The Rich are Under Taxed?

[kalm]

And the author doesn't even mention the effective tax rate for corporations who tend to externalize some of their costs onto the tax payers.

Are low taxes exacerbating the recession?
Higher marginal tax rates mean more resources for job-creating, wage-generating public investments
By David Sirota


As the planet's economy keeps stumbling, the phrase "worst recession since the Great Depression" has become the new "global war on terror" — a term whose overuse has rendered it both meaningless and acronym-worthy. And just like that previously ubiquitous phrase, references to the WRSTGD are almost always followed by flimsy and contradictory explanations.

Republicans who ran up massive deficits say the recession comes from overspending. Democrats who gutted the job market with free-trade policies nonetheless insist it's all George W. Bush's fault. Meanwhile, pundits who cheered both sides now offer non sequiturs, blaming excessive partisanship for our problems.

But as history (and "Freakonomics") teach, such oversimplified memes tend to obscure the counterintuitive notions that often hold the most profound truths. And in the case of the WRSTGD, the most important of these is the idea that we are in economic dire straits because tax rates are too low.

This is the provocative argument first floated by former New York Gov. Eliot Spitzer in a Slate article evaluating 80 years of economic data.

"During the period 1951-63, when marginal rates were at their peak — 91 percent or 92 percent — the American economy boomed, growing at an average annual rate of 3.71 percent," he wrote in February. "The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm — just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent."

Months later, with USA Today reporting that tax rates are at a 60-year nadir, Secretary of State Hillary Clinton told a Brookings Institution audience that "the rich are not paying their fair share in any nation that is facing [major] employment issues ... whether it is individual, corporate, whatever the taxation forms are."

A prime example is Greece. While conservatives say the debt-ridden nation is a victim of welfare-state profligacy, a Center for American Progress analysis shows that "Greece has consistently spent less" than Europe's other social democracies — most of which have avoided Greece's plight.

"The real problem facing the Greeks is not how to reduce spending but how to increase revenue collections," the report concludes, fingering Greece's comparatively "anemic tax collections" as its economic problem.

On the other hand, the opposite is also true — as Clinton noted, some high-tax, high-revenue nations are excelling.

"Brazil has the highest tax-to-GDP rate in the Western hemisphere," she pointed out. "And guess what? It's growing like crazy. The rich are getting richer, but they are pulling people out of poverty."

This makes perfect sense. Though the Reagan zeitgeist created the illusion that taxes stunt economic growth, the numbers prove that higher marginal tax rates generate more resources for the job-creating, wage-generating public investments (roads, bridges, broadband, etc.) that sustain an economy. They also create economic incentives for economy-sustaining capital investment. Indeed, the easiest way wealthy business owners can avoid high-bracket tax rates is by plowing their profits back into their businesses and taking the corresponding write-off rather than simply pocketing the excess cash and paying an IRS levy.

In summing up her remarks, Clinton said that this higher-tax/higher-revenue formula "used to work for us until we abandoned it."

Though she felt compelled to insist, "I'm not speaking for the [Obama] administration," it was nonetheless a politically bold statement — so bold, in fact, that like all of the other corroborating tax facts, it was summarily ignored by politicians and the Washington media. They had their clichés to promote — and unfortunately, until they let substantive though uncomfortable ideas displace conventional wisdom, it's a good bet that the WRSTGD will continue unabated.

David Sirota is the author of the bestselling books "Hostile Takeover" and "The Uprising." He hosts the morning show on AM760 in Colorado and blogs at OpenLeft.com. E-mail him at ds@davidsirota.com or follow him on Twitter @davidsirota.

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[ALPHAGRIZ1]

We are taking in enough revenue the government is just spending way too much.

I dont agree with the article either.


All men are created equal, they should be taxed the same. This idea that just because somebody has more money they deserve to pay more is total horseshit

[CitadelGrad]

During 1951-63 when the US economy was booming with very high tax rates, it was because Japan and Europe went boom (literally) in the 40s and were still digging out of the rubble. We had no competitors. We could manufacture at relatively high costs and export to rebuilding countries who purchased our goods with money that we lent them. It was a pretty good deal for us. Unfortunately it isn't today's reality.

The notion that roads, bridges and broadband grow an economy is absurd. What roads and bridges, like the interstate system do is provide the ability to transport manufactured goods at lower cost. In case you haven't noticed, domestic manufacturing has been declining since the 70s. It really isn't necessary to make an enormous investment in new road systems. It is only necessary to maintain existing highway systems and bridges to meet safety standards.

If you want to make a significant "investment" in infrastructure, fine. You can use the money you'd save by eliminating pork, entitlements and useless government agencies. That ought to build a new bridge or two.

[houndawg]

We are taking in enough revenue the government is just spending way too much.

I dont agree with the article either.


All men are created equal, they should be taxed the same. This idea that just because somebody has more money they deserve to pay more is total horseshit

The very rich live in a different America from the rest of us, they should pay more.

[native]

We are taking in enough revenue the government is just spending way too much.

I dont agree with the article either.


All men are created equal, they should be taxed the same. This idea that just because somebody has more money they deserve to pay more is total horseshit

The very rich live in a different America from the rest of us, they should pay more.

Too much spending is the problem. Too few people with skin in the game is an even bigger problem. GW, with his "rebate," is to blame just as Obama the Dems.

[houndawg]

The very rich live in a different America from the rest of us, they should pay more.

Too much spending is the problem. Too few people with skin in the game is an even bigger problem. GW, with his "rebate," is to blame just as Obama the Dems.

If you're going to spend a decade fighting unnecessary wars on the other side of the planet, and it appears that we will, the moneys gotta come from somewhere.

[native]

Too much spending is the problem. Too few people with skin in the game is an even bigger problem. GW, with his "rebate," is to blame just as Obama the Dems.

If you're going to spend a decade fighting unnecessary wars on the other side of the planet, and it appears that we will, the moneys gotta come from somewhere.

Although your point is well taken, dawg, your excessive hatred and envy of people who are rich, successful or productive apparently blinds you to any meaningful alternative.

There is an elusive sweet spot somewhere between isolationism and imperialism that neither modern American political leaders nor us geniuses on this board have quite been able to find.

[houndawg]

If you're going to spend a decade fighting unnecessary wars on the other side of the planet, and it appears that we will, the moneys gotta come from somewhere.

Although your point is well taken, your excessive hatred and envy of the rich and the successful blinds you to any meaningful alternatve.

If there is a Hall of Fame for missing the point you're a first-ballot shoe-in.


You see, neigher, I am rich and successful. The percentage of the planet's population that wouldn't trade places with me in a heartbeat is vanishingly small.

You may call borrowing from China to bomb Afghanistan a "meaningful alternative" but I don't.

[CitadelGrad]

We are taking in enough revenue the government is just spending way too much.

I dont agree with the article either.


All men are created equal, they should be taxed the same. This idea that just because somebody has more money they deserve to pay more is total horseshit

The very rich live in a different America from the rest of us, they should pay more.

This should be quoted in the dictionary next to "non sequitur". You could turn easily turn it around and it would make as much sense. We live in a very different America than the rich, therefore we should pay more. The entire premise of your statement is jealousy and envy. Nothing more.

[Skjellyfetti]

"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."
-Adam Smith

What a fucking commie.

[CitadelGrad]

Although your point is well taken, your excessive hatred and envy of the rich and the successful blinds you to any meaningful alternatve.

You see, neigher, I am rich and successful. The percentage of the planet's population that wouldn't trade places with me in a heartbeat is vanishingly small.

Congratulations on your success and great wealth. I didn't realize sucking cocks down at the bus station's men's room could be that lucrative.

[native]

...
If there is a Hall of Fame for missing the point you're a first-ballot shoe-in.


You see, neigher, I am rich and successful. The percentage of the planet's population that wouldn't trade places with me in a heartbeat is vanishingly small.

You may call borrowing from China to bomb Afghanistan a "meaningful alternative" but I don't.

Bullsh!t. I acknowledged your point right away, arsehole. Borrowing from China for wars is obviously not a meaningful alternative, and is not a point that I advocated in my response to your post.

Now, cowboy up and offer a meaningful alternative somewhere between isolationaism and imperialism, or an argument for isolationism, or offer your own alternative paradigm.

But don't try to respond with a lie about something I did not post.

[Chizzang]

...
If there is a Hall of Fame for missing the point you're a first-ballot shoe-in.


You see, neigher, I am rich and successful. The percentage of the planet's population that wouldn't trade places with me in a heartbeat is vanishingly small.

You may call borrowing from China to bomb Afghanistan a "meaningful alternative" but I don't.

Bullsh!t. I acknowledged your point right away, arsehole. Borrowing from China for wars is obviously not a meaningful alternative, and is not a point that I advocated in my response to your post.

Now, cowboy up and offer a meaningful alternative somewhere between isolationaism and imperialism, or an argument for isolationism, or offer your own alternative paradigm.

But don't try to respond with a lie about something I did not post.

Why would NOT fabricating a war in Iraq constitute "isolationism"..?
Maybe I don't understand a key point.?

We've got troops ALL OVER THE WORLD - many in nations who have been asking us to leave since 1960 - we're as far from Isolationism as you can get with or without the meaningless portfolio building profit exercise called Iraq

[native]

Why would NOT fabricating a war in Iraq constitute "isolationism"..?
Maybe I don't understand a key point.?

We've got troops ALL OVER THE WORLD - many in nations who have been asking us to leave since 1960 - we're as far from Isolationism as you can get with or without the meaningless portfolio building profit exercise called Iraq

I do not disagree with you, Cleets, that NOT conducting the Iraq War would have constituted isolationism.

I agree that we need to reduce our overseas footprint.

I am not saying that you or dawg advocate isolationism. I am only saying that we have not yet hit upon the correct foreign policy. What foreign policy do you advocate?

[CitadelGrad]

What countries have been asking us to leave since 1960? Don't get me wrong, I would like to have a military presence in far fewer countries, but I don't recall us refusing to leave any country for 50 years. The Phillipines told us to leave and we quickly vacated Subic Bay and Clark AFB. Okinawa is an issue, but Japan has made it clear that they want a US military presence in their country. Ironically, Vietnam has raised the possibility of establishing a US naval base in Cam Ranh Bay, but we've yet to act on it.

[mainejeff]

All men are created equal, they should be taxed the same. This idea that just because somebody has more money they deserve to pay more is total horseshit

Unfortunately, they aren't. The other thing that is horseshit is that all gay people and unmarried heterosexuals are taxed at a higher rate than heterosexual married people. Why should gays and unmarried heterosexuals have to finance the tax breaks of heterosexual married couples????

[Pwns]

Yes, kalm...raising taxes on businesses and corporations when unemployment has been in double-digits for months is a great idea.

And taking the money and letting the government blow it off on war, UN crap, and unnecessary military bases overseas does a lot more good then letting the money be spent in America.

[kalm]

Yes, kalm...raising taxes on businesses and corporations when unemployment has been in double-digits for months is a great idea.

And taking the money and letting the government blow it off on war, UN crap, and unnecessary military bases overseas does a lot more good then letting the money be spent in America.

The wealth of millionaires across the globe grew last year. Exxon paid no taxes last year.

[Chizzang]

What countries have been asking us to leave since 1960? Don't get me wrong, I would like to have a military presence in far fewer countries, but I don't recall us refusing to leave any country for 50 years. The Phillipines told us to leave and we quickly vacated Subic Bay and Clark AFB. Okinawa is an issue, but Japan has made it clear that they want a US military presence in their country. Ironically, Vietnam has raised the possibility of establishing a US naval base in Cam Ranh Bay, but we've yet to act on it.

Good point: No governments want us to leave - it's easier and far less expensive than building and sustaining your own military

I am referring to the citizens - like Italy and Germany & England - when I lived in Germany and traveled about I didn't meet one (not one) citizen who wanted us there...

[CitadelGrad]

I've been to Germany several times, both during my days in the Army and as a civilian. Most of the Germans I met who wanted Americans out were not even in the American sector. In southern Germany, in the American sector, Germans were far more hospitable, even those whose livelihoods did not depend on Americans.

[Ursus A. Horribilis]

What countries have been asking us to leave since 1960? Don't get me wrong, I would like to have a military presence in far fewer countries, but I don't recall us refusing to leave any country for 50 years. The Phillipines told us to leave and we quickly vacated Subic Bay and Clark AFB. Okinawa is an issue, but Japan has made it clear that they want a US military presence in their country. Ironically, Vietnam has raised the possibility of establishing a US naval base in Cam Ranh Bay, but we've yet to act on it.

Good point: No governments want us to leave - it's easier and far less expensive than building and sustaining your own military

I am referring to the citizens - like Italy and Germany & England - when I lived in Germany and traveled about I didn't meet one (not one) citizen who wanted us there...

The odd thing to me is why their citizenry would keep electing governments that do that in spite of the peoples wishes.

[ALPHAGRIZ1]

The very rich live in a different America from the rest of us, they should pay more.

This should be quoted in the dictionary next to "non sequitur". You could turn easily turn it around and it would make as much sense. We live in a very different America than the rich, therefore we should pay more. The entire premise of your statement is jealousy and envy. Nothing more.

Exactly

[Ursus A. Horribilis]

I've heard that the top 5% in this country carry 50% of the tax burden and something like the top 10% carry 90% of the burden. Is this not true?

If it is true then shouldn't we actually be sucking the dicks of the rich for providing us whit all this sweet, sweet welfare instead of telling them that are not doing enough?

I mean seriously how much pride can you have in yourself as a man if these numbers are correct and your argument is that you think they should provide more?

[Chizzang]

Good point: No governments want us to leave - it's easier and far less expensive than building and sustaining your own military

I am referring to the citizens - like Italy and Germany & England - when I lived in Germany and traveled about I didn't meet one (not one) citizen who wanted us there...

The odd thing to me is why their citizenry would keep electing governments that do that in spite of the peoples wishes.

as soon as this country - America - elects Ralph Nader then that comment you're making will make sense...

[Ursus A. Horribilis]

The odd thing to me is why their citizenry would keep electing governments that do that in spite of the peoples wishes.

as soon as this country - America - elects Ralph Nader then that comment you're making will make sense...

How the fuck didn't you get that I was firmly pointing that one back at us?

The next time I see you...you better have already given yourself a black eye because if you haven't I'm gonna help you start a monopoly on em' in the greater Missoula area.