A compromise on taxing and spending

Here’s the deal: If the left will cooperate to implement a simple flat tax rate, I’ll convince the right to let you all spend that revenue any way you like.

Comments

  1. jimspice says:

    Counter offer. A steep logarithmic tax curve — kicking in at the poverty level, then basically a flat 30% from there to, I don’t know, $1 million, after which it grows gradually to, say, $2.5M then SWOOPS upwards to a max of 60%. We progressives would weep tears of joy, and the rich would STILL be paying rates FAR below what they were for the majority of the most economically vibrant post-WWII years.

    Tell ya what we’re gonna do. For the concession, we’ll toss in a little something extra. How do free floor mats make you feel?

  2. You didn’t say a word about spending. I’m pretty sure that’s the problem in a nutshell.

  3. John Foust says:

    You didn’t say a word about daydreams of endless growth that doesn’t come with a cost. Or war spending.

  4. Yes I did. I said you get to choose how to spend it all. Entirely your call.

    Your “endless growth” is a statement indicating you don’t read this blog on a regular basis, do you?

  5. jimspice says:

    Not sure if I’ve said so on this here particular blog, but I’m of the mindset that anyone who views our path out of this predicament as entirely revenue driven or entirely taxing driven as equally dense. It’s both. But I DO worry that a sudden drop in govt. spending could do more harm than help. Did you participate in that NYT interactive solve the deficit feature a few months back? I managed 90% solvency 10 years out with almost exactly even spending cuts and tax increases.

  6. Isn’t revenue from taxing? Maybe you meant something else.

    Fine. Propose a flat tax that allows for the current spending level. Like I said before, you get to call spending entirely.

  7. BrkfldDad says:

    Why a logarithmic curve, and not just a flat (personal and corporate) tax rate? I’m all for all income levels paying their taxes and getting rid of loopholes that allow many to dodge taxes, but see no merits in a logarithmic solution.

  8. Cindy: I know you are not big on Charlie, but he read this on the air last week and it seems somehow relevant here.

    http://www.620wtmj.com/shows/charliesykes/119915879.html

  9. Here’s the trade I’d like to make:

    Obama gets a half trillion to spend on whatever he wants in exchange for a permanent ban on withholding of all tax (Federal and State, including Medicare and Social Security taxes).

    The psychology of withholding is really powerful…. once people have to actually write out the check for the full amount of their taxes every April 15, the pressure to lower taxes will increase tremendously, and that would be a wonderful thing.

  10. jimspice says:

    “Why a logarithmic curve…?”

    Logs describe many natural processes, and I believe wealth is one of them. Believe it or not, I, a self-professed and proud lefty progressive liberal , see all the merits of capitalism that my righty brethren do. Generally, a free and open economic marketplace produces a reasonable level of good for the great majority of its citizens. However, I , like many liberals, see faults that the right does not recognize. Capitalism works on paper because of certain theoretical assumptions that are not present in the real world, the biggest being that actors are acting from equal standpoints, which of course is not true. Sure, if we were all starting out from a state of nature, with equal capabilities and resources, the system is fair. But in the real world, we don’t start each day from scratch. Some people have the “unfair” advantage of better education, better family connections, more money, etc. and over time those advantages build up, aggregating money upwards, and it’s not a linear relationship.

    There’s a great visualization of this very un-normal distribution called the “L Curve.” The website (http://www.lcurve.org/) is really old and almost painful to look at, but very thought provoking. The takeaway point? That accumulation of wealth, visualized as it is, closely mirrors a logarithmic function. What better way to counter than a logged tax. We’re not looking for a government takeover, or a redistribution of wealth. We just want those who benefit disproportionately to pay disproportionately.

    I bet you didn’t think any of us actually ever think about why we think what we think. Ya think?

  11. So you think that “Some people have the “unfair” advantage of better education, better family connections, more money, etc.” How does one explain the self-made person who started from that place of nature and ended up at the top of your curve. Your model demands that one also be punished for hard work.

    Is that also your goal? Should I strive to achieve your goal of mediocre?

  12. John Foust says:

    Gee, Cindy. One minute you’re complaining I comment too often, the next you say I’m not reading and memorizing enough. I’m tempted to say your “if” clause is at least possible, but the “then” is hard to imagine.

  13. jimspice says:

    “Your model demands that one also be punished for hard work. Is that also your goal?”

    I thought the tax structure I laid out was very even handed for everyone up to the point of no-one-would-deny-that’s-rich-itude. If someone works hard and manages to accumulate a fortune of $25M, at that point he or she could just shift it into neutral, kick back in the La-Z-Boy™, pop a few brewskis and watch endless marathons of Desparate Housewives while their financial managers manage a portfolio that still produces an income level below which the more inflated tax rates kick in.

    But if you would insist on labeling that “punishment”, I guess I’d have to plead guilty. However, if you’d like to discuss inheritance tax rates approaching stratospheric on estates over $10M, I’d be willing to consider tweaking my income tax structure downward at the upper end.

    By the way, there are 272 self-made American billionaires , 678 worldwide (Forbes, 11/08/10: http://bit.ly/SelfMadeBillionairres).

  14. Now you want to punish America by having the productive members “pop a few brewskis.” Awesome. I wonder where your fantasy tax revenues will go at that point in the plan? I’ll reiterate what I said yesterday. I’m so tired of stupid people. Plus, Democrats eliminated inheritance taxes for a whole year because they could get their stories straight. You are laughable to even bring up the subject. And yes, now that means I’m spending my day laughing at stupid people.

    How many self-made people earn more than $250,000 a year per couple? Self-made bllionaires are easy to pick on at only 272. Obama wants so much more. I’m sure it’s all ok with you as long as your income bracket isn’t touched.

  15. The IRS code for sure needs simplification but it won’t happen. the bur-crats, accountants, tax courts and lobbyists like is complex so no-one will understand except them. on the surface a flat income tax has a certain flavor, sort of like paying dues, but what about shortfalls. we still will pay. it is so important if we know who to trust.

  16. “How many self-made people earn more than $250,000 a year per couple? ”

    I don’t know the self-made part of that question, but the total number of households in that category is 2,372,000 (2009 numbers — http://www.census.gov/hhes/www/cpstables/032010/hhinc/new06_000.htm), or roughly 2% of the whole. But if you read back, that’s still far below the level at which my swoop would kick in.

    I don’t begrudge those people their success. I have friends, family and neighbors in that group, and aspire to join it one day myself. I would be nice if your side would similarly withhold the scorn for the good fortune of the teachers and firefighters close to you.

    And did you just call me stupid? That’s not very nice. I’ve been nothing but respectful in this conversation.

  17. jimspice, after all, what’s a little class warfare between acquaintances? Your plan is iron clad if you choose to shut down the economy and let that top percentage of wage earners pop a few brewskies. (See your earlier comment.) How’s that class warfare thing going to play out when the top earners are in recline with their feet on an ottoman nursing a cold one and the remainder of the working class still have to, you know, work? Can you not see through the spittle of your own argument?

    I’d have no problem showing teachers and firefighters respect if they’d act like grown ups instead of spoiled children. If you have a problem with it all, rag on them and suggest they acknowledge their own good fortune. I don’t begrudge their income. I’m wholly unimpressed with how they whine about their income.

  18. jimspice says:

    The operative word in that original brewski example is “could:” people “could … kick back in the La-Z-Boy™,” not that they “would”, or “should”. As in I “could” refute that argument with one arm tied behind my back.

    The claim that higher taxes induce lower incentive to work is a classic one, and may be true for lower levels of the income spectrum. But at a certain point, after needs have been met, and the Joneses have been kept up with, income loses its utility in the classic sense. You don’t work harder to buy another villa in France, you work harder to compete with where you were yesterday. That incentive is there regardless of tax rates.

    The point where money loses its conventional utility is the point at which I suggest we locate the focus of our log curve.

  19. Nah. You implied that the top tier “could” slack off, and your world would be just fine. Go ahead. Tie off an arm and give it a try.

    (I find it amusing you are now an expert on the working ethic of those other than the “lower levels of the income spectrum.”)

    Your point of inflection for higher taxation, by your own argument, would be an income level of $75,000 according to recent research. Wanna go there? Oh, come on. Why not?

  20. John Foust says:

    Do wealthy people have more political power than poor people? If so, what do wealthy people tend to use it for?

  21. No, I don’t think wealthy people have more political power than poor people. In a simple response, each has one vote. On a more complicated level, yes, I’ll agree, some with money like to pay into political accounts in hopes of return; sometimes it’s granted, and sometimes it’s not. But a poor person receives a transfer of wealth from the rich person (poor and rich being simple terms) in a form of coercion, and that indicates a great deal of political power by the recipient.

    One could argue it’s just the opposite, in fact, that a poor person has more political power than a wealthy one.

  22. John Foust says:

    So when a wealthy person receives a tax break that’s a few hundred times more than the poor person’s yearly income, it’s an indication that the poor person is more powerful than the rich one?

  23. Tax breaks are not income. I know you want it to be so really really badly, but nope. Not the case.

  24. John Foust says:

    So when a wealthy businessman contributes with a “hope of return”, what exactly were they looking for? Something that has no value?

  25. John Foust says:

    Something’s gone wrong with the blogging software here. Cindy hasn’t added the last word.

  26. Usually it’s the opportunity to do more business. You know. Work harder.

  27. John Foust says:

    So all that lobbying done to create new tax breaks, that’s not because they want to pay less taxes? It’s because they want to work harder?

    It’s not like businesses (which are of course run by people, and some for shareholders) aren’t actively seeking to pay less, whether it is lowering taxes, changing a regulation that favors them, or in outright subsidies from government. Ron Johnson wants a new railroad siding, government helped pay for it. Why’s that?

  28. Here’s the bit the left does not seem to comprehend: if you pay the money in taxes, then you don’t have the money to work on your behalf in your business. It really isn’t hard. I’ve somewhat decided you ignore the detail in order to continue arguing. As I will once again explain, I have absolutely no problem with you all implementing a flat tax that does not allow deductions. Why don’t you put your energy there instead of complaining about how ill used you are as a voting group.

  29. John Foust says:

    You seem to be arguing that if you have a lot of money, or you are making a lot of money, you shouldn’t be paying taxes. That seems contrary to wishing for a flat tax.

    And who’s the “you all”? Are you lumping me into a group for dramatic effect?

    When you’re railing against big government, who are you railing against? The rich or the poor? The policies favor who most often?

  30. jimspice says:

    “…if you pay the money in taxes, then you don’t have the money to work on your behalf in your business.”

    But in a tough economy, it’s not logical for business owners to use that money to expand. It’s makes more sense to sit on it in the safest investments, the simple savings account (maybe bonds). The money is not working for anybody. Business owners won’t pull that money and use it for expansion until demand increases, and that means getting money in the pockets of consumers.

    Of course not all circumstances call for the same strategies, but tax cuts for the rich in a down economy are about the LAST thing you’d want to do.

    And Cindy, I keep up with your blog because you’re one of the few conservatives around that can recognize when your side is in the wrong, but seriously, your saying that the poor in this country hold the real power, and with a straight face I’m assuming, really strains credulity.

  31. Jim, I think I made a good point. I guess you aren’t very open minded after all.

    JF, you’re making up things because it’s easier than real discussion. While you’d love to pretend I’m arguing rich shouldn’t pay taxes, you know that’s a ridiculus claim you are trying to pin on me. It’s wimpy of you to even try.

  32. John Foust says:

    Here I thought I was being reasonable by using gentle phrases like “You seem to be arguing”, which would give you plenty of room to demonstrate your position, perhaps explaining why it’s a good thing that the rich can influence tax policy in a much larger fashion than the poor.

    So when a person with immense income gets their “hope of return” to reduce their own personal tax burden, that’s because they want to work harder and put the money back into their business?

  33. Some. It was given as an example.

    Here’s the bottom line John: whatever I offer will be twisted by you until I don’t even recognize it. Do you not have hobbies or friends or anything else to do with your life than nitpick and annoy bloggers with which you disagree?

    That’s it from me for a few days. Hope you survive.