Friday, October 31, 2008

The Proof is in the US already has the MOST Progressive Tax System

A new report by the Organization for Economic Cooperation and Development (OECD) shows how extreme the progressivity of our tax system has become. The U.S. "has the most progressive tax system and collects the largest share of taxes from the richest 10% of the population." That's right: our tax system is more progressive than Sweden's.

Currently, the top ten percent of American income earners pay 71 percent of all income taxes.

Our excessively progressive tax system has created a dangerous situation in which anyone can vote for politicians who promise to deliver goodies by "spreading the wealth," but only a handful are responsible for paying the bills. Whether a democracy can survive indefinitely under these circumstances is an open question. If Barry wins we probably are going to get the chance to find out since he wants to make the industrialized world's most progressive tax system even more progressive.


Gary said...

You make a great point. Why wouldn't a low wage earner want a democrat as president? Yeah, gimme some of those fat cats money. Since the hard working succesful business people are outnumbered by lower-salaried employees, I'm surprised a liberal doesn't get in the White House every term. Somebody tell me why that doesn't happen?

Jim G. said...

Because even those you describe realize that is a pathway to ruination. Having said that, changing our culture via immigration and the socialist education system may manifest your destiny.

Remember when I told you I thought we were in economic trouble and you said it was just because of my relative age. Turns out I was right at any age.

And I am very worried that America the Socialist version 2.0 is on the horizon.

jimb said...

I'll play devil's advocate here. This study ignores many other taxes including "...Value Added Taxes, corporate income taxes and excise taxes." With the exception of corporate income taxes, these are flat or regressive taxes. They've also (from what I can tell)ignored the largest regressive tax, the sales tax.

To make an argument about how progressive our taxes are, while ignoring several forms of flat or regressive taxes, is just silly and meaningless. The largest error made by McCain's campaign this election season is forgetting that he is dealing with a man who, as a prior president of the Harvard Law Review, is likely MUCH more intelligent than him. Don't even get me started on Gov. Palin. While being intelligent obviously has its advantages, it is not the be all and end all of success. However, using anything less than the most rigorous arguments against him, is likely to simply backfire. Let this one go and find something real.

Jim G. said...

Welcome Jimb, my lost soul. From your writing (all accepted but all open to retort), one can deduce that you have strayed far from your conservative roots.

Your argument, a non sequitur. Well yes, everyone pays some for the government they receive, and? You suggest it should be otherwise? However, the vast majority of government services are paid for by a limited number of citizens.

We conservatives have many arguments against the tax issues you discuss and I offer 3.

As Gary notes in the comment above yours, what happens to the behavior of citizens who no longer pay for the services they receive (and this group is ever growing)?

Why does transferring money from one group (with a nod to the Libertarians, via force) to another help? Note, the big chunk of the budget is entitlements. Why is it not more efficient to let the citizen keep it and let the normal economy work?

This would not be much if an argument if the government was not so big and taxes so significant (I maintain all citizens should pay some taxes and the present imbalance will lead to our ruination, fodder for another post). So...if your man is so special, lets shrink government.

Lastly, I find it laughable that you equate the Harvard Law Review as an appropriate presidential training program (you are not the first, in this group to do so). The "O" has been smart enough to get this far without actually saying anything, except get us out of Iraq (which he is now modifying). Brokaw and Rose commented yesterday how they don't know "O". Gosh, think they could have had a chance to do so before now? He has gotten a pass not extended to Joe the Plumber.

Oh, and my friend Mark, the tax guy, is pretty tough (think Luca Bratze (sp) from the Godfather) and should chime in soon.

Having said all that, welcome! Truly, to listen to a disaffected former Conservative is enlightening. I make no bones that we FU and need to take a walk in the woods. First of all we should never nominate a moderate again (boy, that has really helped).

jimb said...

Thanks Jim it's been fun

Just to clarify, I'm not taking an opposing sides on taxes, nor have I strayed from my conservative roots. I think you know where I stand on taxes and conservative politics.

I was playing devil's advocate to make the point that this study tried to conclude something without doing the difficult work of including all taxes, particularly widely varying sales taxes. Since it was lazy, it fails to PROVE the conclusion, even if that conclusion may be correct.

It would indeed be laughable to claim that being president of the Harvard Law Review has anything to do with Presidential training. I never said that. I brought it up in the context of intelligence only, to show that if we are going to compete, we damn sure better know a bit more about who we are competing against. You don't get into Harvard Law, much less become president of the Harvard Law Review without some serious intelligence. That should be patently obvious to anyone, but appears to have slipped past McCain and his advisors.

And you are absolutely right about nominating moderates, or even fake conservatives. We talked the limited government talk, but blew it up beyond imagination. I don't know if Obama will grow or shrink government. I suspect it will grow some ... AGAIN. The fix for that will take a hugely gifted conservative politician that I don't see on the horizon yet. That's my entire argument.

Jim G. said...

Now wasn't that fun. See Richie that is how it works. Jim wrote something, I responded, he read it and without being insulting or dismissive replied in a great fashion.

Gosh, welcome to the blog Jim. It is nice to have a reasoned opposing viewpoint, must be your conservative roots.

Just wait until the liberals on the blog chime in with emotional arguments, which is liberalism taken to its logical conclusion, it may give you pause in your present direction.

Mark R. said...

We are talking about taxes from the Federal perspective. In this country it is unconstitutional for the Federal government to levy a "sales tax" per se. That power is left to the States. Hence you have such a wide variety of rates.

Here in the State that spawned Barry's political career which has succombed to the power of the corrupt Democratic elites long ago we pay the highest sales tax rate in the nation.

The Feds had a sales tax on telecommunications known as the Federal Excise Tax which was found to be unconstitutional and therefore we all received small credits on our income tax returns in 2006.

We really do not know how Barry got into Harvard Law School nor do we know how he became President of the Law Review. For some reason he will not release any of these transcripts to the public. Could it be that he got there based on something other than merit? Would this make the American electorate think less of him? As I pointed out before it is widely believed that one of our most intelligent Presidents was Jimmy Carter so there is not much of a correlation between being book smart and being an effective President. I believe wisdom is a far more important qualification and usually wisdom is aquired by either experience or having very good mentors. All of Barry's mentors appear to be radical anti-american zealots. In my view not to promising for the future of his Presidency.

Where his campaign has been very successful is in their waging of class warfare. Promising every family that earns less that $250,000 a tax cut, which has now become something like $125,000 according to Biden, is a shameful attaempt to buy votes by promising to stick it to the "rich". Flaming people's baser instincts like envy and jealousy in order to buy votes is immoral in my view.

McCain has been very weak on connecting the dots between what has happened historically when you have an ultra progressive tax scheme coupled with large expenditures for entitlements partnered with increased protectionist behavior as the Democrats are pushing. When you add these policies to an economy that is already in recession you have the recipe for an economic disaster the likes of which we have not seen since the great depression. In the early 30's government revenues where decreasing so the government raised taxes, became more protectionist and increased entitlement spending. Looks sort of familiar to what is being proposed today.

The Democrats have been very good for a long time at taking advantage of those who are less intelligent by selling class and race warfare. Yet they have not solved any of the economic or education problems of the poor and minorities with their governmental largess. When are we going to learn as a nation that you do not solve these problems by just throwing more money at them?

It has been stated many times in the past including the place where the Kool Aid drinking started, "those who do not learn from the past are doomed to repeat it".

terry said...

The rich should pay more taxes, because the rich get more from the government.

Consider defense, for example, which makes up 20% of the budget. Defending the country benefits everyone; but it benefits the rich more, because they have more to defend. It's the same principle as insurance: if you have a bigger house or a fancier car, you pay more to insure it.

Social security payments, which make up another 20% of the budget, are dependent on income-- if you've put more into the system, you get higher payments when you retire.

Investments in the nation's infrastructure-- transportation, education, research & development, energy, police subsidies, the courts, etc.-- again are more useful the more you have. The interstates and airports benefit interstate commerce and people who can travel, not ghetto dwellers. Energy is used disproportionately by the rich and by industry.

As for public education, the better public schools are the ones attended by the moderately well off. The very well off ship their offspring off to private schools; but it is their companies that benefit from a well-educated public. (If you don't think that's a benefit, go start up an engineering firm, or even a factory, in El Salvador. Or Watts.)

The FDIC and the S&L bailout obviously most benefit investors and large depositors. A neat example: a smooth operator bought a failing S&L for $350 million, then received $2 billion from the government to help resurrect it.

Beyond all this, the federal budget is top-heavy with corporate welfare. Counting tax breaks and expenditures, corporations and the rich snuffle up over $400 billion a year-- compare that to the $1400 budget, or the $116 billion spent on programs for the poor.

Where's all that money go? There's direct subsidies to agribusiness ($18 billion a year), to export companies, to maritime shippers, and to various industries-- airlines, nuclear power companies, timber companies, mining companies, automakers, drug companies. There's billions of dollars in military waste and fraud. And there's untold billions in tax credits, deductions, and loopholes. Accelerated depreciation alone, for instance, is estimated to cost the Treasury $37 billion a year-- billions more than the mortgage interest deduction. (Which itself benefits the people with the biggest mortgages. But we should encourage home ownership, shouldn't we? Well, Canada has no interest deduction, but has about the same rate of home ownership.)

Jim G. said...

A well thought out response from our friend Terry. He has previously written with more emotion than fact but after getting slapped around by my political soul mate, Mark, the man with the facts, he is at least using data.

I will leave to Mark the actual response.

Baxter said...

You can blame Dubya for taking many off the tax rolls in 2001 + 2003. I agree that the income tax should be more widespread.

Those who use the term "socialist" to describe the simple rollback of Bushes tax cuts to the Clinton top rate are a little hysterical - at best.

Jimmy, what is your skirt size? I want to get you appropriate attire. I have never seen anyone whine more in a blog. Honestly.

Jim G. said...

My skirt size is a lot, lot ,lot, lot smaller than yours.

Actually 32, and you?

Baxter said...

LOL! :)