A wall-streeter says tax the wealthy archived

I'm amused when people in the Pacific Northwest carry on against the Federal government, while typing on the Internet using devices powered by electricity from the hydroelectric dams built as public works projects.

In one sense, this thread is about whatever people discuss in it. So if someone posts a recipe for french toast, then the thread is about french toast, at least to a degree.

If you ask what I wanted to discuss when I started the thread, the only valid answer is the answer I give. If you guess wrong, I can tell you you're wrong, and that would be a fact, not an opinion.

In the piece I cited, Rattner took as a given the idea that we are going to raise federal income tax on the wealthy. That was a given, as far as I can tell.

Then with that as a premise, he lists the various ways the federal government could raise money (for the federal government) by taxing the wealthy. He uses political realities as they bear on the likelihood of passing various measures.

Here’s the math: We need at least $4 trillion of long-term deficit reduction, with a substantial portion — on the order of $1.2 trillion — coming from new revenues.

I don't know where he came up with the $1.2T number, but I trust that we do, in fact, need to reduce the deficit by at least $4T, maybe more. I can infer from that: we need to reduce spending by at least $2.8T.

Now you can argue with his ratios, but the article is written with that as a premise, too, so I don't see the point.

Basically, he addressed the question of how to raise $1.2T through taxation of the wealthy.

If I ask an engineer to design a new bridge to be built across the Hudson into Manhattan, you could butt in and say the engineer should really design a tunnel. But you may not know that all concerned parties (people, government, whoever else) has decided that there's going to be a bridge. And someone else could butt in and say that people should just telecommute instead of using roads to get between NYC and NJ. And someone else could butt in with some kooky idea about what color the bridge should be. But if you want to talk about bridge design, it should be about bridge design.

Maybe the title of my thread should be: How the federal government can raise $1.2T through taxation of the wealthy.

As such, I'm not interested in whether or not we should. I'm interested in how.

And Rattner seems to have come up with some reasonable ways.

Oy.

pennboy, I thought of a new game I'd like to play with you. I invented the game myself. Let me know if you're interested. The cool thing is, no matter what, I will always win the game. Just tell me if you want more details, and I'll provide them.

pennboy2 said:

It is so tiresome, this "soak the rich" mentality from people who are not producers.

Liberals know nothing about history.

Hey, why do you think this country is so rich, because we've followed your socialist ideals? It's funny.

The left is also so quick to talk about rights. Homosexuals should have the right to marry, and we can't put that to a vote!! Women should have the right to abortions, and we can't put that to a vote!!

How about my ability to keep the fruit of my labor? According to some, if 51% of the people say that the most successful can keep only 20% of the product of their labor, that's OK. How about that right, eh, my socialist friends?

The looney left rightfully can shout government should stay out of our bedrooms, but they do want the government to tell us what we can buy to eat or drink in our delis.

..And you say hands off my millions, but I can force you to have the baby who's the result of rape.

pennboy2 said:

ml1 said:

that is factually untrue. taxing the 1% at 100% would eliminate all of the projected FY13 federal budget deficit. I'm not suggesting we do it.

but we should have our facts straight.

Well that is untrue. If you tell someone you will tax them at 100% their income will be 0. Or would you still go to work if you're not going to get paid?

All this class warfare, jealousy at the successful and envy is so ugly. And un-American.

you are ignoring the part where I wrote that we shouldn't do it.

Incidentally, if the argument is that we ought to be entitled to keep the 'fruits of our labor', that is actually an argument for taxing wealth, and not work.

I'm all for that.

Tom,

Before you buy into Ratner's idea that we need to raise $1.2T by taxation (which may or may not be a good idea), what do you think about the arguments made here?

http://www.modernmoneyandpublicpurpose.com/seminar-2.html

(this is a good series, with parts 1 and 3 both worth watching as well)

johnlockedema said:

ml1 said:

that is factually untrue. taxing the 1% at 100% would eliminate all of the projected FY13 federal budget deficit. I'm not suggesting we do it.

but we should have our facts straight.

Link please? What I seem to recall reading it would zero out a few months worth of the 13 deficit.

Of course, it does nothing to reduce the existing deficit at all. So taxing the 1% 100% of their income does nothing to reduce the $16 trillion in debt we have now.

We will never reduce the overall debt because if we ever ran at an annual surplus, Republicans in congress would argue that that money needed to be returned to taxpayers (like during the Clinton administration).

And for clarity, we are significantly better off that 4 years ago. Thankey.

http://www.chicagotribune.com/news/chi-durbin-urges-progressives-to-back-entitlement-cuts-in-fiscal-cliff-deal-20121127,0,3123621.story

And now the number 2 Democrat in the Senate is getting religion! Yeah! Sorry that Obama had to ignore bipartisanship for four years, but he can't ignore it now.

Why can't he? He won reelection and has more Dems in both the Senate and House.
He's stronger now than he was before.

It has always been the Democrats saying we need a combination of revenue and cuts. It's the Republicans who just "got religion."

rastro said:

It has always been the Democrats saying we need a combination of revenue and cuts. It's the Republicans who just "got religion."

You sure didn't hear that during the campaign for POTUS, have you? And have you seen the traditional Democrat supporters talking about entitlements being left alone?

It was discussed over and over last year during the debt ceiling talks.

It was the Republican primary candidates who said they would not accept $10 in spending cuts for $1 in revenue increases.

pennboy2 said:

It is so tiresome, this "soak the rich" mentality from people who are not producers.

Liberals know nothing about history.

Hey, why do you think this country is so rich, because we've followed your socialist ideals? It's funny.

The left is also so quick to talk about rights. Homosexuals should have the right to marry, and we can't put that to a vote!! Women should have the right to abortions, and we can't put that to a vote.

Human rights are not a matter of 'majority rule'. And a major reason for the Bill of Rights and other elements of our constitution and fundamental American 'social contract' is protection of the rights of the minority from the 'tyranny of the majority'. That is why these rights are most often initially affirmed through the courts rather than via referenda.

rastro said:

It was discussed over and over last year during the debt ceiling talks.

It was the Republican primary candidates who said they would not accept $10 in spending cuts for $1 in revenue increases.

Primary candidates? I guess you're forgetting that 08 candidate Obama promised entitlement reforms in the last two years of his term if he won-because entitlements were unsustainable-which he ignored while campaigning for his second term . . .

sac said:

pennboy2 said:

It is so tiresome, this "soak the rich" mentality from people who are not producers.

Liberals know nothing about history.

Hey, why do you think this country is so rich, because we've followed your socialist ideals? It's funny.

The left is also so quick to talk about rights. Homosexuals should have the right to marry, and we can't put that to a vote!! Women should have the right to abortions, and we can't put that to a vote.

Human rights are not a matter of 'majority rule'. And a major reason for the Bill of Rights and other elements of our constitution and fundamental American 'social contract' is protection of the rights of the minority from the 'tyranny of the majority'. That is why these rights are most often initially affirmed through the courts rather than via referenda.

sac, you do know that Obama believes that gay marriage is a states rule issue, not a civil right?

sac said:

Human rights are not a matter of 'majority rule'. And a major reason for the Bill of Rights and other elements of our constitution and fundamental American 'social contract' is protection of the rights of the minority from the 'tyranny of the majority'. That is why these rights are most often initially affirmed through the courts rather than via referenda.



Well put.

Of course, we have people who want plural marriages to be civil rights issues as well-and given that plural marriages are common in many countries I can't say they don't have a point.

johnlockedema said:

sac, you do know that Obama believes that gay marriage is a states rule issue, not a civil right?

If that is the case, then I respectfully disagree with him. It wouldn't be the first time and I'm sure not the last either.

I wish someone would explain how cutting SS and Medicare would help us with the deficit/debt today.

(this is a trick question)

http://www.nytimes.com/2012/11/26/opinion/krugman-fighting-fiscal-phantoms.html

Tom_Reingold said:

sac said:

Human rights are not a matter of 'majority rule'. And a major reason for the Bill of Rights and other elements of our constitution and fundamental American 'social contract' is protection of the rights of the minority from the 'tyranny of the majority'. That is why these rights are most often initially affirmed through the courts rather than via referenda.

Everyone seemed to miss my point: Do I have no "human right" to the product of my labor? If what some of the Democrats are asking for gets adopted, many people in California will have marginal tax rates over 50%. Do they not have a right to keeping more of what is theirs than the government? What of those human rights?

The top 5% of wage earners pay 59% of the income tax in this country. When is it enough for some people?

Where do you look to history to say that your socialist ideas are good public policy?

Tom_Reingold said:

"Because that's where the money is."

Kidding aside, society as a whole decides what it wants to do. It also decides, as a whole, how to pay for it. These are legitimate questions that we answer actively or passively.

We have decided that the services that government provides are indispensable. There is not a single service where there is near-unanimous agreement that we should eliminate it.

The places where we have to agree on are:

- How much we should pay for each service
- How we pay for the government

Each service has an opportunity to continue to do what it's been doing but at lower cost. There is a duty to investigate how to do the same (or better) at the same or lower cost. A good example of this now is medical care. Government workers get health insurance as part of their compensation, but the cost of health insurance is rising rapidly. What can we do about this? I don't know, but it's a good question.

We pay for government through taxation, which comes in various forms. Pretty much everyone pays some forms of taxes. So no one is saying that only the wealthy should pay taxes. But the need for the federal government to raise revenue ought to come from raising some taxes on the wealthy. Why the wealthy? Because most people who are not wealthy don't have any extra money to give the government. We've seen our effective incomes stay flat or decline in recent years. We spend more and get less, generally speaking.

So that's my answer to the question, "Why raise taxes on only wealthy people?" I assume that's really what you meant.

Another approach to that question is, why not the wealthy? They would not suffer, as far as I can see.

Now I did use the word "ought" above, which indicates an opinion, not a fact. It is my opinion, and it's the opinion of a growing number of Americans. I don't know what fraction, but I suspect it exceeds 50% now and is rising at a substantial rate over the last three or four years. I think we have consensus among the people.

Thanks for the clear acknowledgement that you don't subscribe to the They have it - we want it - let's take it school of tax policy. Based upon that which you had written yesterday (as well as some of what's above) I had some doubt.

To my mind, that school of thought bears too much of a similarity to the justification for a mugging. The fact that there might be a consensus amongst a group that a someone in another group was an excellent target, doesn't make it any more palatable to me; and I would guess, the mugging victim.

Insofar as the high income households not suffering from the additional bite; now, that has some legs. I'll be back later today to address why I think the bite should be put on more than just the high income/wealthy households, as well as Mr. Rattner's ideas.

Lastly, for this morning, I applaud your willingness to consider ideas, regardless of the source. Some ideas are just plain stupid (They have it - we want it - let's take it) and should be rejected upon the most cursory of examinations. Others may provide food for thought, and lead to better ideas. And of course, every once in a great while, some smart guy comes along with an idea and expresses it in terms so clear and unassailable as to command assent.

Think on.

TomR

pennboy2 said:

sac said:

Human rights are not a matter of 'majority rule'. And a major reason for the Bill of Rights and other elements of our constitution and fundamental American 'social contract' is protection of the rights of the minority from the 'tyranny of the majority'. That is why these rights are most often initially affirmed through the courts rather than via referenda.

Everyone seemed to miss my point:

No surprise there, you were kinda rambling a bit with the gays and the abortions. You did forget to mention the tyranny of the SCOTUS and how much better TV was in the 50s.

pennboy2 said:

Everyone seemed to miss my point: Do I have no "human right" to the product of my labor? If what some of the Democrats are asking for gets adopted, many people in California will have marginal tax rates over 50%. Do they not have a right to keeping more of what is theirs than the government? What of those human rights?

The top 5% of wage earners pay 59% of the income tax in this country. When is it enough for some people?

Where do you look to history to say that your socialist ideas are good public policy?

pennboy, you brought gay rights and abortion here. I'm content if we leave them out of this discussion. sac's point was a response to you. I think she was trying to say that those topics are human-rights topics, not fiscal topics. Majority-rule is not a mechanism for determining human rights. Topic closed, OK?

Rights and duties go together. You do have a right to the product of your labor. That's why you have money. Where do you think you got it? You earned it.

You also have a duty to pay for things that society pays for collectively.

There is no amount or fraction that changes these principles. You get to keep everything you don't owe in taxes. Isn't that simple enough?

Electing representatives who determine tax levels is our system, and I think it's fine. Do you have a counter-proposal?

pennboy2 said:

Where do you look to history to say that your socialist ideas are good public policy?

Settle down, Beavis. We're talking about returning to the tax rates we had under Clinton. Historically, those were good economic times, no? And still a whole lot better for the wealthy than the tax rates we had under Eisenhower. Your cries of socialism are pure bullsh-t. What a freakin' whiner. It must pretty lonely up there in the part of the country no one cares about...

Of course, you do know without cutting entitlements the extra money raised by the Obama tax increases will be enough to run the government for 8 days (by the CBO).

Some plan!