The way out of the debt and economic crisis: Tax the rich!

[eisenkopf]

It's been a hot topic ever since, also on TWC: Should we tax the rich more or less? Here's a compelling argument for taxing them more: The rich are not creating jobs, the middle class is. So we should tax the middle class less, and compensate by taxing the rich more:



IMHO, the presenter's arguments make sense and are logical. So for anyone who disagrees with Hanauer: Please elaborate on where he is wrong!

[Mr. Scott]

Here's the thing. The system already taxes the upper middle class and lower upper class more heavily than the very wealthy. While I tend to be pro-lower taxes, I really don't think our current system is the most effective it could be.

[Condottiere 40K]

The middle class is the bedrock of any society, and they are the ones that should be encouraged to consume and incentivized to invest in their local communities. The rich are more likely to bury their wealth, like the ancient Pharaohs.

[Admiral Piett]

Because the wealthy have very good tax lawyers who simply get off with paying much less and the tax burden yet again falls back onto the middle class.

[Lord Thesaurian]

Because the wealthy have very good tax lawyers who simply get off with paying much less and the tax burden yet again falls back onto the middle class.

Exactly. That is one of the many problems with the progressive tax model. It creates infinite loopholes, serpentine, duplicitous regulation, and ultimately makes tax law so difficult to navigate that smaller and start-up enterprises often do not have the resources to compete in what becomes a highly politicized market. "Tax the rich" is one of the most simplistic and frankly idiotic "economic" theories since the populist silver push in the US in the post-Civil War era; and indeed the entire progressive tax model that most of the civilized world now uses. The only way to ensure long term, measurable results from a revenue stand point is to institute a flat tax with universal economic regulations. No exemptions, no loopholes, and hopefully, no back-room political schemes between the government and its mega-corp cronies. If there is a uniform system of taxation and regulation, this will greatly decrease the opportunity for fraud, political grand-standing, and debt growth as a result of a ballooning government apparatus due to an increasing need for enforcement (for example, a flat tax in the US would virtually eliminate the utility of the IRS).

It would also, contrary to popular belief, greatly decrease the tax burden on the "working poor" while increasing that of the "rich" in most cases. For example, most "workers" pay about 15% of their income in payroll taxes, in addition to their income taxes, state and local taxes, and sales taxes, which makes for an average total tax rate of about 27% for the average employee and as much as 40% for employers. When one considers the sea of exemptions and loopholes, its no wonder every April in the US has become a national "maximize that tax refund!" game in a hilarious manifestation of progressive economics. I personally know people who nearly double their income every tax season and effectively pay a negative amount in taxes thanks to "dependents, child tax credits, earned income tax credits, exemptions" and all such nonsense.

Meanwhile the truly "rich" scatter their income to escape the income tax and pay only in "capital gains," at 15%, and some manage to skip that as well. This is progressive economics. This is what creates class envy, political capital, and politicized markets. 50% of the adult, able-bodied population pays no income tax and the top 10% pay 70% of tax revenue. Now we see the political and intellectual elites telling us that the solution to the current economic and revenue problems is to implement more of this lunacy, not less. Tax the rich more and spend twice as much, then wonder why the money has vanished. This has been the motto of western economics for over a century, and the only "evil corporation" to benefit from it all has been the largest, most insidious corporation of all: unrestrained government.

The flat tax would solve the majority of revenue problems and, in a short time, many economic ones. A 20% flat income tax to replace all other federal taxes would generate an additional 300 billion in revenue annually. This would lower "middle class and poor" rates while making sure the wealthy "pay their fair share." Is that not what progressive economists and politicians have been whining about for years? If the current average tax burden was roughly matched at a 25% flat rate, it would increase revenue by nearly a trillion and slash the current budget deficit of 1.2 trillion without even addressing entitlement reform, fraud, or waste. It could be implemented as a payroll tax for employees and employers and perhaps as a capital gains tax for those who do not collect a paycheck. Bottom line: any money in your name will be taxed as income no matter where you put it, how many kids you have, or any special circumstances, and that's all anyone will pay in federal taxes.

Instead of this we have a perpetually expanding federal apparatus with mounting debts, impossible regulations, insane loopholes, and class envy. This can't be accidental. If you're wondering how this happened, you can see it all in microcosm if you look up "Cross of Gold, populist movement US 1870s, unlimited silver mintage, Progressive movement US." See the transformation of the US from a Republic into a Progressive Democracy, and hear William Jennings Bryan and the socialists and populists shreak about how the "little man" is being crucified on a "cross of gold" erected by evil industrialists and bankers. Sound familiar? The equally moronic solution at that time was not primarily to "tax the rich,"
but to deliberately devalue the dollar. I wonder if a century from now, people will look back at the "tax the rich" argument with the same incredulous chagrin; if they have the freedom to look back at all.

Sources:

http://en.wikipedia.org/wiki/Payroll...ax_withholding
http://taxfoundation.org/blog/payrol...r-income-taxes
http://www.cbpp.org/cms/index.cfm?fa=view&id=3505
http://bber.unm.edu/econ/us-tpi.htm
http://en.wikipedia.org/wiki/United_...federal_budget

[Exarch]

taxing the rich? sounds good in practice; but in the end they're just going to use their army of lawyers to stash their excess moolah to the caymans or switzerland and the rest of us middle class-or in the case of some of us, low brow trailer dwelling mouth breathers- are going to get stuck with the massive bill.

Small wonder the middle class is shrinking and it aint cuz the 1% is getting bigger.

[Thorn777]

Small wonder the middle class is shrinking and it aint cuz the 1% is getting bigger.

Ever heard of rent and interest payments? Well, guess what that "bigger 1%" creates instead of "jobs"?

Thats right: Debt, all troughout the system, hence rent extraction trough productive processes by the mass of people, and with increased debt, there is increased rent extraction, increased demand for productivity of the mass of people, and a decreased purchasing power of the mass of people. Hence a shrinking middleclass because of an increasing 1%.

Why care with all the difficult processes of running a business and working hard for a surplus, when you can just hand it over to "the experts" and "let money do the work for you".

People today think they are different from past peoples, but we are not above mathematic principals either. The ship will sink sooner or later, and its because of not taxing the rich.

And to people who say, its nonsense because of capital moving abroad in tax-havens etc. Well not long ago in the UK for instance people moving above 50 pounds abroad had to declare that at the govt. Guess why thats no longer necessary? Its not like we are talking squaring the circle here. Its a matter of intend.

[Yosemite]

pfft, everyone knows that you have to get a collage degree to become rich and get dosh

[DarthShizNit]

I would say something to support the idea that rich people should pay more taxes....but that video really sums it up perfectly.

Granted, just taxing the rich their fair shair isn't enough. At the same time goverment needs to be smarter about how they spend, and in times of crisis or if it makes good sense cut back on entitlments (no you don't get to retire at age 50 sorry).

[DimeBagHo]

Not a current event. Moved from the Mudpit to the Academy.

[AqD]

It's been a hot topic ever since, also on TWC: Should we tax the rich more or less? Here's a compelling argument for taxing them more: The rich are not creating jobs, the middle class is. So we should tax the middle class less, and compensate by taxing the rich more:

It's simply wrong. The economics today are built completely on prosperity, and future prosperity. If nobody is borrowing, the banks would be closed, and no new business, no new jobs, and we lose everything.

To tax people in order to return the debt is just useless because it's never meant to be returned. The ones who lend you money want interests, and they want you to borrow more to keep their business up. The existing debt is nothing but a number as long as you prove yourself capable of returning the debt if asked - which wouldn't happen, and you don't break up like Greeks did, and more importantly, capable of borrowing more to create more future benefits.



The best way out of it is that we stop talking about debt, or even thinking about it. Be optimistic and the economics would restore itself.

[Thorn777]

Thats all valid at sustainable levels and with a functioning redistribution via taxation or other incentives, but we are nearing a level where that seems no longer vaiable. Growth, nvm sensible growth, sees its limits for various reasons and mere "optimism" doesnt change that.

[Rorarii]

Here we go .. heading down the criminal path of wealth redistribution - ie theft! .. those EVIL "rich" people

Everyone should pay a flat tax of no more than 20% .. and governments stop spending.

R

[Yosemite]

Here we go .. heading down the criminal path of wealth redistribution - ie theft! .. those EVIL "rich" people

Everyone should pay a flat tax of no more than 20% .. and governments stop spending.

R

if they have so much money why don't they create more job

serious question

[Thorn777]

The rent extraction aka free lunch of the 1% is the more problematic "theft" going on. Really depends how you define "theft". But lemme say I dont care about sematics and old slogans.

[Condottiere 40K]

Uncertainty - until the market settles down, you sit on your assets.

[DarthShizNit]

Uncertainty - until the market settles down, you sit on your assets.

Then why weren't they creating jobs during the Bush years?

Serious question.

[Condottiere 40K]

Then why weren't they creating jobs during the Bush years?

Serious question.

You have the trickle down theory, that was introduced during the Godfather of conservatism's terms, but in order to produce water sufficiently, you need to consume an inordinate amount of liquids, that while possible, usually isn't a comfortable undertaking unless it happens to be alcohol, with the result that the expected outflow might not reach it's target, as the aim would be off.

The real answer is that increasing automation and off-shoring will ensure that the resultant efficiency just eliminates positions in traditional industries in the developed countries.

[Denny Crane!]

Gov waste. Taking it off the rich really doesnt mean its going to get to the poor it just leads to vastly over inflated government spending, ie. the UK

[Yosemite]

we always hear that the rich get richer... do they also create more jobs as they get richer? or is it personal wealth that grows?