Economic Death and Millionaire Taxes

[Omaha Steve]

http://themancommon.blogspot.com/2008/12/economic-death-and-millionaire-taxes.html

By David Sirota

For most of us, Benjamin Franklin’s words in 1789 still apply: “Nothing is certain but death and taxes.”

However, millionaires, by definition, are not most of us. While they can’t stave off the grim reaper, they can convince lawmakers to shield them from the taxman and balance budgets on the backs of everyone else.

That’s what’s going on in revenue-starved states right now: governors are preparing to slash middle-class programs and are resisting calls to raise taxes on the wealthy.
Nowhere is this class war more pronounced than in New York—the home of the financial thieves who killed the economy. Having halved its top tax rate over the last three decades, New York today faces a $15.4 billion deficit. In response, Gov. David Paterson, a Democrat, might have asked his state’s Gordon Gekkos to pay higher taxes, especially considering the idea’s popularity in polls and the news that Wall Street’s elite are still swimming in money. Indeed, according to CBS News, the allegedly beleaguered financial industry is so flush with cash it plans to dole out $14 billion in executive bonuses this year.

Yet, far from forcing robber barons to pay their fair share, Paterson told The New York Times that taxing millionaires is “the last place you want to go.” Instead, he proposes to punish Joe and Jane Six-pack by hiking the taxes and cutting the programs that disproportionately impact them. Specifically, he wants to increase sales taxes, college tuitions and licensing fees and slash education and low-income health programs.

Paterson defended his proposals by telling PBS’s Bill Moyers “that when you tax the wealthy in the downturn of an economy, you have an automatic link of a loss of job opportunities and then a loss of population.” The rationale sounds intelligently pragmatic—until you peruse the relevant data.

When New Jersey recently raised taxes on the wealthy, Princeton University researchers found that most of those who later left the state moved to places with higher taxes, meaning there is no causative link between levies on the rich and residential flight. Likewise, when New York temporarily raised high-income taxes after 9/11, the state added 127,000 jobs, meaning no link exists between higher taxes on the rich and job loss.

FULL story at link.

[Sarah Ibarruri]

1. Politicians are all wanting the rich to continue to feed off the public trough...

... and the rest of us to take up the slack for them. When will they finally taxes again? They've had a long enough break from taxes - from Reagan to the present. Isn't that enough time?

[David Dunham]

2. Paterson is right. NY already has a higher income tax than other states like NJ

Increasing the income tax on NY's rich will drive them to FL, CT, and other states that have lower income taxes or no income tax at all.

[MajorChode]

3. How the Repugs fooled the populace into a regressive tax code

Here's the Repug logic:

Joe Millionaire deserves to pay less taxes because he's already paying more than his "fair share" and he creates jobs.

There's numerous problems with their logic. First, everyone creates jobs in proportion to their income. Joe Sixpack who makes $50K per year is both a producer and a consumer just like Joe Millionaire with a $1M income. So on average, fifty Joe Sixpacks will create just as many jobs as one Joe Millionaire. So the rationale that one "deserves" a disproportionate tax break over the other is hogwash. Next, Joe Millionaire doesn't pay his fair share regardless of what the fat junkie claims. The super rich get most of their money from capital gains and dividends which are taxed at a rate of approximately 20%. Furthermore, other taxes like social security, fuel taxes, state taxes, property taxes, sales taxes, and just about any other tax you can name are all extremely regressive, which means the more you make, the less you pay as a function of income. So while Joe Sixpack may have a total tax burden as high as 50% of his income, Joe Millionaire only has about 25%.

But...but...but, what about the fat junkie's claim that only the rich pay taxes? The fat junkie will tell you that the top 20% pay 80% of the taxes, and he is more or less correct, however those numbers are very misleading. First of all, it only mentions federal income taxes which is only part of the picture. Next, those numbers assume that taxes should be distributed per capita, meaning everyone individually should pay the same amount in order to have a system that is "fair". I guess that concept sounds good to a repug, but no government on earth operates that way. If you divide the total federal tax receipts by the number of people in the US, you get a number that would be impossible for most to pay, however if you divide the total tax receipts by the total GDP, the number is quite manageable. So it can't work any other way, unless you want a socialist type economy where everyone makes the exact same amount. In fact, the "bottom 80%" control only 16% of the wealth in this country. So even if you use the fat junkie's numbers, the "bottom 80%" are still paying a disproportionate share in terms of wealth and income. Next, notice how the fat junkie lumps the top 20% together. To be in the top 20%, you need a household income of about $80K or so. I would hardly consider that rich, but the fat junkie does. Why is that? Because the fat junkie knows that the upper middle class does pay a large amount of taxes. They have enough income to put them in the higher tax brackets, but not enough to earn most of it from shielded sources like stocks and off-shore tax shelters. What he won't tell you is little facts like the top 1% own almost 40% of the wealth in the US or that 90% of all stocks held by US citizens are owned by the top 10%.

But...but...but, if you give the super rich a tax cut, it generates more tax revenue than you cut. Ah, the old "supply-side", AKA "trick-down" retort. The only problem is it's completely false. Raygun tripled the federal debt and Bush ran record deficits despite giving the rich massive tax cuts. "Supply-side" was dreamed up by less than a handful of discredited economists. It's never worked and never will.

But....but...but, JFK was a supply-sider. The fat junkie loves to use that one. The problem is it's completely false. JFK favored temporary tax cuts in a recession economy (although they were never implemented until after his death). The reason is because tax cuts in a recession economy do have a positive short term effect. Once the economy gets started again, you raise taxes and pay the bills you ran up. That was JFK's plan. It worked, and it was classic Keynesian economics. Giving tax cuts to run deficits in a non-recession economy is counter productive because it runs up massive debt and ties your hands when you do get in a recession, which is the problem we have now.

Republicans have a long history of economic policy failures. Raygun cut taxes on the wealthy and the country went into a deep recession. Then he took credit for the economic boom that followed Paul Volcker whipping stagflation. Clinton raised taxes on the wealthy and we got the largest period of economic prosperity in history. Bush cut taxes on the wealthy and the economy has been going in the toilet ever since. None of their half-baked nonsense they feed their useful idiots is based on economic realities. Their lies are nothing more than a trojan horse to get more tax cuts for the rich.

[HughBeaumont]

4. Not to mention . . .

. . . Tax cuts on the extremely wealthy does not lead to job creation. In fact, quite the opposite occurs.

[MajorChode]

6. Not surprisingly, as it turns out

First, neither the Raygun "tax cuts" or the Bush "tax cuts" were actually tax cuts. They were actually tax deferments to be paid back at a later time, with interest. The reason was because commensurate spending cuts never materialized. So to actually call them "tax cuts" is very misleading to begin with. The result of them were massively rising deficits. Those deficits created financial uncertainty in the long term. Repug's "tax cuts" were all part of the grand "supply-side" economic "theory" in which the economy can be controlled on the supply-side rather than the demand-side which is Keynesian theory. The vast majority of noteable economists believe supply-side is nothing more than smoke and mirrors and history has proven them correct. The few so-called "economists" who subscribe to supply-side are by and large Republican hacks. To a layman, supply-side might make sense. However, if you think about it, nothing is farther from the truth. Supply doesn't create demand. It never has and never will. The reverse is true and always has been.

Clinton raised taxes (on the rich) and decreased spending. The result was a long period of financial prosperity. It was classic Keynesian theory in action. It seems the Republicans are trying to prove Keynesian theory wrong. First it was monetarism, then it was supply-side. Both were disasters. Obama has surrounded himself with Keynesian economists, and that's a very good thing.

[elehhhhna]

5. wall st. 9/11's itsself and we pay for the fix. only in america.

[Puzzler]

7. "When you tax the weathy... "

“... you have an automatic link of a loss of job opportunities"


Oh yeah, where? What job opportunities are lost?