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View Full Version : Why the rich should be taxed at lower rates than the middle class.



Keith Wilson
07-22-2010, 09:20 PM
From El Pais:

http://img821.imageshack.us/img821/3319/3106.jpg

"We avoid paying taxes because we don't like to flaunt our wealth."

http://smilearchive.com/s/contrib/sally/lol.gif

ahp
07-23-2010, 03:30 PM
If the rich are taxed, then they do not have the choice of where and how to spend their money. The government does. Do governments spend money more wisely than the rich? Inquiring minds wish to know.

mizzenman
07-23-2010, 03:47 PM
Do the rich spend their money?

Why are they then still rich?

ahp
07-23-2010, 08:13 PM
The rich don't stuff it in the mattress. They invest it by lending it to cities to build sewers, corporations to buy machinery, etc. It gets spent and puts people like you to work. I am in my conservative mode now.

oznabrag
07-23-2010, 08:15 PM
The rich don't stuff it in the mattress. They invest it by lending it to cities to build sewers, corporations to buy machinery, etc. It gets spent and puts people like you to work. I am in my conservative mode now.

Yes, yes! Except, these days, it puts Chinese people to work!

Kaa
07-23-2010, 09:20 PM
This is not class jealousy. This is revolution. I don't want a bigger piece of their pie. I want a different pie they haven't put their thumbs into.

I bet you want a pony, too :D

Kaa

Keith Wilson
07-23-2010, 09:38 PM
I don't like ponies. I do want the US Gini coefficient to be where it was about 1970, or even lower.

Shang
07-23-2010, 09:59 PM
http://i45.photobucket.com/albums/f93/shangboat/mob_pitchforks_small.jpg

Kaa
07-23-2010, 10:06 PM
I don't like ponies. I do want the US Gini coefficient to be where it was about 1970, or even lower.

I didn't offer a pony to you :D

And if we're talking about civic-minded wishes, I'd prefer the poor to become less poor and I don't care what happens to the Gini coefficient in the process...

Kaa

Kaa
07-23-2010, 10:09 PM
And I bet you'd like to see your feet and your peepee at the same time. What's your point? I at least stand a chance of achieving my goal.

LOL. As I mentioned earlier, the insults one chooses are illuminating :D

Anyway, I didn't see any goal of yours, just lotsa bellyachin' interspersed with periodic desires to inflict pain on someone...

Kaa

Kaa
07-23-2010, 10:18 PM
My goal is equality under the law for all, without fear or favor, and wealth no longer an issue in the pursuit of justice. That clear enough for you, lunchbox?

Did you change your mind? A few minutes ago you wanted this:


So I say, scroom. Scroomall. I would rather see the government tax the very, very rich until they squeal in pain

Kaa

P.S. As to your goal being achievable, I wouldn't hold your breath.

RonW
07-23-2010, 10:23 PM
So at what point do you tax the rich and at what point do they just up and take their money and business's to another country where conditions are more favorable?

Just like john kerry moving his yacht to another state to avoid taxation...........

OconeePirate
07-23-2010, 10:49 PM
So at what point do you tax the rich and at what point do they just up and take their money and business's to another country where conditions are more favorable?

Just like john kerry moving his yacht to another state to avoid taxation...........

Haven't they already done that?


http://upload.wikimedia.org/wikipedia/commons/e/ea/Eat_The_Rich.JPG

Kill The Poor
http://www.youtube.com/watch?v=zhjYNjpUV4U (http://www.youtube.com/watch?v=zhjYNjpUV4U)

coelacanth2
07-23-2010, 11:28 PM
What is the GINI coefficient?

Keith Wilson
07-23-2010, 11:43 PM
What is the GINI coefficient?A broad measure of income inequality, named after its inventor, Corrado Gini. Look here. (http://en.wikipedia.org/wiki/Gini_coefficient) One is perfect inequality: one person has all the money and everybody else has nothing, and 0 is perfect equality; everybody has exactly the same amount.

The US over time:

http://www.thewe.cc/thewei/_/images11/us_rich_scandal/income_inequality_us.jpe

Variation by state:

http://dev.null.org/scrapbook/2009/0420_us_gini.jpg


A comparison of countries:

http://upload.wikimedia.org/wikipedia/commons/3/34/Gini_Coefficient_World_CIA_Report_2009.png

Various countries over time:

http://upload.wikimedia.org/wikipedia/commons/thumb/0/01/Gini_since_WWII.svg/720px-Gini_since_WWII.svg.png

C. Ross
07-24-2010, 01:15 AM
I don't like ponies. I do want the US Gini coefficient to be where it was about 1970, or even lower.

Which has almost exactly zero to do with tax rates, unless you are in favor of the government increasing taxes massively on the top 10% of taxpayers and writing checks to the lower 40%.

Income disparity is caused by many things, none of them tax policy.

purri
07-24-2010, 01:38 AM
^ In part yes! BTW tax policy can redress the imbalance.

BarnacleGrim
07-24-2010, 07:38 AM
I don't really like the idea of taxes as way to manipulate the economy, or tell to people what to do.

McMike
07-24-2010, 09:02 AM
What I don't like is the ability of the rich to manipulate government to its purposes. What I don't like is the ability of large companies to make insane profits on the backs of its employees without feeding some of that back into the vary communities that helped create that wealth. With the last point I'd like to add that I don't like the attitude that the folks on top disserve ALL the spoils of market domination when the workers also had a large part to play in the success of the given company. I'm not saying that the "worker" deserves the same level of reward of the folks who risk large sums to bring a given product to market but a proportional one would be nice for a change.

A law I would implement is that any company importing any products manufactured in another country must pay its employees who manufactured that product a wage equivalent to the average wage expected for the same work of the people in the market for which they intend to sell their product, directly or indirectly.

ccmanuals
07-24-2010, 12:08 PM
If the rich are taxed, then they do not have the choice of where and how to spend their money. The government does. Do governments spend money more wisely than the rich? Inquiring minds wish to know.

Why wouldn't this statement apply to everyone, rich, poor and in-between?

ahp
07-24-2010, 09:47 PM
The rich, specially the old rich, know how to spend with taste and style. Class will out!

Seriously for a minute, the NYT's reported today that 17 large banks received bail outs. Eleven have payed all back. Those that have not to date have also awarded the largest bonuses to their top executives, 1.5 billion total.

brad9798
07-24-2010, 09:52 PM
I've said for a DECADE here, that success should not be taxed ... well ... not beyond its already elevated tax bracket!

WHY penalize folks for being successful?

Do any of you remember the LUXURY TAX? You know ... the tax that put middle-class workers out of work?

JUST curious!

;)

RonW
07-25-2010, 09:27 AM
Milo you are confusing keith's zero percent gini coefficientcy data summarization report with the true agenda.

Keith's true agenda is based upon what is called the Robin Hood effect.
Take from the rich and redistribute to the poor.

Also know as redistribution of funds.
Later to be capitalized upon by some nut called Karl Marx.

Tax the rich and create social programs, a chicken for every pot, a program for you.
Thereby diminishing self worth and personal gains..socialism at it's best..

oznabrag
07-25-2010, 10:25 AM
Milo you are confusing keith's zero percent gini coefficientcy data summarization report with the true agenda.

Keith's true agenda is based upon what is called the Robin Hood effect.
Take from the rich and redistribute to the poor.

Also know as redistribution of funds.
Later to be capitalized upon by some nut called Karl Marx.

Tax the rich and create social programs, a chicken for every pot, a program for you.
Thereby diminishing self worth and personal gains..socialism at it's best..

I would be very interested to hear your report on having lived in Somalia for 5 years. They've got a system that sounds like you would just love it!

'Socialism' paved the road to your house.

It also erected the network you use to so effectively to display your ignorance.

John P Lebens
07-25-2010, 10:49 AM
The "rich" have been huge beneficiaries of tax cuts in recent decades, have supported our gigantic military expenditures and have helped elect Republican presidents who have run the debt sky high since Reagan. They have supported policies which have allowed health care costs to rise. They support a right wing media that vigorously defends their interests.

The real "socialist" agenda in this country is a lucrative corporate socialism. Consider the S&L and recent financial sector bailouts. These bailouts were hugely expensive taxpayer bailouts of entire business sectors. How is it that the rich in this country have high quality health care and many poorer people have nothing? Corporate farming subsidies, off shore tax advantaged corporations, export of jobs due to free trade agreements, declining education system for most Americans (except the rich), are all part of the shift of USA assets to the top tier. Have you ever wondered why, with the amazing productivity gains achieved in recent years, average American's wages have been so stagnant?

I don't think it's right to soak the rich, but some balance has to be restored. Somebody will eventually have to pay some bills in this country - and the richest Americans are the only ones with any money left.

Here are some ideas for not raising taxes, but for cutting costs to enable us to pay some debt. Cut the military budget a lot. Eliminate all energy subsidies and put a tax on energy. Rebate the tax to the general taxpayer. Eliminate all farm subsidies to corporations above a certain size. Reduce the overall income tax, but switch to taxes of "bads" like air and water pollution and excessive energy use.

Tax levels under Clinton were pretty balanced and certainly did not soak the rich. Revenues and expenses were more or less in balance and the economy prospered. Do you remember when the dollar was much stronger and we were all much richer in the global economy? Then under Bush the debt was doubled, the dollar plummeted, employment stagnated and - you know the rest of the story. It all started with the biggest tax cut for the richest 1% in the history of the USA.

Forget the hyperbole - it is possible to solve these problems with moderate measures.

McMike
07-25-2010, 10:52 AM
I think it's truly F'ed up that wealthy business owners can justify their employees living in poverty while they bestow upon themselves extraordinary compensation. The truth is the business owner would not be where he/she is without EVERY SINGLE ONE OF THE EMPLOYEES THAT WORK FOR HIM/HER. In a prosperous company, everyone who contributed to the prosperity of that company should themselves prosper relative to their contribution. Living in poverty is NOT prospering.

Again, I'm not saying that the janitor should be driving a Bentley or even a BMW but they should be paid a living wage that allows them to live without fear of going without the basics. Don't you think if you work 40+ hours a week you should be able to afford some extras, not all or a lot, but some.

This again is assuming the company is prosperous. In my previous job I was underpaid by $10,000/year or more. I accepted this wage because the company was struggling. If the company were doing well increasing the profits of the business owner so should have I been compensated better and if the company were prospering I would have expected commensurate bonuses. I have never experienced this type of fairness nor do I expect this philosophy to be widely practiced. I will say it should be and I will say of those who are lucky enough to own or run a prosperous company; if you don't follow this philosophy then you are greedy and represent the worse in society.

paul oman
07-25-2010, 11:08 AM
remove billionaire Bill Gates from the universe - and see how many folks would be out of work! Also, you wouldn't be posting your reply on the internet, you'd be sending everyone smail postcards. Picture life without Bill Gates' successes. Could have happened if he was 'overtaxed' as any of many points along his career.

McMike
07-25-2010, 11:15 AM
remove billionaire Bill Gates from the universe - and see how many folks would be out of work! Also, you wouldn't be posting your reply on the internet, you'd be sending everyone smail postcards. Picture life without Bill Gates' successes. Could have happened if he was 'overtaxed' as any of many points along his career.

Who is suggesting that the Bill Gates of world should disappear? I happen to have known many people that worked for his company in the late 90's, some were very well compensated; most didn't know the relative prosperity that the company had known at that time. I think that's wrong.

OconeePirate
07-25-2010, 11:19 AM
remove billionaire Bill Gates from the universe - and see how many folks would be out of work! Also, you wouldn't be posting your reply on the internet, you'd be sending everyone smail postcards. Picture life without Bill Gates' successes. Could have happened if he was 'overtaxed' as any of many points along his career.

The internet existed before anyone knew Bill Gates.

All those awful socialist European countries still have advances and breakthroughs.

John P Lebens
07-25-2010, 11:41 AM
We are not talking about "punishing" the rich - just making sure they pay their fair share. Rich is good! Taxes should be as low as possible - but in the past 30 years income distributions have widened dramatically. The US middle class has fallen behind while the rish have gone way ahead. Time to readjust for the benefit of all.

JimD
07-25-2010, 11:48 AM
The patriotic poor understand that their poverty is part of what makes America great.

Gerarddm
07-25-2010, 12:04 PM
There is the multiplier effect of the middle class. A rich couple might go out and buy, say, a Maserati; 4 or 5 five middle class couples might go out and buy Hondas or Fords for the same total sum.

The multiplier effect says more jobs will be created and sustained by the middle class choice as compared to the wealthy choice.

The Bush tax cuts tilted the table very steeply against the middle class in favor of the wealthy. The wealthy did pretty well under Clinton's tax levels, so I don't see the big deal in letting the Bush tax cuts expire.

Landrith
07-25-2010, 12:20 PM
The Rich should not pay taxes. Instead their work, recreation and even culture should be subsidized or even provided without cost. Its the goal of every Socialist. People with more property and wealth benefit to a greater degree from government than any progressive tax system can factor in. The number of federal agencies you depend on when you are rich and doing business are far greater than the those utilized by the poor and Yeoman tradesmen or homesteaders. That's why lefty Democrats have such disdain for libertarian Republicans. We might cut the budget from Rockefeller's National Petroleum Radio. 'Nuff said.

John P Lebens
07-25-2010, 12:27 PM
Here's a good example of how this thing works - Republicans/libertarians oppose higher taxes and "socialism" while reaping the benefits.

"Ky. GOP's Rand Paul criticizes federal farm subsidies, has father-in-law who received them"

Read more: http://www.newser.com/article/d9h51tf80/ky-gops-rand-paul-criticizes-federal-farm-subsidies-has-father-in-law-who-received-them.html#ixzz0uiDpyDDC

http://www.newser.com/article/d9h51tf80/ky-gops-rand-paul-criticizes-federal-farm-subsidies-has-father-in-law-who-received-them.html

Landrith
07-25-2010, 12:59 PM
No doubt his father in law is Rich. Farm subsidies are a shining example. Few people have heard of the ag-industry giants. They did not originally have to sell stock like Microsoft. The Mississippi river valley is a multi billion dollar corn and soy bean bonanza with all the inputs provided to ag-industry at the tax payer's expense, while all the profits ( not shared with the farmers) are privatized.

OconeePirate
07-25-2010, 01:03 PM
How much of the (mythical?) work hard, be self sufficient, do well American ideal is left over from the era when there was lots of cheap (or free from the government) land out there?

McMike
07-25-2010, 01:24 PM
So you are in favor of a one world govt. Who would you put in charge of this govt?
I am in favor of a standard legal system and with that, a standard Bill of Rights. I understand this would probably fall under a "one world govt." designation.


RE: Who would we put in charge of any government? I would like good and fair-minded people in charge of it. You?



What I don't like is the ability of the rich to manipulate government to its purposes.

Who would like to be in charge of that? Are you 100 % sure they always get what they want? And can you provide proof that they do?

I'd like good and fair-minded people in charge of it. You?

RE: "Are you 100% sure". Ummm, I'm 100% sure they do not but I'm also 100% sure they do have an unacceptable amount of influence on government creating a climate that is not in the best interest of the people. Hardly a valid rebuttal BTW.


What I don't like is the ability of large companies to make insane profits on the backs of its employees without feeding some of that back into the vary communities that helped create that wealth.



Some of it goes back into the local economy even if it's when the CEO wife buys stuff , what ever stuff she decides on, that can vary widely.

Are you blind? Most of the money that CEO's wife spends is on items produced far away from that locality and sold by companies that also don't exist locally or have a significantly positive financial impact on the same locality. Hell, the CEO's family doesn't even live in the same state most of the time. What world do you live in? The truth is, rarely does the profit from a company make it to the communities of the people who make that company profitable. I'm sure there are exceptions but not very many anymore.



With the last point I'd like to add that I don't like the attitude that the folks on top disserve ALL the spoils of market domination when the workers also had a large part to play in the success of the given company. I'm not saying that the "worker" deserves the same level of reward of the folks who risk large sums to bring a given product to market but a proportional one would be nice for a change.


What % would be acceptable to you? Who would regulate it , the workers? All this goes back to the bible story of the rich ruler three workers the 5 talents, each one had a different result, pretty much the same result today. Some people just handle money better than others, it's just the way it is.

I'm not sure what % would be acceptable but let's start with a living wage and then we can start to dream about fair compensation based on a company's overall profitability.

Don't quote the bible please, I'm not allowed to rebut with the identifications of the insane contradictions that Christians commit against Christ's teachings without getting my post deleted so you're not allowed to quote scripture in any argument where scripture is not what's being discussed. It's only fair.

As for "Some people just handle money better than others", you need a reality check my friend, you clearly don't understand what it means to live in poverty. I will agree there a lot of folks that don't know how to handle money and that is their fault but it hardly constitutes as an excuse for paying folks a sub-living wage, don't you think?

Captain Blight
07-25-2010, 01:35 PM
The Rich should not pay taxes. Instead their work, recreation and even culture should be subsidized or even provided without cost. Its the goal of every Socialist. People with more property and wealth benefit to a greater degree from government than any progressive tax system can factor in. The number of federal agencies you depend on when you are rich and doing business are far greater than the those utilized by the poor and Yeoman tradesmen or homesteaders. That's why lefty Democrats have such disdain for libertarian Republicans. We might cut the budget from Rockefeller's National Petroleum Radio. 'Nuff said.
No, I have disdain for Libertarian Republicans because they are often poorly educated hillbillies who think they know what they're talking about but don't. Every single time the numbers get run, the actual and unskewed numbers, the Libertarian Conservative agenda falls far far short of its goals. It is absolutely fine in theory; but I do not for one second believe it will work in practice save in isolated enclaves. Certainly not as national policy.

Captain Blight
07-25-2010, 02:27 PM
So basically you want to tell people what they can spend their money on and where they should spend it.

How the heck did you derive that out of McMike's post? Seriously, I don't understand how that happened.

Captain Blight
07-25-2010, 02:38 PM
I don't know if I'm fair and balanced, Paul, I like to think I am... Or at least try to be a lot of the time. Mind you, I also have to filter all this through my personal belief system, so there's inevitably at least some bias creeping in. Let's just say that I try to remain open to logic and reason. So far, I haven't seen a lot of that coming from the Right. I see that there's a lot of angsting, but no real solution that I can accept. There ya have it.

Captain Blight
07-25-2010, 03:44 PM
Oh? You didn't exult a little when Ted Kennedy finally found out whether or not he'd be seeing Mary Jo Kopechne one more time?

Captain Blight
07-25-2010, 04:11 PM
Well. It's a character flaw of mine that I seem powerless to change, I guess. I think what I'm after is justice for what Bushco did to the US; I would happily accept a public trial in lieu of a painful death. I just want to see these goons in the Hot Seat, in front of cameras, with no way to escape the questions asked.

Captain Blight
07-25-2010, 05:32 PM
I know. But MAN I wish I would. In fact, my biggest beef with Pelosi was (is) that she didn't impeach Bush when it would have been appropriate to do so. Absent that, I'd be perfectly happy with (say) hired goons kidnapping and drugging Bush and Cheney and imprisoning them somewhere 800 miles up the Congo river. I like the idea of them having to practice their diplomatic skills in a Congolese prison population. If I could get a live video feed of that, I would be a happier man.

Landrith
07-25-2010, 06:04 PM
No, I have disdain for Libertarian Republicans because they are often poorly educated hillbillies who think they know what they're talking about but don't. Every single time the numbers get run, the actual and unskewed numbers, the Libertarian Conservative agenda falls far far short of its goals. It is absolutely fine in theory; but I do not for one second believe it will work in practice save in isolated enclaves. Certainly not as national policy.


I got a picture of my great grandfather and his family on their front porch in Mountain Home, Arkansas. I am not poorly educated but after the 20 years it took me to get a bachelor's degree while taking off shift classes and in the military, I noticed my grades and critical thinking skills were better than many of the traditional aged college students that were the product of our enormous increased investment in public education.

I recognize the over simplification of Libertarian positions. However main stream thought on business cycles and other constructs used to justify strong federal government involvement in daily life are also simply erroneous when policy makers blind themselves to the effect of perverse government incentives that created the very problems they are addressing.

McMike
07-26-2010, 07:01 AM
So basically you want to tell people what they can spend their money on and where they should spend it.

And I bet you think you're a example of the fair and balanced leadership?

I bet you think it's ALL their money to spend. I see it as being stolen from the people who manufactured the items being sold, you know, the folks who did the majority of the actual work. Just because a CEO says he's worth a certain amount doesn't mean he is. I know this goes both ways but the balance is way off in the ruling elites favor.

I think I have a lot to learn before I would feel qualified but I know I am leaps and bounds more qualified than most simply because I have a good sense of honor, respect, and fairness. I'm also able to admit when I'm wrong and change my course accordingly without having to blame it on someone else. Note: I am not in favor of handouts, I am in favor of hard work and fair compensation for that work.

Dan McCosh
07-26-2010, 08:00 AM
If the rich are taxed, then they do not have the choice of where and how to spend their money. The government does. Do governments spend money more wisely than the rich? Inquiring minds wish to know.

Bernard Madoff.

Captain Blight
07-26-2010, 12:34 PM
Here's a very interesting LINK (http://mbaoath.org/about/the-mba-oath/). This is a step in the right direction; but I really have lost faith in money managers to not let their personal grasping run rampant. When a small group of people can bring down entire national economies through their greed, I would say that that is tantamount to a coup d'etat. It is functionally indistinguishable from the pursuit of an independent foreign policy in money matters.

So this "MBA Oath" will certainly help. I fear, however, that without legal muscle to back it up, it's just pretty words.

brad9798
07-26-2010, 09:45 PM
Funny ... how ALL have avoided the 'old' luxury tax ...

Thus- taxing the rich ... well, it pretty much only hurts the poor! (assuming the tax is DIRECTED towards the rich ... i.e. the luxury tax!)

Yet no one addresses the luxury tax ... and its complete and TOTAL debacle!!!

:)

Art Read
07-27-2010, 05:02 AM
"I am not in favor of handouts, I am in favor of hard work and fair compensation for that work."

Define "fair". A thought game: You own a business. There is a pool of qualified candidates for each position your company has available. You compete with a "pool" of other businesses offering the same service or product that you do. Just as you compete with those other businesses for customers, your potential employees compete with each other for the opportunity to be employed by you, just as you compete for the best employees. Be they janitors or the CEO. If you offer too little in compensation, your competition gets the more qualified employees and, theoretically, becomes more competitive against your company. Your revenues decrease and you now have even less ability to reward your employees. Conversely, you offer too much compensation: You are less able to compete effectively against your competition. Your company suffers just as much in that case again. Same result. Your "pampered" employees find themselves out of a job. So who was right? Answer? Neither! "Fair" is what good management determines through realistic appraisal of market conditions creates the most efficient deployment of human and financial capital. This can be positively, or negatively, affected by government policy and regulation, but "utopian" definitions of "fair compensation for hard work" based on subjective premises will NOT change the basic math involved.

Are current trends in some businesses management compensation too generous? I suspect so, in many cases. Are employees at lower levels proportionately under compensated? Perhaps... but only in comparison. The answer? Results... No matter how cynical you may be about the "unregulated market", it does tend to punish imbalance. Perhaps that's why it has worked, (for the most part) for so long?

Captain Blight
07-27-2010, 05:21 AM
It's a poser, that's for sure. I just really want to know by what metric the CEO of a manufacturing concern can earn 300-600 times what a manufacturing laborer makes, and still have it be called "fair."

Art Read
07-27-2010, 05:35 AM
Because that what the "market", (for now) will bear.... That level of compensation requires a proven track record of increasing productivity, market share and ensuring profit (or preventing loss) in proportion to the level of pay. (Multiplied many times...) If nobody else was offering them just as much, or more, it would move the other way.

(Sounds silly, what with failed financial companies "requiring" bailouts, auto companies letting the fed take them over and the stock market tanking, but you have to understand that boards of directors can appreciate limiting loss as much as growing profit. Both are rewarded. Is that wrong? I am as offended as anybody else when I hear of CEOs who have made a shambles of their jobs walking away with "golden parachutes", but those are contractual concerns. The directors who hired them made that mistake. Seems to me to be issue that the shareholders should address... They are the owners after all. Does anybody really think that Congress sticking their dirty little fingers in there will really help do anything but give them even more opportunities to collect campaign donations?)

Art Read
07-27-2010, 07:14 AM
Put another way:

__________________________________________________ __________________________________________________ ___

"How Smart Are We?
By Thomas Sowell

Many of the wonderful-sounding ideas that have been tried as government policies have failed disastrously. Because so few people bother to study history, often the same ideas and policies have been tried again, either in another country or in the same country at a later time-- and with the same disastrous results.

One of the ideas that has proved to be almost impervious to evidence is the idea that wise and far-sighted people need to take control and plan economic and social policies so that there will be a rational and just order, rather than chaos resulting from things being allowed to take their own course. It sounds so logical and plausible that demanding hard evidence would seem almost like nit-picking.

In one form or another, this idea goes back at least as far as the French Revolution in the 18th century. As J.A. Schumpeter later wrote of that era, "general well-being ought to have been the consequence," but "instead we find misery, shame and, at the end of it all, a stream of blood."

The same could be said of the Bolshevik Revolution and other revolutions of the 20th century.

The idea that the wise and knowledgeable few need to take control of the less wise and less knowledgeable many has taken milder forms-- and repeatedly with bad results as well.

One of the most easily documented examples has been economic central planning, which was tried in countries around the world at various times during the 20th century, among people of differing races and cultures, and under government ranging from democracies to dictatorships.

The people who ran central planning agencies usually had more advanced education than the population at large, and probably higher IQs as well.

The central planners also had far more statistics and other facts at their disposal than the average person had. Moreover, there were usually specialized experts such as economists and statisticians on the staffs of the central planners, and outside consultants were available when needed. Finally, the central planners had the power of government behind them, to enforce the plans they created.

It is hardly surprising that conservatives, such as Prime Minister Margaret Thatcher in Britain and President Ronald Reagan in the United States, opposed this approach. What is remarkable is that, after a few decades of experience with central planning in some countries, or a few generations in others, even communists and socialists began to repudiate this approach.

As they replaced central planning with more reliance on markets, their countries' economic growth rate almost invariably increased, often dramatically. In the largest and most recent examples-- China and India-- people by the millions have risen above these countries' official poverty rates, after they freed their economies from many of their suffocating government controls.

China, where famines have repeatedly ravaged the country, now has a problem of obesity-- not a good thing in itself, but a big improvement over famines.

This has implications far beyond economics. Think about it: How was it even possible that transferring decisions from elites with more education, intellect, data and power to ordinary people could lead consistently to demonstrably better results?

One implication is that no one is smart enough to carry out social engineering, whether in the economy or in other areas where the results may not always be so easily quantifiable. We learn, not from our initial brilliance, but from trial and error adjustments to events as they unfold.

Science tells us that the human brain reaches its maximum potential in early adulthood. Why then are young adults so seldom capable of doing what people with more years of experience can do?

Because experience trumps brilliance.

Elites may have more brilliance, but those who make decisions for society as a whole cannot possibly have as much experience as the millions of people whose decisions they pre-empt. The education and intellects of the elites may lead them to have more sweeping presumptions, but that just makes them more dangerous to the freedom, as well as the well-being, of the people as a whole.

purri
07-27-2010, 07:36 AM
No doubt his father in law is Rich. Farm subsidies are a shining example. Few people have heard of the ag-industry giants. They did not originally have to sell stock like Microsoft. The Mississippi river valley is a multi billion dollar corn and soy bean bonanza with all the inputs provided to ag-industry at the tax payer's expense, while all the profits ( not shared with the farmers) are privatized.

Here they call them the Agrarian Socialist Party (AKA Country Party). privatise yer profits an socialise yer losses.

Curtism
07-27-2010, 08:53 AM
Art, your “thought game” scenario is eerily similar to a business model that was tried here in west central Florida starting back around the early sixties. Two large powerboat companies built huge plants about a mile apart and put them right on a county line where they would have access to lots of cheap labor from the lower income northern area. They also had a wealthier population to the south with lots of marinas, service facilities and condos on the intercoastal waterway. There are white sandy beaches, resorts and halls to show off their wares and entertain dealers. The locals filled slips and waterways with their products resulting in lots of great exposure. Things were looking good for all involved.

Not wanting to be left out of the fun, a third company relocates from down south and puts a large plant in a cow pasture a couple of blocks from the larger of the two existing companies. Meanwhile an industrial park grows up around them with lots of support industries; suppliers, small equipment repair guys, tool shops, custom shops and other small businesses occupied the rows of warehouses and storage units. The place was hopping. You couldn’t go out at noon, close your eyes and throw a rock without hitting either a break-truck or a migrant worker in a grinding suit.

Around the same time in a county 30 miles to the north a thriving sailboat industry builds several plants . . . a very similar thing happens.

The gas wars start, power boat guys suffer and segments of the work force migrate north where the sailboat shops are popping up like spring grass.
Reel ahead a few years; the luxury tax hits the r/v industry pretty hard and the herd is thinned drastically. Shortly after the housing boom starts the boat yard labor force fills the need for framers, roofers and people to stucco all the styrofoam condo complexes.

With the uptick in the economy the stronger companies that have been bought out by large conglomerates prevail. All the intermediate and small shops dry up and blow away. What was once a friendly game of boat-builder-trading cards is now a fierce scramble to see who’s hungry enough to take a job for the same pay they were making twenty years before. Never mind all this new development that’s tripled your home value and subsequent taxes. Add to that, or subtract I should say, the fact that the insurance mob’s protection fees have multiplied like rabbits and it’s a brand new world since 9-11 ya know. The president wants us to go shopping while the working folk are scouring thrift stores for the kids’ x-mas gifts and becoming experts on which grocers have the best buy one get one sales.

I came in a little late to this whole show, mid seventies, but I had a front row seat for the best and worst of it. As of the last couple years, the last large company I worked for sits quiet except for a few pigeons that live in the rafters of the dusty assembly buildings. What was once a fairly good employer with a staff of 400 plus is a corporate office in a trailer, a couple receptionists and a handful of yard guys to jockey and shrink-wrap product that was returned when dealers started vaporizing. There are acres of vacant employee parking that is now jammed with brand new product that sits rotting in the Florida sun. Their core staffs of upper mangers and engineers were told a couple years back not to wait around and if they did eventually start to re-hire, “things will be different”. Meaning for many of them, never mind if you were approaching the twenty year mark and all the wonderful carrots on stick they were promised.

There are a lot of old workmates of mine who, like myself, are in their mid fifties that reside in this right to work state and are just now figuring out what “right to work” actually means. One dear old friend is going back to school to become an ex-ray tech and I know others who are learning trades in the health care industry. I got out, self parole, hopped the fence, around five years ago and was making plans but they were boat related and I now may have to reconsider.

What’s disturbing for me nowadays is trying to imagine some old pals who I worked with in plug shops - some of them resembling the Vikings in the capitol one commercials with shaves and haircuts - prepping my elderly mother for an ex-ray.
I’m sure it will all work out though. The economy will come back, a new middle class will forget what junk production boats really are; a new generation of college grads with video game programming degrees will get lured into the romance of being a boat builder; vo-techs will start teaching the trade again and the same guys who own it all will sit poolside mulling over which old molds can be revived in order to “earn” that fat bonus this year.

Curtis

McMike
07-27-2010, 11:11 AM
Because that what the "market", (for now) will bear.... That level of compensation requires a proven track record of increasing productivity, market share and ensuring profit (or preventing loss) in proportion to the level of pay. (Multiplied many times...) If nobody else was offering them just as much, or more, it would move the other way.

The only way to make it (Correcting the compensation ratio) move the other way is to mandate it, the "market" has lost control of this and, I think, needs help to wrangle it back in. Ideas on how to run a company are not THAT hard to come up with; it's the tireless hours that upper-middle to lower-level employees spend implementing these ideas that make the largest impact, without their labor the ideas would never come to fruition. A properly running company can be achieved by following standards that have evolved throughout the history of business, tweaking the standard models to suit your business's unique needs as well as the market's can be difficult and should warrant a higher compensation for those who do this successfully. While the executive's job is worth a fair amount more than the sub-executive's job in terms of risk taken and intelligence/knowledge needed, most of the leg work is done by non-executive employees. I'm not saying that the executive's job is easy, what I am saying is they are not as important as they are currently paid to be. Correcting compensation ratio and coming up with a much fairer way (yes I mean regulation) to distribute profit, NOT taxation, will turn this economy towards growth and keep it there a lot more stably then rewarding thieves for thievery.


Does anybody really think that Congress sticking their dirty little fingers in there will really help do anything but give them even more opportunities to collect campaign donations?)

I think a more accountable Congress can do better to steer big business via reasonable regulations rather than business operating within a free market. I do agree we need to do our best to control and make transparent the financial ties between government and big business in order to get any kind of substantial gain from my philosophy but then there also has to be the consideration that a country is only as great as its economy, there has to be relationships between government and business in order to maintain a strong one. This means strong regulations but also a tolerance for the relationship between government and business, I think it's a mistake to consider the two separable.

Art Read
07-27-2010, 09:02 PM
"...Reel ahead a few years; the luxury tax hits the r/v industry pretty hard and the herd is thinned drastically. Shortly after the housing boom starts the boat yard labor force fills the need for framers, roofers and people to stucco all the styrofoam condo complexes..."

__________________________________________________ __________________________________________________ ____

That's a very sad and familiar story, Curtis... And a perfect example of negative governmental influence on the free market! The "luxury" tax had the unintended consequence of driving high income discretionary spending offshore, along with the hundreds of thousands of jobs that had previously met that demand domestically. Then the federal mortgage regulations promoting "affordable" home ownership drove the huge increase in housing development and debt/pricing levels that were unsustainable.

The luxury tax was eventually, wisely, repealed, but the businesses and jobs were already gone. Those boatbuilders and RV makers had already turned to banging nails in housing developments. Then the housing bubble burst. Now what? Census workers! Demand better, people!!

Curtism
07-28-2010, 01:14 PM
I’m not sure what the legislators were thinking when they imposed the luxury tax of the late eighties to early nineties but it certainly made a mess of the large toy industry here. Even so, over the long term, that was just one dip among the many ups and downs of the boat industry. Being primarily petroleum based products, whether they are sail or power boats, the manufacturers faced challenges every time the price of oil went up.

What I know about the concept of a free market economy is limited, other than it is a favorite drum of certain economists, talking heads and politicians. Concepts such as this may have very valid aspects and surely look good on paper, like your thought game for example, but they seldom reflect reality when they’re applied in full scale. That is what I was attempting to allude to in my last post and now suggest that there are huge holes in the “rising tide lifts all boats” meme.

Free market models could very well work if it were somehow, magically perhaps, made illegal to purchase legislation. I believe the legislators were originally intended to be the voice of the people who voted them in. I’m pretty sure that’s not quite how it works anymore and one of the larger reasons for the bite many of our fellow citizens are feeling these days.

Tom Montgomery
07-28-2010, 01:20 PM
I'd rather have 66.66% of $1,000,000 than 95% of $30,000.

Captain Blight
07-28-2010, 01:30 PM
Free market models could very well work if it were somehow, magically perhaps, made illegal to purchase legislation. I believe the legislators were originally intended to be the voice of the people who voted them in. I’m pretty sure that’s not quite how it works anymore and one of the larger reasons for the bite many of our fellow citizens are feeling these days. I like this post. You're making a lot of sense, so eventually you can expect to be shouted down by someone or another for doing so.

Welcome to the Bilge.

Landrith
07-28-2010, 02:57 PM
I like this post. You're making a lot of sense, so eventually you can expect to be shouted down by someone or another for doing so.

Welcome to the Bilge.

Makes a lot of sense to me also. I could empathize with President Obama at the State of the Union expressing pain over the campaign finance decision of the Supreme Court. Moderate Republicans and Democrats saw that as their singular shining achievement, which had just been destroyed. I don't have the corporate speech needs to be protected ideology of the establishment conservatives but in the end, the only ones following the rules were us citizens, the victim of corporate criminals using big government against us for their private gain.

Kaa
07-28-2010, 03:06 PM
Free market models could very well work if it were somehow, magically perhaps, made illegal to purchase legislation.

Um. That's exactly in reverse :-)

If it magically became impossible to purchase legislation, then we wouldn't have to worry that regulation will be driven by monopolistic and commercial-advantage desires of the big players, and so -- because there would be no danger of regulatory capture -- there would less reason to fear bad legislation and regulation.

On the other hand, lacking such magical means and keeping in mind the very real dangers of regulatory capture, we should strive to LIMIT regulation and promote MORE FREE markets. In free unregulated markets there is no point in buying legislation -- you gain nothing.

Kaa

Curtism
07-28-2010, 07:22 PM
"Welcome to the Bilge."

Thanks for the welcome, Capt’n, and the heads up.

Curtism
07-28-2010, 07:25 PM
[QUOTE=Kaa;2670177]Um. That's exactly in reverse :-)

Thanks for clearing that up, Kaa. So it’s a more of wild west approach to business. Everyone is armed and there is little or no need for sheriffs. If you get shot, you patch yourself up or start digging a grave.

So, there wouldn’t be any need for public subsidies either?

Who would pay for the infrastructure in such a model?

Kaa
07-29-2010, 12:42 AM
So it’s a more of wild west approach to business. Everyone is armed and there is little or no need for sheriffs. If you get shot, you patch yourself up or start digging a grave.

Well, I'm not sure what do you mean by "it" here. If "it" is free markets, they are hardly the Wild West. The point is, for the free markets to exist and function there needs to be a large bunch of laws and regulations to start with.

For example, you need to right to own property. You need to be fairly secure in that right, that is, have some assurances that His Lordship's men won't ride over the ridge one fine morning and just take it all. You need the right to contracts, in particular, the right to sell your stuff (and buy other people's stuff). You need a system to have contracts enforced, so that's some kind of justice system. Etc., etc. -- you need a fairly large chunk of an organized society in place to let the free markets function. There's certainly need for sheriffs.

Having said that, free markets tend to be Darwinian. Are you stupid, clumsy, simply unlucky? Sayonara, baby. Don't look but there's already a line of vultures to peck your bones clean :-)


So, there wouldn’t be any need for public subsidies either?

Public subsidies to businesses..? No, generally speaking, I don't see much necessity for them.


Who would pay for the infrastructure in such a model?

Like roads, sewers, etc.? The government, of course. There is nothing in the idea of free markets that says people (and businesses) can't cooperate if it's in their best interest to do so.

Kaa

Landrith
07-29-2010, 08:22 AM
I am a Social Darwinist, but here is the problem with free markets on a groundwork of market regulations and enforcement ( why rich people consume more far more government services than poor folk). In the USA under Bush and then Obama, even the dumb dinosaurs were smart enough to bribe the sheriffs. General Electric (openly a Ponzi scheme Enron), Goldman Sachs, our five largest banks and even the foreign corporation British Petroleum bypassed Congress and just bribed the sheriff. When Congress failed to do the will of the corporatist executive branch, it was just blackmailed into submission.

Curtism
07-29-2010, 12:49 PM
Kaa, it (your interpretation of a free market business model) sounds almost- um- magical.

It would probably work in the animal kingdom, where the participants wear their stripes externally and abide by laws of nature, long before any human society could accomplish such a lofty goal. :-)

Curtis

Landrith
07-29-2010, 01:35 PM
Kaa, it (your interpretation of a free market business model) sounds almost- um- magical.

It would probably work in the animal kingdom, where the participants wear their stripes externally and abide by laws of nature, long before any human society could accomplish such a lofty goal. :-)

Curtis

Looks like a wrap. Anarcho-capitalism is the only moral answer. No one is duped by the government into believing other market participants are subject to enforcement of the rules when they are not. Citizens are not taxed to pay for enforcers that are sitting on their hands. No Iron Rice Bowl.

Kaa
07-29-2010, 01:38 PM
Kaa, it (your interpretation of a free market business model) sounds almost- um- magical.

My mind must be stuck in the mundane realm :-) I don't see much magic here or the necessity for it.

Kaa

brad9798
07-30-2010, 08:52 PM
Taxes on the 'rich' hurt the poor ... over the long haul!

:(

ccmanuals
07-30-2010, 09:00 PM
Taxes on the 'rich' hurt the poor ... over the long haul!

:(
Interesting statement. Any proof to back this up or are you just speculating?

Glen Longino
07-30-2010, 09:14 PM
Interesting statement. Any proof to back this up or are you just speculating?

Imagine yourself a steer in a feedlot in Lubbock, Tom.
Imagine that your wealthy owner is burdened with increased taxes.
Imagine that your owner cannot afford to feed you properly and you therefore do not make money for your owner.
You sorry bastid!:D

brad9798
07-30-2010, 09:14 PM
Uhhh ... check out the old 'luxury' tax ... :rolleyes:

paladin
07-30-2010, 09:27 PM
Well...you could always kidnap the critter and transport him to a country that would like to make him responsible for his actions.

brad9798
07-30-2010, 09:39 PM
I guess 'ccmanuels' does not get it ... err ... Tom! ;)

Glen Longino
07-30-2010, 09:43 PM
Tom gets it!

brad9798
07-31-2010, 08:01 PM
Do some research then, ccmanuals, on the effects of the old luxury tax ... it put many boatbuilding employees out of work ...

It was a COMPLETE failure ... cannot you do any research on it?

Why do folks always expect others here to do THEIR research?!?!? :confused:

Keith Wilson
07-31-2010, 10:30 PM
Lordy, I post a cartoon I thought was modestly amusing, and you guys go on for a week.

The luxury tax was a stupid tax, badly designed, and as such did fair amount of harm. Extrapolating from this to "more progressive taxation would hurt the poor" is absurd.

Try to correlate the top marginal tax rate with general prosperity. Can't do it, can you?

http://www.coventryleague.com/uploads/4/0/6/0/40602/9317853_orig.png

But Chris Ross is right, as he often is. Tax rates don't have all that much to do with Gini coefficients.

brad9798
07-31-2010, 10:59 PM
WOW! Keith did not ask me to research this for him ...

Yet, he still does not understand that the lux tax hurt the working class ... NOT the rich!

:(

Landrith
07-31-2010, 11:16 PM
I think the numbers for the luxury tax effect on the overall economy were overshadowed by the change in real estate investment taxation. I think they eliminated passive loss at the same time. So if you weren't swinging a hammer at the boat yard, they got you laid off on the construction site too.

The unpredictable change of Congress tinkering itself probably creams the economy. If you have to have income taxation, it should be a flat tax.

Keith Wilson
08-01-2010, 11:35 AM
Yet, he still does not understand that the lux tax hurt the working class ... NOT the rich!And Brad still hasn't learned how to read what I actually write, rather than arguing against what he imagines I might be thinking.

Once again: The luxury tax was a stupid tax, badly designed, and as such did fair amount of harm. Extrapolating from this to "more progressive taxation would hurt the poor" is absurd.

A flat tax on income is a terrible, terrible idea, unless you think that the less money you have, the harder taxes should hit you.

Captain Blight
08-01-2010, 03:13 PM
Um. That's exactly in reverse :-)

If it magically became impossible to purchase legislation, then we wouldn't have to worry that regulation will be driven by monopolistic and commercial-advantage desires of the big players, and so -- because there would be no danger of regulatory capture -- there would less reason to fear bad legislation and regulation.

On the other hand, lacking such magical means and keeping in mind the very real dangers of regulatory capture, we should strive to LIMIT regulation and promote MORE FREE markets. In free unregulated markets there is no point in buying legislation -- you gain nothing.

Kaa

Codswallop. We have NEVER had truly free markets in this country, and we have the free-est markets on the planet. I say we take away all government subsidies, from everyone, all at once. We'll get to see who the REAL free agents are.

Landrith
08-01-2010, 09:29 PM
A flat tax on income is a terrible, terrible idea, unless you think that the less money you have, the harder taxes should hit you.

It steers toward the other end of the spectrum: meritorious citizenship. Like societies where military service was necessary to vote. Even the poorest have to shoulder the burden and have equal honor. Preserves republican limitations on democracy's tendency to pass around ever larger piles of fiat currency. Almost as good as my personal idea of taxing government to make it pay its fair share. Lol.

Landrith
08-01-2010, 09:33 PM
Codswallop. We have NEVER had truly free markets in this country, and we have the free-est markets on the planet. I say we take away all government subsidies, from everyone, all at once. We'll get to see who the REAL free agents are.

I agree. 100%. Looks like another libertarian Republican has just been born. Eliminate subsidies and enjoy Emancipation Capitalism. Just don't forget to eliminate the subsidies to McDonalds and Walmart.

Keith Wilson
08-01-2010, 09:53 PM
It steers toward the other end of the spectrum: meritorious citizenship.Did you really just equate making money with "meritorious citizenship"? Oh, my. Understand I have nothing against making money; I try to do as much of it as I reasonably can, but like most things it can be done is a meritorious way or a way that does terrible harm. Equating merit or success with income is absurd.

A flat income tax is nothing like equal, and certainly not equivalent to universal military service; it's much more onerous the less money one has. Do I truly need to post the basic argument for progressive taxation again?

John Smith
08-01-2010, 10:08 PM
If the rich are taxed, then they do not have the choice of where and how to spend their money. The government does. Do governments spend money more wisely than the rich? Inquiring minds wish to know.

I was told that cutting the taxes for the wealthy was the key to creating jobs. Ten years ago we cut taxes on the wealthy, and now we have no jobs. Kind of puts a "they were wrong" exlaimation point on things.

If 10% of the people own 90% of the wealth, then they should pay 90% of the taxes. If they pay less, someone else pays more. Guess who that would be.

I've also been told, countless times, the cutting taxes increases revenues. Sounds like BS to me. If it were true, why not eliminate all taxes, and our government would be swimming in money?

John Smith
08-01-2010, 10:10 PM
The rich don't stuff it in the mattress. They invest it by lending it to cities to build sewers, corporations to buy machinery, etc. It gets spent and puts people like you to work. I am in my conservative mode now.

Actually, more and more of them are finding ways to increase their wealth by simply manipulating the financial markets.

brad9798
08-01-2010, 10:31 PM
So just exactly what should be the maximum percentage rate the rich pay in taxes?


Not more than 28% ...

brad9798
08-01-2010, 10:32 PM
But that was loaded question, wasn't it, now, RonW!?!?!?!? ;)

Keith Wilson
08-02-2010, 08:14 PM
--so what percentage rate , Keith..You mean the top marginal rate for federal income taxes? Oh, maybe 35%; maybe a bit more. 40% is fine. If I were king, I'd also reduce corporate income taxes, eliminate a lot of the loopholes, but tax capital gains like ordinary income. I'd also tax all income for social security, but reduce the percentage accordingly for everybody. Also have a hefty estate tax. The details are supremely important with tax policy, though.

For a little historical perspective, here's a comparison of federal tax rates in 1960 and 2004 for various income levels. (Source here (www.nber.org/papers/W12404), fig. 1) Maybe I should take back what I said about tax rates only having a small influence on Gini coefficients. And add to this state taxes, which in most cases are fairly regressive.

http://1.bp.blogspot.com/_ZBy66b-zlMs/RyllEIC95NI/AAAAAAAAAYo/Ge9NGGqDqVg/s1600/TAX%2BRATES%2B-%2B1960%2B-%2B2004.jpg

Tom Montgomery
08-02-2010, 08:24 PM
Yea 40% is B.S. norm, the rich ain't gonna pay it...


...so long as the tax law provides them the requisite loop-holes.

Keith Wilson
08-02-2010, 08:29 PM
After all that is or suppose to be after tax dollars and you should be able to leave it to the brats.Nope. Inheriting all daddy's money tax-free is not a right. Alternately, one could tax inherited money over a certain fairly large amount as ordinary income.

Keith Wilson
08-02-2010, 08:33 PM
Lots of things "always have been", at one point or another. Slavery, subordinate status of women, state religion, hereditary nobility . . . Again, inheriting great wealth tax-free is NOT a right.

Glen Longino
08-02-2010, 09:43 PM
Uhh it always has been at least for the eldest son, along with all lands and titles..

:D
You sound so Old Testament, Ron.
Try to fast forward 5,000 years will ya please?

Landrith
08-03-2010, 12:13 AM
Uhh it always has been at least for the eldest son, along with all lands and titles..

Get thee back with your primogeniture, first born son feudalism. We revolted from that old world stuff when the tax on wealthy individuals started to equal 12.5% ("In his testimony to the Parliament in Feb. 1766, Ben Franklin estimated the tax rate in Colonial Pennsylvania at 12.5%). With taxes that low, you could care for your extended family into old age and still donate to the poor house charity voluntarily.

brad9798
08-03-2010, 08:27 PM
Poor Keith ... still simply wants to argue about things ... b/c of his hard on for me!

SORRY, Keith ... your silly point of view is still stupid/wrong!!

;)

Keith Wilson
08-03-2010, 11:50 PM
More data:

All taxes in the US, 2008

http://graphics8.nytimes.com/images/2009/04/13/business/economy/taxrates2.jpg

http://graphics8.nytimes.com/images/2009/04/13/business/economy/shares.jpg

Source here (http://economix.blogs.nytimes.com/2009/04/13/just-how-progressive-is-the-tax-system/), with some interesting links.

Nothing to contribute again, Brad?

leikec
08-04-2010, 12:49 AM
Poor Keith ... still simply wants to argue about things ... b/c of his hard on for me!

SORRY, Keith ... your silly point of view is still stupid/wrong!!

;)
Keith is making a reasoned argument--you are ranting. Big difference.


You just don't seem happy unless you're running headlong into another time-out....

Jeff C

Art Read
08-04-2010, 10:26 AM
"Democrats from wealthy districts are torn: they really want to raise taxes on the wealthiest Americans, but the problem is many of those Americans hail from their own districts! What to do.

One irony of the tax increase that arrives on January 1 is that the it will hit residents of high-income, Democratic-leaning states like California, Connecticut, New Jersey and New York the hardest. This is a problem for pro-tax Democrats.

Enter New York Representative Jerrold Nadler, who wants to exempt his own six-figure constituents from the tax hike he supports. Mr. Nadler's bill would "require the IRS to adjust tax brackets proportionally in regions where the average cost of living is higher than the national average."

In other words, the various tax brackets would apply to residents in certain regions at higher income levels versus other parts of the country. A family with an income of $50,000 or even $1 million in Manhattan would pay less federal income tax than a family with the same earnings in Omaha. The bill is called the Tax Equity Act, but a more accurate title would be the Blue State Tax Preference Act.


"WASHINGTON, D.C. – Today, Congressman Jerrold Nadler (NY-08), Congresswoman Nita Lowey (NY-18) and Congressman Steve Israel (NY-02) announced their introduction of the Tax Equity Act of 2009, an important piece of tax legislation designed to adjust federal tax rates to account for the actual cost of living in major metropolitan areas. As representatives of, respectively, New York City, Westchester County, and Long Island, these three lawmakers serve constituents who simultaneously pay higher taxes and spend a larger proportion of their incomes on basic necessities than most Americans. This bill would require the IRS to adjust tax brackets proportionally in regions where the average cost of living is higher than the national average.


“This overdue tax legislation is, pure and simple, about instilling fairness into our federal income tax system,” remarked Rep. Nadler. “As New Yorkers know too well, the basic costs of life in the New York region are much steeper than in most parts the country. The reality is that a dollar in New York isn’t worth nearly as much as a dollar in Spokane or Knoxville or Topeka. It’s time for our tax code to take reality into account when assessing someone’s tax liability.”


“When it comes to the tax code, one size just doesn’t fit all,” said Rep. Lowey. “Residents of the New York metropolitan area pay more for housing, food, and utilities, not to mention some of the highest property taxes in the country. “Making ends meet is difficult in our region even for those with good jobs. It is only fair for the tax code to reflect that reality.”


“A six figure income in Islip is not the same thing as a six figure income in Idaho,” said Rep. Israel. “New Yorkers pay some of the highest taxes in the country, but we also pay some of the highest housing, food and gas costs. Middle class and working families in New York are taxed as if they were rich, and that’s not fair. Our plan for a regional cost of living adjustment will bring fairness back to the tax system and lessen the burden on New York’s middle class and working families.”


Residents of the nation’s most expensive areas – i.e. New York, San Francisco, Los Angeles, Honolulu, Washington – spend a greater share of their paychecks on everyday necessities and, hence, their incomes are stretched thinner than those living in other areas. Yet, New Yorkers and others are taxed the same as the rest of the country, which produces an unfair burden on New Yorkers and other metropolitan residents. The Tax Equity Act of 2009 would ensure that no such burden exists and would require people to pay only their fair share of taxes. This bill would not affect the taxes of people living in regions with a cost of living that is below the national average."