Somebody else made that happen—and he’s here to collect
The President has been insisting for some time now that those who earn more than $250,000 a year are not paying their “fair share.” One must assume that the President is aware that these “wealthy” Americans are in fact paying more than their fair share, under any obvious definition of the word. So what exactly does he mean when he keeps referring to a “fair share”?
Last Friday, the President dropped a big hint as to how he answers that question, and in the process put his campaign into damage control mode (including calling out Romney for quoting the President’s words back to him):
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.”
Before we get to the “what does he mean by ‘that’” question, let’s focus on what the President’s supporters say he really meant by the money line: “If you’ve got a business, you didn’t build that. Somebody else made that happen.” Let’s assume for the moment that the President is in fact referring to infrastructure—i.e., publically funded schools, roads, fire and police services. And those are just the cheap and easy examples to get the heads nodding. (The President was standing on a road across from a firehouse. Sometimes, you say what you see.) We also need government to provide a stable currency and a transparent, arm’s-length financial system. We need government to provide a legal system that allows individuals to collectivize and risk their capital in limited liability organizations, and to check the behavior of those organizations with appropriate regulations (civil damages are quite a bit insufficient if you’re a victim of the Triangle Shirtwaist fire, for example). We need government to protect intellectual property and balance innovation with Jefferson’s vision of ideas as fires that must spread or die. And so on.
It’s all of this, far more than mere roads and schools and police and fire protection that entrepreneurs absolutely depend on to create new wealth. And if we’re being charitable—because, to be precise, a literal construction defines “that” as referring to the nearest preceding object, i.e., “business”—then the President is referring to this sort of infrastructure.
The real hint to understanding the President’s vision of “fairness,” then, is in another line of his speech: “The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.” This is more revealing than it might at first appear. Consider: Not one serious person is suggesting we stop acting collectively (i.e., through government) to provide education, roads, police and fire service, courts, a stable currency, and the rest of the necessary infrastructure of a modern economy. And this is true even though, as I will argue in a forthcoming long piece, a strict conservative constitutionalism denies the federal government from providing many of the components of this infrastructure.
Thus, the President’s remarks were not advocacy for some particular spending program or other policy objective. They were an articulation of his understanding of the moral basis of the modern economy: A financier, for example, cannot pretend to the same sort of moral claim over a stock dividend as a farmer has over his crop. The simple farmer owed thanks to no man, but the financier owes his good fortune to a long train of economists, inventors, statesmen, intellectuals, entrepreneurs, armies of blue-collar workers, and untold others.
The President is not wrong about this, if I have not gone overboard already by reading so far into his remarks. But there is a logical leap, a principled leap, that the President is not entitled to make unilaterally, not without a full-throated articulation to the American people of what he is about. When he says, “we succeed … because we do things together,” I suspect he means that, somewhere along the way of achieving this modern economy, we have done away with the presumption that the individual owns his success and treasure. I suspect the President thinks we have replaced it with the presumption that the wealth generated in this country—by individuals making profitable use of the infrastructure created by their forebears—belongs to the collective, and specifically to the institution that acts on behalf of the collective: the government. The government owns the means of production, and thus holds a lien on all wealth. The individual no longer invests in infrastructure; infrastructure invests in the individual.
One can also see this presumption in the way the President speaks of taxes. In a recent speech concerning another extension of the Bush tax cuts, the President twice referred to the cuts as “spending,” suggesting that the money you earn does not belong to you unless and until the government decides not to tax it. This further evinces the notion that, for the President, our success and our wealth is derived “together,” and it is together, through government, that it is owned.
The problem is, we don’t do things that way. It is not the American way, no matter how elastic that term may be. It’s not that we can’t have the conversation. It’s just that it’s so obviously far beyond the beliefs of mainstream Americans that it would be politically foolish to try. Maybe Robert Reich will write another honest (and politically toxic) speech in favor of the President’s economic vision the way he did for the left’s health care vision.
For now, the President’s July 13 speech will do. The statement “you didn’t build that” is a double entendre, and for the President, both meanings are true: Yes, that entrepreneurs need infrastructure; but also that the government, not individuals, presumptively deserves the credit for economic success.
The thing that bugs me is that the President talks as though the Internet was something that just kind of happened; taxes went into government and the Internet came back out.
The Internet was the direct result of defense-industry spending, which is apparently Public Enemy Number One on every progressive’s funding-cuts list. So the government made the Internet, but we’re not actually going to keep the part of the government that did it.Report
Exactly duck…libs want to get rid of defence spending…brilliant….
You want to get a bout 99% of libs to actually agree on something, ask them if we should spend more on research, science and tech dev..the answer is yes.Report
Greg are you seriously denying that the US defence budget is too big and can be reasonably cut down by at least 15%?Report
No. I ‘d love to cut the defence budget. DD said “we’re not actually going to keep the part of the government that did it.” suggesting lib’s want to get rid of it all. Of course we could cut defence and should. but lib’s aren’t for the stupid cartoon version presented by conservatives that we’ll gut the budget so much we would be defenceless.Report
Sequestration, bro. A hundred and twenty billion dollars less every year for the next ten years. And if you think that means they’re going to keep all the R&D and send all the tanks and planes and assault rifles to rust in some Nevada boneyard, you got another think coming.Report
Oh crimany…the unamerican crapReport
Oh, don’t get all Chris Matthews about it.Report
Je suis désolé, ma m’excuserReport
You preface the entire first half of the post to be charitable…and in doing so you set up…I don’t quite know what it is, but it seems like you’re trying to build an even more elaborate “The President is a Socialist” argument out of that interpretation.
It would of course, be useful in the context of the speech you quote. He specifically is talking about tax cuts in the context of budgeting the federal budget. Tax cuts are a tax expenditure, particularly when you’re talking about ones that are set to expire. Just like how tax credits are spending, or subsidies are spending. Contextually the argument is that making a tax cut permanent is a deliberate spending decision versus targeted cuts elsewhere. It’s taking money from a revenue stream and putting it somewhere else.
Semantical definitions aside, if the President actually believed what you’re attributing to him, his policy proposals would go beyond the differences in marginal rates that he’s proposing and go into higher, confiscatory taxation policies. He’s not saying that. Baseline taxation based on marginal tax rates isn’t the same as believing all profit or income is collectively owned, and making that logical leap smacks of paranoia.Report
Nob,
As I said, no one disagrees that we need infrastructure. Presuming the President is engaging a discussion with his opponents rather than simply agreeing with them, we have to conclude that he believes the infrastructure he’s talking about is relevant to the way he thinks about success and wealth.
Robert Reich, whatever else he might be, is a straight shooter. There are things the left can’t, won’t say on a stump. If anyone knows what those things are, Reich does. I don’t think anyone would say Reich is paranoid about that.
In the same speech in which the President refers to the tax extensions “spending” as to the wealthy, he refers to the expiration of the extensions as “raising” taxes as to the middle class. He was not using these terms strictly as a government accountant.Report
Ditto what Nob said. It’s entirely legitimate to ask if Obama is shifting the balance too far toward the group, too far from the individual, but to see this as anything more than a dispute about where the boundary lies–to see it as approaching eliminating the boundary and making it all group–is too read far too much into his words.Report
It might be legitimate, but talking about Obama in those terms makes me wonder what planet people are living on. After all, the policy context of this quote is Obama’s socialist desire to…raise the top marginal tax rate by 4 points.Report
Or to put it another way: He’s talking about pushing the boundary back to 1998. Not 1898. (And not even fully! Just a bit!).
We’re not talking rolling back the New Deal (ie, going back 60 years ago)– which I might add actually IS pretty much a major goal of a sizeable chunk of the GOP.
It’s hard to take all this seriously.
The current tax rate wasn’t handed down by Libertarian Jesus. It was voted on in 2001 by people adverse enough to reality (they didn’t want to admit the costs) that they set it to expire in a decade.
All this reading of the President’s tea leaves and trying to shoehorn in meanings to a pretty basic “We’re all in this together, chums!” statement over…this?
Whether to make permanent part of a temporary tax cut passed a decade ago?
My god, the horror.Report
I’m starting to think that this is the equivalent of a 4th-hand story about the whopper that Bob caught when he was fishing the other day. Obama made a completely banal point in an awkward way, but after it gets passed through the Fox/Drudge/Blogosphere media machine a few times, he’ll be standing on that podium with a hammer and sickle talking about liquidating the Kulaks.Report
You spent the first part of the article showing how our government helps foster success and then in the last paragraph you deny it any credit. “The point is, is that when we succeed, we succeed because of our individual initiative” doesn’t sound like The President is denying individual credit.Report
I don’t think I deny credit to government-facilitated infrastructure, though I admit I don’t go into detail how I think it’s relevant to the way we think about wealth and success. I’ll be going into that in a forthcoming post. Suffice it to say for this post, I disagree that this infrastructure means that government has a moral claim on individual success. I believe that, even though the President is correct that success in a modern economy can’t possibly come on one’s own, we still have to assign success and failure to the individual, just as we don’t excuse bad behavior because “society made him do it.” Of course, this all gets complicated, because we might consider such things as mitigating factors. But my argument is about where our presumptions lie.Report
When he says, “we succeed … because we do things together,” I suspect … the President thinks … that the wealth generated in this country … belongs to the collective, and specifically to … the government.
And I suspect that when he says, “we succeed … because we do things together,” that he means “we succeed … because we do things together.” It just seems like a safer way to interpret his statement.Report
If you want to be safe about it, then you can stop at “If you’ve got a business, you didn’t build that. Somebody else made that happen,” and have a good day.Report
Yeah, because applying grade school reading comprehension skills to a paragraph is exactly the same thing as going from “we succeed because we do things together” to “the wealth generated in this country belongs to the collective”.Report
i prefer elizabeth warren’s framing to obama’s.Report
I can understand why the Romney campaign wants to take a quote out of context, completely misrepresent its meaning, and spin it up as un-American (see, e.g., John Sununu), but I am at a loss as to why somebody who is not associated with the Romney campaign would want to embarrass himself like that.Report
Not another Chris Matthews.Report
And you were doing so well …Report
A cursory examination of the tax code reveals different tax rates for different people. If we are to put “fair share” in quotes, we might start with any child’s assertions about fairness: that what’s true for me ought to be true for you as well. Thus collapses this entire mendacious argument in a flaming heap.
But I will kick at the embers a bit more.
Nobody’s a success on his own. Anyone who pays anyone else for a job well done knows this is true: the client and the customer become a joint mechanism for both sides to feel the brisk hearty breeze of success. Nobody builds a business on his own: success always has a thousand fathers, yes, and mothers, too. Anyone who feels this is not true ought to truthfully examine their own lives and careers and be quiet thereafter, saving those of us who are grateful for the help and encouragement we’ve received from further generation of stomach acid.
Nobody succeeds on his own. To say otherwise is a flat-out lie.
Farmers owe thanks to many men and many of them will thank the powers for crop insurance this year. Farmers are utterly dependent upon the infrastructure which gets their grain to the elevator, where they are paid on the basis of the commodities futures marketplace and the related spot marketplaces on them. The farmer is perhaps the most-dependent of all entrepreneurs upon working infrastructure.
The cobbler must stick to his last. Pray spare us any further talk about the Independent Farmer. This myth has been around since the time of Rome, where the doughty Agricola was held up as a paragon of independent virtue. He is no such thing.
It doesn’t matter who owns what in a modern society, thanks to the structures of government. Unless they’ve burned their mortgages, “homeowners” do not own the houses in which they live. Nor do they “own” the new cars in their driveways unless they’ve paid them off. Nobody did it “on their own”.The power of taxation and budgets are held by the House of Representatives. All this cheap talk about what money belongs to us and what belongs to the government is grade-school nonsense: your first few paragraphs went well enough, explaining the necessity of government. Infrastructure paid for by tax dollars is part of everyone’s success and we must all pay for it, as surely as we owe the banks our mortgage payments. The social contract is real enough: we are not only obliged to file tax returns as citizens, we are entitled to walk our dogs in the parks and drive on the roads and call 911 in emergencies, all facilities and benefits paid for with those tax dollars.
And now we shall pay for health insurance and we shall not see 62 year old women sent home from the hospital with breast cancer or the girl who owns the hair salon across the street putting a poster in her plate glass window having a haircut-a-thon to raise money for her treatment. If that woman were 65 she’d be covered by Medicare and the odds of her making it for another three years are very slim.
You didn’t build that. There’s a great deal we didn’t build as a society, things which might serve us all well. You might not wish for women to die of breast cancer because their insurance has been cancelled. You didn’t build that. What you really don’t like is the idea of someone else building it with your tax dollars. If the vast web of benefits both tangible and intangible eludes you, don’t get in the way of those of us who are trying to build a better world, a world from which you’ll benefit, too.Report
Blogging at this site has been a tremendous benefit to me, as it forces me to try very hard to see the other side’s point of view and anticipate that in my arguments. This comment finds me a bit stuck, because it makes the very arguments I anticipated, and indeed credited, in the OP. Blaise, where you and I differ, I suppose, is not in the realization that no one attains success on their own in a modern economy (or in a rudimentary economy, for that matter, to a lesser to a degree). Where we differ is whether this means the individual still has rights as against the collective.Report
“The only reason you see as far as you do is because you stand on the shoulders of giants!”
I don’t think that anyone disagrees with this statement.
“Therefore I am entitled to a certain amount of cash and obedience!”
This is where people tend to start asking “how much?” and “really?”
“If you don’t like it, move to Somalia!”Report
To use your analogy, we stand on the solders of giants, however those shoulders are crumbling and there is the possibility we can build them higher for our children.Report
“What happened to the last X dollars we gave you for the shoulders?”
“Pension obligations.”Report
That’s right obligations, ie something we gave our word we would do. Are you willing to be considered a liar and cheat?Report
“we gave our word we would do”
I’d need the “we” and the “our” broken down, there.
It seems to me that if the promise was made, say, before I was born, then there’s some fancy footwork going on there.
“A promise was made before you were born by people who have since died to people who haven’t died quite yet and the promise included regular payments on your part. Are you willing to be considered a liar and a cheat?”Report
A promise was made before your were born to people who were hired by the duly elected government of the USA and the promise included regular payments after their retirement in lue of other compensation while they were working. Are you willing to instruct our representatives to go back on this agreement thus proving us all lairs and cheats?Report
“Are you willing to instruct our representatives to go back on this agreement?”
Yes.Report
If it is legitimate for duly elected officials to make promises on behalf of people outside their immediate constituency, it’s certainly legitimate for duly elected officials to revoke those promises.Report
That seems like a good topic for our symposium. I’ve always been interested in the difference of the time horizons between private individuals, private corporations, and the government. Assuming you had a benevolent CEO and board, would it be a violation of their duties to their shareholders to engage in more environmentally-sound practices that rendered a loss in the short and medium term, but moral and community benefits in the long term? Stipulate that the goodwill the company would receive would be enormous, just that it would have to wait 30, 40, even 50 years for it. Is that benefit legally cognizable when it’s that far away? Morally cognizable? To whom is a duty owed? Present shareholders or future shareholders? The present community or future generations?Report
> Assuming you had a benevolent CEO and
> board, would it be a violation of their duties
> to their shareholders to engage in more
> environmentally-sound practices that
> rendered a loss in the short and medium
> term, but moral and community benefits
> in the long term?
I believe that the practical answer to your question is “yes”. That is, sufficient voting shareholders could sue on that basis and certainly win. Not that they necessarily would.
This is a problem.Report
I believe Patrick is correct. Even if we stipulate that there will be tremendous goodwill a long way down the road, deliberately pursuing a policy that renders a loss — deliberately pursuing a policy that does not maximize profit — would be readily characterized as a breach of the Board’s fiduciary duties to the stockholders. Profit is the only metric that counts. If society wants to encourage corporations to behave in an environmentally-sound but not profit-maximizing way, then the law needs to be altered such that penalties and incentives are created that maximize profit for the desired behavior. When considering this issue, however, critics typically consider the carrot side of the equation to be “corporate welfare” and the stick side of the equation to be “punitive over-regulation.”Report
By the way, this comment is intended to reply to Patrick’s comment above.Report
Has this ever actually happened?
What might a company with a social in addition to financial mission do in order to avoid this?
It’s well-known that Progressive Corporation (ie Progressive Insurance) has a social mission, of sorts. Any investor ought to know that. Could someone really invest in them and then turn around and sue because they’re “wasting money” on the Automotive X Prize?Report
By “this” I mean a lawsuit over a company being “irresponsible” by promoting or contributing to a social cause, not a company simply being “irresponsible” for some other reason (bailing out a board-members brother’s company or what-have-you). I’m sure lawsuits on the latter basis happened.Report
Patrick, They could surely sue on the grounds that the CEO abnegated his responsibilities to share-holders, but that doesn’t mean they’d win, of course. To win, it seems to me they’d have to show that the CEO acted willfully in doing so – that is, he knowingly chose to implement corporate policies placed environmental values above profit maximization.
But that’d be a tricky argument to make either in advance of the decision or even in the short term because for many firms maximizing corporate profits relies on the public viewing the firm in a favorable light. I’d think that the suit would have merit only if the negative effects of those decisions could be shown over a period of time and the loss of profits could be directly attributed to those choices.Report
I posted a response to Patrick here. Don’t know how it got shunted to the bottom.Report
If the Constitution and the Bill of Rights are promises we have to keep as a Nation (And I think they are, even though we do a poor job of it) then so are all the other laws we enact. Regardless of whether they were passed by persons long dead and buried or if they effect people generations from being born. Else, yes, we are liars and cheats.Report
We pass a budget that promises snowflakes and unicorns to everybody on a bond that matures in 30 years, where the payback schedule is deferred for 28 years, and the total value of the bond is > GDP.
This would be something that people 28 years from now could legitimately claim was a bad faith contract, right?Report
Yes and sue.Report
“If the Constitution and the Bill of Rights are promises we have to keep as a Nation (And I think they are, even though we do a poor job of it) then so are all the other laws we enact.”
Au contraire, it’s exactly the other way around (and this is actually a very important point even though it’s kind of obscure). It’s because the government is subordinate to the nation as a whole that the nation has the right to rescind promises made by the government for insufficient authority.
If you have a six-year old daughter, she probably has the authority to buy an ice cream pop from a truck, that doesn’t mean she has the authority to buy a Buick. If she signs a contract to that effect, her parents can simply repudiate it.Report
Only if they give back the Buick. In the case of pensions the nation has already received the services agreed upon.Report
The Constitution is basically the ruleset of the game — the government has to follow those rules, at least to the satisfaction of the referees in black robes. The laws are instances of the game being played, and nothing in the ruleset prevents the government from passing legislation to alter or undo prior legislation. So I don’t think your analogy really holds.Report
Call me crazy, but I think he’s just saying that government investment has been an essential component of American business success, and that the scope of government advocated by most Republicans at the state level (see recent articles on Kansas budgeting) and at the national level (see Romney and Ryan’s discretionary spending target) will make equivalent, modern interventions in the economy impossible. It’s not an argument about who’s most responsible for success or whether anyone deserves more taxation. It’s more an argument that (1) this type of spending is beneficial and (2) GOP policies are making it impossible.Report
The President has said that we no longer do things like the Golden Gate Bridge (not actually a government project) and the Hoover Dam. What are the Golden Gate Bridges and Hoover Dams that we need to build today that the GOP policies are making impossible? I’m actually curious.Report
Well, there are none, of course. Because global warming is a hoax, and public transportation is a collectivist plot.Report
Pick any project from this list.
Report Card for American InfrastructureReport
Thanks for this link, Loviatar.Report
Please. USDOT has put plenty of money into the Golden Gate bridge.Report
Take it up with Matt Welch. But I’d be curious to know your answer to his question: “That $35 million [county bond issue to build the bridge] during the Depression is worth around $530 million today, or far less than 1 percent of Obama’s stimulus package. So, where the hell are our new Golden Gates?”Report
Well since most of the ARRA consisted of tax cuts and aid to state governments, I’m not sure where this expectation that it immediately produce giant megaprojects is coming from.Report
If it were still acceptable for a dozen people to be killed during s construction project, we could build things a lot cheaper.Report
Eh, just because the federal gov’t didn’t build the Golden Gate Bridge diesn’t mean it wasn’t gov’t built. It was built by bonds issued by a set of counties–that’s still a collective building of infrastructure.Report
Healthcare reform. It’s not built of bricks and mortar, but a country’s healthcare system is an integral part of its infrastructure.Report
Cut the pretense that finance is more valuable than work by eliminating capital gains rates, and then we can start to talk about fair shares.Report
All things considered, investment income is actually taxed far more than labor income.Report
On earth?Report
Yes. In the US at least, and in most, if not all, other countries. The headline 15% rate obscures a number of other ways taxes take a bite out of investment income:
1. Investment income is diminished by past taxes levied on the principal. See Landsburg’s post on this issue here. Note that this effect compounds—each year your net worth is a smaller and smaller fraction of what it would have been without taxes.
2. Investment income is not indexed for inflation. You’re taxed on your nominal returns, not on your real returns. If inflation is high enough and your nominal returns are low enough, taxes can actually change a positive real return into a negative real return. Alternatively, you can model this as inflation being a tax on assets.
3. Corporate income taxes. If someone tells you that the rich pay very low tax rates, in the 15-20% neighborhood, he’s ignoring corporate income taxes. As corporate taxes come straight out of the cash holdings of corporations, payment of them is properly attributed to the owners of those corporations.
I believe I had a fourth point, but it’s escaping me at the moment.Report
1. Er, Landsburg’s point about grandma’s inheritance is only germane if you consider grandma’s inheritance transferring to Carl something that Carl legitimately earns. Now, we can go around the maypole about whose money it actually is, Carl’s or his grandmother’s, but Carl’s grandmother paying taxes on that money doesn’t mean in any way, shape, or form… that Carl paid any taxes on that money. That’s just odd reasoning there. Otherwise, I don’t have too stringent of a quibble with the rest of his point.
2. True. And is this the case, right now? Seems to me there’s a decent amount of evidence that investment income is far surpassing inflation. Put another way: in your opinion can we tax capital gains like any other income if we index it to inflation? Or is that still fundamentally unfair in some way?
3. No, payment is not properly attributed to the owners of those corporations. Well, unless it’s a partnership. You pay a vig for limited liability. You don’t want to pay that vig? Incorporate as a sole proprietorship. We can, of course, take the position that we charge too high of a vig for limited liability, but that’s a different issue than individual tax rates.Report
1. Not really. The point is that if Carl’s grandmother hadn’t paid those taxes, she would have had more money to pass on to Carl, who would then have more investment income. Taxing Carl’s grandmother has diminished his investment income.
2. Who knows what’s “fair?” All I’m saying is that investment income is taxed more heavily than wage income. The first point means that this will be true even if we index assets to inflation for taxation purposes. That would bring the effective rates closer together, but investment income would still be taxed more heavily.
3. I’m pretty sure that limited liability for debts is priced into corporate bonds and loans, so corporations are already paying creditors for that. There’s also limited liability for torts, but I’m pretty sure that most profitable corporations could buy liability insurance for a fraction of what they pay in corporate income taxes. Troubled corporations perhaps not, but they’re not making profits anyway. So it doesn’t seem plausible to me that large, successful corporations are choosing to remain incorporated specifically for limited liability. Can you even have a publicly traded partnership?
A little Googling reveals that there are publicly traded partnerships, but that the IRS will treat them as corporations for tax purposes unless at least 90% of their income comes from specific types of sources. So there’s the answer: Most large, publicly traded corporations don’t actually have the option to forgo limited liability in exchange for favorable tax treatment.
Also, keep in mind that even where a partnership is an option, the choice is between corporate income tax plus 15% for dividends and/or capital gains tax on the one hand, and taxes at the ordinary income rate on the other. Owners do not, under any circumstances, have the option to pay only the 15% investment income tax.Report
1. By this logic taxing anybody is taxing everybody double dip; all taxes are double-dip taxes. Or, rather N-dip taxes for N sufficiently large. If you tax me, that’s less money I have to engage in business, you’re taking money away from whoever I do business with. You only get away with this logic for inheritance taxes as a special case if you assume that Carl has some sort of specific right to *all* of grandma’s money as entailed on his behalf. Which plenty of people believe, but I’m not sure I’m on board. In fact, I’m pretty sure I’m *not* on board.
2. This doesn’t follow unless you’re assuming all these riders are true, Brandon. I’m not buying that entirely. Put another way, I see people who have investment income getting vastly increased wealth in the last two decades in comparison to people who rely solely on wage income, which corresponds to the drop in capital gains. So while your theory seems like there might be something to it, the empirical reality I see around me leads me to believe that there’s a Very Big Something that you’re missing.
3. The point is that the LLC is a legal fabrication – not in the sense that it is an untruth, but in the sense that it exists entirely as a construct of society for a purpose. Society gets to decide what that purpose is. You get access to the pubic trading capital, you get limited liability, you pay the costs that the law associates with that construction, incorporation fees and corporate tax rates.
I’m totally on board with arguments from justice when it comes to things like partnerships and individuals; when it comes to corporations they get the rights we grant them and nothing else… and if we choose to change the rules, we have the right to do that, as corporations have no moral existence of its own. See Tim’s question up above; for-profit corporations are, of a necessity, amoral creatures.
Put another another way, if corporate taxes are onerous (and I am by and large staggeringly unconvinced that they are for large corporations although small and medium businesses might have a case), the corporation (by the laws of the market) would not be able to compete against a simple pass-through tax competitor who was incorporated as a partnership and paid income tax rates on the profit… and then *those* critters would be dominating the market, right? If it’s so advantageous to pay income tax over corporate tax, an entrepreneur could attack a large corporation’s presence in the market and beat its brains out on costs alone. Sure, one entrepreneur couldn’t attack Proctor and Gamble, but a couple thousand small businesses should be able to attack P&G’s various brands in regional markets and beat them to death by the death of a Thousand Small Cuts.
I don’t see that at all, in the general marketplace… in fact I see quite the opposite in most industries. So again, you’ve got a theory that has some legs under it somewhere, but what we actually see in the real world would indicate you’re Missing Something.Report
Certainly. I think a company’s stock is going to go up, so I buy some of it, when it does I sell it, and I pay 15% on the proceeds. But on top of that, there’s, well, nothing. As against that, the company took the money I invested in them, and … hold on a second. They never saw a penny of it. But if they had issued more stock in the interim, my purchase would have had a tiny effect on determining its price. This makes me a hero of capitalism.Report
I don’t understand why I can’t “earn” a pile of money at a casino and get taxed at 15% like the big boys.Report
“Cut the pretense that finance is more valuable than work by eliminating capital gains rates, and then we can start to talk about fair shares.”
This is an important misunderstanding that libs need to clear up in their own heads before they can really be legitimate participants to the benefits of our political culture. Finance (or capital gains in general) is not taxed at lower rates than labor because it is more valuable than labor but because labor is captive, and capital can go other places, and it will, and it has.
There’s a bigger point here too. Libs have created a world where capital is much more valuable than it ought to be as a factor of production.
Not too long ago at the League we had this big symposium on inequality, which for the most part I didn’t participate in. But as near as I can see, nobody really made the connection between the basic structure of capital as a factor of production and our current labor market. Ie, a significant number of working Americans, probably most of them, are going to work in a situation where the boss gives them some set of reasonably well-defined duties, the employee does them either well or poorly, and in return the boss pays the employee periodically, usually every two weeks.
Wherein our current political environment, the powers that be have killed the opportunity and the desire of capital to participate in our labor markets, the capital that is still there is tremendously powerful. No matter how low the wages are, no matter how difficult or onerous the duties, the labor is available because it has nowhere to go.
That’s not the only thing to be said about economic inequality in America but it’s a decent-sized part of it.Report
To me, the article you link to does not make that point in an obvious way. It does indeed make the point that the very rich contribute a large amount of tax revenues, but it’s not obvious to me that that is a fair share. It’s not obvious to me that it isn’t, either, but there is room for debate.
The article quotes Sen. Kyl as saying “You got the top 2 percent paying almost half of all income taxes. Is that fair?” And his claim is followed by figures that purport to show that the top 1% pay about 36% of all income taxes and the top 5% pay about 59% of the total received by the federal government.
I admit that’s a pretty big chunk, and I also am very skeptical of the claim that “all we need to do is raise taxes on those who make over $250,000” to resolve our budget woes.
But I see at least two counterarguments. The first is that those who make more can better weather paying higher taxes than those who make less, and if taxes need to be increased, then it is not unreasonable to claim that those who already pay more might need to pay even more than that. Is 75% or 90%, as Arthur Brooks in the article claims, enough? Maybe, or maybe it’s too much. My point is, it’s something to consider.
Second, I suspect that those who pay the most taxes are pretty well served by what those taxes and other taxes pay for, which appears to have been part of Obama’s point. It’s not just infrastructure–physical and legal (property rights, etc.), the police officers and schools –it’s also medicare and social security (an income tax that’s doesn’t appear to be included when the article says that “nearly half of American wage earners – 49 percent – pay no federal income taxes at all”): I’m not just talking about the fact that if these programs continue, the very rich will live to enjoy them based on payments by less affluent workers; I’m also talking about the fact that social security and medicare probably help many of these people today care for their parents. It’s also the regulatory agencies that supposedly increase confidence in our banking and financial system, a confidence that arguably is beneficial to society as a whole, but that appears to benefit the very rich in the most immediate term.
Look, there’s a legitimate debate about how much is too much and how much is fair, and I realize there’s also a movement (among at least some conservatives and some liberals) to address the regressiveness of the medicare and social security programs.
How much is enough and how much is too much? I don’t know. But I don’t think the article you link to resolves the issue.Report
Anyone arguing that the 90s tax rates are ‘unfair’ has a tough row to hoe. Especially in light of the fact that the 2001 tax cuts were temporary by design.Report
I’d take issue with the article more directly, as it cherry-picks statistics to produce the impression that the Rich are paying a disproportionate share of the tax burden. For example, income taxes are not even close to the only revenue source for the Federal Government, and they are one of the most progressive revenue streams available to the feds. If you add in payroll taxes, capital gains, etc., you see the rest of the country paying a much larger share, and that number increases further if you add state governments that are supported by a number of regressive taxes, i.e. sales taxes, gas taxes, tolls and the like.
For another example, expressing the tax burden of the rich as a % of total tax receipts is a somewhat questionable metric, as this number will increase if the government taxes a larger share of their income, but it will also increase if their income increases relative to the rest of the country, as it has done for the past 30 years. So when somebody points out that the top 1% pay 36% of all income taxes, that says to me that the top 1% have a tremendous amount of pre-tax income, not that their tax burden is high. And indeed, if you look at the question in terms of all taxes (state, federal, and local) as a percentage of income, you’ll see that the total tax bite is barely progressive at all, with the vast majority of the country paying somewhere between 20% and 30% of their income.
http://www.ctj.org/pdf/taxday2011.pdfReport
I’m inclined to agree with you here.Report
For another example, expressing the tax burden of the rich as a % of total tax receipts is a somewhat questionable metric, as this number will increase if the government taxes a larger share of their income, but it will also increase if their income increases relative to the rest of the country, as it has done for the past 30 years. So when somebody points out that the top 1% pay 36% of all income taxes, that says to me that the top 1% have a tremendous amount of pre-tax income, not that their tax burden is high.
No, that’s not ‘questionable’. It’s _dishonest_.
If some specific thing is taxed, it is inherently dishonest to compare that tax against the _population_, regardless of how much of that thing they have or use.
Did you know that 15% of people pay _100%_ of the cigarette tax? Clearly, we need fairer cigarette taxes.
Did you know that people over three feet tall pay 99.99% of sales tax? What sort of absurd discriminatory tax laws do we have in this country?!?!
It’s not ‘questionable’, it’s not ‘dubious’, it’s not whatever words we want to use for politely calling it into question. It’s just a flat out lie to make statements like that, comparing apples to oranges.
It is not valid to just pull the number 1% out of ‘people’, and 36% out of ‘income tax’. The comparison is not ‘percent of people’ to ‘percent of income tax’. It’s ‘percent of income’ to ‘percent of income tax’.
Now, it would be valid to point out that the people at the top pay range about 2% into income taxes for every 1% of income, compared to others. I.e, their income tax rate is, on average, twice as high than an average persons. That would be a non-lying place to start the debate. (At which point the response would be ‘Hey, wait a minute, what do we mean by ‘income’ and don’t the super-rich have it structured so that their income isn’t actually income? So while they’re paying twice as much on the stuff they haven’t rigged that way, what are they paying on the rest, and what is their average if we include that?’.)Report
Pierre,
The second link makes the point more clearly. http://blogs.wsj.com/wealth/2012/04/18/the-real-tax-rates-of-the-rich/. But I don’t contend that either article proves the separate point I’m making here. Those articles just touch on the mainstream, intuitive meaning of “fairness.” I do think that there is further discussion to have about the concept of fairness, particularly in the context of modern economies.
The “who can afford to pay more ought to” argument is indeed an important part of that discussion. John Ramsay McColloch said “The moment you abandon, in the framing of [graduated] taxes, the cardinal principle of exacting from all individuals the same proportion of their income or their property, you are at sea without a rudder or compass, and there is no amount of injustice and folly you may commit.” We’ve bounced from a 90% top rate to a 35% or so top rate in the past 50 or 60 years, though, and the only kinds of arguments we tend to see are economic ones, not moral or principled ones. Nonetheless, I don’t think the argument is easily dismissed. As I said, I think there is something to the fact that we rely heavily on infrastructure provided and guaranteed collectively.
Then again, don’t we enter civil society, conceptually speaking anyway, to facilitate our individual interests? That’s at least the story of our American government. We invest in infrastructure to improve the returns on our individual economic activities. Over time, of course, our economic fates and our individual endeavors became closer and closer linked together. Now the government, through which we create that infrastructure, has realized the value of the infrastructure creates and holds in trust for its citizens, and seeks to barter a better deal. In so doing, it seems to forget why it exists in the first place—the tail is wagging the dog.
Government as infrastructure provider has taken on a life of its own. You may not be interested in infrastructure, but infrastructure is interested in you.Report
Tim,
I suppose we’re in basic agreement about this point: “I do think that there is further discussion to have about the concept of fairness, particularly in the context of modern economies.” I had read perhaps too hypercritically your assertion that “any obvious definition” of “fair” leads one to conclude that income taxes are not fair. Now I have a better idea what you mean.
Thanks for the link. I will add, however, that in addition to the data the wsj article provides, it also has the following qualification: “This isn’t to argue against higher taxes on the wealthy. Nor does it deny that some rich people reduce their taxes to well below the official rates through tax avoidance schemes and capital gains.” In other words, the code, taken in isolation, is ostensibly “fair” in the sense of being “progressive,” assuming progressivity in the tax code is a measure of its fairness. But in practice, the rich might not be paying this share.
Is that fair? Maybe it is. I, for one, appreciate the deduction I can take on the interest I pay for my student loans without having to itemize deductions. So in my own small way, I benefit from a “tax avoidance scheme,” although that’s not what usually people mean by the term. I’m inclined, however, to again agree with you that we need a “further discussion of the concept of fairness.”
As to your last point about entering into society as individuals or to advance individual interest, I have the following thoughts. I’m not totally on board because I think “the individual” can be a pretty ambiguous concept, even if we bracket the types of benefits conferred by infrastructure.
For example, I am myself, but I am also a boyfriend, a son, a sibling, an uncle, a tenant, a student, a (procrastinating) aspirant to the history profession, a citizen of the US and a citizen of one of its states. All of these statuses confer on me certain privileges and exact from me certain responsibilities. And while there is a “me” to which and from which these things are conferred and exacted, there is also a sense in which the “me” is bound up in these relationships.
Now, I’m not trying to go back to the jungle and find my state of nature, in the Lockean version of which, as some feminist scholars have argued, the “patriarch” and, by implication, his household were treated as sum of the individual. But I am trying to say I’m ambivalent about “individualism.”
I’m also inclined to see differently your assertion that facilitating the individual is “the story of our American government.” To this assertion, I’ll ask, when was this true? For which individuals? We–the American “we” of 1787–did not start tabula rasa as atomistic entities teetering on the edge of a war of all against all. We were an ordered society, in which certain castes had certain freedoms and certain castes did not. As you might point out, there was a progression from the ordered society to one more indulgent of universal rights and opportunities, but that progression was fitful (except when it erupted into civil war), contingent, and imperfect. Still, I ask to you consider that appeals to what is or is not the American Way do too much work and are probably not the best tactic you can follow to convince others who either disagree with the factual claim, or deny it the normative power you would assign to it.
Finally, thanks for your courteous response. Even though I disagree with your political outlook in general, I appreciate that you are willing to engage people like me who see the world so differently.Report
Pierre,
Your thoughtful comments are always much appreciated.
Though I’m ambivalent, I suppose I’m not against progressive taxation. I’m certainly not strongly against it, especially the relatively mild form we have in the U.S. So why am I critical of the President’s modest proposal here? Perhaps because of the fact that he’s purposefully made such an issue of it, even getting to the left of Pelosi and Schumer, who proposed the rate be increased only for $1 million+ earners. The President wants us to think more about this stuff, about how much of our pay and investments we should be entitled to keep. This is quite clearly part of the President’s campaign.
This country’s founders mined Locke in particular for the intellectual basis of our republic. They didn’t look to Rousseau, and Fitzhugh’s vision of communitarianism was obliterated. There have been lots of American socialists, some who deserve serious consideration. But based on my studies as an amateur but avid student of U.S. history, the individual-centric view has always been the mainstream one in this country.Report
I certainly agree that it’s part of the President’s campaign. I also think that in the past, say, three or four weeks, his campaign has done a pretty good job of controlling the narrative, which is fine with me because although I might not vote for him, I hope he wins.
As for the “individual-centric” vs. other-kinds-of-centric, that’s a difficult discussion to have without some bounds. But your argument is certainly one that has a lot of justification for it. It’s easier for someone like me (or anyone else, really) to poke holes in your (or anyone else’s, really) ideas about the central ideas in American history than it is to build and defend my own ideas.Report
Really? Could you elaborate on that a little bit, because I disagree. As far as I can see, the President’s narrative over the past month has been that Bain is bad. It’s moved the needle maybe one or two points but that’s it. It’s not really anything he can sustain a campaign with, certainly not as an incumbent, especially where the President and his supporters are trying to win.
http://www.realclearpolitics.com/articles/2012/07/19/how_the_election_will_play_out_and_why_romney_will_win_114848.html
For people like me who are all about the margin of victory, we haven’t had a good month either.Report
Tim, you’re right that a strong Lockean individualism runs through the American political consciousness, but I think you (like most of your ideological compatriots) fail to appreciate how that individualism is tempered by other concerns.
Americans don’t mind wealth, but they DO detest class. While class divisions in the United States historically haven’t been as pronounced as they were in Europe, this is changing pretty quickly: Along many dimensions, social mobility is higher in Europe than in the United States. What’s more, America’s relative rurality has turned from a force for equality (yeoman-farmer style) to a force for inequality, as the cultural and economic benefits of living in urban areas have become more pronounced as America has moved to a knowledge and service economy.
Another problem is that the economic conservative position is no longer as politically stable as it once was. There’s vastly more financial inequality today than there was when the American political consciousness was forged. Moreover, the cultural distance (and literal distance!) between the rich and the poor has never been so wide. The conservative argument that the government shouldn’t provide a social safety net because private philanthropy and community action will fill the gap might have passed the laugh test when there was more natural cultural admixture of the rich and poor, but it doesn’t work very well when the rich people have all cloistered themselves into enclaves of suburban wealth.
I’ve seen arguments similar to yours before, made by other upper-class white people who have only a dim view of how economic inequality is viewed in America. “Oh, these attacks on Romney’s wealth (or the banks, or insurance companies, etc.) couldn’t possibly work, because even poor Americans celebrate success!” Not quite: Americans celebrate self-earned success, but view pretty skeptically success that seems to be a clear outcome of where and to whom you were born. Economic conservatives need to think more deeply about how America’s vaunted equality of opportunity is turning into a European-style lithified class structure, otherwise they’ll face the same fate as the aristocrats of old.Report
“The conservative argument that the government shouldn’t provide a social safety net …”
Um, no. The argument is that it shouldn’t be a hammock.Report
But Tom, that’s not a conservative argument per se, because even liberals agree with it, notwithstanding your apparent misunderstandings of their positions.Report
RG, every proposed cut* is draconian. Further, The Life of Julia is your candidate’s social vision. Yes, conservatives oppose it.
http://www.barackobama.com/life-of-julia/
I do not know what liberals oppose, except cuts**.
____________________
*usually a reduction in rate of increase
See also
http://www.cato.org/publications/commentary/obamas-paul-ryans-conflicting-budget-visions
“The United States is teetering on the edge of Greek-style bankruptcy. Our total indebtedness, including the unfunded liabilities of Social Security and Medicare, could run as high as $130 trillion, more than 900 percent of GDP. In the face of this looming crisis, Obama and Ryan have presented two distinct visions of the future. The president offers a bigger government, paid for with more debt and higher taxes. Ryan’s vision may be maddeningly timid and vague in places, but it takes important steps toward a smaller, less costly, and less intrusive government.
If that’s the debate that President Obama wants to have, let’s do it.”
** Cato’s Tanner gives President Obama points for aggressive cuts in military spending. This comes as a surprise to neither of us.Report
So cutting spending is good UNLESS it’s military spending. Check.Report
Americans celebrate self-earned success, but view pretty skeptically success that seems to be a clear outcome of where and to whom you were born.
Which is why nobody ever liked or supported FDR, JFK or either of the Bushes.Report
FDR and JFK left office long before the American wealthy went all Randian (and were redistributionist darlings anyway, so it’s curious you’d bring them up), the elder Bush was drubbed out office by a prole who could better feel the electorate’s pain, and the younger Bush is a universal laughingstock. I don’t think you’ve made a powerful argument here yet.Report
I don’t think you’ve provided any evidence that “Americans” dislike the rich who inherit their wealth. Some do, sure. But enough to say that’s what “Americans” (as a collective) do?
Look, I’m not saying anything about whether Americans should or should not dislike them, and I’m certainly making no brief for the trust-fund set. But I get all itchy whenever people start saying “Americans like X,” or “Americans believe X.” At best it’s a really bad extrapolation from individuals to the group (fallacy of composition); at worst it’s an attempt to define dissenters as un-American. (I think you’ve only done the former, not the latter.)
And I’ll see your W laughingstock and raise you three Kardashians!Report
James, I think it’s pretty obvious that I’m using “Americans” as a shorthand for “mainstream American opinion that will obviously have plenty of dissenters.” My post was a response to Tim Kowal’s remarks about the “mainstream [views] in this country” and so I figured the context would be enough for people to understand what I meant, but if you really want to hang my argument on that then you’ll do that regardless of how I finish this response.Report
I think the onus is on both of you to demonstrate that you represent “mainstream views.” But even “mainstream” views should not be represented as “Americans believe.” The problem is that in fact it’s not obvious when someone means “obviously ‘Americans’ includes all the dissenters.”
I mean that quite seriously. It’s almost never obvious that the person saying/writing the line means that.
On a separate note, I think it’d be an interesting experiment/contest to whether you or Tim has a better grasp on what is mainstream opinion.Report
James, I think you’re ignoring some of the canons of text construction here, but I generally don’t see much harm in humoring pedantry, so I’ll use more exact language in the future so we can focus on the more important empirical questions. Deal?
So: “The typical American voter doesn’t mind wealth, but she DOES detest class.” “The typical American voter views pretty skeptically success that seems to be a clear outcome of where and to whom one was born.” Feel free to discuss.Report
Great, now I’m just waiting for evidence to support the assertion of a partisan that the typical voter shares his partisan views.
And if you really think it’s just pedantry, perhaps you haven’t noticed all the “that’s un-American” shit-slinging that goes on in this country. Words have effects, which is why we use them. When they have bad effects, we should try to use them less carelessly.Report
I find all the to-do about that comment ridiculous. If it takes eight paragraphs to “explain” that the President meant something other than the obvious “Individuals live in a society with a complex dependency on each other, and just because you’ve reached the top doesn’t mean you get to cut the cord to the society that helped get you there”, then you’re, well, probably making things up.
Are we claiming Obama is dog-whistling here? Did he secretly reveal some deep truth about his world-view?
What’s the matter with taking it at face value? You got rich off a country that has to spend money to educate the workforce you used, build the roads you used, protect the lands you live in, etc, etc, etc — and you’re rich as Midas now (good for you!) so it’s time you pay it forward a bit, and accept the unimaginable horror of going back to the same tax rate you paid 15 years ago.
Why all the deep analysis of what’s a flat-out unremarkable point?Report
I suspect the answer is: “Because August came early this year.”Report
“I find all the to-do about that comment ridiculous. If it takes eight paragraphs to “explain” that the President meant something other than the obvious “Individuals live in a society with a complex dependency on each other, and just because you’ve reached the top doesn’t mean you get to cut the cord to the society that helped get you there”, then you’re, well, probably making things up.”
Often, the libertarian argues that one must trade to make it to the top and trade to stay on the top. There really wouldn’t be an obligation to continue to contribute, except for maybe the degree that they enjoy economic rents.
“… liberal social theory proves that each single man sees in all others, first of all, only means to the realization of their purposes, while he himself is to all others a means to the realization of their purposes; that finally, by this reciprocal action, in which each is simultaneously means and end, the highest aim of social life is obtained – the achievement of a better existence for everyone. As society is only possible if everyone, while living his own life, at the same time helps others to live; if every individual is simultaneously means and end; if each individual’s well-being is simultaneously the condition necessary to the well-being of others, it is evident that the contrast between I and thou, means and end, automatically is overcome.”Report
Even taken at face value, it’s pure sophistry. Obama doesn’t want the rich to pay more taxes because we need them to pay for basic infrastructure; he wants the rich to pay more taxes to fund subsidies to individual consumption. That’s where most Federal spending goes now, and it’s where most new proposed Federal spending is going. If necessary infrastructure work is going unfunded, it’s because the government has chosen to prioritize consumption subsidies, not because the rich aren’t paying enough taxes.
You got rich off a country that has to spend money to educate the workforce you used
I always get a bit of a chuckle over this. Public education is just a giveaway to the rich?Report
Public education is just a giveaway to the rich?
Yes. Ever try to train an illiterate workforce?
Also, i’m enjoying your clever rebranding of Defense spending as ‘individual consumption’.
That and debt are the biggest driver after you remove Medicare and SS, both funded out of dedicated and capped revenue streams which neither the rate nor the cap is being lifted. So obiously you can’t mean them.Report
Medicare parts B and D are paid for out of general fund revenue. Part D in particular is expensive, as I’m sure you know. Part A is also subsidized by the general fund. Overall about 40% of medicare revenue comes from the general fund. As a matter of fact, medicare taxes will increase next year from 2.9% of all income to 3.5% of income over $200k for individuals, $250k for couples.
Social security revenue is in effect shared with the general fund – when it has a surplus, the surplus is exchanged for IOUs, when it has a deficit, the IOUs are cashed and the money to pay them comes from the general fund. There have been many more surpluses that deficits, but given that there will be future deficits, this merely means social security has many chips to cash in exchange for tax revenue. You also skipped out Medicaid, TANF and food stamps.
Between all the different consumption subsidy programmes they comprise over 43% of the budget (that number is actually just the big three – for all of them its probably over 50% but I can’t find the numbers right now). About 20% of the budget is spending on the big three programmes not covered by their supposedly-hypothecated payroll taxes. Defense spending is about 20%, and net interest on the debt is only 6%.
I say cut defense first too, but facts are important.Report
“The simple farmer owed thanks to no man, but the financier owes his good fortune to a long train of economists, inventors, statesmen, intellectuals, entrepreneurs, armies of blue-collar workers, and untold others.”
Who doesn’t agree with this?
Just about everyone knows the thanks go all around, that why we have contracts and exchanges. That’s why people get paid. If that is what Obama is going for, then he is stating that government direction was responsible over the market.
If he is saying “that” and referring explicitly to infrastructure, I’ll go with that. That should cut the necessary government revenue by 75-90% or so.Report
“we have done away with the presumption that the individual owns his success and treasure.”
I don’t know if “we” have done away with it altogether, but I really don’t think the individual owns his or her success completely. As BlaiseP pointed out above, a business usually needs customers and workers and sometimes luck and sometimes other things. None of this is to say that some people don’t work harder than others and that some don’t risk more than others do. But I think that when it’s not the contentious issue of taxation, even business owners often credit the help they got from others and their customers. When they do, perhaps it’s just touchy-feely PR, but I get the sense (only anecdotal and impressionistic, of course) that they do realize they don’t do it all on their own.Report
You know, considering we use marginal tax brackets, the taxation issue is actually dumber than I thought.
The rich pay the same as the poor, dollar for dollar, on each penny of income. The poor just run out of money before they hit the higher brackets.Report
I’m not so sure that’s how marginal tax brackets work. Maybe they do, but I’m just pretty ignorant.
I do think, however, that it’s plausible argument that those who can afford to pay more ought to pay more, even if (or especially if) others are also asked to pay more than they have.Report
That’s exactly how they work. After deductions and so forth, every pays the same rate on the first X dollars or taxable income. Then every body pays the same higher rate on the next Y dollers, then the same even higher rate on the next z dollars and so on.
This is part of the reason that I find Obama’s $250,000 cut-off frustrating. Because it only effects income above that number, people making even $275,000 or $300,000 in taxable income will only take a small hit, yet the policy is formulated and sold as if it dramatically effects everyone at that number and above, but that’s ok because if you’re making $250,000 or more you’re rich. If I had my druthers (and the public understood marginal taxation), we’d be talking about raising rates on income above $100,000 or so.Report
And of course $250,000 in income and $250,000 in taxable income are totally different things, which warps the picture even further. It creates a dynamic in which people who aren’t even going to pay higher taxes are acting as if Barack Obama has somehow personally insulting them by suggesting that they should pay more, even if in fact they wouldn’t pay more at all or would only pay a trivial amount of additional taxes.Report
I still don’t fully understand. It has nothing to do with your explanation, it’s just that such things confuse me. In other words, I probably won’t make the short list for the Nobel Prize in Economics this year.
I’m inclined to agree that the government should use a lower baseline–say, your $100,000 line. I do wonder, still, where to draw the line, however. I realize it’s easy for me, with a very small income, to state what others can afford to pay.Report
Maybe it’ll be easier with concrete numbers attached. Let’s say that you and I make $50,000 and $100,000, respectively, and that there’s a 5% tax on the first bracket, which goes up to $75,000 and a 10% tax on the next bracket, which effects all income above that (note: these numbers are not at all an accurate reflection of current rates). So my $50,000 is all under the cut-off for the higher bracket, meaning that I simply pay a 5% rate and am on the hook for $2500.
You, on the other hand, have income above the cut-off. What happens is that your first $75,000 is taxed at 5%, which adds up to $3750, but your remaining $25,000 in income are taxed at 10%, which adds up to another $2500 in taxes. This means that your total bill will be $6750, for a total tax rate of 6.75%. That’s higher than the rate that I’m paying, but it’s a lot lower than the top marginal rate (10%) that you’re paying. And if you made more money, your total effective rate would go up, as more of your income was being taxed at that higher 10% rate.Report
Thanks for explaining, Don. I think I have a better grasp of it now.Report
That said, effective tax rates on very high incomes asymptotically approach the top marginal tax rate.Report
True, but when we get into really high incomes we also see much more sophisticated tax avoidance, much more capital gains income, etc. I suspect that the number of people actually paying anything higher than 32% or 33% is vanishingly small.Report
Also, if I thought that there were any chance that he’d release the rest of his returns, I think a pool betting on Mitt Romney’s lowest effective tax rate from, say, 1999 to 2009 would be fun. I’d start it off at about 5%Report
Easy solution! MORE BRACKETS!
Also, you’d have more of a case if gains were taxed marginally instead of subject to a flat 15% rate. Which sorta shoots your case in the foot.Report
PC, this may or may not help, but I’ll try. I’ll use a simplified model, without trying to match it to actual U.S. tax rates.
The country has only2 taxpayers, me and you. The first bracket is up to $10,000. Neither of us pays any tax on that first 10k. I make $10,001, while you make $9,999. You pay no tax, I do. But I pay tax not on the whole 10k, just on the $1 above that amount.
The same holds true for each successive bracket. If the next bracket (higher tax rate) starts at $20,001, then you pay no tax on your first 10k, pay the first bracket rate on all income between $10,001 and $20,000, and pay the second bracket rate only on the amount you earn ove 20k. The higher rate does not apply back to the earnings in the lower brackets.Report
That’s it. I’m taking the iPad away from my wife so I’ll stop accidentally posting as her. Even if her picture is more attractive than my piston man.Report
And Dan beat me to it anyway.Report
Thanks for the explanation James / Johanna. Thanks to you and Don, I’m getting a better grasp of it all.Report
That’s your lady?! Damnation Hanley you dirty dawg you don’t deserve that you filthy libertarian!Report
Heh, you got that right, North. Talk about inequality and unearned wealth!Report
Well, when you say “it is not the American way,” you are by implication also suggesting that “no, we can’t have the conversation.” Once it’s about going against “the American way,” then not it’s not much of a jump to saying your opponents are, well, not truly American.
Now, what do you mean by “American way.” You’re probably not referring to history. There’s a history of class conflict in the US–or, to put it more mildly, a history of confrontations and controversies that invoke the trope of the rich and privileged arrayed against the interests of the less affluent and the more marginal and the more worthy. Some examples: the Bank of the US controversy, Hamilton’s assumption and funding scheme, the Civil War (free people vs. the slavocracy and slaves vs. the same slavocracy), the greenback and silver movements, the series of violent strikes from c. 1877 to at least Ludlow. There’s also a history, in America of advocacy for tax reforms aimed at allegedly unearned or undeserved wealth, or at making people pay their “fair share”: the single tax, and the attempts to implement progressive income income tax, culminating in the 16th amendment.
So if historical precedent doesn’t provide a clear guide of what counts as “the American way,” perhaps we have to look at normative values: shat America ought to be. I suppose we can have that debate, but if you want to go there, it’s not clear who’s going to win the argument. Those types of battles tend to be based on numbers, and while you might find a large number of people agreeing that free enterprise and capitalism is good, you’ll also find a large number of people–sometimes the same people–claiming that the rich are idle parasites who do not pay their fair share, even at the (relatively) high proportions (of income taxes, not including social security and medicare) they already pay.Report
“You’re probably not referring to history.”
To clarify, I realize that “history” can, like the Bible, be invoked to justify almost anything by citing precedents. My list of controversies that involve class or class-like tensions is just as much of a cherry-picking expedition as a list of consensus around laissez-faire and “19th century liberal” values would be.
My point is, though, that one cannot look at the history of the US and conclude that there is, without qualification or complication, one single “American way” that we already all agree on.Report
Pierre,
I’ll take that under advisement. I do get that there are wider implications in using the term “the American way.” More strictly speaking, I am referring to the fact that, if you want to challenge the “individual autonomy” and “personal responsibility” regime in the political realm, the burden is on you. But I admit that it’s a little bit of ribbing of all the hyper-sensitivity to the effect that calling anything “American” is tantamount to an accusation that the President is “foreign” or “other.”Report
Well, I wasn’t particularly thinking about calling Obama “foreign.” In fact, you’ll have to take my word that as hypersensitive as I can be and have been on that subject, it didn’t enter my mind this time around.
I would–and do–say that I question the extent to which “the ‘individual autonomy’ and ‘personal responsibility’ regime in the political realm” actually exists. I don’t question whether it exists, just its pervasiveness.
I also suggest that if there is a certain “way” that might be called American–and at some point we probably do have to go there or not complain too much when someone else does–it ought to be used and invoked cautiously, and with full awareness of its implications. All the time? Maybe not, but it helps to be sensitive to that point, if only to avoid cognitive confusion among those who are disposed to disagree with you.
I also suggest there is evidence to suggest that there has existed, and continues to exist, counterpoints to that “American way” that have historical claims to the title “American” and that these claims cannot be easily dismissed.Report
As for people who are “disposed to disagree” with me, I cannot hope to convince them no matter what I say. Nor they me. The hope is that clear and evocative rhetoric will tend to stick in the brain more than the unclear or mealy-mouthed variety. It’s a fine line between finding rhetoric that does not sting so much that it fails to stick. No one can always walk that line, least of all me, but that’s the goal, anyway.Report
I think Tim turns on its head or misreads what Obama was saying. Instead of saying that the collective has a presumptive entitlement to all your money, what he’s doing is combatting the polar opposite view – that we’re a bunch of atomistic individuals who if we achieve anything do so by our own efforts and that speaking about collective needs is either incoherent or immoral. In his view, even the most impressive individual efforts have to been against the bedrock of community efforts to support and nourish them. He’s standing against (well, rhetorically, but that’s where Obama lives) the Randian idea that we’re all a bunch of John Galts with no moral or ethical claims on one another, and let the devil take the hindmost. I didn’t think he was making any more of a point than that.Report
I read this sentence, second sentence of the post:
And now I know that whatever follows, no matter how much effort is made to make it sound reasonable and even-handed – and the author does show himself quite capable of reasonable concessions and similar gestures – is polemics, opinion, not a search for truth. If it’s an “obvious” “fact” that the “‘wealthy'” are “paying more than their fair share,” then why do we need to have any discussion at all? Anyone who doesn’t agree with the O.P. is obviously insane.
What’s in fact obviously true are the two following obvious facts:
1. Not only did no one get rich without help from others, no one got rich without taking from others. No one even “got middle class” without directly or indirectly taking from and destroying others. The only question is whose unfairness – or which larceny, expropriation, and murder – on behalf of which collective entity backed by what level of threat of further force will be given priority and called “just” or, anyway, a starting point.
2. Fairness in this discussion presumes that only income is accessible, while assets – more or less no matter how they were originally accumulated, flagrant recent lawbreaking excepted – are sacrosanct. So we in effect assume that all existing relations are already infinitely “fair,” and that only the marginal adjustment of streams of income and exchange (which are largely determined on that pre-existing distribution of wealth) are even up for consideration. In this way, we freeze the history of inequity in place, permanently, or at least until the next revolution.
In fact, it’s obvious that all existing relations on Earth are deeply unjust, and that any efforts we make toward rectifying them will be likely have little impact on that injustice, yet it remains our infinite obligation to ourselves and to each other to do whatever we can, however imperfectly, to fight it, and to give. What would in fact completely obviously be fair would be a relatively massive divestment of mostly ill-gotten assets by the global and especially Amero-capitalist kleptocracy.
Within the American national context, just to start, what would in fact completely obviously be fair would be for the very wealthy to devote some significant percentage, I think around 10% would do it, of their accumulated assets, to putting governance on a firm footing as we begin the obviously fair process of further movement toward obvious fairness.
Any other perspective is obviously in fact corrupt and evil. To believe that such other perspectives essentially define America is to say that America is corrupt and evil. Why would any American want to say such a horrible thing?Report
“no one got rich without taking from others. No one even ‘got middle class’ without directly or indirectly taking from and destroying others.”
I’m not sure I agree with the assumptions behind this statement. I suggest it’s possible for people to gain wealth in mutually agreed upon exchanges in which both people come out ahead. In that sense, one indeed “takes from others,” but not necessarily or obviously in an invidious way.
I do have problems with the notion that mutually agreed upon exchanges are always to the good and do not (or at least not significantly) sometimes work in oppressive ways. And I certainly agree that people don’t get rich without help from others. But I think it’s a stretch to say wealth creation is necessarily a beggar-thy-neighbor proposition.Report
How could you possibly disagree with such obvious facts?
If you think about how we really got here and how we really stay here and what we really do just a little more – in all of its sheer reality, not in some ideal thought experiment – I’m confident your disagreement will fade away. I’m confident because I just don’t believe you’re insane or evil, or entirely insane and evil, or anyway more insane and evil than I am.Report
Well, I might not be entirely insane or evil, but I’m working on it!
On a slightly more serious note, if you have to say it’s obvious, then it’s probably not obvious. I also suggest the claim you are making is not a purely factual claim. To say we get rich by “taking from and destroying others” is to interpret what might be true (getting rich by taking) fact as bad or invidious (“destroying” has at first blush a negative and pejorative connotation, even if it’s in the service of something “creative,” as Schumpeter–who I have never read, for what it’s worth–might say).
I’ll also confess to being clumsy and not fully defining what I mean by “wealth.” I’m not sure how to define it.
On an even more serious note, do you disagree that wealth cannot be created, at least sometimes, by mutually agreed upon exchanges? I’m not insisting that wealth must be created this way, or always is, but rather that it’s possible for a rising tide to sometimes lift all boats.Report
I think you got a little self-entangled on your most serious note, but to me that’s another ideal thought experiment. My honest answer to the question I think you’re asking is “no, obviously not.” There is not actually any pure exchange. Every possible actual exchange must pre-suppose a chain or history of prior unequal or implicitly unfair “exchanges” all overshadowed by or conditioned upon acts of expropriation achieved and secured by violence. This is not an abstract point, but an historical observation susceptible to analysis. Its implications even attach, perhaps especially, for the mere exchange of words on a blog thread about ideal thought experiments. The point isn’t to wail and gnash our teeth over past and present cruelties to the countless victims of our approximations of fairness from the origins of our present distribution of property and resources, up to today and tomorrow – but to understand that whatever standard of “fairness” we’re applying to marginal income tax rates, for example, is inherently a partial or parochial, self-interested fairness, not some moral absolute and in fact obviously, or at least quite likely, very distant from anything of the kind.Report
I agree with this,
I do wonder, though, where we go once we have this realization duly noted. I’ll accept, with not much protest, that my notion of fairness, or the glimpse of fairness I am allowed to have, “is inherently a partial or parochial, self-interested fairness, not some moral absolute….” as long as I can leave open the possibility that a moral absolute might exist and that I might be able to glimpse part of it, albeit from my peculiar (partial, parochial, and self-interested) vantage point.
As for my question about whether there is never a mutually agreed upon exchange that creates wealth, I take your answer to be, “there is no such thing as a sheerly mutually agreed upon exchange because the incidents of that exchange and the past and statuses of the two actors are inherently and unavoidably legacies of past violence, etc.”
I can probably agree, but once we’re there, then what? Can an exchange take place in which the legacies of past violence, etc., approach zero to a significant enough degree that we can call the exchange, for practical and admittedly bounded purposes, “mutual”?Report
I think, but will have to leave a possibly more satisfactory explication to some other time, that discussing “then what” forces us to confront the presumptions underlying the discussion itself as to its actual or potential purposes. Since this blog is a heavily libertarian blog, we can ask – and I frequently find myself asking this question under whatever latest libertarianist post – what is the authentically libertarian praxis? What is or could be the bridge between the ideal thought experiment and not-ideal (political) life? It often seems to me that the real libertarian objective is libertarianism, an ideological project whose relation to the political is negative – not the actualization of libertarian utopia, since this could never take place, or is very highly unlikely to occur, except by application of wholly non- or anti-libertarian means, but the continuation of the libertarian discussion, something that, for now, remains with the power of libertarians acting in a generally libertarian way, but always only insofar as that discussion is “free,” which may mean always actively seeking liberation from stultifying pre-conceptions. If the real point of the discussion in this sense is its own perpetuation as a free discussion, since the notion of any meaningful impact on political life entangles the libertarian in contradictions fatal to libertarianism, then we approach the Straussian classical position on political philosophy, which is also a position on philosophical politics: The true libertarian objective appears to be preservation of a virtual space for liberty within each individual consciousness and within collective consciousness. There is no reason to expect such a philosophy to produce a one-time forever perspective on “fair” rates of taxation or on any other merely political issue.Report
Well, the central presumption–that the rich are paying “more than their fair share” is not true by any measure. The article he linked to showed that the rich pay a higher portion of their (taxable) income in Federal income tax. This is kind of true, as Federal Income Tax is the only progressive part of the federal tax system. The rest is regressive (e.g. the rich pay no Social Security tax on their income over $140,000)
I’m going to try to embed a chart here. If I was unsuccessful, you can find it here.
What we find is that the US tax system is mildlyprogressive. And the richest among us are doing better–and contributing less–than at any point since the Great Depression.
Report
CK,
Thanks for sharing your reaction. I do try to avoid causing reactions like that, while also trying to avoid being mealy-mouthed. I depend on qualifiers to do most of the softening of otherwise bold and brash claims, but maybe “obvious” here oversold me on its effectiveness. Hopefully you were able to discern what I meant was that the rich don’t pay a lesser rate than anyone else, and in fact pay a bit more. That is, they pay a progressive rate, which, at least at some point (we know not where) they begin to pay well more than what possibly could be fair.
At any rate, I’m very anxious for you to read my next long piece, which I think may surprise you. I surprised myself, anyway.Report
I’ll look forward to the promised post, but I’ll disagree that we should assume ahead of time any limitation on “what possibly could be fair.”Report
“And now I know that whatever follows, no matter how much effort is made to make it sound reasonable and even-handed – and the author does show himself quite capable of reasonable concessions and similar gestures – is polemics, opinion, not a search for truth.”
I wish libs could come to grips with the reality that they have screwed up bad enough to the point where the polemic is the truth.Report
Fairness in this discussion presumes that only income is accessible, while assets – more or less no matter how they were originally accumulated, flagrant recent lawbreaking excepted – are sacrosanct. So we in effect assume that all existing relations are already infinitely “fair,” and that only the marginal adjustment of streams of income and exchange (which are largely determined on that pre-existing distribution of wealth) are even up for consideration.
A bit tangential to your point, but I’ve long felt that fairer way to structure a progressive income tax would be to set the marginal rate according to your net worth. I can see legitimate objections to this, such as it would reward those who piss away their earnings rather than saving and investing, and it would undoubtedly be a lot more complex to administer and easier to game.
But what I’m aiming at is a way to address my larger complaint against our current system: that while it can take a lot of blood, sweat, and tears to accumulate your first million, it’s a lot easier from there to get to your second, and easier still to get to your third, and tenth, and hundredth. Income from property is characterized by positive feedback in a way that income from labor can never exhibit. At some point–unless you deliberately piss it away–it’s practically self-sustaining and continues to grow with little effort on the part of the owner. Paris Hilton will always and forever be filthy rich, as will her mutant spawn. Perhaps she needs to manage it, but hey… she’s got people for that.
The law of diminishing returns has been repealed, but only for some.Report
“Fairness in this discussion presumes that only income is accessible, while assets – more or less no matter how they were originally accumulated, flagrant recent lawbreaking excepted – are sacrosanct. So we in effect assume that all existing relations are already infinitely “fair,” and that only the marginal adjustment of streams of income and exchange (which are largely determined on that pre-existing distribution of wealth) are even up for consideration.”
This is a great point. It’s hard to tell exactly what proportions MacLeod is being facetious, outraged, or speculative here, but this is an important idea. Unfortunately the consequences of it are pretty much the opposite of what I’m guessing MacLeod proposes.
It’s precisely in the attempt to create justice among the social relations on Earth that income is accessible but assets are sacrosanct. We can’t afford to indulge spurious lib ideas of fairness when the creation of justice in the world is a practical necessity. Under any regime of expropriation or onerous taxation, whoever controls an asset has a very powerful incentive to move it outside the jurisdiction of the taxing authority. But it’s very likely that society socially needs that asset to create value toward the common good. That’s why assets are sacrosanct, and anywhere they are not is near-infallible indicator of misanthropy and despotism as any cursory look at world history shows.Report
Threats of capital flight or capital strike can be exercised effectively and are often exercised pre-emptively – always already in force – against taxation as against every other mode of bargaining or self-defense by individuals and communities. If there were any reason to believe that acts of worship, convincingly carried off or not, would placate the ruthless annihilator of every conceivable human, natural, or spiritual content, then pretending to sanctify private wealth and declaring to all the world that of course we considered the status quo both HOLY and, of course, FAIR might be worth trying. “Country” – that very special type of “jurisdiction of the taxing authority” to which as schoolkids we pledged allegiance – is one of those contents which you rightly point out often appears as an inconvenient impediment to the free flow of capital. As some of Mitt Romney’s problems have amply demonstrated, however, that patriotism stops at the bank account’s edge is an argument of negative utility within a national political context, especially as confusingly argued by parties who wish to be known for their unashamedly exceptional chauvinism. It will be on behalf of such chauvinism, one suspects, that truly dangerous politicians or political movements, rather than being evaded through flight or strike, will instead be attacked directly, where deemed necessary or useful by the kind of physical violence that the politically psychotic assault on the President for his anodyne observations of the obvious merely rehearses (in the manner of so many other so far merely verbal assaults). Historical experience suggests that, as a liberal polity moves toward civil breakdown and a state of permanent emergency, volunteers ready to escalate from the invigoratingly excessive yet somehow also perfectly true polemic to the holy act of faith will be plentiful.
As for what I might propose or prefer, that’s a different discussion.Report
It seems like we actually might agree on quite a few particulars, though of course I would state things much differently. With a few exceptions though, eg here:
“If there were any reason to believe that acts of worship, convincingly carried off or not, would placate the ruthless annihilator of every conceivable human, natural, or spiritual content, then pretending to sanctify private wealth and declaring to all the world that of course we considered the status quo both HOLY and, of course, FAIR might be worth trying.”
Worship has nothing to do with it. You actually used the word sacrosanct, which is good enough I suppose but you shouldn’t confuse yourself into thinking that the integrity of private property is a liturgical or ritual issue. It’s not, it’s much simpler than that as a matter of basic social utility. The social utility of a widget is in general much greater as a means of production or a compontent to it as opposed to an item for consumption by whichever political authority can assert control of it.
And here:
““Country” – that very special type of “jurisdiction of the taxing authority” to which as schoolkids we pledged allegiance – is one of those contents which you rightly point out often appears as an inconvenient impediment to the free flow of capital. As some of Mitt Romney’s problems have amply demonstrated, however, that patriotism stops at the bank account’s edge is an argument of negative utility within a national political context, especially as confusingly argued by parties who wish to be known for their unashamedly exceptional chauvinism.”
I don’t think so, as we can see by the generally minimal impact of the Bain attacks. More than that, this is reflective of a much deeper aspiration for at least a significant part of the American people to reject folk Marxism.
But I do agree with you that there is a very good likelihood of severe social conflict in America in the next ten to twenty years. I very much hope we can prevent that. To that end we should vote for Willard “Mitt” Romney as an attempt to forstall that as well as end the bane of Demo unemployment afflicting our nation.Report
“The government owns the means of production, and thus holds a lien on all wealth.” This is a bit directly dog-whistley IMO, but it holds an important truth for all societies.
Here’s The Economist: “Mr Obama is on to something in suggesting that [elites’] behaviour is ultimately corrosive to the free-market system. Elites may agree that free markets are both more efficient and moral than alternatives. They should also recognise that free markets can only be sustained by the consent of the majority. The public grants the rich the right to their wealth if and only if they agree that the rich deserve it.” (Source: http://www.economist.com/blogs/freeexchange/2012/07/political-economy-0?fsrc=gn_ep)
If you take my perspective, that is the necessary temporal primacy of government (not necessarily a state) over the market as a social/historical fact, then this makes a lot of sense. Markets are nothing more than a (fairly new!) technology, and the polity continues to allow their current implementation only so long as they produce socially acceptable outcomes. There are alternatives – and there are alternative levels of control that the polity can implement if markets cease to produce acceptable distributions.
If this smacks of socialism to anyone, that’s fair – I consider myself a socialist in part because this appears to me a much more accurate historical account of economic order. For that reason I hold the belief I still maintain is the heart of socialism – that government (again, not necessarily the state) is morally prior to markets.Report
“Let’s assume for the moment that the President is in fact referring to infrastructure—i.e., publically funded schools, roads, fire and police services.”
This is a great point. Like you mentioned, some libs have tried to depend on the idea that President Obama was talking roads and bridges as the things the business owner supposedly didn’t build. Unfortunately that makes it even worse.
The things we get from other people, are mostly from family, colleagues, friends, people who share similar interests, etc. Even the “Village” that it takes to make a business or other venture is for the most part not the government anyway. As Rich Lowry mocks the President, “….ergo, the San Jose, Calif., DMV practically built Apple.”
And for the things that the government is supposed to provide, primarily infrastructure, police, and the judiciary, they are substantially failing at anyway because of the singular incompetence of President Obama and the rest of the libs in the world’s worst case of mission creep. Any which way you skin this cat, the President’s gaffe is illustrative of his unsuitability for office. Our hope for prosperity and limited government starts when the Obama Administration ends.Report
Obama’s in deep trouble: now he’s lost The Corner.Report
No starbursts for him!Report
Not one serious person is suggesting we stop acting collectively (i.e., through government) … And this is true even though, as I will argue in a forthcoming long piece, a strict conservative constitutionalism denies the federal government from providing many of the components of this infrastructure.
In other words, “Not one serious person is arguing against this, even though I will soon be arguing against it”? Perhaps that’s why Obama has to spell out his position in such basic terms.Report
Apropos of nothing….
Fan-TAS-tic avatar!Report
That boy needs therapy.Report
What does that mean?!Report
You’re a nut! You’re crazy in the coconut!Report
Consider: Not one serious person is suggesting we stop acting collectively (i.e., through government) to provide education, roads, police and fire service, courts, a stable currency, and the rest of the necessary infrastructure of a modern economy.
One must assume that the President is aware that these “wealthy” Americans are in fact paying more than their fair share, under any obvious definition of the word
These quotes are trying to lift a load above their tensile strength. We have examples of Repub. led state and local gov’ts NOT allocating resources to water line repair, pothole repair, enacting devastating school cuts, and disavowing responsibility for other “necessary infrastructure” like street lights. Heck, a transportation bill can hardly move thru Congress.
Further, if 1% of the population in US owns 98% of the wealth, then I’d quibble with your “obvious definition” of the word fair. I see no obvious reason that it is fair for Romney or hedge fund mgrs to pay 15% when the middle class pays a higher % rate.
I’d call these quotes the supporting pillars of your argument and to me they crumble with the slightest push. Try again?Report
April,
I’m not sure what you take to be my argument. I’m saying that the President clearly is not simply saying we need roads and fire houses, because there’s no argument that we don’t have enough of those or that we can’t continue to fund them. There is certainly disagreement whether we adequately compensate the workers, teachers, firemen who make up our infrastructure. But those arguments are more along Keynesian lines. E.g., the drive to add more teachers per student adds little or no value to the education, yet Democrats push it anyway. The “middle class” argument is not about infrastructure, it’s about a particular vision about macroeconomics, and a particular vision about fairness. But I would be willing to replace the qualifier “any obvious” in the second sentence of the OP with something milder, say, “a commonly understood.”Report
Democrats and teachers push for more teachers because whenever class sizes get above the mid-20s, teachers have to really start prioritizing who they give personal attention to.Report
“Obama didn’t say it, and I agree with it.” That’s why this one sticks. He doesn’t disavow the sentiment and neither do his supporters.
Brother Plinko got it, unapologetically from the left—over on JasonK’s thread:
I don’t get why we insist on seeing the whole “you didn’t build that” kerfluffle as something Obama threw out ex nihilo? I see it as another round in an ongoing argument about how much we owe our business elites, the one I hear advanced every day by conservatives about the brave , noble capitalist heroes that are all that stand between me and serfdom.
The whole thing makes a lot more sense in the context of ongoing political rhetoric than it does as a new front in the culture war.
Report
But my point is that there IS an argument that we don’t need to pay for roads and firehouses, made by Repubs. So the Dems have to counter that idea and point out to those many that have drunk the Reagan kool aid that instead taxes for these things are public goods that support successful biz ventures and need to be paid for. Every Repub candidate claims that biz is constrained by onerous taxation, ignoring that these taxes support their biz so we have to make what shouldn’t even be an argument. Your post seems to take Obama’s “return to first principles” to coin a phrase popular around here as an outrageous argument against a straw man. I believe the legacy of Reagan is the belief that nothing good comes from taxation, it is only taking for the undeserving. You casual “obvious”the rich are paying more than a fair share leads me to believe you are a kool aid drinker too.Report
This is a very good post on this topic, regardless of any substantive disputes. Can’t say more now, but wanted to get that in.Report
Tim, you spend nearly all the post noting, correctly, that no one says there shouldn’t be taxes and no one says there shouldn’t be infrastructure, and everyone acknowledges that society collectively and individuals individually both play a role in contributing to success. Which is all correct and indeed almost tautologically true, as evidence by the fact that both Presidential campaigns acknowledge them readily.
But then you take a sharp turn and suggest that this speech reveals that Obama thinks that
It’s one thing to say, “Hey, you didn’t get there all on your own, the government helped you and you ought to acknowledge that.” It’s something else to say “The government helped you get what you have so much that your own involvement was incidental.” I just can’t interpret Obama’s remarks as being the funcational equivalent of the second statement; I cannot interpret it as being “You only own what the government allows you to own.”
Obama’s argument doesn’t seem materially different from the argument in favor of progressive taxation. “If you have a lot of money, that means you got a lot of value from what the government does, so you owe more than someone else who doesn’t have quite as much as you.” The rich should pay more taxes than the poor, and therefore taxes should be more progressive than they are. That’s what I understand Obama’s argument to be.
I cannot make myself reasonably understand Obama to be arguing for a proposition to the effect of “Everything belongs to society ab initio, so the government should be able to take, that is keep, what it wishes from anyone.” I see a link between society and government, since government is the vehicle through which society typically acts. But I don’t see the presumption of ownership shifting if Obama’s argument prevails. All I see are higher taxes for high income-earners.
What have I missed?Report
“Obama’s argument doesn’t seem materially different from the argument in favor of progressive taxation.”
Well, see, I always heard progressive taxation described as “they have more, so they can afford more”. Only recently have we started to hear “they wouldn’t have more if it weren’t for the government making it possible” as a mainstream position, and it pretty much coincides with the rise of Tea Party types asking why the business that they work at for fifteen hours a day ought to pay for someone’s methadone.Report
Because that’s really the Tea Party conception of where our money goes, isn’t it?
Mr. Reardon works 15 hours a day, constructing his bidness with his two brawny hands with totally no help from anyone, wresting a civilization out of the goddam jungle, carrying the white mans burden on his broad manly shoulders and about, oh, 80% or so of our federal taxes go to junkies, crackwhores, illegal immigrants, and strapping young bucks drinking Old English 800.Report
Burt — I’ve posted a response here: https://ordinary-times.com/timkowal/2012/07/you-may-not-be-interested-in-infrastructure-but-infrastructure-is-interested-in-you/Report
1. The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’
2. “I’m not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub.”
3. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.
You’ve missed the brainwashing that says that the answer to the question “Which of these statements is most extreme?” is “3”.Report