Ocasio-Cortez Says 70% Ultra-Rich Tax Could Pay for Climate Plan
bloomberg.com
bloomberg.com
>"Added together, the total net worth for 2018's billionaires was US$9.1 trillion" https://en.wikipedia.org/wiki/The_World%27s_Billionaires
Meanwhile, the US federal government spends ~$4 trillion per year: https://en.wikipedia.org/wiki/United_States_federal_budget#/...
So even confiscating all the wealth of the top couple thousand richest people in the world (not just US) would only fund the US government for 2-3 years. And that would be a one-time event.
Basically, the amount of money spent by the US government is already so massive that I don't see how giving it more can possibly help with anything. It would be much more realistic to attempt making the government slightly more efficient and then reallocating the money saved.
And that ignores that barely anyone will end up paying these 90% taxes, just like almost no revenue was collected from the 90% bracket in the 1950s since various accounting methods/etc were be used to avoid it.
Anyway the climate plan is more about moving money around than just taking it and throwing it in a hole. Ideally, more wealth would be generated from people actually spending the money for useful things than would be made from the passive investments favored by the ultra-rich.
I don't follow. Why do you think GDP is the "right number" instead of tax revenue?
Yea, I guess you are correct. I just consider adding to the national debt another form of tax (via inflation).
>"My point was you need to look at capital gains and business taxes to get an idea of how much money there is available."
Still not following. I am concerned with the government spending a very large amount per year. Spending these resources more efficiently seems like low hanging fruit vs just raising taxes on whatever. The idea of confiscating the wealth of the ultra rich is just to demonstrate that they really aren't that rich compared to what the US government is spending.
So if the actual desired outcome was to get, eg this climate project done, then I would expect people to be exploring that option. Plus increased efficiency should be better for the climate...
If this seems radical, notice that this is already part of the American social contract. We already tax people to provide services and invest in long term projects. All this does is change the rates and the allocation direction.
Ok, well here is a department of the government I am familiar with admitting they waste $25-30 billion every year (imo that is an underestimate, but they definitely waste over 50% of their funding on worthless stuff): https://nihrecord.nih.gov/newsletters/2016/07_01_2016/story3...
So why not reallocate that to whatever this climate project is? And I'm sure there is similar massive waste in other departments too. If 87.5% is representative that is $3.5 trillion per year to be used.
I mean no one actually wants to waste ~$30 billion a year on worthless medical research, right?
This reminds me of the Wanamaker quote: “Half the money I spend on advertising is wasted; the trouble is I don't know which half”.
Once you know the common problems, it is actually quite easy to spot design flaws or a history of hiding unwanted results. When you know what to look for you can filter out crappy research in a few seconds. It could probably be automated to a large extent.
For example, a common thing in biomed is to have a "headline claim" that x protein/drug/etc influences y behavior/health outcome/etc. But then there is never a scatterplot of x vs y.
Another is lack of "blinding" (hiding the experimental conditions from the researcher/subjects). There are more, but you get the picture. The presence of these baffling practices quickly demonstrates they don't know what they are doing, and the research should not be funded.
That simplistic logic fails to account for the fact that pursuing income is an incentive to allocate resources to productive investments that are self-sufficient and pay off tons of taxes directly and indirextly, such as by paying salaries and generating demand.
Once you start to impose communist "reallocation mechanisms", not only are you eliminating incentives for productive investments as they effectively cease to be productive due to state intervention and actually create incentives to move production and industrial capabilities out of the country.
In short, you're advocating that the goose that lays golden eggs should be slautered to get to someone else's eggs.
You mean, like a heirarchy of preferential tax rates for different income sources where capital income is favored over general income which in turn is favored over labor income?
In a free and democratic society, a citizen has the right to the fruit of his labour, not just to a small fraction of what he worked for.
> Robbing someone of 70% of their income is way more aggravating and profoundly totalitarian than a simple progressive tax.
A 70% top marginal rate isn't taxing (much less “robbing”) 70% of your income, unless your income is literally infinite.
Also, the top marginal rate was at or above 70% for every year from 1936 through 1980, yet for some reason those 44 years aren't usually considered a “profoundly totalitarian” period in US history.
Why? What do you think happens to money after the government spends it? It vanishes?
I support things like a tax on digital advertising. This is a tax that wouldn’t slow growth or harm the econo,y really and impacts mostly those with extremely high capital investments. Facebook, Google help our economy a lot but they don’t have that many jobs in relation to profits. A 10% tax on digital advertising would eat marginally into their profits but their profits rise 25% a year so not too bad. That would raise around $15-$20B a year by 2020. Imagine how doubling the subsidies for solar and EVs would do for renewables and EVs.
Competent politicians aren't competent because they're knowledgeable in every possible topic, but because they surround themselves with subject matter experts.
¿Por qué no los dos? Is Ocasio-Cortez surrounding herself with subject-matter experts?
In my experience, it's often just "interested parties". I'm thinking of multiple cases where political advocacy groups I've worked with have drafted a bill proposal and taken it directly to state-level legislators seeking to have them sponsor it. In every case, they either refused or submitted the bill as-is without modification.
In one case, that means that an Arkansas law was actually drafted by a 16-year-old (me). That one was relatively minor in the grand scheme of things, but still :)
Secondly, isn't empathy, vision, ambition and an ability to rally people incredibly important for a politician? Politicians aren't supposed to know everything, but rather work with appropriate experts and aides.
Not seeing it. I've spent some time working in a (state, not federal) legislative office and have a political science degree (specialized in pragmatics of US politics.) I've seen some of her interviews. I don't see anything that indicates that she would be incompetent as a legislator. Could you explain the basis for your assessment?
Now, this could be that she's not good at interviews, and feels the need to keep talking to appear competent. She could know far more, and just be unable (yet) to bring it out in front of the cameras. But to me, she comes off as talking without knowing. That scares me in someone who can write legislation.
Every large organization (public or private) has waste the same way every large computer system has waste. Management is complex and there’s simply no way to optimize all resources in real-time. In software we may lament some of the bloat but we generally accept it as a necessary evil. In places where performance is extra valuable we profile and optimize the path. Well the same thing happens in government and corporations. Government of Ontario spends a good chunk of money on grants to health care system researchers to incrementally make things better and the system is doing really well considering how underfunded parts of it are.
These are just off the top of my head. I'm not saying there aren't things that do run relatively effectively... I will also say there is gross overspending at all levels.
For the most part, the military could be cut to a fraction of the current size without much lost. A lot of the rest could be made up by shifting IP registration costs, and reducing protectionism. There's plenty of fat to trim...
Start looking at how all the replacement transportation can be put in place 11 years - either getting all cars off the road, and manufacturing new electric ones; or building other mass transit that can serve everyone (and how long does it take to get a train line built these days?). How are we going to find enough building contractors to install electric heat or heat pumps into every house that uses oil or gas, and to build and install electric stoves?
And of course there's the upheaval of jobs for all the people in the current industries, and trying to find a place for them in the new industries.
Money's not the bottleneck here, we're more constrained by logistics.
Remember also that the vast majority of logistical challenges with climate change aren't developing new products, but handling coordination problems around deploying existing ones.
Things that might happen if America decided to commit seriously to a Green New Deal: - automotive roadmap overhaul to 80% electric drivetrain for all deliveries in the United States by 2030 - tectonic shift in land use around the country to higher density zoning, mass transit, HSR - hundreds of billions of dollars of research to public and private institutions to map all the carbon in our system and the most effective ways to remove it
But these are all giant changes. Here are simple ones that are straight up applications of government power: - switch all major urban areas to Tokyo style zoning with property taxes tied to mass transit investment - steep cliff on ICE vehicles delivered in the United States hitting some x00% in 2030 - end all fossil fuel subsidies - move all energy supply to a Texas style market
Emergent properties of human behavior responding to incentives would take care of the rest.
Yes, that was exactly my point. There simply aren't enough people making electric cars, heat pumps, and all those other new products, to eliminate fossil fuel dependence by 2030, which was what AOC was advocating. Diverting enough resources would be disastrous to other industries, and then once we've made the huge investment to build all that, we suddenly don't need the capacity once we hit the goal. It's economic suicide.
Emergent properties of human behavior responding to incentives would take care of the rest.
You're outlining programs that would push us in the right direction, which is good. These are not things which will eliminate fossil fuel dependence by 2030, which is what AOC was shooting for, and which I'm criticizing.
Beyond this, is expanding the power needs for areas that may not have capacity meaning more infrastructure. Replacing main breakers and panels...
> During World War I, the top rate rose to 77% and the income threshold to be in this top bracket increased to $1,000,000 (equivalent to $19.6 million[68] in 2018 dollars).
> During 1944 and 1945, the top rate was its all-time high at 94% applied to income above $200,000 (equivalent to $2.85 million[68] in 2018 dollars).
Nominal Tax Rates and Brackets, 1913-2013: https://files.taxfoundation.org/legacy/docs/fed_individual_r...
Inflation-adjusted Tax Rates and Brackets, 1913-2013 (in 2012 Dollars): https://files.taxfoundation.org/legacy/docs/fed_individual_r...
To pay high taxes, that means liquidating those stocks and bonds (or in the case of income taxes, never buying them in the first place). That limits the financing that corporations can get, preventing expansion or causing them to downsize.
In other words, taxing the rich actually takes from corporations. Maybe that's the goal, but it has consequences, like job losses, greater dependence on foreign investment and imports, etc.
You could use a function with a smooth derivative, and since a table is used in application it would have no effect on practical complexity of tax prep, though it would make intuitive grasp even harder (and it's already bad.)
If you made the delta 9%, that would get you 44% at $1M, 53% at 10M, 62% at $100M, and 71% at $1B. This gets you in the neighborhood of Ocasio-Cortez's idea, but without one big step to get you there. (I suspect that it would also raise considerably less money than her plan...)
Yes, then you still have the cash loophole, but most people aren't using cash.
> Sanders said income tax rates under Eisenhower were as high as 90 percent.
> A look through the records shows that top earners in the eight years of Eisenhower’s presidency paid a top income tax rate of 91 percent. It was even a bit higher before he took office.
> We rate Sanders’ statement True.
[1] https://www.politifact.com/truth-o-meter/statements/2015/nov...
Climate change is not WWII.
I'd say Katrina, Sandy, Irene, Maria, Camp, Woolsey, and Mendocino, but if you're not convinced already you'll never be.
Climate change shouldn't be political or some far-off hypothetical.. no propaganda, rationalization or BS can deny the mountain of evidence that it's an immediate, existential threat that demands immediate, decisive action on the decatrillion-dollar moonshot scale (roughly the total, multi-decade cost of Iraq & Afghanistan).
The sentence you highlighted has nothing to do with WWII.
Eisenhower was president from 1953 to 1961.
[0]: i.e., legal
[1]: i.e., illegal
https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...
Note I just grabbed the first google result, may be inaccurate / biased
I know it's fashionable these days to play on people's resentment for "the rich" (however that is conveniently defined at the time), but this is budgetary advice from somebody who didn't think far enough ahead to budget her first month of rent in DC (or find a roommate), and who once said that the reason unemployment is low is that "everyone is working two jobs".
If you want a progressive policy, this person is not likely to be able to hold that policy's basic premise in her head, let alone any important details. I'm not a progressive, but surely it's easy to see how a Tulsi Gabbard, for example, is actually likely to produce some form of meaningful policy on at least some issues, whereas AOC mostly relies on desperately clawing to relevance through cheap popularity stunts and gaffes.
Her idea may in fact be good, but on this point, her logic does not work.
As for the idea itself: IIRC, there seem to be significant second-order effects that keep the federal government's income at 18-22% of GDP, no matter what the tax rates are. So raising the rates like this may provide significantly less new income than she expects.
What's more, if you have a pot of new money, there will be competing ideas for how to spend it. This green initiative may be a good idea. Somebody else may have a good idea - say, Medicare for all. And a different somebody may have another good idea - say, guaranteed basic income. The problem is, even if raising the taxes provides the expected money, the money is only enough for one of these ideas. You can only spend that pot once. But Congress being Congress, they're going to want to spend it three times. (Note well: This specific paragraph is not a criticism of Ocasio-Cortez's idea; it's a criticism of Congress in general.)
But it does rebut the common line of argument that it is preemptively deployed against, which is “Radical ideas should be rejected as bad merely because they are radical.”
> As for the idea itself: IIRC, there seem to be significant second-order effects that keep the federal government's income at 18-22% of GDP, no matter what the tax rates are. So raising the rates like this may provide significantly less new income than she expects.
To the extent that revenue seems relatively stable with apparently large changes in rates, I don't think those are “second order effects”, I think that they are coordinated changes to tax policy other than rates. The US doesn't have some kind fof special sui generis immunity to policy changing effective rate of total taxation.
Also, US federal tax revenues were 27.1% of GDP in 2017 [0], so the 18-22% range is not only not immutable, but also not what is recently observed.
[0] https://www.oecd.org/tax/revenue-statistics-united-states.pd...
There might be some kind of gaussian distribution on good ideas, though. The more radical an idea, the lower probability that it's correct. It's still not zero, and the idea should be judged on the merits. But the further out the idea is, the more radical it is, it seems reasonable to say that the level of skepticism should go up.
-- Government-led investment in energy and resource efficiency, as well as reusable energies and microgeneration;
--Low-carbon infrastructure redevelopment in order to create jobs;
--A directed tax on the profits of oil and gas companies with proceeds being invested in renewable energy and energy efficiency;
--Financial incentives for green investment and reduced energy usage, including low interest rates for green investment;
--Re-regulation of international finance, including capital controls, and increased scrutiny of financial derivatives - likely along the lines of Basel II;
--Curbing corporate tax evasion through compulsory financial reporting and by clamping down on tax havens;
It's a bit of a conundrum. The richer you get, the more power you have (via money). We want to tap into that wealth/power for the greater good. Those affected might disagree and can wield said power to prevent you from doing so. You might be able to legally force them to using the power of democracy, but this could cause all sorts of other problems (the rich fleeing to other countries, etc.)
Especially if you manage to do enough damage to society through your greed that it necessitates a class war. We can either redistribute peacefully in an attempt to solve problems that largely affect the poor, or we can push them off until the poor get desperate.
Warren Buffett doesn't actually like it, otherwise he'd be writing checks to the treasury.
And rightfully so. When pretty much everyone benefited from lax climate controls and externalities that are not directly included in the price of a product or service, why should only on special group pay for it? If there were a global move towards pricing in climate change into the end price, however that may work, I would strongly suggest that everyone has to pay their share. Or am I missing something here?
I think the argument would be that the ultra-wealthy benefited more from a carbon-based economy than the average worker, in the form of their accumulated fortune.
However, IF we would have taxed the greenhouse gas emissions into every product, maybe not even the middle class would have been able to afford it. But since gas was cheap, a lot of people were able to afford having a car, building houses, getting to their jobs without moving their homes and were able to improve their lives.
I do see the point in your argument, I just think it would be a fairer solution to tax everyone for the climate change linear to their consumption.
(I say "at least nominally" because I'm not sure that this actually works as advertised. If it did, the deficit shouldn't increase from one year to another, except perhaps in an economic downturn.)
Therefore, domestic policy is not the place where a real impact can be made. It's a foreign policy matter, and something that can really only be accomplished through treaties and the like.
China's contribution to carbon emissions is approximately twice the US's. Trump wants to threaten to harm China's economy through tariffs. Why not combine those two goals and craft legislation so that tariffs are set on a sliding scale based on the origin nation's total carbon emissions?
First, the US has a progressive tax code. So, you wouldn't be taxed 70% on your entire income, only the money over a certain amount. Plus, due to deductions and other loopholes, nobody will actually pay this full amount.
Secondly, this rate isn't a new idea. It was 94% under FDR (democrat) and 91% during the Eisenhower (republican) administration, and both resulted in times of prosperity. And it was 70% as recently as the 80s.
Both occurred during (some) times of prosperity. That's an entirely different premise than giving the tax rate credit for the prosperity. FDR never once saw sustained economic prosperity during his tenure in office. That isn't a statement on his policies, rather, his time in office coincided with the great depression and WW2. He died before the post war boom took hold.
Of course, it's not an actual block on tax increases, and there's a straight-to-the-ballot bypass available.
Similarly, we should also require that regulations on industry be approved by the regulated industry, and that criminal punishments be ratified by those who are guilty of the specific crime.
> I think the numbers you just talked about is part of the problem. Because we look at these figures and say, "Unemployment is low. Everything is fine." Well unemployment is low because everyone has two jobs. Unemployment is low because people are working 60, 70, 80 hours a week and can barely feed their kids.
This was so incorrect that Politifact rated it "pants on fire".[2]
AOC also doesn't seem to have an understanding of basic historical facts. Immediately after she put her foot in her mouth on labor stats, she said:
> Right now we have this no-holds-barred wild west hypercapitalism. What that means is profit at any cost. Capitalism has not always existed in the world and it will not always exist in the world. When this country started, we were not capitalist. We did not operate on a capitalist economy.
That is not the sort of mind that I want tinkering with the economy I am part of.
1. Starting around 5:45 in this video: https://www.pbs.org/video/alexandria-ocasio-cortez-barhhq/
2. https://www.politifact.com/truth-o-meter/statements/2018/jul...