not the only one who can easily buy teams
> and
> paintings. The latest Forbes list of America's
> wealthiest individuals showed that last year's
> highest
> nine earners, whose ranks include New York City's
> mayor, Michael Bloomberg, managed to increase their
> wealth by $5-9bn last year. Yes, that is just the
> annual increase in their wealth. Collectively, their
> $55bn in earnings outstripped the entire national
> income of more than 100 countries.
>
> To put these astronomical numbers in perspective, I
> had Gabriel try to confirm that to be among the top
> nine earners in the US, you had to pull in at least
> $150 per second, including time spent eating and
> sleeping. That is $9,000 per minute, or $540,000 per
> hour.
>
> How much do America's highest income earners make
> compared to the world's billion poorest individuals?
> Well, if the top nine donated their earnings, it
> would
> be the equivalent of about three months' income for
> the bottom billion. (Gabriel knows, of course, that
> Bill Gates and Warren Buffet have donated tens of
> billions already.)
>
> As for the other nine months, given that the US
> accounts for only 25% of world income, it is a fair
> guess that there are some very wealthy individuals
> elsewhere who might be able to kick in. (Mexican
> telephone magnate Carlos Slim, for example, is a
> close
> competitor to Gates for the title of the world's
> richest man.)
>
> Mind you, the idea that the ultra-rich could easily
> solve poverty is stupefyingly naive. Most serious
> academic research strongly supports the view that
> rich
> countries can best help poor regions like Africa by
> opening their markets, and by providing assistance
> in
> building physical and institutional infrastructures.
>
>
> The greatest successes in fighting global poverty
> have
> come from China and India, two countries that have
> largely pulled themselves up by their own
> bootstraps.
> But this seems too complicated to explain to Gabriel
> just yet. So I retreat to the simplistic rock
> star/UN
> view of how great it would be if we could give more
> money.
>
> Are massive income and wealth differences an
> inevitable outcome of fast growth? By and large, the
> answer from history is "yes". China, whose growth
> performance since 1970 has now broken every record,
> is
> well on its way to having the world's most unequal
> income distribution. Indeed, China has passed the US
> and is nearing Latin American levels of inequality.
>
> Policy solutions are not easy. Many super-earners
> are
> also super-creative and bring enormous value. Places
> like the UK actively court wealthy foreign nationals
> through extraordinary preferential treatment of
> their
> investment income. The ultra-rich are an
> ultra-mobile
> group, too. If you are earning $540,000 an hour, it
> does not take too long to save up to buy an
> apartment,
> even in London.
>
> Anyway, there are limits to how much tax pressure
> the
> political system can apply to the ultra-rich.
> Consider
> that any of the top nine American earners make more
> in
> two days than leading US presidential candidate
> Hillary Clinton raises for her campaign in a good
> quarter of the year.
>
> Rather than punitively taxing wealth, globalisation
> strengthens the case for shifting to a flat tax on
> income (or better yet consumption) with a moderately
> high exemption. Aside from the usual efficiency
> arguments, it is just going to become increasingly
> difficult and costly to maintain complex and
> idiosyncratic national tax arrangements.
>
> Unfortunately, movements towards fundamental tax
> reform are on the back burner in most countries. One
> can only hope that our children's generation will
> grow
> up to live in a world that does a better job of
> balancing efficiency and equity than we do. Gabriel
> says he is going to think about it.
>
>
>
>
>
> Blog: http://kenthink7.blogspot.com/index.html
> Blog: http://kencan7.blogspot.com/index.html
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