Isn't it the Laugher curve?
----- Original Message ---- From: Sean Andrews <cultstud76 at gmail.com> To: lbo-talk at lbo-talk.org Sent: Tue, March 29, 2011 10:53:43 AM Subject: Re: [lbo-talk] Comments on WSJ article "The Price of Taxing the Rich"
Here's a portion of my response to a similar argument, which was in response to this little piece written by Charles Kocj in the WSJ:
"Here's where my problem with Mr. Koch and your own little description of how the world works seems to run aground. The top tier are the titans and the Most Important People in Society (in so far as society exists) because you make money then use that money to employ others ("thousands" of others, by both your counts--which is no small potatoes in a country of 300 million. or...). On this count lowering the tax burden would be the best idea because then more of that money could be used productively, pumped back into the economy, more people go to work etc. Then the 95% of people who don't pay taxes would. The alternative, raising taxes, reduces economic activities, taxes, the power of these titans to lift all boats by trickle down economics, etc. Not to mention it is just plainly against the Objectivist ethic (all praise Ayn Rand).
"This is such a blinkered understanding of how things work. For one thing, it takes the Laffer curve as an absolute sort of value--raising taxes ALWAYS reduces tax receipts. But the curve, in case you or Koch has forgotten *is a fucking curve.* There is a point where it actually makes more sense to tax the rich since they aren't really doing much with the money they've managed to squeeze out of the collective and aren't actually doing much productive with it. In other words, there are times when taxing makes some sense, as Reagan's own tax guru has recently said in response to this line of rhetoric:
http://motherjones.com/politics/2011/02/reagan-anniversary-david-stockman
All of this is compounded by the fact that much of this money does absolutely nothing productive except gather interest in offshore bank accounts. When the average worker's wages are stagnant--when the median wage is almost identical in inflation adjusted dollars from the late 1970s to today--yet we have seen healthy economic growth and rising worker productivity, it is not some crazy marxian observation to point out that, while productive work is being done by many people, some people are able to take more of the rewards for themselves. If the condition of your and Koch's employment solution--let the rich people and only the rich people hire you--is that your PRODUCTIVE labor is rewarded at less than those above you this is hardly fair. And it makes the argument that people with more wealth are wealthy because they are more productive a circular argument. People with money are able to take advantage of a structural inequality to capture more money from other productive workers who don't happen to have money or said structural power. This is not a case of productive vs. unproductive workers, but people who claim they are productive because they have money and people who do a great deal of productive work but have not received much money. The cold hard fact is that, in this country, in the past 30 years, it is people like Koch at the very very top that have received ALL of the benefits of growth.
http://www.stateofworkingamerica.org/pages/interactive#/?start=1978&end=2008
This despite the fact that worker productivity has been rising at a steady pace throughout.
"Here your account of the tax burden problem really reverses the issue--as I've said several times before in our interchanges. The real issue is that, in the current economic distribution a relative handful receive the greatest share of the rewards for their labor--did you actually look at the graph I cited: ALL of the economic growth of the past 30 years has gone to the top 10%--and your complaint is that this means they pay proportionally more taxes! This is like robbing someone and then expecting them to sympathize with the burden you have to bear carting off their TV: "You may have been robbed, but man this thing is heavy! My back is killing me!"
"Many many people in this country work very very hard and can barely scrape by. The problem to my mind isn't that 95% of people pay only 40% of the taxes, its that they only earn enough relative to the amount of money floating about out there to fall in the tax brackets in this way. So I'd much rather not have taxes be the primary means of redistribution. I'd much rather have a distribution of income and the benefits to labor that would alter the basic structure of society. I'd rather have 95% of the population pay 95% of the taxes because they make 95% of the money off 95% of the work. In the end it is only an illusion of the automatic superiority of the rich and a degradation and hate for working people that can allow objectivist fantasies to prevail. I don't believe you really believe this."
On Tue, Mar 29, 2011 at 09:53, Bryan Atinsky <bryan at alt-info.org> wrote:
>
>http://online.wsj.com/article/SB10001424052748704604704576220491592684626.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsThird
>d
>
> Hi all,
>
> I would be interested on critiques of the argument and data presented in
> this article.
>
> "Nearly half of California's income taxes before the recession came from
> the top 1% of earners: households that took in more than $490,000 a year.
> High earners, it turns out, have especially volatile incomes—their earnings
> fell by more than twice as much as the rest of the population's during the
> recession. When they crashed, they took California's finances down with
> them. Mr. Williams, a former economic forecaster for the state, spent more
> than a decade warning state leaders about California's over-dependence on
> the rich. "We created a revenue cliff," he said. "We built a large part of
> our government on the state's most unstable income group." View Full Image
> New York, New Jersey, Connecticut and Illinois—states that are the most
> heavily reliant on the taxes of the wealthy—are now among those with the
> biggest budget holes. A large population of rich residents was a blessing
> during the boom, showering states with billions in tax revenue. But it
> became a curse as their incomes collapsed with financial markets. Arriving
> at a time of greatly increased public spending, this reversal highlights the
> dependence of the states on the outsize incomes of the wealthy. The result
> for state finances and budgets has been extreme volatility. In New York
> before the recession, the top 1% of earners, who made more than $580,000 a
> year, paid 41% of the state's income taxes in 2007, up from 25% in 1994,
> according to state tax data. The top 1% of taxpayers paid 40% or more of
> state income taxes in New Jersey and Connecticut. In Illinois, which has a
> flat income-tax rate of 5%, the top 15% paid more than half the state's
> income taxes. This growing dependence on wealthy taxpayers is being driven
> by soaring salaries at the top of the income ladder and by the nation's
> progressive income taxes, which levy the highest rates on the highest
> taxable incomes. The top federal income-tax rate has fallen dramatically
> over the past century, from more than 90% during World War II to 35% today.
> But the top tax rate—which applies to joint filers reporting $379,000 in
> taxable income—is still twice as high as the rate for joint filers reporting
> income of $69,000 or less. "
>
> Thanks,
>
> Bryan
>
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