In the movie Wall Street: Money Never Sleeps, Shia LaBeouf’s character, Jacob Moore, asks Josh Brolin’s character, Bretton James, how much money would be enough for him to end his career and settle down. His answer:
More.
These days, the liberal establishment seems to have the same answer on taxes. While the left’s Occupy Wall Street movement has successfully highlighted the growing disparity between the haves and have-nots, liberals have astutely avoided calling a more “progressive” tax system what it really is: wealth redistribution.
Naturally, the left fails to acknowledge that this remedy has always been its answer to inequality, and one that has failed colossally and consistently throughout modern history.
Meanwhile, the debate in Congress has steadfastly avoided any discussion of a net reduction of government expenditures. Those “crazy” Republicans have only succeeded in reining in the rate of increase in government spending.
Yet, the left continues to drone on about how the wealthy are allegedly not paying their “fair share”. Again, the left has astutely avoided explicitly defining what it means by “fair share.” In fact, the top 10% of earners pay 45% of all taxes, a share larger than any other OECD country. The “dastardly” 1% pay a full 40% of income taxes. By this measure, it seems they currently pay more than their “fair share”.
But ask a liberal, any liberal, how much is enough. How much is one’s “fair share”? No liberal to whom I’ve ever spoken can answer this question. Yet it has an unambiguous answer:
More.
Even if the President seized all the wealth of all U.S. billionaires, took 100% of the income over $250k, and all the earnings of all the Fortune 500 this year, it still wouldn’t be enough to fund the federal budget. It would simply wipe out much of the country’s capital stock (see the video below for the math, which my favorite Canadian blogger highlighted in a recent post).
But that never deters the left. Some guilt-ridden millionaires and billionaires around the country continue to bemoan how their secretaries supposedly pay more in taxes than they do. My response to all this hot-air is: put your money where your mouth is instead of throwing other hardworking Americans under the proverbial bus.
My Solution
For every guilt-ridden millionaire and billionaire out there, I propose a new IRS program. Tax returns should include the option for every American to pay more than their “fair share.” They can even have the option to donate more of their dollars to specific arms of government.
The beauty of this plan is that it allows Americans to decide individually whether they are paying their “fair share” of taxes, while simultaneously exposing liberal hypocrisy.
As for solving the current unemployment problem, I have offered my own solution here, and wealth redistribution has no place in it.
Reflections of a Rational Republican 
First, progressive taxation has worked historically — the strongest economies in the world such as Scandinavia, Germany, France and other northern European countries have used taxation far more progressive than that of the US to achieve much greater relative equality through expansion of opportunity, even though they are capitalist, do have many very wealthy people and corporations, and high levels of freedom. They do not have medical cost related bankruptcies, people have a strong safety net, and in areas where they went too far, they’ve been able to cut benefits and taxes. The GINI indexes of the Scandinavian countries post tax and transfer is about .23, a major drop from the pre-tax and transfer rate. Germany’s goes from .51 pre-tax and transfer (more unequal than the .46 of the US) to .30 after tax and transfers. Yet Germany’s economy has handled the crisis well and has a half century of economic success. It’s simply wrong to say progressive taxation doesn’t work — that is NOT the lesson of history. History does show government control of the economy and economic planning doesn’t work (Communism), but that’s a wholly different subject.
One thing that has never worked is optional taxation. Historically that doesn’t work. In France the nobility were so unwilling to tax themselves that they ended up with the guillotine instead! However, I do think that there is too much. Our culture would not accept Scandinavian or even German tax rates. We’re a more liberal (classical sense of the word) culture, the Scandinavians and Germans are more conservative (classical sense), seeing a societal bond. Traditional conservatism is more collective oriented than classical liberal. So I’d say that closing loopholes and slightly increasing rates on the wealthiest is enough. It could remain lower than the tax rates under Reagan and also keep the wealthy in the US taxed at a lower rate than any other wealthy in the industrialized world. It would also keep our wealthiest 10% still atop the industrialized world, even though our middle and lower classes don’t compare as well with their counter parts. That would be an increase in taxes, but not a massive one — yet one that both symbolically and practically could make it possible to reach agreement on entitlement reform and re-prioritizing spending. Finally, even if spending isn’t cut (that might be really hard to do), we simply have to keep the growth of spending lower than the growth of revenue — or economic growth has to be such that its benefits outpace increased spending. I think both parties need to work together to find a way to do that.
The top 10% in the United States pay more of their share of taxes than any other OECD country. Furthermore, nearly all of these countries have benefited for decades from American miliary expenditures. That is, they can afford to funnel a higher percentage of their budget to social welfare program than the United States can.
“So I’d say that closing loopholes and slightly increasing rates on the wealthiest is enough.”
I agree with closing loopholes, but think increasing rates of the wealthiest just continues the trend of overtaxing the wealthy. This country is becoming increasingly reliant on a smaller and smaller class of people. This reliance has two problems. First, at some point, these Americans will just leave and repatriate somewhere else, creating an ever bigger tax hole. Second, those who receive services but pay for none of them have no incentive not to demand more services. If you advocate increasing taxes, increase them on all Americans, not just one scapegoated group.
“One thing that has never worked is optional taxation.”
And there’s where I see the hypocrisy. The liberal (in the modern sense), should put their money where their mouths are. Otherwise, they are nothing but hypocrites.
That said, I have always agreed that the country needs massive entitlement reform, defense cuts (though not $1 trillion over the next 10 years), and tax reform. The problem is that most are focused solely on wealth redistributive policies which have never worked (i.e., higher taxes for more entitlements).
I agree with most of what you’ve said, except for “only slightly increasing” (aka restoring) taxes on the wealthy. There’s no reason or benefit in being timid. As you say, progressive taxation has worked historically well. During the 50’s, 60’s and most of the 70’s the US was at its most prosperous even with marginal tax rates of 45-70+%. Fast forward 30 years and we now have a declining economy, astronomical deficits and not so coincidentally tax rates that max out at 36%, and most wealthy don’t even pay anything close to that (effective rates are closer to 18%) Put another way, and in direct contradiction to the b.s.that increasing taxes on the rich penalizes the “job creators”, there’s actually no correlation between lowering taxes on the top brackets and job creation and economic growth. You might be interested in this article ,http://www.voxeu.org/index.php?q=node/7402, which claims, somewhat tongue in cheek, that taxes could be as high as 80% before really damaging the economy. Restoring the upper tax brackets to much higher levels, as well as increasing the number of tax brackets (this would help to differentiate between those making $300,000 and those making $1MM or more), would both help to eliminate the federal deficit and reduce income inequality that is very damaging to our economy. I don’t care if it’s called “redistribution of wealth” or not. Bottom line is that it’s good for our society to have a stronger, wealthier middle class than what we have today — good for everyone, including the wealthy.
I enjoin with a rapid retreat to cliché and suggest we’re comparing pomegranates and platitudes. As you would manage a red state roadhouse differently than a big city “ bottle service’ club, the financing of governance differs with type.
A supposed ”one man/one vote democracy“ will demand a different revenue stream than a limited player top down Republic, or a fix is in Oligarchy.
But I’m too glib. I’ll let this guy,Ramesh Ponnuru, you’re familiar with him.. right, have a go.
”The Tax Foundation has calculated the percentage of filers in each state who pay income tax. The ten states with the highest number of non-payers are a strongly Republican bunch: Eight of them went for John McCain in 2008, and nine of them have Republican governors. Keith Hennessey, an economic adviser in George W. Bush’s administration, notes that the historical data suggest that the child credit was the main reason for the increase in the number of non-payers between 1995 and 2007.“
Conservatives were strongly in favor of that child tax credit, agree.
Now, that doesn’t answer your question, but it might suggest we re-think it. We don’t have the same type of government we had at the founding of the nation. We don’t have the same type of governance we had thirty years ago, when the Laffer Curve and Supply Side became the District currency and the middle class began to collapse. When the real ”Wealth rRedistribution“ you argue so rightly about, actually took place. You deny the numbers. Even Ronnie saw it happening and raised taxes numerous times.
As a left of center idiot, I’m for the lowest practical tax rate for each citizen regardless of station.
So back to that Ramesh fellow, who agrees with you in the main, but was sure to include a little Straussian between the lines.
”Changed circumstances may demand a different approach than that of three decades ago. They do not compel conservatism to become a creed openly focused on helping one group at the expense of another, a kind of mirror image of egalitarian liberalism.“
Quoted liberally…sorry.
The Freeloader Myth— Ramesh Ponnuru is a senior editor of NR. This article originally appeared in the Nov. 28, 2011 issue of National Review.
http://www.nationalreview.com/articles/print/283265
Doug,
Thanks for forwarding this article. I agree it is fair to say that the “47%” is a bit of a hyperbolic number, as is OWS’s characterization that they represent the “99%”.
“As a left of center idiot, I’m for the lowest practical tax rate for each citizen regardless of station.”
Amen to that (the lowest practical tax rate for each citizen regardless of station comment not the “idiot” one. ;-))
”Changed circumstances may demand a different approach than that of three decades ago. They do not compel conservatism to become a creed openly focused on helping one group at the expense of another, a kind of mirror image of egalitarian liberalism.“
I agree especially with his point that if you increase taxes on one group of Americans, you should increase them on all Americans and not explicitly favor one group. The current Republican opposition in Congress to the extending the payroll tax deduction fails on this count as does the Democrat refusal to fund it any other way than increasing taxes on the “wealthy.”
The bottom line is the government needs to both increase taxes and decrease spending across the board and at all strata of the income distribution. Unfortunately, watching Congress is akin to being in the front row at a clown show.
“But ask a liberal, any liberal, how much is enough. How much is one’s “fair share”? No liberal to whom I’ve ever spoken can answer this question. ”
-I’m a liberal and I think that the taxation system in this country is fine as it is. All this talk about rich people paying too little taxes or poor people paying too little taxes is nothing but a populist smokescreen (used by both the Dems and the Republicans) to arouse passions and distract the public attention from the real issues.
Clarissa,
Thanks for stopping by! I completely agree with you that the class warfare thing is something both parties engage in. For instance, Congressional Republicans are somehow now against extending the payroll tax cut, which seems to run in direct contradiction to the mantra of low taxes.
I also agree with you that marginal tax rates are probably fine where they are, though do believe the government could raise more money by simplifying the tax code.
While I am impressed that you managed to take a video clip that is unmistakably about corporate greed being a bad thing and turn it into a post about how corporate greed is exactly what we need more of, I am unimpressed by the last suggestion of “volunteer taxation”.
As a fellow reader of the economist, you may appreciate this post on the subject which states of the idea:
“The argument is juvenile in the sense that people older than high-school age should not take it seriously.” because “It takes a proposal about the rules for a collective activity, and responds as though there were no collective and no basis for having rules.”
http://www.economist.com/blogs/democracyinamerica/2011/11/egalitarianism?page=3
BTW, “More” is also the Republican answer to the amount of tax cuts for the rich that we need. If lower taxes for the “job-creating” wealthiest 1% is what would really get this economy going, why not just abolish taxes on them altogether? Better yet, let’s give them a negative tax rate. We can start small, just 1% of our paychecks sent directly to the 1%ers each month. That way they can really get to creating all those jobs!
“While I am impressed that you managed to take a video clip that is unmistakably about corporate greed being a bad thing and turn it into a post about how corporate greed is exactly what we need more of, I am unimpressed by the last suggestion of ‘volunteer taxation’.”
Well, the clip is certainly about corporate greed, but I certainly didn’t intend to turn into a post about how corporate greed is exactly what we need more of. It was intended as a foil to how many on the left assume people making over 250k are somehow bottomless pits of money.
“Better yet, let’s give them a negative tax rate. We can start small, just 1% of our paychecks sent directly to the 1%ers each month. That way they can really get to creating all those jobs!”
Something like this already exists. It’s called social security.
Thanks for posting the article. If I were that guy’s wife, I would tell him to make his bed his own damn self.
Look, I have no issue with increasing taxes. Just increase them on everyone. Scapegoating one portion of the population for political gain is just wrong.
“Look, I have no issue with increasing taxes. Just increase them on everyone.”
Fair enough. Can I assume then that you also disagree with the Bush tax cuts, since they decreased taxes in overwhelming favor to the top 1%?
http://www.epi.org/publication/tenth_anniversary_of_the_bush-era_tax_cuts/
While I agree that everyone should bear the brunt of tax increases, I’m still not sure what proportion each group should pay. I also think the Bush tax cuts were necessary at the time. Remember, the Bush tax cuts were instituted following the bursting of the tech bubble and, I believe, 9/11. In other words, it was a necessary stimulus for the economy. So I don’t disagree with them. That said, at an absolute level, tax increases should fall less harshly on those at the lower end of the spectrum.
“I also think the Bush tax cuts were necessary at the time.”
Well, but that isn’t how it worked: http://www.thefiscaltimes.com/Columns/2010/09/17/Bush-Tax-Cuts-No-Economic-Help.aspx
As to what’s “fair”, that’s a retreat to generalities and theory that’s not really at issue here. The concrete issue is, “should the Bush income tax rates be allowed to expire and switch to the surplus-era rates on higher incomes?” As Edmund Burke put it:
So moving away from the practical and to the realm of airy conjecture is, according to Burke, fundamentally unconservative. (I know, I know, Burke is significantly less influential among today’s US conservatives than Rush Limbaugh or Sarah Palin, but work with me here).
In light of the fact that we have a long-term debt problem, that the bottom 80% of Americans have received roughly zero increased income in the past three decades, that the top few percent of wage earners have seen their income skyrocket over that period, that the US has extremely low taxes compared to other wealthy countries, and that the surplus-era marginal rates are (from our experience & those of other wealthy countries) completely compatible with investment and growth, we should probably return to those rates. That is a pretty commonsense line of rationale, but it runs afoul of contemporary Republican dogma, so we get “how many tax rates could dance on the head of a pin” type of stuff instead of a counterargument.
“Well, but that isn’t how it worked: http://www.thefiscaltimes.com/Columns/2010/09/17/Bush-Tax-Cuts-No-Economic-Help.aspx
To the extent that they had any positive effect on growth, it was very, very modest. Their main effect was simply to reduce the government’s revenue, thereby increasing the budget deficit, which all Republicans claim to abhor.”
I could make the exact same argument about Obama’s stimulus, but I won’t because I think both Bush’s and Obama’s stimulus staved off worse disasters.
“In light of the fact that we have a long-term debt problem, that the bottom 80% of Americans have received roughly zero increased income in the past three decades, that the top few percent of wage earners have seen their income skyrocket over that period, that the US has extremely low taxes compared to other wealthy countries”
Yes, the US has lower tax rates that other OECD countries. That said, the taxes paid by the wealthy in the United States are higher relative to other OECD countries. Therefore, the “99%” is actually paying less than they should be according to the natural extension of your argument. So, I think we agree that if we increase taxes on the wealthy, we ought to increase them across the board. In fact, if you’d really like to hang your hat on the OECD-pays-higher-taxes argument, then the increase on the “99%” ought to be higher than that on the “1%”. I don’t agree with that, as neither, I think, do you. My only point is that just because the OECD pays higher taxes in the aggregate does not imply that the wealthy should pay a higher share of taxes, especially since their share is already higher than the wealthy’s share of OECD taxes.
I was and am in favor of the Bush Tax Cuts since I believe it is entirely appropriate that no more than 10% of my income is all I or anyone should have to pay for US government services..
The discussions I look at usually confound the differences between rates and revenues in order to make one or another political point. The lowest bracket’s rate was reduced by 33%, the highest bracket’s rate reduced by 11.1%, and every other bracket reduced by about 3%, coming in to effect by 2006. (Watch out, I am using statistics in a slippery fashion here.) On the other hand, revenues dropped and then recovered from 2004 thru 2006 even before the full rate reductions were in effect. Therefore, revenue changes had more to do with extant economic reality than tax rates.
Of course the wealthy “did better”. Any rate reduction will flow mostly to those who pay more in the first place. They deserved it. Why should the middle and lower classes be able to steal from the wealthy?
The point is that any conclusion about the effects of the Bush Tax Cuts is mostly hot, meaningless air far removed from any possible rational reasoning. It is all hot air because it is filled by mighta-coulda-woulda-shoulda-beens and impossible “if-only’s .
I think assuming greed is just reserved for the upper class misses a big problem and the point of what we’re talking about here with the second video. Wall Street 2 showed this as well, that “More” is just as dangerous whether it’s coming from the middle class or the upper class.
For example, you had the billionaire who couldn’t put a finger on how much was enough for him to have, contrasted with the mother who couldn’t put a finger on how much was enough for her to have. The greed + entitlement issues were the same at both ends of the spectrum, as was the “moral hazard”. It existed in both cases just the same and was highly destructive.
As for “corporate greed”, I don’t see any distinction between corporate greed and individual greed. In fact, I see the word “greed” itself as yet another generalization that the far left has more than its own share of, yet tries to hide it behind terms like “living wage” and “fair share” in order to try and get their way through moral superiority appeals.
The original Gordon Gecko said “Greed is good”. It “…clarifies, cuts through, and captures the essence of the evolutionary spirit” and “…has marked the upward surge of mankind”. Judging by the far left’s actions, I think the far left, ironically, would agree with it. They certainly have no problem with Steve Jobs’ “corporate greed” when they’re buying up iPads, or the surely millions Susan Sarandon receives for saying about 10-minutes worth of lines in a 2hr movie.
Good point Vern. I had forgotten about the mom character, and actually, until now, didn’t even piece together the parallels you mention. I would agree that “More”, (I’ll use the word “greed”) is dangerous no matter where it’s coming from. I think Gecko was wrong about Greed though. I think what he describes is more aptly referred to as “drive” or “motivation”. In my opinion, greed is really motivation gone too far. I see it as similar to the difference between love and obsession, or sadness and despair. I think motivation/drive marks the upward surge of mankind, while greed is just as happy with tearing other men down as it is with lifting oneself up. Maybe I’m wrong, but that’s how it strikes me. Anyhow, I agree with you that greed is not a partisan trait. Cheers. -Joe
Thanks, Joe. Didn’t think about the distinction between “drive” and “greed” in that context, so thank you. 🙂 For me, I suppose gluttony is the behavior that I have disdain for.
So far in this thread, the only answer proffered as how much is enough is, ‘about the same as it is now’. My answer is a slightly graduated percentage of each one’s income, say from 1% for the lowest income earners up to 20% of the highest incomes. I’d be more than willing to negotiate since it is all Other People’s Money. Oh yes, each one has to write a check to the taxing authority every paycheck … no more withholding.
I agree we need to simplify the tax code, but haven’t done the math to know whether a 20% marginal tax rate would bring in enough revenue to solve the deficit problem.
Neither am I sure of the amount. The deficit is only part of the problem. The unanswered question is how much government spending is enough, the liberal’s answer is the same as it is for taxes – it’s never enough. Why not tax all gross incomes, including business’ and corporation’s? Do the math on that and I think we might get very low rates distributed “fairly” across everyone. Also simple.
Good point.
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