Elizabeth Warren is rolling out a “wealth tax” as a proposal to address the Gilded Age-levels of economic inequality currently blighting our futures (The Post):
Sen. Elizabeth Warren (D-Mass.) will propose a new “wealth tax” on Americans with more than $50 million in assets, according to an economist advising her on the plan, as Democratic leaders vie for increasingly aggressive solutions to the nation’s soaring wealth inequality.
Emmanuel Saez and Gabriel Zucman, two left-leaning economists at the University of California, Berkeley, have been advising Warren on a proposal to levy a 2 percent wealth tax on Americans with assets above $50 million, as well as a 3 percent wealth tax on those who have more than $1 billion, according to Saez.
The wealth tax would raise $2.75 trillion over a ten-year period from about 75,000 families, or less than 0.1 percent of U.S. households, Saez said.
Good for her. My only quibble is that it’s too small.
The political ground has shifted on taxation. People recognized Trump’s tax cut for what it was — another plutocrat smash-and-grab. Donors loved it, but voters didn’t.
The “tax-and-spend liberal” label doesn’t have the bite it did in 1991. Good to see Democrats adjusting their strategy accordingly.
Yes, that is too small. At least it’s a good first step for a serious candidate to propose seriously needed reform
Major Major Major Major
Open thread? The movers seem to have, ah, misplaced our PS4, somewhere in their storage facility. I wouldn’t mind so much except for the saved games, about which I am furious.
Thanks for the link to the Post article. As I mentioned in the thread below, a wealth tax seems more likely to generate revenue for the Treasury than an increase in the marginal tax rate since most tycoons don’t earn their money as reported income.
It wasn’t clear from the article, but I assume this would be per year, not just a one-off?
Steve in the ATL
On a related note, does anyone have any travel tips for Egypt, particularly Cairo/Giza Plateau and Luxor?
Finally – a wealth tax. It’s more efficient than an income tax, because it’s less susceptible to avoidance shenanigans. It’s more fair than an income tax, because it doesn’t penalize work. With skyrocketing wealth inequality, and automation sucking up more and more low-paying jobs, a wealth tax directly tackles the overriding economic problem of our time.
And just think of what can be done with $2.75 trillion. M4A and GND would just be the start.
I am now a Warren 2020 supporter.
It’s too small, but it’s a relatively easy political lift to change amounts and rates in the future once it is law, whereas getting the concept accepted in the first place is going to be really tough. It’s probably better as a matter of strategy to get a wealth tax, any wealth tax, on the books.
(This coming from a resident of Washington where we don’t have a state income tax and we’ve been trying to get one to replace some of our regressive sales taxes. Just doing it at all seems to scare people, regardless of how the proposals so far will effect few it will effect them little.)
??? Goku (aka Amerikan Baka) ??
@Major Major Major Major:
I’d be furious too. Do you still play KSP, btw? It’s on the PS4 now.
So of course every Laffer Curve tax-cut thief is going onto CNBC screaming SLAVERY! DEATH! OHNOES THE JOB CREATORS WILL FLEE!
Gods. They’ve been f-cking up our revenue system for 40 years and we still have to treat them seriously? Never. Jail the tax cut crowd for fraud and lets’ get government working again.
In a somewhat related topic, the new report that finds an *apparent* link between gum disease and the development of Alzheimer’s disease brings to the fore the obvious need to expand ACA coverage to (at least) basic dental coverage. Dental health is closely related to multiple health problems that are covered by the ACA.
And anyway, it’s idiotic to pretend that your mouth is some kind of separate issue unrelated to the rest of your body. We wouldn’t allow the ACA to exclude fingers and toes because fixing extremities is difficult, expensive, and important. The mouths of America aren’t asking for “special rights”, just the right to be free of disease and functional.
Steve in the ATL
@Tractarian: there was a wealth tax in Georgia when I first moved here. Would be less painful now since acquiring a wife and children and thereby divesting all of my wealth.
@Major Major Major Major:
Hate to say it, but I always keep my personal stuff with me when I move, leave all the heavy stuff to the movers.
??? Goku (aka Amerikan Baka) ??
@Steve in the ATL:
Don’t have sex on camera with the Pyramids at Giza in the background. The Egyptian government doesn’t like that. Saw it in a news story a few months ago.
@smintheus: Less controversial that covering a vag I guess. Republicans fear everything moist?
hells littlest angel
I don’t understand how a wealth tax works. Is it a one-time only thing? If so, it does seem too small. However, if it’s something you have to pay annually, one or two percent seems about right — otherwise, you drain away people’s vast fortunes within a few decades (not that there’s anything wrong with that).
@VeniceRiley: Eyes are moist. I’m glad that the Republicans haven’t thought yet of turning sight into wedge issue.
Wealth tax is great but what is needed is giving the financial regulatory infrastructure, teeth. Anti-trust laws, SEC and the like.
@hells littlest angel: The average super wealthy estate increases in value year to year at a rate above 10%. Even a 6% annual tax is not going to make a dent in their ability to become even richer.
Major Major Major Major
@PaulWartenberg: it was basically the one such object that didn’t make sense to schlep around the country for two months.
A number of countries — e.g., Norway, Switzerland — have variations on this theme. France had a wealth tax till a few years ago, when they switched it to a real estate tax. I think British Columbia has a small wealth tax, too.
Capitalism isn’t stable; a few people, through luck or pluck or both, acquire more wealth than others. They use that wealth to tilt the board in their direction, and more and more unearned ducats flow to them and their descendants, and less and less to the great majority of humans who weren’t lucky with their ancestors. A wealth tax AND a confiscatory estate tax — beginning with, say, 50 percent on everything over $1 million and going up to 99 percent over $100 million and 99.9 percent over $1 billion — are ways to put things right.
??? Goku (aka Amerikan Baka) ??
I like the cut of Warren’s jib, but I’d like to get some opinions on this wiki section on Wealth Taxes:
Further, there may be some questions about constitutionality:
An important thing wealth tax does is to stop people from sitting on their wealth during slow times when it is safer to hang on. The cons are eagerness to invest even when there are not good private investment opportunities so more pressure to privatize public institutions.
We add a confiscatory estate tax to this and were really talking about solving income inequality.
Vox has a great video up explaining how marginal tax rates actually work.
Too bad only about three dozen people will see it, while tens of millions will internalize (via Fox) that the Dems are out to impoverish every last hard workin’ Murican.
@??? Goku (aka Amerikan Baka) ??:
So we reduce wealth inequality, and blue states get a bigger share of the tax revenue for once. It’s win-win!
@Major Major Major Major: OH, SUUUURRREEE. I’d be so pissed. Sorry.
And yes, the tax is too small, but I’ll take a start. Want to get my undying loyalty? I’d like a sedition penalty for those who can be shown to have willfully subverted democracy. Forfeiture of all domestic assets. We need major consequences, because these fuckers haven’t learned from all the other times their ancestors did it.
@Jeffro: I don’t think it’s going to work like that this time. The tax law they passed is not popular. People understand it cut taxes for the rich and regular people got nothing or are paying more. Marginal tax rates that increase taxes on the wealthy is not a complicated issue. It’s actually popular.
If that’s not intended as a joke, it’s by far the dumbest thing anyone has written on this blog today.
I like to say that I’m not “tax-and-spend liberal,” I’m just a “tax liberal.” I honestly don’t care what we spend the money on anymore. Obviously, it would be wise and just to use tax proceeds for things that would improve the lives of all Americans, but failing that, I’m fine with just putting it all in a big pile and setting it on fire. All I care about is getting it out of the hands of all those “malefactors of great wealth” (tm FDR) whose personal wealth is on par with entire nations and who want to use all their money to inflict misery on the rest of the country.
My John Bircher gun-toting RWNJ neighbor and I agree on nearly nothing. But get him started talking about whether the wealthy are paying their fair share of taxes and he sounds like a socialist heathen. The ground has shifted on this issue. And it would be a critical mistake for us to forget that Trump won in large part because he lied Americans into believing he was going to stick it to the wealthy.
I was pleasantly surprised by him as Gov. of VA but not sure about him running for President.
@??? Goku (aka Amerikan Baka) ??: I was going to post this. I thought the Supreme Court held during the last Gilded Age that the wealth tax was a direct tax that had to be apportioned.
While it seems too small, I think people will be shocked at how much money that adds up to. Pro athletes and actors aren’t the problem here – it’s the billionaires. It’s a good starting point.
Challenge with taxing wealth is getting to it. That’s also a challenge with income, but income is a bit harder to hide and manipulate. The question of ‘what is something worth’ is a surprisingly challenging one, as we discovered in 2008 when pretty much every fucking mortgage in the country was valued at $0 because nobody had the cash to buy them, yet most homeowners were reliably making their payments.
@smintheus: Even up here in Canuckistan, dental is not covered under provincial health. I believe our provincial government looked at it about 30-40 years ago, but ran screaming at the startup cost.
As a person with next to no intact teeth trust me I think everybody should be covered for everything including teeth, eyes and feet.
@Archon: We also need to address these long-lived family trusts and shit. I read someplace that some of these trusts can last a hundred years? And so the person who sets it up can pass down their wealth, bypassing estate taxes, for that long? Insane. Insane. Gotta fix that, too.
@Major Major Major Major: You didn’t have cloud saves enabled? :(
I think the way to sell this to the uber-wealthy is to explain that the US is really a hedge fund and the 2% tax is a management fee.
They understand that.
Valuation of assets will be interesting. Around here I can already hear the timber families with sawmills and thousands of acres of timberland joining the farmers with thousands of acres of cropland whining about being “small family operations” and “stewards of the land”
Mike in NC
Soak the rich, starting with a certain Fat Bastard who owns a bunch of hotels and golf courses but refuses to pay federal employees forced to stay on the job.
Interesting historical note. The reason for the income tax amendment wasn’t to tax income. The federal government could always tax wage and salary income. The reason for the Constitutional amendment was because the Gilded Age Supreme Court held that capital gains income, like wealth, was a direct tax that had to be apportioned.
If the Sixteenth Amendment we’re repealed, the feds could still tax your income from work.
$2.7 trillion is a lot of “speech” that will fight back hard. This will be interesting; the Democrats might succeed in making their frame of the narrative the general one, since so few wealthy are affected. Dunno how they would compute wealth (does anybody know that part?), which would prompt a lot of attempts to get special interest exemptions if this got significant traction. Fun fun fun!
@Major Major Major Major:
On our recent move the movers misplaced our anvil. About a month later it was found several states away when they tried to move it into someone else’s home.
@Yarrow: I agree. People who mainline Fox News all day might cry about Wilbur Ross and Sean Hannity getting a tax increase, but they aren’t the majority of voters, even if they consider themselves the only “real Americans.”
@Tractarian: Did you read about Warren’s Accountable Capitalism Act? (Vox has a good summary here.) The design is to overturn shareholder supremacy in corporate governance, which could be a huge force for a fairer economy.
So far, I like Warren’s ideas the best of all the declared candidates, but it’s early yet. Win or lose, I hope her ideas get a prominent hearing in the primary. They really are bold.
Maybe the easiest thing to do would be just to reverse the Trump tax cut. It is already unpopular because most people haven’t seem a meaningful benefit and has caused the national debt to soar. Seems like this would be an easier sell.
10% is probably to the high end of returns (unless inflation goes up). The more money you have, the harder it’s to move around. It’s the smaller, growing companies/investments that bring in the high returns, and you going to have to invest in a lot of losers to find them. Warren Buffett just warned that his company. Berkshire Hathaway, was getting too large to keep getting the returns that it has in the past.
It’s a good start, for sure.
Looked it up. In the game Monopoly, created in the aftermath of the last gilded age, the wealth tax is $200 or 10%. Let’s go with 10 %.
Wealth tax? You betcha; freedom isn’t free, motherfuckers (can we call it the Bone Spur Tax in “honor” of the Orange One?).
Tax them until they actually cry. Then tax them a little bit more, just to be sure.
@??? Goku (aka Amerikan Baka) ??: Yeah, in this day and age it’s much easier to set taxes on money transactions.
Taxing assets involves much more research and some guesswork since as the saying goes, your house is only worth what the next guy pays for it.
Clawing a percentage when the estate changes hands does seem more fair and easier to calculate.
Just a reminder that a 1 cent tax on stock market transactions would go far to reduce stock market volatility, give small investors something closer to a fair shake, and raise a ton of revenue.
A public service reminder that billionaires don’t feel the need to apologize for being weird. A sample.
@??? Goku (aka Amerikan Baka) ??:
I don’t think that’s accurate. Where Article 1 sect. 2 and 9 discuss “direct taxes”, the only specific reference is to “capitation”. It’s perfectly understandable why the Constitution would feel the need to underline that a head tax would have to be proportionate to the population of each state…to prevent larger states combining to impose disproportionate burdens on smaller states.
If a wealth tax (which doesn’t affect everyone) counts as a direct tax for purposes of those sections, then so would an income tax and an estate tax. It’s nearly inconceivable that any legal scholars but Federalist Society whackadoodles would regard a wealth tax unconstitutional.
Yes, it has. It’s no longer the 80s, when ‘tax-and-spend’ was the accepted polite formulation for ‘fuck those n-loving liberals.’ The Republican Party is fed up with polite formulations. Liberals are realizing this is total war. An entire generation has grown up never seeing Republicans be anything but insane, with no Soviet boogeyman to make them fear communism, and totally denied the privileges that let previous generations think they could get away with hurting themselves if it hurt blacks more. Bonus points: They have seen exactly one major piece of legislation pass that was vilified as socialist, and it was the best thing to ever happen to them financially.
And also, as someone said above, but I can”t find it, it should be a GOAL to diminish large fortunes over time. Nobody gets to coast for a century on their great-great-grandfather’s work. Nobody. Nobody. So 2% is too small, for that reason too.
Mom Says I*m Handsome
@Steve in the ATL: This may be terribly dated info, but when I visited Egypt in 1986 we spent a few days in Cairo looking at museums, then we flew to Abu Simbel and took a cruiseliner down the Nile. (“Cruiseliner” is being very generous; there might have been 30 passengers on what was basically an oversized houseboat.) We visited famous ruins mostly at times when the bus tours weren’t there, so we usually had the places to ourselves. So much of ancient Egyptian life revolved around the river, so spending that much time on it was a neat reminder. The trip downriver was 3 or 4 days.
Good for Warren. I think this is good policy and good politics. I don’t have any position on whether it is too big or too small.I’ll go read some economists who have an informed opinion, maybe email NYT to ask Krugman to address it.
I think it is good politics because the key to success for 2020 is to put good, clear, unambiguous, strong policy front and center.
I don’t think all the other kabuki theater and pundit blather, and political posturing make nearly as much difference as it used to. People want help in their daily lives through strong clear and good policy.
Delurking to say I could watch my Senator Bennet (Colorado) slam Ted Cruz a zillion times…
ETA CSPAN link
Better tax-and-spend liberals, than borrow-and-steal RWNJs.
It’s a very old split that goes back to the days when dentists were lower-class working drones and physicians were upper-class gentlemen who never actually touched their patients because it was déclassé. Surgery actually developed from dentistry and was only folded into medicine in the mid-1700s. This is why, in the UK, surgeons are still traditionally addressed as Mr. or Ms. instead of Dr. even though they now have the same medical training.
@joel hanes: Even a 0.1% tax on each stock market transaction would help a lot.
Yes and no. I have a decent amount of money, but there are a ton of vehicles that I can’t touch because I don’t have enough. For instance, real estate is effectively out of reach, as is owning businesses. I’m not in Swiss bank account territory.
The difference is whether we’re talking about cash or assets. That’s why money laundering is a thing – convert your cash into an asset, move the asset, convert it back into cash. If you’ve got a lot of money, you have a lot of options there.
That remains to be seen. I bet both would be highly subject to shenanigans, and have no idea which would be moreso.
I think getting any amount of wealth tax at all would be as they say … a good start.
To me fairness says you have either an income tax rate or a wealth tax rate, and you pay the LARGER of the two.
I think the trust lawyers would make out like bandits, assuming there was some charitable trust exemption ( I bet there would be.)
@??? Goku (aka Amerikan Baka) ??: I don’t know about economics, but I do know that L’Instituit de L’Entreprises is basically an organization of big French businesses. The current head is the CEO of everyone’s favorite water privatizers, Veolia. So, I’d say they probably had, if not a bias, at least a particular point of view they will express. So, if you’re skeptical of the Chamber of Commerce, I’d be skeptical of the Institut.
But the name is so much classier-sounding to an American than that of the US Chamber of Commerce, I’ll admit that.
@??? Goku (aka Amerikan Baka) ??:
Just tax the increase in wealth. That’s a kind of income, and the 16th Amendment allows any kind of income tax. We have defined income in the income tax laws not to include unrealized gains, but that’s just a legislative decision, not a constitutional requirement. In fact, the estate tax basically is a kind of wealth tax, based on the net income received by the dead person during his or her lifetime, and it doesn’t have any constitutional problems.
Was it purchased from Acme?
@joel hanes: I agree. I think that’s a much more sensible approach. It’s much easier to measure, regulate, and collect, and it’s not really going to hurt regular people (who do own stocks through retirement accounts and such and would still feel the fee there). I’d do it as a % though, otherwise you just end up with everyone going into Berkshire Hathaway Class A stock territory (currently trading at $301,000 a share)
Thanks for that reminder. I looked at the 2-3% tax and compared it to the ‘safe retirement withdrawal rate’ of 4% and thought it was too high.
But you are right. I think it was Thomas Jefferson who wanted a high inheritance tax for just this reason.
Someone else suggested Inheritance Tax BRACKETS – wonderful idea.
The Vox video is way too long. This isn’t something you need several minutes to explain. It really should take about 30 seconds. And, really, it could be two sentences: When you talk about the top tax rate, the rate applies only to the income above the level where the rate kicks in. So if the top rate were 70% and it started at $10 million, only the income over $10 million would be taxed at 70%.
@Steve in the ATL: Don’t let an asp go down your shirt. Also, Nile crocodiles bite.
You didn’t ask for helpful tips.
This is dumb. There are liberals who seem to care more about punishing the wealthy than about helping the working poor and the middle class, and this plays right into the hands of the plutocrats.
The Trump tax plan thoroughly rigs the tax system to benefit the wealthiest at the expense of everyone else. It gives the middle class pennies in tax breaks and limits credits while raining tax breaks and loopholes on the upper crust.
You don’t solve income inequality just by raising more tax revenues and then creating a Democratic Party version of trickle down.
People want jobs, good wages, and the ability to save for the future. In the past, Republicans could win on the bullshit lie of “tax and spend” because the poor and the middle class could not see how liberal proposals would translate into more money in their own pockets.
Some people never learn.
@Mnemosyne: Interesting. That, like so many other aspects of medicine up until the early 20th century, harkens back to medical practices and attitudes in ancient Greece and Rome. The Hippocratic corpus advises doctors never to engage in any form of surgery.
@joel hanes: This. A small transaction tax would do wonders for the Treasury and at the same time ensure that regular folk with retirement accounts are not hurt by the booms and busts that characterize Wall St. at the moment.
And more recently a number of commentators have noted that large fortunes are *incompatible* with democracy. Because those large fortunes have an outsize voice, and will have that voice no matter what we do about political contribution rules.
I’d have paid good money to see AOC ask those Davos gobshites exactly how they planned to remedy the anti-democratic nature of great wealth — with the warning that if they didn’t figure it out, we’d just take away their great wealth, b/c for sure we’re not going to let them destroy our democracy.
And once again, exploding the myth that anyone ever really paid the highest top marginal tax rates in the 1950s:
We’ve conquered the Cayman Islands? And other off-shore places to stash cash?
The rich have a lot of people working for them to avoid paying taxes. They’ll find ways to hide their wealth.
The stock market needs much more reform than just a transaction tax. Also, not sure how a transaction tax would work in dark pools.
I have heard estimates stating dark pools account for 14% to 40% of stock trades in the USA.
@Brachiator: Interesting take. It matches my own concern about the need of populism to have an enemy to tar and feather as an enemy of the people. I’ve seen enough of the pitchfork crowd for a lifetime. Can we go back to sober policy yet?
This is obviously accurate. But it also shows the problem of talking about only the top rate. You have to consider how the rates increase for income below the $10 million (or whatever) threshold is for the top rate. It’s not like the first $10 million will be tax free.
Krugman says an excellent tax expert likes Warren’s proposal
A real tax expert on the Warren proposal: It’s serious and worthy. Maybe not the best alternative, but on the right track.
The usual suspects will try to make this seem like a wild and crazy idea. It’s actually very smart — as you would expect given the source.
@Brachiator: paying your fair share is not being punished. You are spouting the libertarian line.
$50m!? That’s going to impact those two-earner families like a cop and a school teacher family with a $49.9m trust fund. How will society get by?
Uh, no. Reducing concentrations of wealth has its own salutary effect, because it lessens the runup in prices for housing, education, health care. It reduces the winner-take-all effect, so other workers can be paid more. Businesses have a choice of whether to pay their CEOs massive $$, or invest in their businesses (and in lower-down workers’ salaries, training). When a CEO can take almost all the money, you know the business is going to do it. When a CEO gets 5% of that money, the calculation changes, and businesses may prefer to invest. Certainly this is a reasonable explanation for why the high-tax 50s were a period of great business investment.
And finally, you need to have revenue to -spend-, if you want to provide education, health care, income support, etc, to the populace. If you get it by printing, you run the risk of inflation. Sometimes that’s OK. But why leave that money sitting in the hands of the rich, where they’re guaranteed to do evil things with it?
Oh hai. I am HeleninEire. But I’m sure you know that. The problem with taxes is how they are spent. I have lived for 2 years in Europe. I am taxed at about the same rate (28% ish). And let’s be clear I lived in NYC.
At the beginning of my second year here I had a seizure. Fell down on the street. Sounds scary, but I had one in NY about 15 years ago. When I woke up in the ambulance here I knew what happened. They took me to the hospital. I was there 7 hours (and by the the way the give you sandwiches and tea every 4 hours)
They found nothing in all the tests. Just like in NY. It cost me €380. That would have been $10,000 in America.
@Baud: It is amazing how people a) do not understand graduated ( progressive) taxation
and b) people who do and should understand it purposely misunderstand it. I think Sinclair Lewis had something to say about that.
@Baud: True. But I think the basic concept can be explained more quickly. The US used to have more brackets than since the Reagan years, so progressivity of federal income tax could be more precisely crafted.
Buildabrand and Hardass might as well pack up their picnic baskets.
@gene108: This is just one step. We can demand that banks that are connected to our clearing systems are transparent about the beneficial owners of accounts. Notice that we’re starting to do that with Switzerland, yes? Your issues can be addressed — and frankly, the methods would prodiuce greater transparency and reduce fraud, worldwide, in addition to being instrumental for wealth taxation.
@gene108: What we need of course is teeth in such a law. Let the super rich try to hide their wealth; get caught; end up in jail; and have their entire estates confiscated. Problem solved.
@jl: Here’s a 4-minute Khan Academy video on it. He usually does a good job explaing things.
That’s a can of worms I had not considered. Who in the US government is going to be able to assess the value of land holding in India? A ranch in Argentina? Or family heirlooms held abroad? Wealthy people are very good at hiding their wealth from tax authorities.
@ChrisS: Yes, you cannot raise taxes on the upper middle class like that.
@Brachiator: If you haven’t already, you should read about Warren’s Accountable Capitalism Act (linked in comment #43). Amazingly, Warren is capable of both walking AND chewing gum!
The problem is nothing she’s proposed would do that. The people in Davos don’t earn their income as salary. They get it from things like the carried interest loophole. Shit, we even pay them to borrow money to invest in margin accounts. The whole discussion of marginal tax rates is something of a distraction in my view. It feels good but it doesn’t actually address how to generate more revenue for the Treasury that can be used for social programs, in turn.
I don’t agree with any of that, nor believe what you claim is even true (link?), but it does remind me of what author David Sedaris – who now lives in England – said about the biggest difference between the United States and England.
I’m paraphrasing because I can’t find a link, but he said that in the United States people see an expensive car and want one for themselves, but in England they see an expensive car and want to scratch it. Having worked in England for a while, there’s definitely some truth in that.
@catclub: We used to use “progressive taxation” as a programming test for prospective new hires. It’s a good test, actually: Not very complicated in concept, but lots of bad ways to implement it.
And if they couldn’t grasp the concept in a paragraph of explanation, they weren’t up to the job of being engineers either.
I have heard solutions along the line of: You declare the value of your assets yourself, with the proviso that the Government has the option
to buy those assets at the value you declared. Be careful!
The funny thing about this is that Trump would value his assets at $50 Gazillion to look big, up until his accountant tells him he has to pay 1%
of that in taxes – which he does not have.
Ron DeSantis’ new Secretary of State is a racist. DeSantis declared that his racism was a “side controversy”.
@catclub: There was a braggart in my small New England town who liked to inflate the cost of building his house. His figure kept going up over the years in the telling. Eventually the tax assessor re-appraised his house for his highest self-declared amount. The guy had to sell his house. I think it led to divorce as well.
As we’re on the subject of taxes, it seems worth posting a link to Wikipedia’s table of global tax rates. The US is not actually a low tax nation. We just don’t seem to do it well or fund programs very effectively, and we really punish those who live on reported (salaried) income. We’re also one of the very few developed nations to tax all residents on global income. And to my knowledge we’re the only country in North America and Europe to have onerous property taxes. I can’t speak for all of Europe but I know that in Germany and France property taxes are miniscule. In places like NJ, by contrast, they are sky high.
As opposed to spend-and-don’t-tax conservatives, naturally. Paul Ryan, fiscal conservative man of ideas! His main idea being fuck the poors, of course.
Because income can be hidden, the wealth that results from that income can also be hidden.
Neither does the income tax, which is ostensibly used for govt provided services, infrastructure, security, etc. which is not to say that the current income tax structure is fair, but your comment appears to be aimed at income tax in general.
@tobie: tax tables don’t tell you what rate people actually pay. There’s nothing in that table for ex. that explains that in the US the poorest people pay a higher rate of their incomes in taxes and the richest do. But your ‘concern’ is noted.
I have to admit, the most shocking thing to me in that story is that in Florida, the Secretary of State that oversees elections is appointed by the governor. WTF? Who thought that was a good idea?
I’ve never seen anything that proves this connection. Especially when you combine housing, education and health care. In San Francisco, for example, the average home price is a million bucks. This is exacerbated by the high wages paid to some technical workers, but the impact is not nearly as great on education and health care.
Nope. Blame shareholders not CEOs. The salaries of the greediest CEOs is still a small fraction of total employee wages. OTOH, we’ve seen companies plow tax cuts into stock buybacks.
The 1950s were not a high tax era.
Absolutely agree with you here. And the Trump tax cuts have eroded our ability to do this. This needs to be fixed. But you also need middle class tax cuts and an effective economic stimulus.
Maybe we should try to separate good economic policy from simple moralizing.
[NB: fixed the links]
that wkipedia page is hard to parse, doesn’t have the right data, and includes too many countries unlike the US. Here’s a link to “All-in average personal income tax rates at average wage by family type”. It’s a spreadsheet-like thing, so you can choose family type and then sort-descreasing. And indeed, the US is a low-tax country,compared to its peers (OECD countries).
Here’s another: How do US taxes compare internationally?
And here’s yet another: A Comparison of the Tax Burden on Labor in the OECD, 2017
All of these studies look at total tax burden, not merely rates, or top marginal rates.
@Brachiator: That link is just mindblowingly disingenuous. It “disproves” that anybody paid the 70% taxes by looking at a group of people of whom almost none were subject to that tax and claiming their *average* tax was below 70%. Is AOC’s lesson on marginal vs. average taxes already forgotten?
As soon as we get around to putting the Balloon Juice Jackals on a tax writing committee, our moralizing and bloviating will
So in the past few days Gillibrand was in Iowa sucking up to the locals with this pablum:
Meanwhile, Warren was in Puerto Rico headstomping Trump and defiling his corpse:
Sure I’ve cherry picked, but they are both real quotes from the past few days. Warren already sounds like genuine contender, and Gillibrand sounds like she’s barely getting started. It’s early days, but I can see Gillibrand falling off the radar before her campaign even gets off the ground.
@smintheus: As I indicated already the people who are hurt most by our tax policies are the middle class and the poor. Both live on reported income. Your desire to dismiss all question regarding taxes as concern-trolling is noted.
I’ve mentioned this before, but even some of the Robber Barons of the guilded age favored 100% estate taxation to prevent sloth and disolution. Andrew Carnegie famously said, “I would as soon leave my son a curse as the almighty dollar.”
It’s not “simple moralizing”. Many well-respected commentators have argued that democracy is incompatible with great wealth and income inequality. This is a mainstream position.
@Chetan Murthy: Thanks for the link to the OECD’s tables. I will look into them. I should have specified I was trying to compare individual tax rates (income and payroll taxes) not tax rates as a whole.
And I can provide an existence-proof which is emblematic of an entire class. My father was a doctor in a small Texas town. When Reagan lowered the top marginal rates, I remember my mom telling me that we were rich! rich! RICH! And he wasn’t some cray-cray specialist. Just a cardiologist for a bunch of old white folk in this small town. I’m sure this story was repeated in doctors’ tax bills nationwide.
@Chetan Murthy: A mainstream position with research proof points, even.
Of course he is because Desantis himself is a plain up racist.
BTW, secretary of state has already resigned.
So many states, so few Kris Kobachs.
This was just one example. I don’t you can find any study that shows that any wealthy taxpayer paid any taxes at the top rates. Any my link does note the loopholes and breaks that let the wealthiest shift income elsewhere so that it would not ever be taxed at the highest rates. As I noted before, the entire reason that the alternative minimum tax was devised in the 1960s was because a small number of wealthy households were paying zero income taxes.
It doesn’t remotely apply here.
And while we are at it, a larger problem are tax breaks that let people accumulate gains which are excluded from ever being taxed. A simple example are Roth IRAs, which may be a good idea, but which still creates piles of nontaxable income.
And we shouldn’t forget corporate income taxation. The original rationale for the corporate income tax was as a way of making up for the “corporate barrier”. If corps can privatize gains and socialize losses, then society needs a way to recoup those losses from corps — and corporate income tax is that way. It should be a shit-ton higher, enough to cover all the environmental cleanup from toxic wastes, air pollution, all the harm from contaminated food, and on and on and on. There are a TON of “spillover damages” that corps shove off onto all of us, that they need to be paying for.
Just a wild and crazy guess on my part, but I suspect that Rick Scott thought it was a terrific idea.
And certainly Jeb Bush in 2000 also approved.
@Brachiator: taxfoundation.org is a right wing bullshit mill.
@Immanentize: I’ve been following the secretary of state issue closely because DeSantis is expected to throw up roadblocks to the voter rights restoration initiative that passed in a landslide in November. I read up on Mr. Blackface prior to this incident and was actually somewhat relieved DeSantis didn’t appoint someone with a long and obvious record as a vote suppressor. Now this. Jesus, Mary and Joseph.
@Chetan Murthy: More about corporate income tax: There are those who argue that it’s a hindrance on business — that we need to set business free to innovate and all that shit. But by that same argument, the laws against bank robbery are a hindrance against business — if I could rob banks, I could generate so much economic activity by spending that cash!
In a similar way, these corps rob each and every one of us — for instance by leaving contaminated brownfield sites that we must pay to have cleaned-up, or selling contaminated food that causes illnesses&deaths (I remember reading that the romaine lettuce contamination saved the farms/corps a few million, and generated insanely more costs to everyone else — from restaurants and retailers, to the people who became ill and had to pay for their own health care, when they were injured by corps).
Liability needs to reside where the harm is generated, not upon those who are harmed.
@catclub: Some folks are born silver spoon in hand
Lord, don’t they help themselves
But when the taxman comes to the door
Lord, the house looks like a rummage sale
It ain’t me, it ain’t me, I ain’t no millionaire’s son, no
It ain’t me, it ain’t me, I ain’t no fortunate one
@Mnemosyne: The GOP?
Thanks very much for pointing this out. I took a quick look, but really want to dive deep into it later. Very interesting stuff! And probably scares the crap out of right wing blowhards.
@Immanentize: Good point – Jeb??? would be an even better example.
And yet even *they* agree that the tax burden on average wage earners in the US is well below the average of OECD countries.
Fair enough. That’s why I would never pay attention to any of their proposed tax policies.
But the take on historical tax rates is accurate and seems to be confirmed by any other easily referenced source I could find.
And yet, it turns out, the bottom half of the top 1% has stayed still, while the lion’s share of the massive rise in inequality has gome to the top half of the top 1%, and even more concentrated than that. And the C-suite has been a big part of that top half of the top 1%.
Look: one way or the other, the money needs to be clawed-back from that top half of the top 1%.
At least the guy didn’t say, “it was just a youthful costume prank, get over it!”. But as you suggest, who’s next?
To those of you who argue against steeply progressive income & wealth taxation I have a simple question for you: The best economists of our time (Delong, Krugman, Piketty, Rodrik, et al) all think this is not just a good idea, but *necessary*. Who are you to put your judgment in place of theirs? Why do you think you’re more qualified than they are?
More Carnegie on serious estate taxation of wealth (as opposed to stipend or allowance):
I love that so much.
Cool stuff. Thanks. A quick glance at the table shows personal tax rates in the US are a lot less than in Germany and in the Netherlands but close to France and commensurate with Canada. I need to see how these rates are compiled and if they include VAT (an issue in other OECD nations), property tax (not really an issue anywhere but the US), etc. Thanks for pointing to the OECD charts.
Yep. The Trump tax cuts revised the entire tax code: individual, corporations, estates and trusts, and everywhere favored the wealthiest over the middle class and working poor. It is remarkably cruel.
And it will take a lot to undo it and to repair the damage it has caused.
Right. They’re not the absolute worst (they don’t just fabricate numbers), but they cherry pick in their analysis, with a very obvious bias to the right.
The Koch Foundation funds them, and the chair of their board of directors is from Koch. Calibrate your trust in their views accordingly. For someone here to be citing them as a source is….surprising.
@Chetan Murthy: I’m not opposed to it. I just don’t get the exclusive focus on marginal tax rates at the expense of all the other messed up aspects of the system.
Oddly, the Trump tax cuts might usher in some form of flat tax which would end up more progressive than our current maze of perques.
What Have The Romans Ever Done for Us?
My wife went to high school with one of the Rockefeller heirs. This was in the latter 1980s, but said Rockefeller was encouraged to work hard by her parents to make it clear that she was intent on contributing something useful to society and not going to just coast on her wealth. But she easily could have coasted on her wealth. A century plus after the robber baron era those families – everyone in them down several generations – still did not have to do anything but sit and watch the money grow if they didn’t want to. I mean, I don’t mind the rich passing on something to their heirs but so much that their great great great grandchildren will be so wealthy they never have to work for a living is just too much.
You have made some good points here, but that call to authority is cringeworthy and pathetic.
@??? Goku (aka Amerikan Baka) ??:
This should have gone the way of counting slaves as 3/5ths of a person. this was put in the constitution to protect slave owners from having slavery taxed out of existence. It’s time for it to be repealed.
Really? It’s a well-known thing that when a trained specialist in field A, goes over to field B (that looks superficially related), and start opining, s/he makes grave errors. It’s remarkably common. And that’s because *expertise* counts for something.
Furthermore, you’re impeaching the *entire* scientific method. Because nobody can judge the validity of work in some nearby field, or worse, some far-away field. And we can’t reproduce the experiments. We are ALL forced to go on the word of experts, and so in science, we have developed methods for deciding if some one expert is to be trusted or not.
It’s not a “call to authority”. It’s the *heart* of how science works.
P.S. As a friend of mine once said: “six months in the lab can save you half an hour in the library”. There’s a reason why we consult experts, and it’s not because of some sort of worship.
P.P.S. I once gave a talk about the “two-phase resource acquisition rule” (typically taught in databases about locking) and its wide applicability to many areas of systems-design. In that talk, I adduced three different deployed commercial systems where the rule was flouted, and describe how the systems failed, what the commercial impacts were, and how we discovered the problem (in the field, after the systems had failed, and we were called in to fix ’em).
My punchline was: You can be smarter than the highly-paid people who built these systems — read and understand your textbooks!
This logical fallacy is called “the appeal to authority.”
Krugman clearly is one of the foremost economists of the modern era and is a master when it comes to macro economics. But in my humble opinion, he is not a great practical economist.
I trust him when he says something like “the economic stimulus should have been x billion dollars.” I would not necessarily trust him in deciding how the stimulus should be spent.
And me? I’m just a nobody with 30 plus years experience in the tax industry. It don’t make me no expert, but hopefully don’t make me no dope neither.
I’ve done some computer simulations on this sort of thing.
It’s AMAZING how small a wealth tax can be and still be hugely useful. More would be great, but I don’t buy that the Warren wealth tax wouldn’t be helpful on the grounds of being too small. You don’t need much of a wealth tax to deal with some of the structural problems of wealth and inequality.
I don’t see that happening. I also don’t see how a flat tax can be progressive.
Betty, I don’t wanna shock you or anything, but the Florida Secretary of State under Ron DeSantis these last 14 days may have been a raging racist asshole.
I spent a few years looking at flat taxes. there is no goddamn way that type of tax should be considered Progressive.
What does this mean? Are you actually transferring income from the wealthiest to other income groups?
Not bloody likely. a progressive tax structure has at least a CHANCE of being progressive. A flat tax has zero chance.
Have you noticed how many Billionaires have been in favor of a flat tax, and how few labor economists?
I said “more progressive” didn’t I?
@PaulWartenberg: Yeah, just look at who is pushing them.
What we currently have is not progressive in actuality, is it? Isn’t it actually regressive as to wealth?
Progressivism depends on what is taxed, does it not? A flat tax applied to all wealth would be as progressive as wealth gathering. Of course, everyone is assuming all the current taxable exclusions, right?
@What Have The Romans Ever Done for Us?:
Forbes magazine once did an article about the 400 richest families in 1900. Very few of them still had big bucks by the 1970s, or had been pushed aside by newer money.
I knew a kid in college whose grandfather invented a popular product and amassed a great fortune. He also married a woman who came from great wealth. But my friend admitted that while his generation was very well off, the next generation were going to have to get jobs.
I think in America, the DuPont family is one of the few truly old continuously wealthy families.
Also, if corporations are people for speech, does the equal protection clause allow different tax rates than for equally situated people re, income?
You cannot assume that at all. Where you been? Hell, the new tax law suspends personal and dependent exemptions until 2026.
I think my question is, ideally, what system would be the most equitable and least likely to be gamed? I think different people are arguing about a different set of questions.
That was me. And I used them for a single example because it was clear and factually accurate.
Slate referenced the same article and threw this in
There are other analyses but they are more technical or hidden behind pay walls
A link to Slate.
I think the GOP putting the ‘let’s do something that will totally blow the budget if it is permanent, but only for ten years’ will work to their advantage. They will claim that letting all those provisions expire (that they wrote, just that way) is raising taxes. and so will blame Democrats for raising taxes.
A flat tax is the least equitable. And once you start throwing in exclusions and adjustments, it’s not really flat anymore.
Least likely to be gamed? No such thing. You will always need an effective collection and enforcement division. Which is why Trump hobbles the IRS.
@Brachiator: You could, for example, use the windfall from wealth taxes to reduce the burden of taxation on the middle and working classes.
The GOP wants to make the temporary individual provisions permanent. This will make it easier for them to go after Medicare and Social Security, claiming that they need to fix the deficits caused by their tax cuts.
@Mnemosyne: Thank you for this very informative comment.
I remember looking up the court decision which said whackadoodles use to claim that the Income Tax is unconstitutional, because it supposedly said something along the lines of “this act gives no new powers to Congress.” The very next line (which they never mention) is something along the lines of “Because they already have this power. Now they just don’t have to decide how to specifically spend it ahead of time.”
The functions of government are basically protecting wealth and providing a social safety net (even national parks are a way of protecting wealth). You can get rid of progressive rates all together and end up with a more progressive tax system than the status quo by making a flat wealth tax to pay for the stuff that protects wealth and a sales tax for everything else (maybe get some progressivism in there by making some things tax free or giving back some amount of tax paid).
Exactly right. And to cite economists of all people as your “authority”!….
It’s a ridiculous argument to make:
“Who are you to question Peter Navarro recommending that we impose tariffs on Chinese goods? The man has PhD in Economics from Harvard!!!“.
@Mandalay: My favorite story about her is something she tells herself about when she was still working on the CFPB and had dinner with Larry Summers. Basically all about insiders & outsiders & what they can say and do. Gillebrand (maybe bc she’s got NYC in her backyard), seems more like an insider, Warren has always seemed more like an outsider (maybe bc she literally cannot do that in Boston w the out-of-state upbringing). Again this is my impression, which cannot be fully accurate, if nothing else bc they’re women in politics, so they’ll never be fully insiders.
Uh, no. Having a PhD in econ from Hahvahd is not the same thing as being a widely respected economist. Not at all the same thing. And I’m sorry to have point out that you appeal to authority every day. Every day you use systems — safety-critical systems — that have been verified by authories. You *trust* that those authorities did the job right, and you perform no verification yourself. For most of them, you don’t even know how they work. And this is true of most of the mechanisms that run our society.
Knowing how to identify trustworthy and trusted authoritative experts is a key skill in a science education. Without it, nobody, and mean *nobody* could do as Newton said:
“”If I have seen further it is by standing on the shoulders of Giants.”
Simon Wren-Lewis on raising marginal tax rates: https://mainlymacro.blogspot.com/2019/01/the-key-arguments-for-high-top-rates-of.html
He mentions Saez & Zucman. Lots of pointers in there to good work on this subject.