Maybe the threat to increase taxes is about more than raising revenues

I’m in a “yes, but” mood this morning. Maybe it’s because I’m still not feeling that great. Maybe it’s because I am feeling a little better, and the fight is coming back. In any event, it seems that everything I’ve read this morning opens a dialog for rebuttal.

Specifics? Consider the comment that Walker was slammed twice above the fold on the front page of this morning’s MJS. Yes, but the articles are not about Walker specifically, they are about the mess that’s the Milwaukee County Mental Health facility and the disaster that’s the County budget. Walker’s managed to have these issues roll off him like water from a duck’s back. Nothing to see here. Move along.

The last article this morning to catch my eye is this piece from a Harvard professor in the New York Times. N. Gregory Mankiw writes:

Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?

He concedes earlier in his piece that the extra taxation implies a redistribution of wealth. What he never acknowledges is that his decision to work less given the extra taxing is also a method of wealth redistribution. If he isn’t filling the want in the marketplace, someone else will. Sooner or later that’s supposed to trickle down to create more employment, which again redistributes wealth.

Since right after this country began taxation was not only used to generate the funding for the common good, but to drive moral society. Government thinks it’s good for you to contribute to your local church, so government gives you a deduction. Government thinks it’s bad for you to smoke, so government adds a tax so it will cost you more.

Government thinks you are sucking too much work out of the economy, so government slaps you with a 90 percent marginal tax rate.

We need big picture thinking in our taxation discussion. Higher taxes on the rich are a march to socialization. The simple argument “they can afford it” overly simplifies the argument in order to get you to accept a flawed premise that socialism is good.


  1. “Higher taxes on the rich are a march to socialization. The simple argument “they can afford it” overly simplifies the argument in order to get you to accept a flawed premise that socialism is good.”

    And the simple argument that higher taxes on the rich is a march toward socialism is a flawed premise in and of itself. The fact is that taxation in this country, in it’s current form and at it’s current levels, redistributes wealth upward and not downward. The data is clear.

    And Mankiw’s 90% marginal tax rate is just wrong. Unless he’s never heard of estate planning. Or an SEP and the deductions related to it.

  2. You planned the time, didn’t you? ;^)

  3. Sorry about that J. Strupp. You were hiding in the Spam filter for a few hours.

    If our current taxing system is so bad, why don’t you campaign for something different? I’d be fine with a flat tax.

  4. Oh my goodness! No, actually, I didn’t Dean. I’m still too fuzzy headed to pull something like that off.

  5. Randy in Richmond says:

    I assumed you did the time thing, also. If you didn’t what are the chances….?

  6. I guess I should by a lottery ticket today, huh?

    I changed it so no one would worry.

  7. J. Strupp says:

    Better late than never…..

    I would be interested in some form of VAT but only in addition to our current tax system. I can’t see us completely starting over from scratch.

    Also, some form of speculation tax would be agreeable. It’s works pretty well for the Brits.

  8. Aaaarrrrgghhh!!!

    You don’t give up easily, do you? A speculation tax? A VAT on top of property taxes that make you cry and an income tax? Oh my goodness.

  9. I’m looking to pile on to our current system with a VAT. Only if it makes our current system more even handed. Maybe it’s not the answer. Just something that I think could be workable.

    The speculation tax…..I’m looking to pile on to our current system.

    Bottom line. Our long term budget woes are not going to be fixed by budget cuts alone. And yes I’m saying that our long term budget woes must include serious budget cuts in the future.

    In the future. Not now.

    You caught me on a night with a sleeping family, bad television and an even worse homebrew which is the reason for my somewhat rational commentary tonight I suppose.

  10. Ritholtz responded to Mankiw’s column the other day and I think it fits in nicely with the debate on this issue. For the record, Ritholtz is not a liberal. Far from it actually: