Greg Mankiw in the New York Times (via Instapundit): " ....don’t let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden."
posted by Helen at 6:10 AM
Monday, October 11, 2010
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35 Comments:
I heard Rush talking about Mankiw's economic breakdown of whether or not to take a $1000 gig. It was quite detailed and very persuasive. Reagen said the same thing back when the top tax bracket was so high, before Kennedy cut it. Why would he do the work for another movie after he had made up to the limit of the punative tax bracket.
Trey
Same for corporate taxes. Corporations simply pass taxes on to the consumer as the cost of doing business. Corporations don't pay taxes, people pay taxes.
Microeconomic theory (at least as it was taught forty years or so ago) says that how much of any increase in cost (taxes or any other cost) will be passed on to the consumer is a function of price elasticity. If the price elasticity of demand is very low, nearly all the increase in cost will be passed on to the consumer (of the enterprise's goods or services); if it is high, very little of the increase in cost will be passed on.
or, to simplify further; if you tax something, it goes away.
The situation is even worse than Mankiw's analysis shows.
He is a married man with children who faces the highest marginal income tax at an income that is more than double that of a single man with no kids.
Though holding advanced degrees earned on gummint scholarships in both Physics and Law, I decided at an early age not to marry and not to breed. The result of that decision was that I had to stop working at both those professions, as in either one I arrived at the top marginal rate of around 60% (FICA included) after working only 6 months. Of course, a huge percentage of my taxes went to support the "married with children" lifestyle choices of other people: the awful public schools, the worthless whitewashed public libraries, and the like.
So I “went Galt,” and, since I began my professional career some 42 years ago, I have taken 38 weeks unpaid vacation per year, on average, from my professional work.
Being single and childfree means, of course, that you really don't have to work much to sustain your lifestyle, as long as you forgo buying all those new cars and insurance of any kind.
Added advantages are that you have ample time to travel and even to live cheaply overseas, gaining language skills and experience your peers have to forgo throughout the 18 and more diaper-changing and teen-rebellion years. They will never have the time, for example, to find out that all of our Amerikan national parks and forests are visited primarily by elderly white men and women. From Yellowstone to Mesa Verde, you will almost never see a brown or black face!
When not working the annual 14 weeks per year (average) as a computer engineer, I employed myself gaming the system by maxing out on unemployment compensation and by fixing up my principal residences, then selling them, one after another, for profit, escaping altogether any FICA and income taxes on my labors and not even paying any capital gains taxes on a profit of up to $250,000 on the sale after a two-year period. This amounts to a tax-free income of $125,000 per year, corresponding to an annual taxable income of some $250,000 I might earn practicing law for 2500 "billable hours" at $200 gross per hour. Like Mankiw, I'm no idiot, though I did show myself to be smarter than him by avoiding marriage and breeding.
I now maintain mortgage-free homes in a popular Colorado ski resort, in Austin, and in Rio de Janeiro. As Mankiw explained, it would be stupid for me to return to earning my living practicing physics, computer science or law.
Which invites me to wonder: how many Einsteins, Gateses and Zuckerbergs are forced by the Amerikan tax code to redirect their skills at an early age to plumbing and electrical installation?
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It is not so much that I (or anyone) is hot on the rich so much as we are cold on how the government simply assumes that they are better equipped to spend my money than I am and that the government seems to actively punish those who attempt to use their money in their own best interests (which strangely enough is usually but not always in society’s best interests).
Take John Smith and the invisible hand as a starting point. Though I will admit that there are some things we need to rely upon the government to do, the simple fact is that the Government does absolutely nothing better than can be done by private business. The Government is less efficient and more wasteful at everything and (as the old saying goes) the only government worst than ours is everybody else’s. That being said, that is no reason to just go along and allow the Government to destroy this country by poorly spending its self into non-existence.
Additionally, why “punish” anyone, rich or poor regardless of how they got their money? What business is it of yours or the Government where my money came from as long as I did not get it illegally? If you want to collect funds for running the Government, what is wrong with taxing spending? What is wrong with a national, flat rate sales tax on all purchases that are not unprepared food or medicines? In that way, you are only taxed on what you spend and there is no penalty for earning money regardless of your sources of income. Combine this with some limits on Government as to doing only those things that they should be doing and we are on our way to a simpler, saner country.
"If you want to collect funds for running the Government, what is wrong with taxing spending? What is wrong with a national, flat rate sales tax on all purchases that are not unprepared food or medicines?"
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Sure, I would love that. It would not only take away the income tax, it would get the spy organization (the IRS) out of investigating every facet of your life.
But that will also never come to be. I have no idea why. There are some middle class people who are on their way up to becoming rich. They are being slowed, heavily slowed, by the income tax.
But all of these people worshiping the rich (and I don't know how else to describe it when I see the steady output from Helen Smith and Amy Alkon) don't seem to really care.
The only reason I suggested what I did is: If you eliminate the income tax (and that is my basic idea), you will have to get the money from somewhere else in this modern society, otherwise it won't fly. My idea is to shift it to the parasites. But you can also tax consumption or whatever.
Well I guess you and I have different definitions of “parasite”. A woman (or man) that married into money and does not work, simply plays all day and spends money may be a waste of air but not what I would consider a parasite as they are not costing me or anyone else anything to live. On the other hand, someone that has never held any kind of job but simply works at producing offspring with which to fill some inner need while living off of the Government is a parasite and should be incentivized to stop. I care not how someone legally came by their money but do care when my money is spend on caring for others that could and should care for themselves.
Well, you're mixing things here Todd.
I'm reacting in part to posts about how "the rich" known far better how to spend the money etc.
That is not the case with regard to the parasite portion.
I'm pointing that out in part, and I don't agree with the worship of "the rich" across the board that I am seeing lately from Helen Smith and Amy Alkon.
You, on the other hand, are coming from a more reasonable point of view. You don't seem to worship the rich, and you seem to acknowledge that not all of them have massive job-generating brains.
I'm not arguing with YOU, I'm arguing with the people who have a more drastic tilt towards "the rich".
Simply eliminate the income tax (and along with it the examination of your entire life by the IRS). Fight among yourselves as to where the money is going to come from for the takers in life.
Any arguments?
Thank you for that but I also view all of this type of thing as nothing but class warfare and in some cases class envy (not saying you are doing either). There is far too much of the "they have money, lets take it". The upper levels of income earners already pay a very disproportion amount of the taxes in this country. The statistics for 2007 are that the top 5% of tax payers payed over 60% of the taxes (http://www.ntu.org/tax-basics/who-pays-income-taxes.html). It is not healthy for any country to be so heavily dependent on so few and it tends to breed a "Government is free" mentality in lots of folks.
Sure, so eliminate the income tax ... and they pay 0. And the middle-class guy with a great idea also pays 0.
For some reason, that will never, ever happen in the United States. I ask people directly why the income tax shouldn't be replaced by a consumption tax or ANYTHING else that doesn't involve spying on me and also capriciousness on the part of the taxing authority. No one gives me a good answer, but apparently no one will vote for it.
Capriciousness: I have seen the IRS actually approve certain investments for a particular tax-free status and then go back on it 3 years later. I have actually seen that. People have had to pony up huge somes that they didn't reckon with. That also applies to tax decisions in other matters.
Why do people want this KGB-type system of spying on you?
My last point, and then I'm done:
Anyone who worships "the rich" is simply downright naive. I would use other words, but I'll restrain myself. Get to know some of them.
"Well I guess you and I have different definitions of “parasite”. A woman (or man) that married into money and does not work, simply plays all day and spends money may be a waste of air but not what I would consider a parasite as they are not costing me or anyone else anything to live. On the other hand, someone that has never held any kind of job but simply works at producing offspring with which to fill some inner need while living off of the Government is a parasite and should be incentivized to stop."
_____________________
They are obviously parasites in both cases.
I think the difference you are trying to express is that the "host" is voluntary in the first instance, but not in the second instance.
But hosts in the first instance (with the housewife) are routinely ordered to continue to support the parasite involuntarily. And an argument could be made for the second instance that it is what the general public wants (via the democratic process).
Point 2: All tax policy is based on a selection process as to who (which groups) are going to pay certain percentages. From that point of view, why NOT shift taxes from people who produce to people who don't produce but get their money as parasites?
Is it morally better to tax producers but not parasites like Heather Mills? No.
Is it better for the economy to tax producers but not parasites like Heather Mills? Absolutely not.
You have to get some tax money from somewhere, otherwise the style of government will be anarchy.
If you earn your money (thus contributing to society), you are taxed up the wazoo.
If you just *get* your money, you are not taxed at all (parasitical spouses, trust fund people, heirs, women who have dates and vacations paid for etc.).
Why does society think that is great?
Our primary child rearing institution is very good at creating characters who need lots of government intervention.
i think the pathology of the irs is that of a bland cruel bureaucrat who allows the rules to bait and switch like a debutant in heat, and then beg to be only upholding the laws of the land.
the really tragic thing about this system of pillory is that it satisfies a substantial amount of the population who would behave that way themselves if given the chance.
that why we see burgeoning bureacracy in all facets of government.
twisted little s&m types and latter-day torquemadas let loose amongst the population.
in a perfect world we should be able to hunt them for sport.
I guess I am too much of a libertarian as I don't think that taxes and government income should include morals. I feel that it should be based on consistency not "favored" or "disfavored" groupings in part because one year's favored group is next year's target. Look at the tax mess we are in now with a tax code almost as complex as ObamaCare. No one knows what it means and everyone is a tax violator to one degree or another. Simpler is ALWAYS better.
I ask people directly why the income tax shouldn't be replaced by a consumption tax or ANYTHING else that doesn't involve spying on me and also capriciousness on the part of the taxing authority.
Why not?
Because the taxes would go UP for the majority of voters, if we keep the same social programs that we have now. The problem is that these parasites at the bottom want their social programs but don't want it to hit their own pocketbooks.
Also, I agree more with Todd's idea of what a parasite is. A woman married to a rich man gets his earnings because she provides enough value to him that he deems her worthy. Of course, the government-imposed continuation after divorce is a parasitic condition, but the voluntary trade previous to that is a person's choice.
"A woman married to a rich man gets his earnings because she provides enough value to him that he deems her worthy."
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You seem to think that a "rich man" is just a static condition. You better rethink that, because it puts you squarely in the camp of the "class theorists" like Karl Marx.
As a side note, this is also worship of the "rich" because you seem to think that his opinion means jack shit.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
"Of course, the government-imposed continuation after divorce is a parasitic condition ..."
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Yeah, well, just the fear of that post-divorce situation can make many men forget about divorce as a solution. Then you have a situation in which this all-knowing rich man (couldn't he have foreseen the future?) is paying for the parasite because the alternative is worse.
And frankly, a parasite is a parasite, whether she lives off a man or taxpayers. Whether it's symbiosis or not doesn't take away from the fact that it's a parasite.
Why men refuse to view women like this as parasites - even to the very end - is just beyond my capacity to understand. They are friggin' parasites.
You seem to think that a "rich man" is just a static condition.
It pretty much is, for a man (person) who earned his own wealth. Yes, it is possible for a rich man to loose his money, but he won't lose the skills and though processes which enabled him to earn that money in the first place.
If we divided all the money in the US and gave an equal allotment to every man and woman, within a year the "rich" would again be rich and the "poor" would be poor. The biggest thing separating the rich from the poor isn't means of income, but skill with money and the "emotional logic" surrounding it. If that belief makes me a "class theorist", then so be it. Label me whatever you want, I'm still right.
As a side note, this is also worship of the "rich" because you seem to think that his opinion means jack shit.
So if I have a differing opinion I'm "worshiping the rich"? Go fuck yourself. Sorry to the other readers, but I need to reply to Tether at a level he'll understand.
And frankly, a parasite is a parasite, whether she lives off a man or taxpayers.
No, it's not. A woman (or man) who is willingly supported by another has that other's support because that other believes the cost/benefit ratio is in their favor. Otherwise they wouldn't support them.
Your contention is that men are dumb idiots and incapable of making meaningful choice. Are there women who will provide value and are worthy of sharing my income? Yes (admittedly more rare they they used to be). Are there women who will just take without providing value? You bet. Is the game rigged such that a man mistaking the latter for the former is fucked after marriage? Unfortunately so.
Your problem is that you entangle symbiosis with parasitism. The former is a mutual gain for both (even if one does more of the work) while the latter is a gain for the parasite at a loss for the host.
"It pretty much is, for a man (person) who earned his own wealth. Yes, it is possible for a rich man to loose his money, but he won't lose the skills and though processes which enabled him to earn that money in the first place."
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So you mean that if Heather Mills loses her money ... she has the skills to get it all back.
And if you think that every rich person plotted out the path to become rich from his/her poor status ... every inch of the way ... and with a concommitant development of skills ... you are flat-out, plan nuts. Get to know a few rich people.
And the word is "lose" not "loose". I'm hardly ever the grammar Nazi, but I just can't see "loose" for "lose" one more time or I'll go crazy.
"Go fuck yourself. Sorry to the other readers, but I need to reply to Tether at a level he'll understand."
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A level I will understand is logic and facts that I will understand.
You started the crude insults, let it be noted.
"No, it's not. A woman (or man) who is willingly supported by another has that other's support because that other believes the cost/benefit ratio is in their favor. Otherwise they wouldn't support them."
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My life experience has that young men think with their dick and not with their head. They also don't know if they are going to get rich or not.
Even in the 1800s, we see Schopenhauer writing about women using their window of opportunity - when they are young - to snag men for their entire life. I see little snippets about that from Shakespeare in the 1500s. It's not a friggin' new topic, but men in general will never get it. Some will; I get it.
"It pretty much is, for a man (person) who earned his own wealth."
So you mean that if Heather Mills loses her money ... she has the skills to get it all back.
You're a troll, an idiot, or both.
Name-calling is the first sign that you lost your argument and that you don't have much there.
This worship of the rich is bizarre, especially by people who don't seem to be rich.
No, name calling is there because you serve no other purpose other than to serve as a catharsis as I can yell at you for your idiocy, and the masses are unavailable.
You're either trolling or an idiot. Or, you live in some magical land where Heather Mills earned her own money rather than stole it from Paul McCartney at government gunpoint.
So, because you're not arguing from reality, your only value here is for me to insult so that I can get the venting out of my system. Don't worry, it doesn't take too long, and then you'll be truly useless.
I'd offer practical debate, but you're already attempting to pigeon-hole me by claiming I "worship" the rich (I don't) simply because I do have a bit of respect for some of them and what they've accomplished. You're arguing like a child (emotionally driven and you HAVE to be right rather than seeking a higher truth), so there's no reason to continue this as a real discussion.
Lots of people have earned money and then gone bankrupt (and stayed there). It's a little-known fact that most professional athletes (football and basketball) have no money left a few years after their retirement. Look it up.
Lots of actors/actresses have gone belly up along with such notables as Mike Tyson and (possibly) Michael Jackson.
Business? The Dot-Com boom and bust is familiar to most. The Hunt Brothers are famous for having single-handedly lost a billion or two in record time. Lots lose it because of being caught at white-collar criminal activity and then never regaining it. Lots of people in firms like Drexel Burnham Lambert (if you remember that one). Lots of ZZZZBest businessmen.
You just never hear about them or really think about them again.
Some rich people retain their wealth, some don't. The ones who retain their wealth are smart to do so, but I just don't worship them like the vibe I'm getting from some people here.
And frankly, women like Heather Mills, specifically, ARE able to repeat their success. There are women who go from man to man getting fabulously wealthy by doing so.
It's legal (although I have no idea why) and its repeatable, so in a sense these women DO earn their money. It's repeatability alone makes it much difference than the "luck" of a lotto win.
You think Zsa Zsa Gabor got rich based on her acting skills?
Women who get rich off men set their target and then pluck it. Many of them go after several targets, one after the other. It is repeatable and real, and once you develop the skill, you can do it as much as you want.
I don't see much difference between them and corporate raiders, for instance, who set their target and then dismantle a company.
Demonspawn sez:
"If we divided all the money in the US and gave an equal allotment to every man and woman, within a year the "rich" would again be rich and the "poor" would be poor."
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I don't believe that at all.
Let's examine "the rich":
First off, "the rich" usually have one or more spouses. People like Larry King, Johnny Carson and Ted Kennedy generate multiple rich ex-spouses.
The spouse has the same standard of living and, since women live longer, usually women get official title to the money after stupid dies. But even during stupid's lifetime, we see things like: "The MALINDA and bill Gates Foundation". Guess who's deciding about the money there?
So we've got a little over half that would have to find a rich spouse again. OK
But then let's got to the rest: (As stated above), athletes, actors, musicians, entertainers, TV series people and everyone in that area would have to do it all over again. Can they - when they are older - whatever, dude.
Now we've got the bulk of "rich people". As far as business goes (the only area left where it's not luck), we're going to first cut out the sinecures and nepotism and all of that stuff. It exists. But they can't repeat it.
Now we're down to the people who found a niche and multiplied their money. The software giants (like Bill Gates) were positioned right at the beginning of software development when they were teenagers, AND they all had fairly rich parents who could afford to send them to schools with a computer and programming possibilities (we're talking 1970s here). Frankly, it sounds like luck to me, but let's say "they found their niche".
Anyone who thinks these people are gods, and they would find their niche again if the whole world was topsy-turvy and they had nothing ... is simply a worshiper of "the rich" without any real-world basis.
Why?
They are people just like you. There is truly an immaturity of thought there if you think they are gods.
And I am personally watching a woman - who has never worked in her life, and who has gotten rich off two good divorces - work yet another old guy for his money. I am seeing this close-up with a relative.
She has never worked in her life, and she is richer than anyone reading this will likely ever be.
And there are people here who worship women like that, without realizing it, because they have no idea who "the rich" really are. No idea.
Stupid.
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