Trying to get a straight answer on this issue is turning out to be impossible. I am going to try one more time.
You are sitting at a table, contemplating creating a fictional government. You are not at war, you have no budgetary needs, there are no starving children, welfare moms, bone thin elderly waiting on a social security check, uninsured sick, or anything of the sort. You are in a fictional world creating a fictional government. There are no rich, there are no poor, EVERYONE makes exactly the same amount of money. You ask yourself this question:
How much of my fictional citizen’s income do I think it is acceptable to take every year in the form of taxes. At what level of taxation would I say to myself, “X% is too much, it would be immoral to take that % from any individual.”
We’ll try this and see where we get.
Matthew
Ah, ye olde thought experiment!
Let me see. I would avoid payroll taxes because those are the most regressive kind of tax, and even if people start out all making the same amount, some kind of differentials would appear over time, and people making less money would be more adversely affected by payroll taxes than others.
I suppose I’d return to my Jack Kemp fan roots and say that a 20% flat tax with no tax shelters or other loopholes would be fair and efficient. Of course, I bet liberals would beg to differ :-)
Keith McComb
Given the set-up you gave, in such a fictional government, any answer greater than zero strikes me as thievery.
John Cole
Damnit Keith.
MommaBear
First: Determine minimal required governmental responibilities. Then start with zero-based budgets, based on population, geographical situation, and external threats. From there one determines necessary intake to support those budgets. At that point, the % taxation rate is set. It is a function of necessary expenditures.
Brian
25% (not flat) – no tax loopholes, no deductions, to off-shore tax havens.
Although I think Keith’s answer is by far the best answer.
st
How can you get a straight answer to such a tilted question? How much does all of that utopia you describe cost? Well, if everyone makes the same amount of money, divide the amount it costs the central authority of whatever type to provide what it provides, then divide it by the number of citizens, and there’s your percentage.
People are leery of answering this question because it so easily becomes a club in the hands of those who disagree with any significant level of taxation. Further, it’s kind of impossible to put a number on the returned value of a tax dollar spent, as most Americans (well, me at least) don’t have any idea what the value of the government service they receive is.
Moreover, it’s a meaningless fucking question, as the country, at different times, has prospered under any number of tax regimes. In the late 1940’s, not exactly a depression, the top income tax rate was 90%. 90 percent! I’m not saying we should have 90% taxes NOW, I’m just saying that assigning a pinch number is meaningless.
So, with all of that out of the way, how much is too much? Right now? In this economy, with these conditions, not in that jury-rigged lefty trap you have set up in your post? Fuckit…75%. I think my life would be pretty screwed up if I lost half my income (considering that with all the taxes I pay, not just federal income, I lose 50% off the top anyway).
Adam
John-
Matt Yglesias cut out the first part of your hypo. That changes my thoughts on his board a bit. In your hypo, I’d say whatever the government needs to do what it has to do. If we can assume a nonfederal system (i.e. one where there is only one tax collector), then the tax revenues should be enough to pay for roads, schools, police, defense, health care, and whatever else the government has to do. I’d have a progressive income tax whereby the first x amount of dollars is tax free for everyone, and so on with several brackets. I can’t say what the top rate would be until I knew the size of my country, its demographics, its GDP, etc.
If it feels like I’m fighting your hypo, I am. I don’t think government is particularly more efficient than the private sector. I just think it has a necessary role to play where the markets cannot provide services to the people. Once that role is determined, tax rates should be set accordingly.
Thus, I think your hypo applies only to the top tax bracket. My first thought is that at the margin, one should always be able to keep more than one is taxed. So, I’ll say 49.9% should be the highest rate.
Barney Gumble
Taking into account the Reagan era and Clinton’s 1993 tax cut, the peak of the Laffer curve seems to be around 33%.
anti commie
“There are no rich, there are no poor, EVERYONE makes exactly the same amount of money. ”
That’s communism!
Are you a Commie loving rat bastard?
(^^sarcastic^^….but I find it odd that you would choose a fictional world based in communism)
Jay
Okay, for your hypothetical utopia, 0%.
For the needs of the day: I say progressive taxation on income from 15% to 20%, no exemptions, and removal of all regressive taxes (sales tax, what not) and specific taxes (real estate, luxury taxes). Justification? Never mind, but that’s how I’d see it.
But I’m a Conservative, so my answer doesn’t count.
Kevin Drum
This is a mighty peculiar discussion, isn’t it?
John Cole
Kevin- I think I am asking this because at some point I think regardless of how gfood the intention of a government program is, it is absurd to ask someone to give over a certain amount of their income. Hell, the mafia protection racket operated with more shame than some of the people wqho suggest we owe 99% of income to the government.
JKC
John-
I think the thinking of some of us on the left is not that taxes should be progressive to “punish” the rich. (Before you start, I know there are some on the fringes of the left who feel that way: they’re loud, but I don’t think they represent mainstream liberal thought.) The idea, rather, is to have people pay for their government according to their ablility. As I said in an earlier thread, my wife and I can afford more than the single mom working in the checkout line at Wal-Mart, and Bill & Melinda Gates can afford a bit more than I can.
The idea is not to place everyone at the same socioeconomic level. Surgeond, for example, should earn more than sanitation workers. The guy who picks up your garbage, though, ought to be able to afford a decent, safe place to live (not a mansion, maybe not even his own house) and should have access to decent medical care, and should be able to get his kids educated in a decent school. That’s what I think we on the left are trying to get at.
John Cole
JKC- It might shock you to find out I agree with you. The question is how to get there, and how much we need to have the government take from each individual to get there, and also again, what ‘there’ means.
Tomorrow I intend to ask the question you posed earlier, and I intend to ask people what they think the role of government is or should be. However, fundamentally, we have to agree that there needs to be an upper limit of taxation.
RHJunior
Okay, let’s break it down.
1) Graduated income tax is both unfair and counterproductive, because it punishes the one behavior necessary for the existence of a thriving nation— namely, prosperity. Furthermore, the only way to sell it is to appeal to the spite and jealousy of those who do not wish to labor for their own prosperity.
So we conclude that a graduated tax of any sort is both unjust and irrational.
2)Appeals to “compassion” are irrelevent. Compassion is the territory of charity: any system whereby wealth is confiscated by coercion from one group and distributed to another is not charity, but legalized plunder.
3) We also conclude that the majority of services that government *currently* provides are 1)unnecessary, 2)ineffective, 3)counterproductive, and/or 4)better administrated by the private market. Primarily because most of the “services” consist of the aforementioned legalized plunder– robbing one to pander to another.
The only services government is morally authorised to render must be those which *benefit the nation as a whole,* and *are not providable by the marketplace.* These are limited to national defense, and the enforcement of the penalizing of violence, theft, and fraud… and at least a passing nod to the necessity of public decency.
In short, the government is currently both grossly overfunded, and grossly underperforming. If it were a business, everyone would be either fired or arrested already.
5)It has been further demonstrated repeatedly, not in a textbook but in the real world that a reduction in taxes by percentage results in an increase in government revenue overall. The lower the taxes, the better for the government’s wallet– because people cannot invest what the government confiscates. It’s better to get one percent each from a hundred rich people than fifty percent each from a hundred poor people.
A fair tax is one that bites all men the same, and bites as little as possible. Ten percent. Period.
Max Sawicky
As a matter of process, shouldn’t citizens be able to vote for as much or as little tax as they desire? In the interests of avoiding tyranny of the majority, I suppose we could set some limits to that. Maybe that’s your question.
One needs to remember that high taxes would mean lots of individual consumption needs provided by the state — most likely health care, education, transportation, recreation, some housing, etc.
So I would say for the wealthy (say, annual income of $200K and up), 30 percent of income is reasonable for the after-tax remainder. In your hypothetical, where everyone has the same income, I would stick to that as the maximum advisable. Part of the difficulty with what’s prudent is tax competition. There is some rate where you start driving people with means out of the country, and it’s probably lower than 70 percent.
More realistically, taking the present overall U.S. tax share from around 30 percent of GDP up to 40 percent would finance national health insurance and fix Social Security indefinitely, just for starters. 50 percent in toto I think is a good number.
Informational Note: after the 2001 tax cut, the average (not marginal) effective Federal individual income tax rate for the top one percent was 31.3 percent. After figuring in the new tax cut, that will be reduced.
I can’t speak for Democrats. I am not one. I didn’t vote for Al Gore. And it’s Sawicky with an ‘a’, not an ‘e’.
cheers.
John Cole
Fixed it, Max.
Ricky
**effective Federal individual income tax rate for the top one percent was 31.3 percent***
I’ve got a spreadsheet I downloaded long ago (which says the source for the info is the IRS), that shows the average rate for the top 1% during the Clinton years was just under 28%. For Reagan, it was over 30% (yet falling downward). If the data is correct, that despised group has had their EFR increased.
Max Sawicky
Rick — if you’re going to compare results like that, you need to refer to identical estimation methods. There are a lot of different ways of calculating this. My number is from the Brookings/Urban Institute web site. I’m not saying the one you raise is wrong. It could have been done differently, though, and would not necessarily be comparable to the one I cited.
These numbers are never simply tabulated from IRS data. The IRS doesn’t make its data available; they distribute (sell) a file that is a random sample from approx 130 million returns. Methods for processing this data will differ.
pj
God only asked his followers for 10%. Now, admitting that our government doesn’t have the same resources at it’s disposal as he does, I’d say a somewhat higher rate between 1/4 and 1/3 is reasonable.
Dean Esmay
I find anything above about 10-15% to be despicable, personally.
Ricky
Max,
Here’s a site with the info I mentioned & it looks like it’s from the 130 million returns:
http://www.taxfoundation.org/prtopincometable.html
Max Sawicky
Rick — The rates in the link you provide are calculated by the Tax Foundation, not the IRS. So they are not necessarily comparable with the Brookings/Urban Institute results. Nor is one necessarily right and the other wrong. I always go with Brookings/etc and Citizens for Tax Justice myself. Consistency of internal logic is the key to using this kind of data.
According to your table, the tax burden on the top one percent went down usually after 1996. It’s hard to imagine it not going down further after the 2001 cut — all groups got some tax cut in ’01, though clearly not the same amount or the same percentage of income.
So clearly the Revolution is at something of an ebb tide. If the wealthy paid more, good ‘ole boys could be paying less.
“Who were some of the men who said by their votes that it was right for you to pay tax on your wagon, and wrong for the railroad to have to pay tax on the palace car; that it was right for you to be taxed to death to keep up roads and bridges, but it was wrong for the Central railroad to pay taxes? Who were some of the men who showed by their votes that they were in favor of that great wrong?”
— Tom Watson, Sparta, 1892 (in one of his better moments)
Barney Gumble
I’m coming in late, but Andrew Tobias (well known financial writer) has some thoughts:
“’m not arguing for a 90% or 70% top bracket.
markus
assuming I’m allowed to reframe the question along the lines of Max Sawicky’s post to “how much services do I think the government should provide (which implies a corresponding tax level)” * I’d say between 20 and 50% taxation/government services is ok. I tend towards something around 40 percent, because I’m in favour of spreading risks among the entire population. The actual value I’d find acceptable of course varies with circumstances like necessary economic stimulus and what I get in return.
* I think the original question is weird in that respect, it feels like being asked what I’m ready to pay for a computer. The answer of course entirely depends on what sort of computer I want. (I have a mac and being German I have big government. I don’t think there’s a connection though)