Who Pays for Big Government?

[UnderConstruction]

Originally Posted by DSK

How in the heck do you think the government could survive without the income tax?

the government doesn't need to survive. People need to survive.

[DSK]

Originally Posted by CuteOldGuy

They'd manage. They could either replace it with a simple, non-invasive tax, or just not replace it and quit spending so goddamn much.

Considering the government doesn't give me money, I feel like it spends too much, also. However, you cannot possibly think that our system could survive the huge reduction in government revenue required with a repeal of an income tax.


The fact is, people who receive benefits from the government love it, and those who pay and feel they have no choice hate it. Too many people benefit from our system of government to give it up very easily.

[CuteOldGuy]

Originally Posted by DSK

Considering the government doesn't give me money, I feel like it spends too much, also. However, you cannot possibly think that our system could survive the huge reduction in government revenue required with a repeal of an income tax.


The fact is, people who receive benefits from the government love it, and those who pay and feel they have no choice hate it. Too many people benefit from our system of government to give it up very easily.

That's why the country is going to hell.

[DSK]

Originally Posted by CuteOldGuy

That's why the country is going to hell.

Yes, I agree with you completely. The beneficiaries don't care what happens as long as they get theirs. Hopefully, we will find that honest politician that you look for who will tell us the truth and get elected. I'd be shocked if it happened. I haven't seen an honest politician since Abe Lincoln.

[CuteOldGuy]

I'd go with Calvin Coolidge long before Lincoln. But since then, nothing.

[Texas Contrarian]

You make a number of points and pose a couple of key questions, so I'll try to tackle them one by one:

Originally Posted by shanm

I'm curious. I understand what you said about the consumption and VAT, they are always regressive and always have to be, unless you can charge rich people a different amount for the same thing. If you go to europe, everything seems so ridiculously expensive in countries like France and Spain, due to the combined effect of the Euro standard and consumption taxes. In the U.S, we do have a sales tax though, which is arguably the same thing, but it's much lower. Yes, state sales taxes are typically levied at a fairly small fraction of European VAT rates. So states that also impose state income taxes often have tax systems that are at least mildly progressive, unlike Texas, which has no income tax. Note that California, for instance, has a 13.3% top-bracket rate on income and capital gains. Several other states, such as New York, have state and local income taxes that approximate that level.

You say that there is indeed a problem of the rich not paying their fair share. I am well aware that the rich pay most of the tax burden for this country. BUT I don't think that is very hard to do if, for example, the top 1% own more than a third of the wealth of the entire country? It seemed like you were arguing in favor of the rich not getting higher taxes. The gist of my argument is that the sorts of efforts often employed to tax wealthy or very high-income taxpayers often fail to work well, or even raise much additional revenue, and in fact in some cases simply backfire. Note the French top-bracket increase that took the rate all the way up to 75% a few years ago, for instance. It was a disaster, and the French (not exactly noted for conservative policy advocacy!) quickly backed off. My dad is a multi-millionaire, and just like Buffet he argues that he should be paying higher taxes; he regularly pays around the 20-25% mark. I'm guessing the reason for that is that he is able to take his "income" in the form of something other than salary and bonuses (such as capital gains or carried interest, which are now taxed at a 23.8% rate). Similarly, I was advised by my tax advisers many years ago that I am under no compulsion to draw salary income from any entity, and that it's generally to my advantage not to do so. As is also no doubt the case with your Dad, I am careful not to run afoul of the law, as the consequences of doing so are painful indeed! But I do not wish to pay more than the code requires. I can definitely see that we don't need more money and the money that we don't pay in taxes doesn't always "trickle down" through the economy. That's often true, and this points up one of the problems I have with Republican Party campaign rhetoric. The way most of those guys craft their arguments simply makes them seem disingenuous, although it's obviously bad to implement tax policy that excessively disincentivizes investment and capital formation. That is one of the essentials of the wealth inequality in the country, and a huge flaw in the current capitalist system. The rich keep on amassing wealth instead of spending it to the benefit of the economy. Capitalism only works in the U.S at a macro level, meaning people who are already rich can use our system to gain even higher levels of wealth while the majority of the poor people are doomed to work a 9-5 job for their entire lives, and that is if they're lucky. The rags to riches American dream just isn't possible anymore. It's all the effect of our broken capitalist system and tax + corporate laws that overwhelmingly favor the rich.
Raising taxes is a start. The government might not be as efficient as the private sector, but at least the money is going somewhere other than the pockets of the rich, don't you think? Spending helps our economy, that is pretty much set in stone as far as economics goes. Spending can help the economy, but IFF (if and only if) the resources are put to productive use. All too much spending is wasted on boondoggles such as "bridges to nowhere." The spending-savings gap gets bigger the richer you get. That same $1000 that would be added to the bank account of Warren Buffet could go to a middle class person who would use that to buy products/services that fuels further creation of those products/services and in turn creates more jobs and more growth in the economy. That sounds like "sound economics" to me. There are a couple of interesting articles I've seen that address this topic, and I will post links later when I'm able to get back to the computer I have them on. (I've been traveling.)

[UnderConstruction]

Originally Posted by CuteOldGuy

I'd go with Calvin Coolidge long before Lincoln. But since then, nothing.

Coolidge was actually extremely methodical and quite pensive. Same can't be said for most in here, unfortunately. He even kept all of Harding's cabinet even though some were scandal-ridden, because he felt he wasn't elected and should keep them on because Harding chose them. That's just how he was.

[Texas Contrarian]

Originally Posted by UnderConstruction

Coolidge was actually extremely methodical and quite pensive.

I submit that we would have been well-served to have had a lot more Calvin Coolidge and a lot less Herbert Hoover in the late 1920s and early '30s.

Amazingly, many history teachers still seem to believe that the Great Depression was caused and later exacerbated by the "hands off," laissez-faire practices of Hoover, who it was said did nothing while the economy burned. In fact, that's what I "learned" in high school.

But, while Coolidge was perhaps the last true conservative to occupy the White House, Hoover was a staunch supporter of government activism and a big-government interventionist. He did a lot, and much of what he did was very bad. In fact, federal government spending increased by about 47% during his term. He can be viewed as the George W. Bush of his day.

That's why I find it so amazing that polemicist ... er, economist Paul Krugman, who should know better, said a few years ago that the states seemed to be governed by "50 little Herbert Hoovers" when they weren't increasing spending rapidly in efforts to provide more "stimulus."

The Great Depression was not caused, extended, or exacerbated by the failure of government to spend enough money, despite claims to the contrary by activists and supporters of big government.

The same is true of our recent financial crisis and "Great Recession."

[lustylad]

Originally Posted by CaptainMidnight

The capital gains tax cuts of both the Bush and Clinton eras actually contributed very little to the increasing income disparity of the last few decades, which is primarily due to megatrends that began decades ago involving free-trade globalism and rapid advances in technology.... The capital gains tax is always a favorite tool of demagoguery for progressives, but the rhetoric connected with attempts to push it to historically high levels is all about base-pleasing politics; not sound economics.

Daayyuumm, Cap'n... you're taking all the fun out of bashing Bushie and those evil Republicans!

Sometimes a graph can be instructive. Here is one showing the history of the LT capital gains tax rate and the percentage of federal revenues collected from it (through 2009, so it doesn't include changes since then):





Notice how each rate cut (whether by Carter, Reagan, Clinton or Bush) was followed by an upsurge in capital gains tax revenues pouring into the US Treasury! Daayyuumm, how can that be? Could those supply-side idiots be on to something?

.

[UnderConstruction]

Love seeing this pop up and knowing that his little hateful words are hidden.

This message is hidden because lustylad is on your ignore list.

Suck it, you cretinous turd.

[lustylad]

Originally Posted by UnderConstruction

Love seeing this pop up and knowing that his little hateful words are hidden.

This message is hidden because lustylad is on your ignore list.

Suck it, you cretinous turd.

Translation - Even though I put lustylad on my ignore list, I can't really ignore him so I will post this reminder that he is on my ignore list so he knows I am pretending to ignore him.

[IIFFOFRDB]

Originally Posted by lustylad

Daayyuumm, Cap'n... you're taking all the fun out of bashing Bushie and those evil Republicans!

Sometimes a graph can be instructive. Here is one showing the history of the LT capital gains tax rate and the percentage of federal revenues collected from it (through 2009, so it doesn't include changes since then):





Notice how each rate cut (whether by Carter, Reagan, Clinton or Bush) was followed by an upsurge in capital gains tax revenues pouring into the US Treasury! Daayyuumm, how can that be? Could those supply-side idiots be on to something?

.

Can you see? ... undercuntalinky... can you see?

[UnderConstruction]

I see this. And it's glorious.

This message is hidden because lustylad is on your ignore list.

[lustylad]

Originally Posted by IIFFOFRDB

Can you see? ... undercuntalinky... can you see?

Iffy... you forgot he can't read graphs. Nice try anyway.

[UnderConstruction]

Today, 12:06 AM

This message is hidden because lustylad is on your ignore list.