in the long run keynesianism is already dead...,
| Main |
for a $4,800 tax-free annuity, I might consider faking it...,
Markets redistribute wealth from those who sell low to those who sell high. Credit redistributes wealth from future productivity gains to those who presently have money to lend. Inflation redistributes wealth from those who save to those who borrow. Etc. etc.. Virtually every economic event or activity but the most basic operations of trade involve the redistribution of wealth to some degree.
If it wasn't for all this constant redistributing of wealth from where ever it is now to someplace else in the future the economy would be static and staid with a gross product approximating zero.
Now go here and examine the bottom chart, "share of income of bottom 99%", 1% of the population now earns over 20% of the national income. Does it look to you like there has been some wealth redistribution going on since Jimmy Carter set us on the course of "deregulation" and "liberalization"?
As some scientists observe we already had an effectively flat tax structure funding the public sector that many conservatives and libertarians advocate. After EITC and other rebates to low income earners anyway, since every flat tax proposal I've seen sets the flat rate only on income after some arbitrary poverty line. The tax structure has been essentially a flat rate structure taking about 30% of income since around the time Reagan slashed top marginal rates and increased payroll taxes.
As you can see in this graph capital gains rates have been significantly lower than the effective flat rate most of us pay for much of the past 30 years. That means that the narrow sliver of the top brackets who make most of their earnings from capital income are paying much lower taxes than the rest of us. This data also comes conveniently along with revenues as a share of GDP: note that impending tax hikes and past rate reductions radically alters the behavior of investors, briefly encouraging the realization of capital gains (sell-offs) before a rate increase or after a decrease. Higher rate schedules, you could intuit rather easily glancing at that data, encourage long term commitment, discourage speculative behavior, and reduce federal revenue skimmed off market growth. Most people would, I think, take all three of these as a net positive for the functioning of the economy.
It is the height of absurdity for anybody to be panicking about Obama's proposed capital tax hikes to 20%, from 15%. He's not even going to restore the flat tax structure for the top fraction of the population: instead of the 17% Warren Buffet presently pays he will end up paying something more like 22%, plus some change for small increases to top marginal rates on personal income. Obama is proposing more of the same regressive tax policy that we've enjoyed for the past 30 years, and these people are gurgling on their own foam flecked spittle about communism.
Now, personally, I find the flat tax to be disgusting morally, unfair ethically, and draining economically, on the
understanding that the wealthiest are wealthy not in a vacuum, but by taking the greater advantage of all those opportunities
offered by society and hopefully contributing some marginal innovation on top the heap of our civilization and ascending
to their own little thrones of status and power, from whence they have an obligation to invest a greater share of their gains in
the creation of similar opportunties for future aspirants to the same kind of amply rewarded marginal innovation.
There would be approximately
zero wealth to hoard and approximately zero wealth for others to create without roads and rails and electricity and sewage systems and socialized cost dimensions of the regulatory regime; an expensively educated working population; a vast amount of publicly funded and risk-intensive R&D that is converted directly into private wealth; enforcement of legal protections of private property
as well as federally fabricated monopolies on intellectual creation derived in large part from those public investments
in education and R&D; defense spending allocations to industry and a costly underperforming foreign policy apparatus incubating favorable foreign investment and trade opportunities abroad. All this tends to redistribute wealth upwards, even if it presumably makes us all richer. If you're going to organize society in such a way that some people reap the benefits of all public works proportionately more than others, such as we have, it makes sense to stick them with a greater share of the bill. Given the precondition of this society as it more or less is, that's the way this particular element of how it functions should obviously function.
But Barack Obama apparently doesn't agree with this fairly ancient and broadly conceded - across much of the spectrum of analysis - conclusion that progressive taxation is both wise and fair. He doesn't even believe in the flat tax. He believes in a slightly less regressive system than he will inherit, where the very very wealthy have an effective tax schedule of something like 25% instead of 20% while the broadest swathe of the population continues to pay 30% plus or minus some knob twiddlng. That this is a lesser evil than McCthulu's even more regressive adjustments is besides the point: Barack Obama's proposals are
basically no different than the tax schedules of Ronald Reagan. This has conservatives calling him a Marxist usurper and making liberals faint with praise.
Nobody in this country has an ideological committment to regressive taxation. There's no logical premise ever offered
for its defense - only obfuscation of the fact that it is what we basically have. Conservatives have to make ludicrous
sounding arguments just to defend their broad commitment to the flat tax. But here we are, with liberals basically stuck
defending regressive taxation against the indenturement of society to state and capital.
It's absolutely inexplicable.