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Why 'Tax The Rich' Doesn't Solve Anything: It's The Math, Stupid

Tyler Durden's picture




 

While watching the political conventions over the past couple of weeks, JPMorgan's Michael Cembalest wonders aloud: What if, something like the CBO’s Alternative Case scenario came to pass; debt markets were no longer willing to fund trillion dollar deficits, so the deficit had to be reduced to 3% of GDP by 2020; taxing the rich was the only thing the country could agree on doing? If this happened, how high would top marginal Federal income tax rates have to go? The answer, after some number-crunching: 71% for the top bracket, and 57% for the second highest bracket. Adding state, local, and payroll taxes, and in 'Blue' states like NY and CA, income taxes will approach 80%.

This is not a projection, but an illustration that there are not enough Americans subject to the top brackets to reduce the deficit to 3%.

Eventually, the US will more likely have to adopt broader-reaching tax reform (e.g., raising taxes on the middle class), larger spending cuts than those already adopted, and/or Federal Reserve monetization of the public debt.

Another option: a set of pro-growth policies that solve the problem by ramping up the denominator. The challenge: under the CBO Alternative Case, real GDP growth would have to average 8.6% per year (rather than the 2.9% that is currently assumed) to get the deficit to 3% by 2020.

After seeing what has happened in Europe, it seems likely that debt monetization would be a part of a US solution (in addition of course to the $1.7 trillion in Treasury bonds the Fed already owns).

One more thing on taxation. There was a lot of discussion around both conventions about the progressivity of the tax code.

The charts below show some history on effective tax rates by bracket, from the CBO. The first table shows income tax rates...

Note: effective income tax rates for the bottom two quintiles are actually negative due to the value of transfers and tax credits.

the second shows total Federal tax rates (including payroll and excise taxes).

 

Progressivity, apparently, is in the eye of the beholder. To me, the tables suggest a substantial increase in progressivity since 1979.

 

Before anyone says, “well, tax rates used to be that high”, consider the details. Marginal tax rates were 80%+ in the 1950’s, but applied to the mega-wealthy (income of $3 million+ in today’s dollars), rather than the $388,350 that marks today’s top bracket. In other words, people had to be 10x wealthier in the 1950’s to be subject to ultrahigh marginal rates. There were also more deductions then. For example, in 1979, while the top statutory income tax rate was 70%, the effective tax rate for the top 1% was less than 25%.

 

Source: JPMorgan

 

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Mon, 09/10/2012 - 13:07 | 2778882 malikai
malikai's picture

Tax the rich = Capital flight.

Good luck with that, 'progressives'.

Also, nothing really 'progressive' about trying the tried and true way of crushing an economy.

Mon, 09/10/2012 - 13:12 | 2778898 Thomas
Thomas's picture

We may be past the failsafe point--in a barrel on the Niagara River trying to think of a solution. Default may be the only way out.

Mon, 09/10/2012 - 13:24 | 2778949 veyron
veyron's picture

Instead of taxing the rich (future income), what would happen if we put a 1% one-time tax on wealth?  Some of that 33T overseas could help ...

Mon, 09/10/2012 - 13:31 | 2778975 ratso
ratso's picture

Taxing the rich doesn't have to result in higher revenues.  

The rich should pay their fair share of the burdens that the rest of America is paying for - that's hardly too much to ask when their wealth was created on the backs of the poor and the of middle class. 

The Amercan rich are simply the biggest ass wipe whiners in the world.  BOOOO!

Mon, 09/10/2012 - 13:50 | 2779078 EscapeKey
EscapeKey's picture

You speak of the Laffer curve.

I like how said ultra-rich people always assume that we're on the right of the Laffer curve, with zero statistical or otherwise evidence to back up this assumption.

Mon, 09/10/2012 - 18:55 | 2780128 falak pema
falak pema's picture

rich man's laughter curve?

Mon, 09/10/2012 - 13:53 | 2779085 johnQpublic
johnQpublic's picture

what we need is a one page tax code.

no loopholes,subsidies etc for anyone

make corporations actually pay some tax, because they are after all just people,right?

reduce total tax paid to 25% max

including capital gains

then make the politicos work within the means provided

balanced budget and all

if that means programs need to be cut, then thats what happens

nothing is sacrosact

and then maybe eliminate barriers to entry for small business, like those stupid million dollar badges for taxis(as an easy low hanging fruit example)

next we could prosecute crimes of the elites, like wall street

legalize all drugs and let little mom and pop dope growers make a little side income

i also want a pony and muthafukkin world peace(which i'm sure i'll get before anything else on my list)

Mon, 09/10/2012 - 18:00 | 2779939 odatruf
odatruf's picture

Fuck you.

While I am not rich, I haven't made mine off the back of any poor and middle class. I provide a good service and do so at a fair price.  If you / they want to go elsewhere, there is the door.

Asshole.

Tue, 09/11/2012 - 12:00 | 2782021 dmger14
dmger14's picture

ratso,

I love that:  "created on the backs of the poor."  How is that?  If you are talking about exploiting workers, let those people find another job paying more.  If you are talking about consumers being overcharged, let them buy from someone else, or better yet, go into business making the widgets themselves, paying labor more than market rate and charging consumers less than the cost!

ATLAS is only beginning to shrug!  I hope the successful sell their businesses and retire or move overseas to places more hospitable to business.  Let the bloodsucking noncontributing leeches cannibalize themselves!

 

Mon, 09/10/2012 - 13:46 | 2779057 AldousHuxley
AldousHuxley's picture

France has 1% wealth tax.

 

Instead of taxing the rich cut income tax to be lower than that of capital gains.

  1. Rich won't complain because their taxes aren't going up
  2. Workers will like less taxes to spend on consumption to get the economy going.
  3. It is only the government who will then have to become more efficient dueto less total revenue.
  4. Politicians, lobbysts, lawyers, and anyone who depend on government like military, education, healthcare will have to learn to live on their own and prices will go down.

 

doesn't matter the real percentage....as long as income tax is not equal to capital gains tax, someone is getting screwed over.

Mon, 09/10/2012 - 13:54 | 2779100 blunderdog
blunderdog's picture

The people who earn wages, for the most part, cannot afford to purchase the necessary political representation.

So the only people who are "well represented" are the people who make their money through capital gains.  Obviously, as the only real US constituency, they're not interested in changing this. 

Some of them are complaining *now* about all those paupers who don't even earn enough to pay Federal income tax.

Mon, 09/10/2012 - 13:57 | 2779114 EscapeKey
EscapeKey's picture

Minor technicality, but they complain about those paupers who "pay no taxes", conveniently ignoring "income taxes" != "taxes".

Mon, 09/10/2012 - 14:11 | 2779184 malikai
malikai's picture

Sales tax, fuel tax, excise tax, and a host of others come to mind.. Not to mention that little "tax" in subsidy for things like biofuels.

Mon, 09/10/2012 - 13:47 | 2779064 seek
seek's picture

There's no such thing as a "one time" tax. Once pigs have tasted flesh, they come back for more.

In any case, inflation is a de-facto wealth tax, and thus there's an ongoing wealth tax that's well above 1% per annum. And it's still not enough.

The problem is the parasite has grown to be ~40% larger than the host -- there's no fixing this without killing the host (tax-paying population) or reducing the size of the parasite (governments and entitlement class, which includes social programs, military contractors, etc.)

Mon, 09/10/2012 - 13:53 | 2779093 EscapeKey
EscapeKey's picture

They will 'fix' it by making the central banks finance an ever-greater share of deficits, in overt and covert ways.

The Keynesians will insist "we're in new terrotory", "this has never happened before", and "this time is different" despite significant volume of evidence suggesting the contrary.

The Austrians will shout loud, but ultimately be ignored, because it serves neither government nor big banks to have them running the country. Laymen will blame Austrians for not getting the timing right, hence "nothing they say is of value" - despite Keynesians not nailing the time either.

Sheesh, kind of depressing really...

Mon, 09/10/2012 - 13:55 | 2779102 johnQpublic
johnQpublic's picture

so....kill the poor, eat the rich, vote the bums out....kumbaya?

Mon, 09/10/2012 - 14:13 | 2779192 MachoMan
MachoMan's picture

Exactly.  To create the power necessary to perform the one-off tax, you also create the political environment of total economic control and, thereby, necessary ruin.  Pandora's box.

Mon, 09/10/2012 - 13:53 | 2779086 Cranios
Cranios's picture

Do you really think that isn't coming? Except it will be an annual wealth tax. The progressives (commies) aren't going to stop until every last cent of wealth in this country is used up.

Mon, 09/10/2012 - 14:54 | 2779339 marathonman
marathonman's picture

In this case wealth isn't used up, it's just redistributed.  From your pocket to their voters with a healthy cut for their cronies, beaurocrats, and other legal parasites.  That's the government hussle.  Same as it ever was.

Mon, 09/10/2012 - 14:17 | 2779202 slightlyskeptical
slightlyskeptical's picture

I think taxing accumulated wealth instead of income is the way to go. If a guy makes 10 million a year and spends it all he should pay no taxes, he is already doing his part to trickle down. Maybe allow the first $3 million or so of wealth to be tax free and then make it progressive from that point forward. I figure we need a top rate of about 3-4% of accumulated wealth annually for the US to make it's nut. If all the money in the economy is held in just a few hands then the rest of the economy cannot operate as desired - it's just basic math.  

Mon, 09/10/2012 - 14:57 | 2779351 drchris
drchris's picture

We already have "controlled" inflation.  That is a weath tax.  It hurts anyone with cash and helps debtors.  

Mon, 09/10/2012 - 15:18 | 2779431 LetThemEatRand
LetThemEatRand's picture

The mantra that taxing income can't solve the problem is cover for the wealthy who don't want to admit that a tiny percentage of the population owns most of the wealth of the world already.  It's like Mitt Romney -- he is wealthy but he has little traditional income.  Zero hedge had a great article on this concept here: http://www.zerohedge.com/contributed/2012-07-15/soak-wealth-not-income

 

Mon, 09/10/2012 - 17:11 | 2779852 Quantum Nucleonics
Quantum Nucleonics's picture

There is the slight problem that it would not be constitutional.  Direct taxes would have to be apportioned to the states according to population.  Article I, Section 2, Clause 3.  

Mon, 09/10/2012 - 17:11 | 2779853 Quantum Nucleonics
Quantum Nucleonics's picture

There is the slight problem that it would not be constitutional.  Direct taxes would have to be apportioned to the states according to population.  Article I, Section 2, Clause 3.  

Mon, 09/10/2012 - 13:28 | 2778969 AldousHuxley
AldousHuxley's picture

because "rich" is not $250,000 income....

measure "rich" is wealth.....CEO with $1 salary income but $100,000,000 tax sheltered assets in Switzerland is the real rich.

 

It is the top 400 richest families in America who have rigged the game in their favor stupid!

 

http://econfix.files.wordpress.com/2011/05/us-income-distribution.jpg

 

meritocracy ends at $500,000/year...anything beyond that is luck (right place, right time, born on third base, inside trading, profit off of taking other's piece of pie rather than growing the  pie)....oh and the most popular one......via marriage.

Mon, 09/10/2012 - 13:55 | 2779108 EscapeKey
EscapeKey's picture

I seem to recall reading that a significant cause of the fall of the Ottoman empire was down to a large amount of her wealth being exempt from taxation.

But this time is different.

Mon, 09/10/2012 - 18:06 | 2779227 e-man
e-man's picture

Does no one else see through the smoke and mirrors here?  You could tax the rich 100% of income and it would not solve fiscal mismanagement.  So why would a government propose this?  It makes people feel that the rich are paying their fair share and so it becomes acceptable.  In reality, it is a surreptitious way for government to sterilize the effects of their profligate borrowing and spending by way of the printing press.  Simply confiscate the money by taxation on the upper end of the pay scale (where most of the newly printed money accumulates first) and you will greatly delay the effects of inflation.  Neat trick, huh? 

Now, continue on with your class warfare people or else the other side is going to eat your lunch. Nothing to see here. 

Mon, 09/10/2012 - 18:38 | 2780074 A Nanny Moose
A Nanny Moose's picture

Pffft. Politicians will repeal the law of gravity if they think it will buy them votes.  Voters are just dumb enough to vote for exactly such a platform.

Mon, 09/10/2012 - 13:30 | 2778970 Bananamerican
Bananamerican's picture

Tax

Lloyd Blankfein

Brian Moynihan

Jamie Dimon

Vikram Pandit

John Stumpf

Richard Fairbank

Ralph Babb Jr.

Russel Goldsmith

Gerald Hassel

Peter Ho

 

 

et al...

 

100%

Mon, 09/10/2012 - 13:33 | 2778997 LawsofPhysics
LawsofPhysics's picture

But, none of those banks are solvent, nothing really there.  Wait, what's that?  Mark to what?

Mon, 09/10/2012 - 13:56 | 2779112 johnQpublic
johnQpublic's picture

unicorn

Tue, 09/11/2012 - 03:43 | 2780925 Urban Redneck
Urban Redneck's picture

And relatively few of those bankers are AMERICAN, so the IRS can`t and won`t ever tax them anyway...

Mon, 09/10/2012 - 18:39 | 2780077 A Nanny Moose
A Nanny Moose's picture

Tax them? How do you think they got their money in the first place?

Mon, 09/10/2012 - 13:36 | 2779006 Vince Clortho
Vince Clortho's picture

I thought the capital already fled.

Mon, 09/10/2012 - 13:43 | 2779041 johnQpublic
johnQpublic's picture

nonsense

you could tax every american 101% and still not get the defecit to 3% of gdp

period

Mon, 09/10/2012 - 13:46 | 2779043 silverserfer
silverserfer's picture

the super rich have been actively evating taxes for some time. it is their intention to "capital flight' their money. Dipshit. These fuckers get idiots like you to believe they are paying their fare share.

our system has been bled dry by rich and powerful for decades. its nto the poor people who have dont this it is the rich they are the parasites.

Mon, 09/10/2012 - 14:15 | 2779199 Republi-Ken
Republi-Ken's picture

The Tyler Durden Conclusions is

DONT TAX MILLIONAIRES AND BILLIONAIRES...!!! PLEASE NO!!!

These folks are too vulnerable and weak.

Please leave these underpriveleged fucking republican conservative assholes alone.

Tax the Middle Class More. They deserve it and there is more of them.

And Tax those Lazy Ass Niggers who dont contribute anything. But Football and Basketball.

But leave us Millionaireas and Billionaires alone so we can buy another Mercedes.

 

Mon, 09/10/2012 - 18:50 | 2780111 BigDuke6
BigDuke6's picture

A truly embarrassing comment , bringing shame on you at every level.
Intellectual , human, cock size etc

Mon, 09/10/2012 - 20:49 | 2780404 dirtbagger
dirtbagger's picture

Wonder who funds the writer of this article: Heritage Foundation,  Cato Institute, American Enterprise Institute or Americans For Prosperity.    How dare we question hedge fund managers who pay at the 15% capital gains rate while the  rest of us slobs pay the rate on earned income.   Even more amazing is all these ZHers who suck up this Koch Brother's propaganda.   A sad state of affairs.

Mon, 09/10/2012 - 15:56 | 2779567 dugorama
dugorama's picture

The max marginal tax rate only 4 short decades ago was 90% (on income > $1mm).  Look it up.  And yet we still had capital inflows.  Of course, we also had a complicated tax code that allow for deductions and exemptions and exceptions on everything from investment in low income housing to three martini lunches.  Along with economic growth, full employment and low inflation.  No value judgement here, just history.

Tue, 09/11/2012 - 01:05 | 2780832 LMAOLORI
LMAOLORI's picture

 

 

Progressive is code for Communist and judging from the class warfare responses the Daily Kommie kids are out in full force. Even with the facts smacking them right in the face they still don't get it! 

 

Laffer code why raising taxes won't balance the budget

When France Meets The Laffer Curve: Richest Man In France Moving To Belgium

Tue, 09/11/2012 - 07:56 | 2781111 Ain't No Sunshine
Ain't No Sunshine's picture

It's so simple,

TAX THE POOR!

Mon, 09/10/2012 - 13:08 | 2778884 Cognitive Dissonance
Cognitive Dissonance's picture

Just print some more money. That'll fix everything.

Mon, 09/10/2012 - 13:30 | 2778980 Zap Powerz
Zap Powerz's picture

It begs the question of why we even have income tax when we can just print the money we need to run the government.

Or, if taxation is necessary to make progressives feel good, why not print a trillion dollars for every US citizen, give it to them and then tax it at 90% which would leave each citizen 100 billion dollars to buy cheap shit from China and the government would be awash in cash to finance a war against every country on the planet!  Its a win-win for everyone (excpect everyone being bombed, of course).

Winning, duh!

Mon, 09/10/2012 - 14:00 | 2779131 RockyRacoon
RockyRacoon's picture

"Just print some more money. That'll fix everything."

...or, break everything, which would be my preference!

Give my well wishes to Lady Cog.

Mon, 09/10/2012 - 14:08 | 2779173 Cognitive Dissonance
Cognitive Dissonance's picture

The Lady Cog is well and still stacked...........er..........stacking. :>)

<Don't tell her I said that.>

Mon, 09/10/2012 - 13:15 | 2778906 LawsofPhysics
LawsofPhysics's picture

File this post under "DUH".  There are over 700 TRILLION  dollars of credit default swaps out there.  Better define rich too, because one thing everybody keeps overlooking is the total debt on the balance sheets and guess what?  There isn't enough collateral ON EARTH to cover any of this.

Unfortunately, only the "rich" have something to spend.  No spending, no eCONomy, no economy and everyone gets to redefine "wealth" and "value", fucking bring it!!!   Long black markets and human stupidity.

Mon, 09/10/2012 - 13:59 | 2779121 EscapeKey
EscapeKey's picture

Net notional = 2-3% of this. OMG $700tn = Max Keiser mathematics.

Mon, 09/10/2012 - 13:15 | 2778907 Der Wille Zur Macht
Der Wille Zur Macht's picture

Taxes are theft.

Mon, 09/10/2012 - 13:15 | 2778912 LawsofPhysics
LawsofPhysics's picture

especially when used for bailouts.

Mon, 09/10/2012 - 13:15 | 2778909 surf0766
surf0766's picture

19% flat tax everyone except the poorest. 20% gov't cuts until we are back on a path of fiscal sanity.

Mon, 09/10/2012 - 13:18 | 2778921 Things that go bump
Things that go bump's picture

Even God only asks for 10%.  

Mon, 09/10/2012 - 13:27 | 2778962 blindfaith
blindfaith's picture

God has no use for money, only man does. So guess who put the words into 'God's' mouth?

If evryone DID actually pay 10% tax there would be no deficet.  But tax dogers and the well healed know how to use the tax code to pay no taxes....after all who do you think paid for the politians who wrote the code...Joe six pack?

Mon, 09/10/2012 - 14:46 | 2779312 helping_friendl...
helping_friendly_book's picture

Allah ask for 20%.

Mon, 09/10/2012 - 15:59 | 2779582 Sokhmate
Sokhmate's picture

Allah asks for 2.5% and prohibits usury

Mon, 09/10/2012 - 18:03 | 2779977 falak pema
falak pema's picture

Jesus offers the other cheek free; and Mahomet says share and share alike with your four wives.

Now that is not usury, its more like "giving free and plenty" from either revelatory diety.

The best things in life and the banksta tribe....oil and water.

Mon, 09/10/2012 - 18:45 | 2780090 A Nanny Moose
A Nanny Moose's picture

Jesus offers the other cheek free;

Jesus didn't have Ben Dover Bernanke et. all, attempting the parting of the ass cheeks.

Mon, 09/10/2012 - 13:37 | 2779012 Zap Powerz
Zap Powerz's picture

Why do the poor get such pampered treatment?  They provide nothing to their society, in fact, they consume more than they produce.

Lets use the laws of incentive and human nature to "encourage" people to not be poor by taxing poor people at the highest rates and rich people at the lowest rates.

Lets give people a reason to not be poor instead of giving them incentives to be poor.

I mean, being poor should be so uncomfortable and horrible that a person would do the crazy thing of actually getting out of bed at 7:30 am, NOT smoking weed all day, going to a job and working all day and NOT waste their money on lotto, beer and cigarettes.

Instead, in this fucked up place we call a country, if youre poor youre treated like some kind endangered species and if you work hard and make money youre treated like some kind of villian trying to kill off endangered species.

Mon, 09/10/2012 - 13:47 | 2779063 surf0766
surf0766's picture

I get what you said. There are some who will still need assistance for some specified length of time. I don't know the definition of poorest of the poor would be.

Mon, 09/10/2012 - 14:01 | 2779133 johnQpublic
johnQpublic's picture

irony is....dont feed the animals in parks type signs....it makes them dependant on humans for food

vs.

snap cards

in credit card format so there is no stigma for being a well fed animal in the national park that is the US

Mon, 09/10/2012 - 18:46 | 2780100 A Nanny Moose
A Nanny Moose's picture

National Parks don't have cages. This is a friggin zoo.

Mon, 09/10/2012 - 13:16 | 2778913 not fat not stupid
not fat not stupid's picture

I know the math doesn't add up. That isn't the point. Doing it will feel really good.

Mon, 09/10/2012 - 13:18 | 2778922 aaronb17
aaronb17's picture

What's amazing is, we are ever more productive, and ever wealthier as a society -- and yet it gets harder and harder to pay for simple stuff like health care and education and retirement because all the fuckers at the top are getting all of that goddamn money.  And they can't pay higher taxes?  Really? 

Mon, 09/10/2012 - 13:45 | 2779054 blindfaith
blindfaith's picture

When I lived inSavannah Ga., I was surrounded by the wealthist of the wealthy.  Jokes and laughs at how easy it was to not pay takes and how stupid 'joe blow' was that he didn't do the same.

One November a neightbor across the alley was moving.  The wife of this lawyer was setting out box upon box of unopened toys, unplayed LP's, cell phones, wireless stuff, TV's....more than 20 large boxes of stuff.  My girl friend and I started to gather up all this stuff to take to Goodwill.  This "high-class" woman comes out sreaming to put it all down or she would call the police, rember I am her neighbor ( in the alley is public domain and it was there for the trash collection).  I asked WHY?  And she said..."because I don't want any of those people to have any of these things because it only makes them closed to how I live and closer to me".  THAT folks is a direct quote.

To do anything that allows anyone 'not of your "class" ' to get close to you, has returned with a vengence.  Now, I don't want to get political here, but I remind the short term memory folks out there that Mrs. Romney said near the same thing about 'those folks' just a few weeks ago.  But then again she won't be running the show the way Nancy Reagen was....will she?

 

As for this shill article...shame on Zerohedge printing shill from the Morgue.  The idea that even a 3% reduction is not worth pursuing is Talk Radio tripe.  Go ask David Stockman who needs to START paying their fair share.  I will bet you that this wonder boy has his 'salary' delayed so he pays capital gains and not income tax on the earnings.

I don't come to Zerohedge much anymore, maybe it was for good reason.

Mon, 09/10/2012 - 15:39 | 2779501 sschu
sschu's picture

The basic questions when we start discussing this topic are:

What is a "fair share"?

Who decides?

Unless specific answers can be provided, these types of discussions are just pure feel-good political posturing.

sschu

 

Mon, 09/10/2012 - 15:56 | 2779563 Joe Davola
Joe Davola's picture

You'll be back.

Mon, 09/10/2012 - 16:56 | 2779813 mytwocentimes
mytwocentimes's picture

Insight - and a spot-on-critique of ZH  -  thanks !

Mon, 09/10/2012 - 13:55 | 2779087 ElvisDog
ElvisDog's picture

Aaronb17, you're either stupid or ignorant, take your pick. The reason we're having more and more trouble paying for health care and education is that cost of those two items are going up annually by 3-4 times the rate of overall economic growth. Here's a math test for you, Einstein, plot out the functions y = x^1.1 and y = x^1.02 over a long time horizon and see what happens.

Mon, 09/10/2012 - 14:04 | 2779159 aaronb17
aaronb17's picture

That's not a reason, that's just a fact, you stupid ignorant idiot. A fact I referred to in my original post.  What is the REASON that education and healthcare have increased at 3-4 times the rate of overall economic growth?  And have you noticed that CEO salaries have increased even faster? 

Mon, 09/10/2012 - 14:19 | 2779204 ElvisDog
ElvisDog's picture

Hah, that's funny, your witty retort was to use my own accusations (stupid or ignorant) against me. Nice to know this is a battle of wits against an unarmed man. The fact is that healthcare and education costs (college specifically) are going up by 8-10% per year. Economic growth is maybe 2% per year. So healthcare/education costs will double every 8 years or so. The overall economic "pie" that can pay for education and healthcare is doubling every 36 years. (Again, just plain old mathematics dumbass). But according to the fantasy-land in which you live, we can pay for the current healthcare/education system if we simply tax those evil rich people.

The reason education costs are going up that much are Federally guarenteed student loans. The middle class has bought into the idea that sending their kids to college is worth the cost, any cost. They can borrow an unlimited amount of federally guarenteed loans. The colleges know this, and have no incentive to rein in annual tuition increases. The reason healthcare costs are going up that much is there is a complete disconnect between how much medical treatment actually costs, how much is billed, and how much people actually pay for healthcare. In other words there is little incentive for many people to limit the healthcare they receive because they aren't paying the full price ($2000 hearing aid? No problem, medicare is paying for it).

In the words of Dean Wormer: Fat, drunk, and stupid is no way to go through life.

Mon, 09/10/2012 - 15:34 | 2779487 aaronb17
aaronb17's picture

Well, I tried to throw your shitty attitude back in your face to show you how it felt, but apparently you liked it and decided you want to keep throwing it around.  I'll leave you to play in your doo-doo.

Your economic analysis of education and healthcare costs is pretty much standard Republican drivel -- "people should know better than to consume too much education or too much healthcare, but they can't stop because the government is paying for it." Because clearly we all suffer if people are too educated or too healthy.  The solution is always "they should have less of this stuff that will make them better citizens/people, because it costs too much."  

The analysis is wrong, because healthcare and education are absolutely fucking paramount to a society worth living in.  It's not about saying "we have to choose -- should we have rich people, or should we have education and healthcare for all?"  That's an idiotic question to even ask.  

Healthy and educated people are what are essential to a society worth living in.  Mitt Romney enjoying an extra marginal 20% of his income is what isn't fucking necessary to a society worth living in.

And yet that is essentially the Republican platform -- "how can we possibly have healthcare and education for all, when Mitt Romney might have to live on $25 million net per year instead of $35 million net per year?" 

Tue, 09/11/2012 - 01:18 | 2780853 StychoKiller
StychoKiller's picture

Git yerself edumacated:

"Economics in One Lesson", ISBN:  978-0-517-54823-3, by Henry Hazlitt

Mon, 09/10/2012 - 14:23 | 2779231 GoldenTool
GoldenTool's picture

Nice apples to oranges argument.  Growth can't be exponential the world is finite, but money can be.  His statement above is correct and one I have often complained about.  More "stuff" is being produced with less work by humans, yet cost keep going up.  We should be near a nirvana state, yet the money system appears broken and does not reflect this.  The creation of false inflation to hide deflation will, IMHO, destroy everything it touches, if it, it being the financial system, becomes uncontrollable.  Right now "it" is controlled and could very well stay that way, but IF the leash breaks I don't think I want to be in that tiger cage.  Can bernanke hold the tiger of raw comodities and energy in check.  China isn't hording for nothing would be my guess.

 

"Do unto others."

Mon, 09/10/2012 - 14:39 | 2779292 ElvisDog
ElvisDog's picture

I would suggest you travel a little more, specifically to the Developing World, if you think there is enough stuff to spread around to reach a nirvana state on this finite rock we call Earth. The fact of the matter is there is not enough "stuff" to meet the promises made to everyone by their respective governments or even their own expectations. Taxing the Rich is a simplistic approach that appeals to a certain part of the political spectrum. But redistribution of wealth by taxing the rich doesn't cause any more stuff or wealth to be generated. It would not cause lving standards, net-net, to rise, and in fact would cause them to fall.

My point is that our current system, and healthcare and education specifically, are unsustainable. You can't change the mathematics of an unsustainable system by printing money or taxing the rich. The system itself has to change. The exponents have to come together.

Mon, 09/10/2012 - 14:59 | 2779343 GoldenTool
GoldenTool's picture

You have just defined the illusion.  Could everyone in the world have 2 cars, 3 tv's, and a summer home?  That's the promise, right...  There will always be enough money to meet the monatary promise, but that doesn't guarantee 2 cars, 3 tv's and a summer home.  Keep chasing that carrot.  I believe Greenspan said some such in the 90's.

I agree with your last point and actually think we are saying the same thing, if you leave the strawmen out that is.

Mon, 09/10/2012 - 15:40 | 2779503 slightlyskeptical
slightlyskeptical's picture

How much are we capable of producing annually as a world? Don't define it in our current system, but in a system where everyone put forth their best effort for 30 hours a week and jobs that were non-productive were eliminated. I think we definitely have the ability to provide everyone in the world with what is considered a nice life by western standards at the minimum. That would consist of a decent home, food, clothing, modern conviences, top notch health care, utilities, retirement, etc.  You would still earn more by providing more, but it would be an accepted ideal that too much for one means too little for everyone else.

Mon, 09/10/2012 - 20:26 | 2780355 GoldenTool
GoldenTool's picture

  I have to agree with you Slightly, at the expense of seeming like I'm sitting down to sing kumbaya at fight club.  Anything that changes certain power structures would be fought tooth and nail.  Everything always looks good in dream land though.

 

"Do unto others."

 

Mon, 09/10/2012 - 13:18 | 2778924 Al Huxley
Al Huxley's picture

While I agree with the general thesis (taxes don't solve the problem) I have some difficulty accepting the objectivity of the source.

Mon, 09/10/2012 - 13:36 | 2778926 Bob
Bob's picture

How about a fundamental reform of the tax system that penalizes predatory financialization rather than real work and productive industry?

http://michael-hudson.com/2012/08/financial-predators-v-labor-industry-a...

Is it not enough that financial parasites make the lion's share of the money and control the majority of the wealth . . . without the rest of us paying the majority of the costs required to support such a self-defeating (for the vast majority)  economic model?

It makes no sense whatsoever . . . except as servitude to sociopathic parasites.

Mon, 09/10/2012 - 13:21 | 2778934 Clueless Bill
Clueless Bill's picture

Taxing the rich is not about raising revenue.  It's about reducing the power of the rich. Unless you are one of the few thousand greedy little men who owns almost everything, you should be in favor of it.

Mon, 09/10/2012 - 14:19 | 2779208 JuliaS
JuliaS's picture

Reducing the power of the rich? Are you implying that those who collect taxes are poor?

Mon, 09/10/2012 - 18:59 | 2780134 A Nanny Moose
A Nanny Moose's picture

Taxing the rich is not about raising revenue.  It's about reducing the power of the rich.

How do you think the "rich" working within a corrupt system, created by rich people, obtained such power and wealth? They did it by getting government to steal from others under the guise of taxing the rich, and fair shares.

The problem isn't the disparity of wealth, it is the breakdown of principles. This is a lack of respect for private property. The fucking pewblik skewl educated proles eat this shit up, just like they did in Nazi fuckin' Germany.

Mon, 09/10/2012 - 13:22 | 2778942 FishHockers
FishHockers's picture

How about just hitting the ESC key, or DELETE instead of PRINT. Just a thought. 

Mon, 09/10/2012 - 13:23 | 2778944 SmoothCoolSmoke
SmoothCoolSmoke's picture

"Taxing the Rich Soves Nothing"  So..... if we stopped taxing the rich today, things would not get worse?  Hmmmmmmmmmmm.

Mon, 09/10/2012 - 16:02 | 2779603 dugorama
dugorama's picture

If tax cuts created jobs we'd have no umemployment by now

Mon, 09/10/2012 - 13:24 | 2778948 aaronb17
aaronb17's picture

As an aside, that supposed "effective total tax rate" of the top 1% is WAY over what Mitt Romney paid.  Why is that?  Is he some crazy-low outlier?  Or are you full of shit regarding the actual "effective total tax rates" of the rich? 

Mon, 09/10/2012 - 14:07 | 2779170 seek
seek's picture

He's a crazy low outlier, because of how rich he is.

Most of the 1% are actually high-income wage earners, e.g. it's earned income. I happen to be in that category and my effective total tax rate (Fed + State) runs about 35%. You'll find most wealthy small business owners are in the same boat, as are doctors, lawyers and the like.

When you get unto the uber-wealthy segment (say top 0.1%) the effective tax rates go down. A lot. This is because the vast majority of the income is unearned capital gains, which is taxed at a very low rate relative to income. Throw in some accounting and tax credits, and you get to Mitten's 14% effective rate. Grab virtually anyone clearlying 500K a year and they'll be paying a rate that is around double this.

A big clue given to me by my accountant for detecting people who understand taxes v. not: the clueless will talk about tax rates, the clued will talk about the definition of income. Tax rates are one page of the 20,000 pages of tax code; the vast majority of the code is wrapped up in defining what counts as income, and that's where the games are played. You can raise the rates to 100% and Mittens will still pay 14% unless you change the definition of capital gains.

The uber-wealthy just love it when people focus on rates. It's the distraction that lets the magician get away with his tricks.

Mon, 09/10/2012 - 14:31 | 2779255 aaronb17
aaronb17's picture

I agree with you, and would also note that the combination of the payroll tax and capital gains tax (capital gains earnings don't get payroll taxed, yay!) are the two massive distortions in the tax code that cause wage earners to be the ass-raped class of society.  Someone with a nice big bank account (say 2.5 million) has a 15% marginal tax rate on his captial gains.   A self-employed plumber works 60 hours per week to make $100,000 that same year, and has a 43% marginal tax rate on money he earns.  Hard work will get you nowhere in America -- it's almost like the tax code rewards people for finding ways to make money sitting on their asses. 

Mon, 09/10/2012 - 16:13 | 2779645 Bob
Bob's picture

A particular result of the corporate buyout of Economics.  Actual meaning got downsized out of the equation:

http://michael-hudson.com/2012/07/veblens-institutionalist-elaboration-o...

Tue, 09/11/2012 - 01:24 | 2780856 StychoKiller
StychoKiller's picture

[quote] Hard work will get you nowhere in America -- it's almost like the tax code rewards people for finding ways to make money sitting on their asses. [/quote]

Well, "The purpose of a System is what it does."

No "almost" about it!

Mon, 09/10/2012 - 14:31 | 2779259 GoldenTool
GoldenTool's picture

+100 to this.

Mon, 09/10/2012 - 13:26 | 2778953 FoxMulder
FoxMulder's picture

Yes but this doesn't account for the utils of pleasure we will derive from sticking it to the richers. /sarc

Mon, 09/10/2012 - 16:16 | 2779666 Bob
Bob's picture

I guess all good things must come to an end.  sigh. 

Mon, 09/10/2012 - 13:35 | 2778978 falak pema
falak pema's picture

so only the poor should be taxed; and how do we define the dividing line?

I know only one thing I learnt from Robin Hood : Take it from the rich. 'Cos you can't take it from the poor.

The heading of this post is the snake eating its tail.  

The logical conclusion of the title is : taxation is useless.

WHy didn't he start with that as the postulate? 

Just some history : WHat were the tax rates when the US was truly top dog? From 1945...to 1975?

Why bother to look back....lol! That's why history repeats!

And its repeating like in 1929...

Mon, 09/10/2012 - 13:44 | 2779044 Bob
Bob's picture

“Do not waste your time on Social Questions. What is the matter with the poor is Poverty; what is the matter with the rich is Uselessness.”
? George Bernard Shaw

Mon, 09/10/2012 - 13:31 | 2778986 SDS Trader
SDS Trader's picture

"but applied to the mega-wealthy (income of $3 million+ in today’s dollars), rather than the $388,350 that marks today’s top bracket. In other words, people had to be 10x wealthier in the 1950’s to be subject to ultrahigh marginal rates."

Why can't ANYONE ever get this correct?  Wealth DOES NOT equal income.  It's not "mega-wealthy", it's "mega-earners".  People had to have a 10X higher INCOME, not wealth. Wealth is assets minus liabilities.  It's a balance-sheet notion.  It does not necessarily derive from the income-statement side of accounting.

If I find a Monet in my grandmother's attic that is worth $30 million but I only make 30K per year, I am wealthy but I have a very low income, especially relative to my wealth.  If I just hang that painting in my living room it ads NOTHING to my income, even though I am worth 8 figures.  Maybe that's a little extreme, but recenlty there was a guy who found baseball cards in his family's attic that were worth millions.  That did not mean he was a high-earning individual.  Likewise, if I spend up to my income on caviar and champagne, I can earn a lot without being wealthy.

At least Cembalest phrased it correctly.

Of all the publications out there, I expect ZH to get it right.

Mon, 09/10/2012 - 16:19 | 2779689 Bob
Bob's picture

In defense of ZH, I think that--for the most part--they get the caviar and champagne poverty perfectly.  FWIW. 

Mon, 09/10/2012 - 13:35 | 2779005 chet
chet's picture

Then let's give them some more tax cuts.  That will probably turn everything around.  If we just keep our lips locked on the tycoon's butt holes long enough, I swear that any day now they'll feel beneficent and start trickling down the love on us.  They'll throw globalization into full reverse out of pure appreciation.

As a society, we just haven't kissed the plutocrats' asses enough, or given them enough hand jobs.  I'm sure just a couple more hand jobs will cause the "job creators" to stop investing in China and start investing in the American economy again.  Okay wage slaves, whose turn is it to give the next handy to the poor put-upon and greatly misunderstood masters of our universe?

Mon, 09/10/2012 - 13:36 | 2779008 Walt D.
Walt D.'s picture

The Governments at all levels -Federal, State and Local are all spendaholics, and like all alcoholics and drug addicts, they will steal from anyone, family, friends, children, grandchildren, to support their habit.

There is only one true and tried solution - quit cold turkey. Congress has a chance to do this when we hit the debt ceiling again before the end of the year. Unfortunately, Obamacare does not have a cojonnes for Congress provision.

 

Mon, 09/10/2012 - 13:37 | 2779011 etresoi
etresoi's picture
"71% for the top bracket, and 57% for the second"

Interesting that the socialist government of France came up with the same numbers.

Tue, 09/11/2012 - 04:17 | 2780940 Urban Redneck
Urban Redneck's picture

And the retard Socialists actually managed to fuck themselves again...

If they implement the rumored exclusion for dividends (and the celebrity monkey class) then Bernnie Arnault could simply simply declare a multibillion euro LVMH dividend for himself and avoid ENTIRELY the new "richly deserving fools" tax. 

 

Mon, 09/10/2012 - 13:41 | 2779032 pasttense
pasttense's picture

In the 1950s under President Dwight Eisenhower (Republican) the United States dominated the world economy. The top income tax rate was 91% at the $200,000 income tax bracket:
http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_...

So clearly 71% tax rates are quite doable; the problem is the rich own the politicians.

Mon, 09/10/2012 - 18:21 | 2779986 Count de Money
Count de Money's picture

I was waiting for someone to make that inane argument. So, thank you.

Here is the fundamental flaw of this thesis: You cannot compare taxes of different eras by looking solely at rates. You have to look at the entire tax regime.

For example, in the 1950's, you could deduct any interest you paid (credit card, installment loan, etc.). Now you can only deduct mortgage interest on a primary home and one other. Back then, sales and gas taxes were deductible, now they're not. Back then, the first $100 (later $400) of interest and dividends were excluded. Now they're not. Back then, you could income average. Now you can't. If you made money outside the US, you didn't pay US taxes. Now you pay US taxes on money made anywhere in the world. In the 1950's, if you found a Rembrant in your attic and you sold it, you didn't pay any tax. Now, you get a 1099-B and a 28% tax on the sale. You see where I'm going?

In the 1950's there were all sorts of tax shelters. One I remember was structured to return short-term capital losses which were later offset with a long term capital gain. Starting in the 1980's the IRS cracked down on "any investment structured to avoid taxes", which is pretty much the definition of tax shelter. Also, things weren't computerized so hiding income or making up phony deductions was a lot easier.

So riddle me this. If tax rates were so high, how did 155 high income people (over $200,000 in income, $1.2 million today) in 1969 pay no taxes?

Tue, 09/11/2012 - 04:22 | 2780941 Urban Redneck
Urban Redneck's picture

There`s another flaw to comparing the different eras.  There simply weren`t the alternatives in a Pre-Globalization / Post-WWII era.

Today, there are other countires with better rule of law, better infrastructure, better taxes, better education, and generally a better of life.

Post WW2 the US was the only game in town while the rest of the world was undeveloped, emerging, or rebuilding...

Mon, 09/10/2012 - 13:42 | 2779038 Vince Clortho
Vince Clortho's picture

The ultra wealthy are not paying taxes now, so we already know the argument that "taxing the rich will reduce capital" has some serious flaws in it.  We also know that over-taxing the wealthy has some serious repercussions.

 

Is there a middle ground between these two positions?

Mon, 09/10/2012 - 16:26 | 2779711 Bob
Bob's picture

I think you're alluding to the exact Cartesian coordinates of the middle class rectum there.  I don't have them at the moment, but I gotta wonder why said middle class should pay to keep all the worthless rich fucks from being hung either. They fucked up, not me. 

 

Mon, 09/10/2012 - 13:43 | 2779042 q99x2
q99x2's picture

Gross income tax should be 100% on the .01 wealthiest Americans to discourage crimminal activity. But the money from that must go to educate the public about Cheney, Obama, Bush, Jamie Dimon, Blankfeind and FED acts of treason against the American people as well as pay for the armorment of State malicias and State control over nuclear launch sites within the states.

Alternately it could be used to help Texas and California secede from the US.

Mon, 09/10/2012 - 13:48 | 2779070 blunderdog
blunderdog's picture

It's way simpler than all that, anyway.

Basic problem: No matter what you do with rates, IT IS IMPOSSIBLE to generate much tax revenue from the poor.

This is not a problem in a country where most people are comfortably affluent.  In the USA, most people are just getting by.

This has nothing to do with gross earnings, though--cost of living is just very high relative to the global competition. 

That's why I've been saying for quite some time we should be trying to find ways for Americans to live in dorms and eat in cafeterias, similar to the Chinese lifestyle.  We obviously just can't afford stuff the way we could in the '70s.  Time to grow up and start dealing with it.

Mon, 09/10/2012 - 17:08 | 2779840 boiltherich
boiltherich's picture

If we cannot afford it the reason is that the one percent used to haul down three times as much as the middle class, now they "earn" hundreds of times as much. Simple solution, a 20 dollar minimum wage and a 260k maximum wage. The rich will just have to be satisfied with making 6 times what the rest have to get by on, instead of 600.

But the basic premise here is that no matter what they tax the debt is unpayable, and it is not just federal government debt we have to pay. All government debt at all levels plus all corporate debt has to be paid by we the people because corporations and companies never pay their own debt, they pass it through to the end customers, you, me. So, we have our own private consumer debt to pay, government debt to pay, and commercial debt to pay, grand total is in the region of 77 trillion.

The bad news is that is more than all private assets combined. The good news is that every debt we have to pay off is an asset to someone. Unfortunately of the 313 million Americans more than half of all households have a negative net worth now, that only leaves the upper half to pay off all those thousands of billion in debt. And the majority of all those assets owed by us are owed to a vanishingly small cartel of thieves that counterfeited our wealth and looted it for their own.

I am not a communist but I can absolutely assure you that this will end in a violent communist revolution because when any society constructs a permanent underclass where upward mobility is simply not happening it ALWAYS ends in violence. One does not have to be an economist to know that history is filled with it.

Mon, 09/10/2012 - 18:41 | 2780086 blunderdog
blunderdog's picture

Well, yeah, although there are other escapes from such a violent fate.

I suspect in the US you'll start seeing the compromises before rich-folks actually start getting HURT.

Mon, 09/10/2012 - 13:49 | 2779075 haskelslocal
haskelslocal's picture

Tax the Universities who proudly wag their collective tails do to their $500B in endowments, although, they are NOT for profit. Nor are they for educating apparantly. Ask your indebted child.

Mon, 09/10/2012 - 14:02 | 2779084 earleflorida
earleflorida's picture

~ 40% has always been the benchmark threshold for taxes on the 1%

http://www.ntu.org/tax-basics/who-pays-income-taxes.html

Mon, 09/10/2012 - 14:00 | 2779126 taketheredpill
taketheredpill's picture

What about looking at Corporate taxes?  Not necessarily higher tax rates, just making some corporationa actually, like, pay taxes.

Apologies if that sounds too socialist....

Mon, 09/10/2012 - 14:07 | 2779139 Monedas
Monedas's picture

AMT   Alternative Maximum Tax  ....  All taxes combined cannot exceed 10% of one's income .... no exceptions .... churches and unions etc. .... no exceptions .... got it ?      Share the taxes collected proportionately amongst the taxing authorities !   

Mon, 09/10/2012 - 14:09 | 2779177 carlnpa
carlnpa's picture

We are all so brainwashed we argue about the % of personal income tax. Bullshit.

We didn't have a earned income tax in this country until 1914. Prior to 1914 the government used other sources of revenue to fund itself, and the nation was by and large prosperous.

Go to the link to see charts on the history of where US tax revenues came from.

http://www.usgovernmentrevenue.com/revenue_history

The resurrection of this country begins with ending the FED in perpetuity.

Mon, 09/10/2012 - 21:24 | 2780478 TimmyB
TimmyB's picture

Those other sources of revenue were mainly import tariffs and excise taxes.  Import tariffs were 44% of the U.S. tax revenues in 1913, the year before the income tax. 

Of course, if we had import tariffs, the rich fucks who shipped American jobs overseas so what used to be high paying U.S. jobs could be performed by Chinese peasents would no longer be able to exploit the wage difference between our two countries. 

I say "great!"  Imports should be taxes at a high rate! 

Of course, neither of our two political parties would support employing Americans in the place of Chinese peasents.  Remember NAFTA was pushed by Clinton, and Obama pushed "free trade" agreements with Columbia and South Korea.  Both major parties in this country are parties of the super-rich.  They just have different ideas on the best way to defraud people of their votes.                   

     

Mon, 09/10/2012 - 14:13 | 2779188 foodstampbarry
foodstampbarry's picture

This isn't about revenues, it's about leveling the playing field. Silly hedgers. Forward Comrades!

Mon, 09/10/2012 - 14:23 | 2779229 jmeyer
jmeyer's picture

The answer will be the VAT. That's all that's left.

Mon, 09/10/2012 - 14:43 | 2779302 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Repeal the 16th Ammendment and replace it with consumption taxes.  This will bring manufacturing back and encourage capital formation.  It will also help everyone (including the poor) because there will be more jobs.

Mon, 09/10/2012 - 18:22 | 2780013 Count de Money
Count de Money's picture

We already have a VAT. It's called the corporate tax. Here's what people miss: Corporations don't pay taxes. Their customers do.

Follow me on this. Taxes are levied on profits. Profits come from sales. Sales come from customers.

The corporate taxes are built into the price of whatever a corporation sells. So in this way, it's a stealth VAT.

Mon, 09/10/2012 - 14:33 | 2779267 AmCockerSpaniel
AmCockerSpaniel's picture

"

Tax The Rich' Doesn't Solve Anything   Well it does for me.

It lets me fell less alone in this S*^t.

Mon, 09/10/2012 - 14:35 | 2779269 linrom
linrom's picture

It's one thing to present data, but FALSE data? In 1980 the effective average rate paid by top 1% was 35%. In 2009 it was 24%. Tax rate is on AGI which means that income is taxed after all the deductions. Then there are tax credits in 2009 of $318 billion for the top 1%.

In 2009 only $865 billion was collected from Individual Tax Returns.  That's 6% of GDP. I think this is worse collection rate than Greece.

Mon, 09/10/2012 - 15:03 | 2779368 MrBoompi
MrBoompi's picture

71% for the top bracket, and 57% for the second highest bracket.

---------

These rates are still lower than the rates we had in the 50s and 60s, but of course JPM conveniently didn't go back that far in their analysis.  In short, there IS enough money out there if they really had the guts to increase revenues and reduce the debt, but the politicians have been bought off by the very people who benefit from the lower taxes (not to mention themselves of course). 

Of course we could NEVER balance the budget by raising taxes on the wealthy and corporations!  But we can certainly try CUTTING OR ELIMINATING ENTITLEMENT PROGRAMS!  The elderly and the poor won't be able to complain when they're deceased.

 

 

Mon, 09/10/2012 - 15:13 | 2779412 helping_friendl...
helping_friendly_book's picture

Let's start with taxing the NYFRB?

They do pay real estate taxes; I checked with the city assessors office in Richmond and they did pay , almost, a million in property tax.

According to the Fed Act:


Exemption from Taxation

(c) Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.

Which means all those douche bags, like the united Nations, don't pay income tax. Isn't it comforting to know Bernanke doesn't pay a nickel in income tax?

Mon, 09/10/2012 - 15:21 | 2779444 A POOR EATIN STEAK
A POOR EATIN STEAK's picture

why the fuck am i supposed to care what jpmorgan, one of the most cartoonishly evil companies in existence, thinks about tax policy again?

Mon, 09/10/2012 - 15:24 | 2779451 A POOR EATIN STEAK
A POOR EATIN STEAK's picture

i mean like whats next are we going to see "jpmorgan says poors should be used as firewood, says uses as dogfood are 'a possibility were exploring as we speak'" getting posted on here?

Mon, 09/10/2012 - 15:48 | 2779522 gmak
gmak's picture

How does the math change if the tax is on wealth (assets) that have been accumulated way out of proportion to the contribution of the owner to GDP?  Would that solve anything?  Does anyone's opinion change if they come to believe that exhorbitant fortunes have an illegal, immoral, and/or unethical act behind the initial accumulation of wealth?  If there has been a shift in wealth from the middle class to the top 1%, shouldn't the rules be changed to tilt the playing field back the other way for a time?

 

 

Mon, 09/10/2012 - 16:14 | 2779649 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Tax HFTs .1 cent per quote.  That'll cover it...

Mon, 09/10/2012 - 16:46 | 2779783 Ned Zeppelin
Ned Zeppelin's picture

Gee, there's a shocker: JP Morgan thinks it is a bad idea to tax the rich.

Why 'Tax The Rich' Doesn't Solve Anything - but it sure is a good start.

Mon, 09/10/2012 - 16:46 | 2779785 Cult of Criminality
Cult of Criminality's picture

Tax all politicians 100% as long as they hold any government position

Tax those that tax us 100%

Tax all banks 100% on all interest.

Tax the federal reserve for every dollar printed since they took the country over 100%.

Tax all the fraudulent mortgages,ripoffs,frauds,stolen assets,derivatives,swaps,backroom deals all the 'lost' gold,all hypothecated funds and rehypothecated also 100%.

Tax the libor criminals 100%

Tax all the 'lost' trillions by the pentagon 100%.

Tax 100% the mutherfuckers everytime they are seen or heard from, then tax them again.If they squeal or protest arrest them and waterboard them at quantanamo until you get a confession.

 Tax the word tax

 Tax this Mother------

Mon, 09/10/2012 - 17:21 | 2779886 Bob
Bob's picture

I see what you did there.  Damn, tax doesn't sound so bad if used in an entirely different way.  Whodda thunk?

Sorry, didn't mean to think about it.

Mon, 09/10/2012 - 16:53 | 2779804 gorillaonyourback
gorillaonyourback's picture

The authors premise is silly, "don't tax the rich" this country is wholly owned by the rich. Its simple don't pay taxes starve the beast

Mon, 09/10/2012 - 17:45 | 2779920 thewhitelion
thewhitelion's picture

And on a relayed note, why would a deficit of 3% of GDP be a goal?  Just to keep the banks fat n happy?

Mon, 09/10/2012 - 18:07 | 2779988 jcmjr
jcmjr's picture

All tax rates should go to zero and we should just monetize the entire federal budget.

Mon, 09/10/2012 - 20:10 | 2780311 IMA5U
IMA5U's picture

It makes the democrats feel better

 

They are full of hate

Mon, 09/10/2012 - 21:01 | 2780364 Urban Redneck
Urban Redneck's picture

 

 

DEUS EX MACHINA.

 

Every time the class warfare card gets played around here that scene from Blazing Saddles plays in my mind. The other side is less disingenuous (or at least better comprehends finance) but they continually fail to offer a viable solution. Instead writing a dissertation length refutation of both sides (and compromise my ever-present option to pick up a no-show seven-figure job at any of the big banks here in Zürich) I’ll simply provide the three simple steps which will accomplish the following and provide the Fed’s own hard numbers to back it up:

 

Balance the budget (without the even cutting the current monstrosity)

Pay off the national debt within 3 years

Attract significant new and repatriated Capital, Savings and Investment

Not create significant inflation

 

The 1% and 10% Plan

 

Step 1- Pass a simple law to expire the U.S.C. and C.F.R. in 24 months. Congress and the Executive will have 12 months to redraft them at no more than 10% of their current word length, and the new laws and regulations will take effect 12 months later.

 

Step 2- Abolish ALL existing federal taxes: the Income Tax, the Capital Gains Tax, the Tax on Dividends and Interest, the Corporate Income Tax, the Death Tax, the Gasoline Tax, all the pending Obamacare taxes, and any other Federal taxes buried in the USC.

 

Step 3- Impose a 1% Federal tax on the MOVEMENT of money.

 

 

 

Without even worrying about anything as insignificant as the US cash economy and the movements of the USD 1T cotton-linen money supply, a 1% tax just on Fed cleared transactions (Fedwire, CHIPS, ACH, Checks, EBT, POS, and Credit Card) would have yielded SEVEN TRILLION DOLLARS in revenue in 2009 the last year for which data is available (and wouldn’t require the IRS for enforcement). Data from the Federal Reserve studies is available at:

http://www.frbservices.org/files/communications/pdf/press/2010_payments_...

http://www.federalreserve.gov/paymentsystems/fedfunds_ann.htm

 

And for an added kicker the HFT bots which cannot clear a 2% breakeven on a round trip will put their owners out of business and might restore at least a little integrity to the equity markets.

 

Let’s see the job creation Wizard-from-Bain and his policy wonk Boy Wonder beat that one.

 

If you can’t audit the Fed you might as well tax it, and make everyone a 1%er in the process...

Mon, 09/10/2012 - 21:51 | 2780518 Milestones
Milestones's picture

Interesting thinking and ideas.         Milestones

Mon, 09/10/2012 - 22:53 | 2780608 Radical Marijuana
Radical Marijuana's picture

The current system is primarily based on:

psychotic disassociations from its reality!

Political economy is always in human ecology.

And, production is always inside reproduction.

The human world operates through astonishing social stories, which are deliberately evolved kinds of bullshit, meant primarily to conceal what is actually happening, behind layer after layer of language which does things through elaborate codes, YET, DOES eventually relate back to real physics and biology, BUT, only in the most devious and tortuously twisted ways that it possibly can.

The rich were the maximum robbers.

The solutions that the richest elites are preparing for the problems they created are world war and martial law, NOT being taxed more by the poor!

Meanwhile, the deeper demographics are even more INSANE.

The overall global facts can be seen when expressed according to this over-simplified, extreme expression of the basic human ecology situation:

Women that have less than 2 children are committing suicide. Women that have more than 2 children are declaring war on their neighbours. Thus, overall, around the world, the rich are committing suicide, while the poor are declaring war on the rich. 

The actual solutions to that which the most elite rich are working towards are genocidal wars, and democidal martial law. Unfortunately, that is just more runaway social insanity, that may become omnicidal. As long as our political economy continues to be deliberately divorced from human ecology, and the language that we use in economics is deliberately not related to the energy laws and general systems theories that we use to understand physics and biology, etc., then the future of possible economic solutions will have to continue to be done through the insanity of never facing the fundamental social facts!

All money is based on robbery, backed by murder, as the most extreme form of robbery. The entire economy actually DOES operate within the physical and biological realities ... it just does so through its own history of being directly proportional to how successful it was being deceitful about doing that.

This is sublime ouroboros of incorporated robbery that we are turning with!  The history that made War King, then made Fraud King. The Fraud Kings can make endless money out of nothing, as debts imposed on everyone else, but that only works because everyone else is forced to work within the Fraud Kings' systems of displaced sovereignty.

This article, and many others like it, that crunch the numbers, easily demonstrate that "taxing the rich" is not enough, and is a grossly oversimplified approach to the magnitude of the problems.

Sorry folks, but the debt controls always depended on the death controls. The money system always depended on the murder system. Taxation was simply sovereign power used to rob, backed by the ability to kill those who resisted. That was always the physical and biological reality behind all money, and will always continue to be. The only actual improvements must come from using more of that information, and operating the human ecology through higher consciousness.

The ONLY social contract that might be sustainable is one that included the murder system with the money system, as an admitted and necessarily whole system. The problem has been that history has selected for those who were the best at deceits to have been the best at maintaining the militarism that ran the murder system. That was what enabled them to also maintain their money systems, and thus, the apparent political economy, which deliberately lies about and ignores ecology as much as it possibly can.

Thus, the richest and most wealthy people were actually the best at being dishonest, and backing that up with violence. There are not a lot of them. There are lots and lots of other people, who were not so good at that! There are sublime, thorough paradoxes running through the propositions that the masses of relatively incompetent poor people are somehow going to miraculously overcome the few rich, that have every advantage within the established systems to become even more dishonest and violent in response, including retreat out of reach, if that was the strategic tactic that suited the times.

In the end, the deeper demographic problems of human ecology surround and overwhelm the superficial notions for taxing the rich. The diffuseness of the deceits that control the masses of poor make it practically impossible for them to respond better, especially since the elites do not want that to happen. Another of the grand paradoxes is that the elites are not really all that competent, except at being able to make sure others are prevented from becoming more competent.

Thus, from every direction we are trapped in the vicious cycles of the triumph of huge lies, and well established frauds, being at the foundation of our current political economy. No superficial notions of taxing the rich make sense in that context. The only way that makes sense is if we face the fact that taxation is robbery, and that robbery becomes murder. Thus, taxing the rich is indirectly attempting to kill them. They will likely effectively fight back ... including deal with the demographic dilemmas in their own sublimely deceitful and destructive ways.

I wish that we were not so deeply cemented into using the biggest bullies' bullshit language to talk about economic problems, but that is the way it is, and so, no good solutions seem feasible to implement, while runaway psychotic insanities are quite probable.

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