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For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

inequality.org

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Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#31

Post by hopler »

foolfoolz wrote: post #15
saghm wrote: post #10

Earlier quoted context omitted.

Honest question: if people like the one described in the article won't actually end up paying more in taxes due to an increase in their tax rate, why do they oppose it?

because this Hausers law shows that the U.S. government doesn't have a revenue problem, it's collecting proportionately the same amount of money as it has been. there' a spending problem: we keep finding more and more ways to spend money. this whole green new deal proposal is "lets go spend billions more dollars on XYZ" a lot of the mental pushback is what are you going to stop spending on today to pay for it? the an…

What's wrong with investing taxes in growing the GDP?

Why does the funding of current projects affect you level of support for different projects? That's sunk cost fallacy.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#32

Post by opo »

saghm wrote: post #10
chrisco255 wrote: post #2

https://en.wikipedia.org/wiki/Hauser%27s_law Hauser's law is the proposition that, in the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.[1] Historically, since the end of World War II, federal tax receipts as a percentage of gross domestic product averaged 17.9%, with a range from 14.4% to 20.9% bet…

Honest question: if people like the one described in the article won't actually end up paying more in taxes due to an increase in their tax rate, why do they oppose it?

Because it leads to bad economic choices by the rich and that doesn't actually help anyone. Just recently we had a discussion on how those in Hollywood avoided the high marginal rates:https://www.bloomberg.com/opinion/articles/2019-01-29/hollyw...

With high marginal rates, the tax shelters the Hollywood rich invested in were less productive investments. Yes high marginal rates will lead to more CPA hours to get around the high taxes, but that is just an example of the Broken Window fallacy. When there is no way around them, very high rates will lead to dead weight losses to the economy as economic activity won't be done.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#33

Post by subjectHarold »

onion2k wrote: post #9
subjectHarold wrote: post #6

I have given up with the long answers. The US had a marginal rate this high before: wrong, this doesn't reflect tax paid which, for the top 1%, is only down slightly since mid-1960s (and not worth anywhere close to what the US needs). Other countries do this successfully: wrong, other countries are far less progressive than the US with many more paying top rates. The lazy "we can be Sweden" thinking also indicates a…

Let's assume you're right and the US really hasn't ever had a marginal tax rate of 70% in the past. Introducing it now would be the first time it's ever been done. What's wrong with trying new things?

That is fair, I didn't explain that. But it is fairly simple: progressive tax systems don't reduce inequality. The US already has one of the most progressive tax systems in the world? Is it working? The US is one of the most unequal countries in the world. Look at other similar systems, are they working? Also, no...they are also amongst the most unequal in the world.

More broadly, this is totally out of step with what is happening everywhere else in the world. The US is still trying to catchup even after Trump's tax cut, the issue is that US has a tax system that is from the 1950s when capital movements between nations were essentially banned. That kind of works for the US as the dominant world power but it is becoming more unsustainable as time goes on.

Great, try new things...but what is being proposed isn't a new idea. It is more of the same. The US system is already the most progressive, it already doesn't work, and the idea is to go even further. The new idea, which is being vigorously rejected, is to just do something that actually works. Crazy, right? You don't need to believe in crazy conspiracy theories, you don't need to re-invent taxation...just do the stuff that works.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#34

Post by subjectHarold »

mikeash wrote: post #12
subjectHarold wrote: post #6

I have given up with the long answers. The US had a marginal rate this high before: wrong, this doesn't reflect tax paid which, for the top 1%, is only down slightly since mid-1960s (and not worth anywhere close to what the US needs). Other countries do this successfully: wrong, other countries are far less progressive than the US with many more paying top rates. The lazy "we can be Sweden" thinking also indicates a…

I think you need a longer answer than this, because the marginal rate was indisputably higher than this before.

http://gabriel-zucman.eu/files/PSZ2017.pdf - my reply was sufficient, you are just having trouble because it doesn't match with whatever you conclusion you jumped to without data.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#35

Post by dragonwriter »

subjectHarold wrote: post #33
onion2k wrote: post #9

Earlier quoted context omitted.

Let's assume you're right and the US really hasn't ever had a marginal tax rate of 70% in the past. Introducing it now would be the first time it's ever been done. What's wrong with trying new things?

That is fair, I didn't explain that. But it is fairly simple: progressive tax systems don't reduce inequality. The US already has one of the most progressive tax systems in the world? Is it working? The US is one of the most unequal countries in the world. Look at other similar systems, are they working? Also, no...they are also amongst the most unequal in the world. More broadly, this is totally out of step with wha…

> But it is fairly simple: progressive tax systems don't reduce inequality.

Ceteris paribus, they do (and certainly inequality has gotten worse in the US since Reagan's tax burden shift reduced tax progressivity), but particularly progressive tax systems are often pared with spending systems with less downward redistribution (or more upward redistribution) than those they are compared with, which counteracts the effect of greater tax progressivity; the US has less downward-redistributive spending than many other developed-world systems. [0] And obviously the tax system alone has less impact on inequality the smaller share of the economy taxation represents, and while the US tax system may be unuusally progressive, but it is also unusually light for the developed world (representing, at all levels of government, about 1/4 of GDP, compared to the OECD average of around 1/3.) [1]

OTOH, the people pushing for more progressive taxes in the US today aren't pushing for that alone, they are pushing for more downwardly-redistributive spending funded by the taxes, as well, and mostly also for taxes representing a greater total share of the economy, as well.

[0] https://www.economist.com/united-states/2017/11/23/american-...

[1] https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe...

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#36

Post by opo »

elliekelly wrote: post #27
chrisco255 wrote: post #2

https://en.wikipedia.org/wiki/Hauser%27s_law Hauser's law is the proposition that, in the United States, federal tax revenues since World War II have always been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.[1] Historically, since the end of World War II, federal tax receipts as a percentage of gross domestic product averaged 17.9%, with a range from 14.4% to 20.9% bet…

So what if tax revenue has been flat as a percent of GDP? That says nothing as to how the burden of that tax is allocated.

>So what if tax revenue has been flat as a percent of GDP?

Like with much data, it has to put in context with other data, but I am pretty sure most people don't know that fact.

As how that tax burden is allocated, do you think the rich paid more of a share of the taxes back when there were high rates?

In 1980 the highest federal marginal rate was 70%. The top 10% paid 49% of federal income taxes in 1980 and the bottom 50% paid 7% of federal income taxes. In 2015, the top 10% paid paid 70% of federal incomes taxes and the bottom 50% paid 3% of federal income taxes. (http://www.ntu.org/foundation/page/who-pays-income-taxes)

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#37

Post by mikeash »

subjectHarold wrote: post #34
mikeash wrote: post #12

Earlier quoted context omitted.

I think you need a longer answer than this, because the marginal rate was indisputably higher than this before.

http://gabriel-zucman.eu/files/PSZ2017.pdf - my reply was sufficient, you are just having trouble because it doesn't match with whatever you conclusion you jumped to without data.

Your own link states that there used to be a 70% marginal rate.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#38

Post by mikeash »

tryptophan wrote: post #29
mikeash wrote: post #12

Earlier quoted context omitted.

I think you need a longer answer than this, because the marginal rate was indisputably higher than this before.

I think he means effective marginal rate. 70% is nice and all, but when you are able to deduct 40% of that, is it really higher than 30%?

“Effective marginal rate” is a nonsense phrase. We can discuss marginal rates or effective rates but you can’t combine the two.

I assume the other commenter is doing the standard, “that rate doesn’t really count because nobody really paid it.” Which is a perfectly good point, but it’s not accurately expressed by pretending that marginal rates weren’t that high.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#39

Post by dragonwriter »

mikeash wrote: post #38
tryptophan wrote: post #29

Earlier quoted context omitted.

I think he means effective marginal rate. 70% is nice and all, but when you are able to deduct 40% of that, is it really higher than 30%?

“Effective marginal rate” is a nonsense phrase. We can discuss marginal rates or effective rates but you can’t combine the two. I assume the other commenter is doing the standard, “that rate doesn’t really count because nobody really paid it.” Which is a perfectly good point, but it’s not accurately expressed by pretending that marginal rates weren’t that high.

You can absolutely compare effective marginal rates; if you have effective rate data by income level, you can calculate from that effective marginal rates, which are simply the effective rate on the difference between the nth and (n+1)th dollar.

OTOH, because one of the big ways this is manipulated is by income that isn't “counted” as income, getting good data from which to estimate effective marginal rates is tricky and you end having to make assumptions that are hard to validate.

Re: For Dell’s Billionaire CEO, Taxing the Ultra-Rich Is a Joke

#40

Post by subjectHarold »

avoutthere wrote: post #11
subjectHarold wrote: post #6

I have given up with the long answers. The US had a marginal rate this high before: wrong, this doesn't reflect tax paid which, for the top 1%, is only down slightly since mid-1960s (and not worth anywhere close to what the US needs). Other countries do this successfully: wrong, other countries are far less progressive than the US with many more paying top rates. The lazy "we can be Sweden" thinking also indicates a…

No amount of tax increase alone is going to address a $22 trillion debt. Reducing the size of the state will be required.

If you make the tax system substantially less progressive, as in Sweden or other often mentioned examples, I think it is quite possible to reach a sustainable level.

I partly agree though in that US spending really makes no sense. Other countries that raise more revenue are generally quite targeted in their spending, the US govt is not...at all. It makes no sense to say that the solution to bad spending is to generate more revenue...but it is also not particularly clear that there is any desire to think about how to spend more effectively, outside of slashing everything.

Btw, just generally this reflects how far the US is behind when it comes to intellectual discussions on policy. Most (but not all) discussions about these topics in the US take intellectual force from anti-scientific dogma. Elsewhere, politics has become an evidence-based study of the merit of policies. The former approach just isn't sustainable, the level of poverty in the US is quite shocking (to this outsider's perspective).

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