I'm rich; tax me more | Hacker News Reader

I'm rich; tax me more

latimes.com

11 pointsmattmaroon24 comments

The problem is not the progressive tax system. How progressive it should be is a legitimate matter to be debated.

The problem is that and middle class pay far too little in taxes, to the point where they happily allow elected officials to overspend. This is entirely rational from their perspective, since the most outrageous spending will only result in a few more dollars of taxes owed over the course of a year. It's known as a collective action problem in economics.

For example, the Iraq war should have cost the typical middle class taxpayer at least $500 in 2001, $500 again in 2002, and so on.

Instead, Bush gave a tax rebate intended to make a large swath of the population ignore the massive cost of the war.

Why shouldn't the average American pay just over $1 per day for a war? Why shouldn't he/she pay just over $1 per day for healthcare? As it stands, both of these were free so why should anyone really give them too much thought?

Bottom line: If the public actually had to pay for the grand schemes, there would be significant pressure not to waste money and taxes for everyone would be far lower than they are today.

To argue against this you either misunderstand my point and thing I'm advocating raising taxes or you think that the public being blind to spending is a good thing.

The war is just another form of elitist corporate welfare. Bush sent a bunch of poor uneducated minority kids to war and used them to fight over a country so the corporations can export our jobs to.

Don't kid yourself, the rich love socialism, but only for themselves, not for anyone else.

So you would seem to support my argument. Bush's propaganda may have been enough to get the middle class on board to support his wars, but I imagine that if it'd come with a tangible price tag the propaganda would have failed miserably.

> Bush sent a bunch of poor uneducated minority kids to war

This is why politics should stay out of HN.

Why? It's true, if we're talking about taxes how can we not talk about politics?

Regardless of your claim's veracity, the chances of it leading to a productive discussion are near-zero, which makes it flamebait.

For nearly the last decade, I've paid income taxes at the lowest rates of my professional career. Before that, I paid at higher rates. And if you want the simple, honest truth, from my perspective as an entrepreneur, the fluctuation didn't affect what I did with my money. None of my investments has ever been motivated by the rate at which I would have to pay personal income tax.

This is wrong and he's missing the point. It's not important what he feels he's motivated to do, or not do. The important part is that every additional dollar he pays in taxes is one dollar fewer he get's to invest in whatever it is he's motivated to invest in. It's the opportunity cost that we need to evaluate. And a large percentage of every dollar he pays in taxes will be lost in the inefficiencies of large government bureaucracy. He would be able to make much more efficient decisions on how to spend that money himself, and that's what's lost when when he pays a higher tax rate.

"he's missing the point"

This is what gets me about a lot of people who argue against anything related to increases in taxes despite the practicality of it. They refuse to look at it in an objective light and take up ideological arguments. Really? A 4% increase on 2% of the population is going to destroy the country? You don't even care about it. It's against your "principles" despite the fact that we're hurting and that makes it wrong.

I think you misunderstand those who argue against increases in taxes. The argument is not "principles" but practicality of it. It is never %4 on %2. For instance the "bush tax cuts" would have cut the taxes of the poorest brackets in half, but the democrats wouldn't allow that. That there was %7 on %90 or so.

High taxes are why we're hurting in the first place. It is government that has so damaged our economy. Take the housing bubble, for instance. Ideologues want to pretend that "banks" caused it, but the reality is it was clinton and bush.

During the clinton era, they decided that "lending money only to people who can pay it back is racist" and changed bank regulations to make the "american dream" available to "all". Then under bush, the interest rate-- controlled by the government via the federal reserve-- was lowered below inflation, which means you could borrow money and earn a zero-risk return on it higher than the cost of borrowing. The primary mechanism for this was the housing market.

Thus, housing bubble. Leftists like Krugman praised it claiming that the housing bubble was just what the economy needed. Meanwhile, practical people who understand economics warned against it.

Now, after half a decade of listening to political types claim there was no housing bubble, or that the bankers caused it, you're now claiming we need to raise taxes because its "practical".

I'd like to see you explain how it is practical.

One things for sure, it won't help the economy.

I'm talking about taxes on the top earners, not 'middle class' taxes. It's "practical" in the sense that it would help reduce the deficit which a certain group of people seem to be so outraged at. Of course, we can cut benefits, which I'm assuming is your preferred mechanism for balancing the budget. The problem is that cutting benefits seems to negatively affect a higher percentage of the population who are not top earners vs. scraping some bucks from the top of the incomprehensibly rich. Whether or not private enterprise is actually more "efficient" at spending money is something I would also like to see proven.

"Raising taxes on the top 2% of households, as Mr. Obama proposes, would bring in $34 billion next year: enough to cover nine days’ worth of the deficit,"

http://www.economist.com/node/17043472?story_id=17043472

This conversation is a waste of time and is pure political rhetoric for election season. $34 billion is insignificant and simply a means to incite class warfare.

Letting these cuts expire is the lowest-hanging fruit for boosting revenue — there are a lot of others above it, like expanding the estate tax before the boomers all die. They're just doing the simplest thing first.

The CRA required the same lending standards for good credit risks in minority neighborhoods, not lower standards. And it didn't even apply to the shady mortgage banks who fueled the housing bubble. They were eager to write loans to anyone who could fog a mirror, because they knew they could get a bent rating and dump even the stupidest loan on Wall St.

Actually, the CRA has very vague requirements, which led it to be used as a tool in a political process whereby community activists worked to block expansion of banks which did not meet their criteria. When stuck between the requirement that an institution's CRA activities should be undertaken in a safe and sound manner and the vocal opposition of politically powerful groups, the regulators did the logical thing in their situation and avoided bad publicity by relaxing standards. In addition, the law was changed to require Fannie and Freddie to do more business in low to moderate income areas in the early 2000s, which defacto reduced their standards and allowed a great deal of crappy subprime paper to be stamped with an implicit (later explicit) government guarantee. If it weren't for this last part, a lot of those loans could not have been securitized. The flood of low quality mortgages did not come as a result of regulatory laxity but of legislative intent, and that is the story that is not being told.

You are mischaracterizing his argument. It is 100% economic.

The "practicality of it" is to make the economy more sound, not some slavish devotion to laissez faire ideals for subjective reasons.

I'm not so sure you're being objective about it. He responds with a logical response that explains why he makes the claim that the OP is missing the point. Your response to him is; "Really? A 4% increase on 2% of the population is going to destroy the country?" Which doesn't say anything at all, especially in response to what the poster said.

Furthermore, in my experience it is exactly the opposite. Most of the people who advocate raising taxes do so for ideological reasons. While those in favor of lowering it are for practical. I'm not saying everyone, there are people who believe raising taxes will stimulate the economy, and there are people who are ideologically opposed to taxes; Ayn Rand for example (although she is opposed for practical reasons also.) That's just been my experience.

The error that no big-government types ever seem willing to address is that the money they take out of the economy, they take out right at the point where it would do the most good for people. Where it would be going to expand businesses and create jobs and eliminate poverty, or allow families to buy a new car, or pay for college, it goes into government which spends it, inefficiently, on programs that are claimed to solve the problems that are caused by taking the money out in the first place. (And programs which are inevitably operated to perpetuate themselves more than to help people.)

India reduced regulations on businesses dramatically in 1980 and has managed to double the standard of living for over a billion people. The poor in india are a lot less poor now, and there's lots of comparatively rich people in india now who have surplus income to give to their extended families, which is a second bonus for the poor.

If governments would just let people be, poverty would be eliminated. In fact, poverty is the pinnacle achievement of government.

Why? Because if you have masses of poor people, you can manipulate them easier, because they are dependent on you. This is how the soviet union survived for 70 years, and it is what big government types are trying to do to the US now.

> If governments would just let people be, poverty would be eliminated. In fact, poverty is the pinnacle achievement of government.

This is either breathtakingly naïve or terrifically disingenuous. Human history shows us many times and places that had little or no government intervention, and such milieux weren't exactly the utopias that lzw seems to claim. When governments "just let people be", we get robber barons, rapacious working conditions, and a beaten-down underclass. The golden age of the middle class in the US occurred in the decades following labor reform, regulation, and the social safety net; and I don't even need to claim that this correlation is causative to cite it as a counterexample to lzw's patently absurd suggestion here.

OF course, as the product of a government school, you believe what you were taught, and you think as you were taught to think, and therefore, simply pointing out obvious history is, to your unthinking mind "absurd". You trot out nonsense like "robber barrons" ignoring the fact that robber barrons were actually a good thing, and were nigher robbers, nor barrons, and did more to increase the standard of living of the poorest in this country than any of the socialist nonsense your addled brain endorses. You are a good cow, and you just mooed, and you are offended that someone might not want to be a cow. Well, the time of your slaughter is getting close, I hope you're nice and fat for the farmer.

Me? I've left the farm. Life's to short to try to educate cows.

Absolutely right. I think people miss the point that no matter what wealthy people do--whether spending, saving or investing--that money is active in the economy.

The other thing missing from this guy's write up is that the human mind is at the center of all value creation. It's as if he thinks money is what creates opportunity and if you just distribute it right--good things will happen. Not true.

The cause of our economic plight is a lack of great minds being applied constructively. One of the reasons that's not happening right now, beyond just poor education, is several decades of messed up interest rates sending the wrong economic signals.

He's also missing the point that he's in the vocal minority of people who are not motivated by the tax rate and that there are many other people who expend time and money hiring accountants and lawyers to structure their investments in ways that avoids these taxes. Why pay 28 to 35 percent when you can pay 15 percent, which probably ends up looking more like 18 percent after all the fees? These people do not go around writing articles about it because they don't want any attention from the media or the IRS but they certainly do exist.

And even more people don't "expend time and money hiring accountants and lawyers to structure their investments", they just do simple obvious things, like put money into tax free municipal bonds instead of things that might grow the economy (for a worst case, a money losing stadium complex vs. a startup).

I watched my parent's economic behavior change quite a bit after the Carter and Reagan tax cuts, specifically on capital gains (yes, Carter started this and the general deregulation of the economy, e.g. air travel and trucks), on "unearned" income (70% before the Reagan tax cuts), etc.

Their behavior and many others became economically much more productive, resulting in the long boom from 1983-4 to the "new normal" we fear will come from the Great Recession and the responses to it.

I'm poor, tax me less.

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