Raising the tax rate versus raising the effective tax rate
Raising the tax rate is not the same as raising the amount of tax money collected, either in the aggregate or from a selected group such as “the rich.”
Even a non-accountant non-economist like me knows that. Does Alexandria Ocasio-Cortez? (excerpts are from an interview she gave on “60 Minutes”):
Anderson Cooper: You’re talking about zero carbon emissions — no use of fossil fuels within 12 years.
Rep. Alexandria Ocasio-Cortez: That is the goal. It’s ambitious. And…
Anderson Cooper: How is that possible? Are you talking about everybody having to drive an electric car?
Rep. Alexandria Ocasio-Cortez: It’s going to require a lot of rapid change that we don’t even conceive as possible right now. What is the problem with trying to push our technological capacities to the furthest extent possible?
Anderson Cooper: This would require, though, raising taxes.
Rep. Alexandria Ocasio-Cortez: There’s an element where— yeah. There— people are going to have to start paying their fair share in taxes.
Anderson Cooper: Do you have a specific on the tax rate?
Rep. Alexandria Ocasio-Cortez: You know, it— you look at our tax rates back in the ’60s and when you have a progressive tax rate system. Your tax rate, you know, let’s say, from zero to $75,000 may be ten percent or 15 percent, et cetera. But once you get to, like, the tippy tops —- on your 10 millionth dollar -— sometimes you see tax rates as high as 60 or 70 percent. That doesn’t mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more.
At the moment I can’t find a transcript of the entire interview, but my guess is that Cooper didn’t follow up with a question about effective tax rates back then, and the existence of so many loopholes and tax shelters at the time that the actual rate paid was much much lower. Would Ocasio-Cortez support the return of the shelters and loopholes that made it that way? I doubt it; that wouldn’t feed the hungry beast of leftist desire to punish the rich—those “tippy tops” that remain undefined as to the details of what income qualifies and what a “fair share” is.
We do know who will decide those things, though—the left. And human nature being what it is, plenty of people will cheer them on.
Anyone who’s interested in the actual situation that prevailed in the 50s and 60s might want to take a look at this (just one of many such articles):
There is a common misconception that high-income Americans are not paying much in taxes compared to what they used to. Proponents of this view often point to the 1950s, when the top federal income tax rate was 91 percent for most of the decade.[1] However, despite these high marginal rates, the top 1 percent of taxpayers in the 1950s only paid about 42 percent of their income in taxes. As a result, the tax burden on high-income households today is only slightly lower than what these households faced in the 1950s. [a graph follows]
…The data shows that, between 1950 and 1959, the top 1 percent of taxpayers paid an average of 42.0 percent of their income in federal, state, and local taxes. Since then, the average effective tax rate of the top 1 percent has declined slightly overall. In 2014, the top 1 percent of taxpayers paid an average tax rate of 36.4 percent.
All things considered, this is not a very large change. To put it another way, the average effective tax rate on the 1 percent highest-income households is about 5.6 percentage points lower today than it was in the 1950s. That’s a noticeable change, but not a radical shift.[3]
How could it be that the tax code of the 1950s had a top marginal tax rate of 91 percent, but resulted in an effective tax rate of only 42 percent on the wealthiest taxpayers? In fact, the situation is even stranger. The 42.0 percent tax rate on the top 1 percent takes into account all taxes levied by federal, state, and local governments, including: income, payroll, corporate, excise, property, and estate taxes. When we look at income taxes specifically, the top 1 percent of taxpayers paid an average effective rate of only 16.9 percent in income taxes during the 1950s.
There’s more at the link, but I also suggest you read this to get a lot more information on the subject. One of the many points made is that if tax rates are raised to that level on too many people it backfires, and if only a few are effected (one might call them the “tippy tippy tippy top”) it has almost no effect on revenue at all.
Ah, but this is all so hard and complex. It involves math, too. Much better to just ask the rich to pay their fair share—and of course, that won’t include us, right?
[NOTE: See also this from Scott Johnson at Powerline.]
Most people have heard of The Laffer Curve. At a 0% tax rate the govt collects no tax and at a 100% tax rate the govt collects no tax (no incentive to earn an income, no one works). The ideal rate falls somewhere in between those two extremes and we know precisely what that effective rate is (Hauser’s Law):
https://taxprof.typepad.com/taxprof_blog/2010/11/wsj-hausers-law.html
So, like most socialist schemes which are based upon the envy of those who have, AOC’s scheme will do nothing more than to suffocate the economy with some progressive-type profoundly noting that this is the new normal.
A personal note: If I had a dollar for every time socialism worked I’d have no money. If I had a dollar for everytime socialism DID work, I’d still have no money, and neither would anyone else (see Venezuela).
T:
I don’t know who you’re hobnobbing with, but I think you need to get out more.
“Most people” have NOT heard of the Laffer curve.
On the other hand, I would bet that Ocasio-Cortez has heard of it, and conveniently ignores what she doesn’t want to deal with and what would dilute her message.
The second fallacy in AOC’s scheme is that the rabble are always roused by a “pay your fair share” argument when it is pointed at the affluent and wealthy. It’s easy to get support for such claims from the 47% of Americans who pay no income tax at all (remember Mitt Romney’s admission?).
Since when, I want to know, is a 0% income tax liability considered anyone’s “fair” share, but AOC ignores that half of the population. Somehow everyone should always have skin in the game if they’re going to vote on such measures. Originally it was land-owners for just that reason.
Well, for those who haven’t heard of the Laffer Curve, and for those who have heard of it but don’t know what it is:
https://en.wikipedia.org/wiki/Laffer_curve
“…so hard and complex…”
Well, maybe, but you can’t really argue with ’em…because even when they’re wrong they’re right:
https://dailycaller.com/2019/01/07/alexandria-ocasio-cortez-60-minutes-interview-radical-morals-better-facts/
Heh! That’s a cool gig! (So what’ll it be? “All aboard for the gulag…”? “Don’t cry for me, Venezuela”…?)
Dan Crenshaw, though, he’s trying hard to break through (bless his heart):
https://twitter.com/DanCrenshawTX/status/1082034107000020998
Well, good luck with that….
AOC puzzles me. Is she really as clueless as her words indicate? Or is she just trying to become the darling of the clueless people on the far left?
AOC has, I hear, a degree in economics. Not to have heard about the Laffer curve sounds impossible, but given the sad state of “higher education,” maybe she’s ignorant and not stupid, despite appearances.
I am very tired of the “fair share” rhetoric. What’s “fair” about proposing that the federal government take 70 cents of every dollar from citizens?
Parker: There actually is a tiny chance she really is that clueless. It doesn’t stop her from being really dangerous.
The averages, such as the average tax rate of the top 1% in the 50’s, is mostly persuasive. But I believe it is true, if my memory serves, that there were some years in the 50’s where the total number of tax filers paying the top rate were only a few dozen. Remember that this was long before McCain Feingold legislation. Many of these pols probably had one or two sugar daddys paying most of their campaign costs. He who pays the piper …
Even today, if a person has a few million or more invested and doesn’t work, that person would not pay a dollar in state or federal income taxes, if it was all invested in in-state muni-bonds. (In most states.)
AOC talking about the really high top rates only applying to the ten millionth dollars is a big laugh. Kevin Hassett and the CEA put together this report on the practices and problems of socialism. The left’s often used role model for socialism are the Nordic countries which are cited extensively in the report. Their top tax rates vary from about 40 to 60%. Interestingly, the left’s newest darling is Norway, and their top tax rate is actually several points less than the current U.S. top rate which is listed at 46% for the purpose of an apples to apples comparison.
The fascinating part is that those upper rates kick in at amazing low income levels. The example at the bottom of page 30 is that an income in Denmark that is equivalent to earning $70K here in the U.S. puts the earner in the 46.3% tax bracket. In the U.S. one must earn about $424K to be put into a similar bracket.
parker:
Your question is a variant of the old “knave or fool” query. In the case of AOC, I believe (as with so many people) it’s somewhat both. But basically, I think she is far more knave than fool. I think she knows quite a bit about the 2+2=4 of economics but choosing to present it as 2+2=5 is what will help her get support from the so-called masses. That means that a lot of the time she is pretending to be clueless, although some of the time she really is clueless about certain things.
Come on Neo, the Laffer Curve was featured in the smash hit comedy of 1986, Ferris Bueller’s Day Off. (True, but also a jest.)
(Should have been “amazingly” in the above.)
Tommy Jay,
I have also seen persuasive arguments that while European countries are often considered successful socialist countries, they are really capitalist countries with huge welfare states only made possible because they don’t fully subsidize their own defense and rely on the U.S. both for manpower and funding.Your note of high income tax rates at low income levels tends to support this.
Furthermore, most people fail to realize that all of the European states are essentially small states.
Germany: ~82-83 million people
France: 65 million people
Sweden: 9.8 million
Holland: 17 million
Norway: 5 million
So when one looks to these countries and say if they can do it so can we, they fail to note that no one is supporting our defense with euros or kroners or pesos and and that we have a territory larger than all of them combined (Texas, alone, @ 696,000 sq miles is larger than Germany France and Italy combined @ 523,000 sq miles). This makes no kind of central government an easy thing, and the more intrusive and larger such a government becomes, the more unmanageable it becomes. Our own federal government is evidence of just that trend.
It doesn’t matter what AOC “knows” or “doesn’t know.”
She’s ideologically committed, she’s photogenic and she’s on the “right side”, as far as all the “beautiful people” are concerned.
The media will run interference for her.
Perfectly situated in the pomo, progressive, “Democratic Socialist” universe that so many inhabit.
And as she says, you don’t have to be factual if you’re morally correct.
Which is, curiously enough, precisely what Hugo Chavez might have said (if not publically—after all, he was never wrong).
So there’s no possibility of debate: one doesn’t debate with the likes of a Hugo Chavez.
And so, if AOC were to be imagined as wearing a Chavez mask (and uniform), it might all be a lot more realistic.
And far clearer.
KyndyllG,
She is dangerous because there are people who take her seriously.
What I want to know is if we did away with all fossil fuels, just what would we wear, what would the electric cars drive on (meaning tires and so forth), would plastics be banned like plastic straws and sacks? Would we be dependent on other countries still drilling for oil and natural gas? Those that want to ban fossil fuels and drilling really don’t know what they are talking about.
“AOC puzzles me. Is she really as clueless as her words indicate?”
I don’t think she’s clueless at all and go along with Neo on the knave aspect. Her Green Plan is exactly the blueprint that started spreading around campuses 6 years ago called the “sustainability movement ” The whole global warming/climate change thing has always been political, but sustainablility takes it to a new level. It basically wraps all the marxist, socialist, social justice ideas into an environmental package. Once again using a nice sounding phrase “sustainable “. AOC has just brought the sustainability movement into the national spotlight. She knows exactly what she’s doing.
T,
I’ve never been fond of the size argument, but when you get to the leviathan scale of our gov. I think it has some merit. Look at poor General Electric. Sure, one could blame a couple of bad CEO’s, but that behemoth really imploded.
U.S. policeman to the world. Big pluses and minuses (costs). Pick your poison.
I didn’t know Norway was quite that tiny. It makes their Olympic medal haul even more impressive. But it also amplifies the fact that their oil reserves in the North Sea has an outsized impact on everything economic in Norway. Like if the U.S. just discovered a new oil reserve worth 25 to 50 trillion dollars.
The left’s often used role model for socialism are the Nordic countries which are cited extensively in the report.
I remember back in the 60s when Sweden did have a top tax rate of over 100%.
There were senior doctors who earned enough to hit the top rate. What they would do was quit then and take off for the Med about the middle of October, when they hit the max. The last two months of the year, you could not get a senior doctor in Sweden.
The Swedes finally figured this out.
TommyJay, Ocasio-Cortez was born in 1989, three years after Ferris Bueller took a day off.
Electing cute femmes to Congress will not serve us well.
AOC is sly. She is also full of Leftist venom.
She makes a good case for conversion to Islam; keep her home and keep her pregnant. Which is where Tlaib should be. Does anyone know if Tlaib has been ‘circumcised’?
I’m going to go with “Knave AND Fool” for $400.
We in Oz live with that sustainability/climate-in-crisis yakkity yak 24/7 and Physicsguy is spot on…but I don’t think she understands the difference between “sustainable” (which includes the ‘How do you pay for it?’ question and “sustainability.” (which is the commie dog whistle for ‘Let me tell you how you’re going to pay for it comrade.’) Because her “Green Plan” isn’t sustainable since as we all know, eventually you run out of other peoples’ money…cf Venezuela and now France.
Oh…and given the combo…she’s quite dangerous.
In the mid 90’s when the Swedes realized that under their then present fiscal regime they could not sustain their welfare state benefits with the government consuming 2/3 of their GDP, they threw out the socialists and under the new conservative government, among other actions, converted their defined benefit state pension plan to a defined contribution plan. They also gave the citizen the option of having their contributions invested in the private market. Today over 50% have chosen that option. Sweden’s government now consumes a more manageable 1/3 of GDP. Maybe we should consider some of Sweden’s current policies, given the major crisis we are facing in the not too distant future regarding funding of entitlements.
Mike K,
I didn’t know that about the docs in Sweden, but it sounds very similar to the personal experience of Ronald Reagan. He was a moderately well paid actor in dozens of B pictures and a few A- ones perhaps. Lots of those cheaper pictures had fast shooting schedules. So he’d line up 3 or 4 of them at the beginning of the calendar year, and by July he’d have succeeded in putting himself into a high tax bracket, and then would take the rest of the year off.
The downside of that was much less severe than your example. Maybe even a plus? Ha!
_______
Stu,
I really do think there’s lots of good stuff the U.S. could learn from Sweden, Norway, Switzerland, and even France. Plus, how not to do the green economy from Spain. But we don’t seem to hear much in the media, not that I really seek it out. Dems mention it a little from their destructive point of view, but Republicans bring it up very rarely. Even Kevin Hassett’s paper isn’t effective communication for 90% of people.
I started medical practice the tax shelter era. These people don’t know any history. The people who get hit by the 91% rate are high income professionals like lawyers and doctors and actors and athletes.
Obamacare is taking care of the doctors’ incomes,. They are down although a few specialties are doing well. Two of the best are those that have no connection to insurance or Medicare. Ophthalmology and Plastic Surgery.
I know older internists who are dropping all insurance and Medicare and are all cash. Their student loans are paid and their kids are educated. The overhead goes from 75% to 20%. They are back enjoying Medicine.
Ooo! Just saw a live video clip from Neo’s quoted interview with AOC.
(paraphrased from memory.)
AC: What about those people who hear the word socialism and think, of the Soviet Union, Cuba, and Venezuela?
AOC: Oh! Ha! ha, no, no, chuckle. That’s not at all what I’m proposing. I want to follow the model and successes of the U.K., and Norway, Finland, and Sweden.
_____
She put the U.K. ahead of the oil rich miracle of Norway?? (The fossil fuel, climate changing wealth of Norway?) Is she going to skip all the socialistic mistakes of Sweden and jump ahead to their capitalist/conservative solutions?
It’s all substance free Kabuki Theater folks. Perhaps.
Did anyone see the film Born Yesterday? It’s an OK remake film starring Melanie Griffith and Don Johnson when they were married, about a mega bucks lobbyist and his bimbo in DC trying to schmooze politicians. Melanie, the bimbo, is embarrassing the lobbyist, so he hires Don Johnson to give Melanie a crash course in political posturing.
Don gives her a few quotes and ideas from De Tocqueville’s Democracy in America. She complains that this isn’t going to work because she doesn’t any significant understanding of the material in that huge book. Don laughs. “Don’t worry. Neither do any of these posers!”
Does AOC really have any understanding of the politics and economy of Sweden in the last 40 years? I don’t either. I’ve heard Stu’s commentary a number of times, but that’s not proof. But I’m not a member of congress pushing hard to completely change the economy of the U.S.
Cicero:
Cute socialist guys can do just as much damage as “cute femmes.”
And would you feel as much danger from cute conservative femmes as from someone like AOC, and feel the cute conservative femmes should be kept home and pregnant?
Sheesh.
And Tlaib was born in Detroit of Palestinian parents, one from the West Bank and one from Jerusalem. Many Islamic cultures (as well as some Christians in Ethiopia) practice FGM, but not all. It’s not unheard of in Palestinian culture but the group does not commonly practice it (even in the Middle East). If you’re really interested in the prevalence of the practice, you can see the chart on page 2 of this report. If you look there, you’ll see it follows a strong geographic pattern in which it is prevalent in northeastern and northwestern Africa.
parker on January 7, 2019 at 5:55 pm at 5:55 pm said:
KyndyllG,
She is dangerous because there are people who take her seriously.
* * *
And they take her literally as well, which may be worse.
I actually think Occasional-Cortex IS that clueless. Bear in mind that she is the product of the ‘everyone gets a trophy’ era.
That cluelessness is demonstrated by Kate’s point about what we would lose/substitute for fossil fuels. The modern world was built on fossil fuels – most of us wouldn’t even be alive without them, let alone living in a degree of health and comfort unavailable to even kings a century ago. Anyone who doesn’t realize that is ignorant of history or brainwashed by their professors.
Would love to see these ‘sustainability’ types take a pledge to live without fossil fuels or the products thereof (put down that smartphone!) for a week. They wouldn’t make it past the first day.
Sheesh. What a bunch of posers. At least the hippies of the 60’s tried to grow their own food.
“The modern world was built on fossil fuels . . . .” [Molly Brown @ 11:08 pm]
Not only that, but their attack on fossil fuels (CO2 emissions is, IMO, just an excuse) comes at a time when fossil fuels are becoming cleaner burning, most plentiful and, thus. relatively cheaper than before. Yet they insist on wanting to replace them with expensive and less reliable sources of power, while believing that such a change will boost the economy.
“Is she going to skip all the socialistic mistakes of Sweden and jump ahead to their capitalist/conservative solutions?” [Tommy Jay @ 9:58 pm]
Great catch Tommy Jay.
“Electing cute femmes to Congress will not serve us well.”
Nor will electing AOC. She is “cute” if you are attracted to crossed bugged eyes and giant teeth. Not me.
“I’m going to go with “Knave AND Fool” for $400.”
Ding ding we have a winner. Like Obama perhaps she is not completely lacking in political cunning but Machiavellian brilliance is not required when so many people, especially the media, are greasing the skids for you.
The eyes are a tell. She is mentally disturbed. She is delusional. She may be the messiah with ovaries, but I don’t think she will break the proverbial glass ceiling.
See, I actually understand most of that. Of course I’ve been an avid reader of science fiction and fantasy for the last 65 years.
For those interested, here is a link to an informative discussion of the changes in the Swedish pension system consistent with defined contribution principles.
http://www.aei.org/publication/swedens-self-correcting-pay-as-you-go-pension-system/
‘their fare share’ = ‘all of OPM’
In all fairness, you can’t go by the eyes. She may be slightly overactive in her thyroid (which would also go with the skinny frame).
I can only HOPE that she is stupid – stupid people, after a lot of work, can be made to learn.
For a dedicated Leftist, who “knows” what is not true, there is no hope.
The Laffer Curve. At a 0% tax rate the govt collects no tax and at a 100% tax rate the govt collects no tax (no incentive to earn an income, no one works).
It’s not “the Laffer Curve”. It’s the Extreme Value Theorem, from calculus.
If you are arguing with a progressive who knows any math–you in the back stop laughing–this shuts down arguments about the “Laffer Curve”. They can choose not to listen to someone they assume is a right-wing nut but denying the validity of calculus is usually too much for them.
That said, the Extreme Value Theorem guarantees only that there exists some rate, which if you increase it, results in lower revenue. That rate could be at 100%.
Or at 70%, which Ocasio-Cortez is proposing.
The idea that you can rape “rich people” for their wealth and/or assets to support ongoing services is based on inherent fallacy. It’s one of the reasons that even as a young person I had zero inclination toward the policies that nitwits like AOC propose.
They believe that “rich people” will willingly stand there and allow their assets to be seized, year after year … and still have assets to seize. This seems to be based on the Money Tree (TM) fantasy that lefties tend to have – that rich people are rich because they have unique access to Money Trees, and morally, they should give more of each year’s harvest from their Money Trees for the benefit those who cannot access Money Trees and therefore otherwise would have no possible way to get Money.
They don’t understand that in real life, what happens is that, if possible, rich people flee with their assets; and if that’s not possible, what you have is a Russian Revolution scenario in which rich people are murdered or exiled with enthusiasm, assets are seized … and then you run out of rich people. You’ll probably then get repeat performances, in which the middle class are chased away or destroyed. Either way, you end up with an elite, and the 99% living in what would now be considered grinding poverty. It’s an inevitable outcome but no matter how many times it plays out nitwits like AOC will still believe that “this time” it will work.
Hauser’s law
The proposition was first put forward in 1993 by William Kurt Hauser, a San Francisco investment analyst, who wrote,
No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP.[3] Hauser cited Arthur Laffer’s concept of the Laffer curve in his original article. While the two concepts are similar, Hauser’s law was put forward as an empirical observation whereas the Laffer curve is a theoretical argument.[4]
https://en.wikipedia.org/wiki/Hauser%27s_law
Also: Rahn Curve:
The Rahn Curve and the Growth-Maximizing Level of Government
https://www.youtube.com/watch?v=uj6lRFXC5rA
One might also consider this: the standard of living in the 50’s was far below the standard of living now. Today’s relative poor live about how many middle class people did then. So why do today’s “poor” deserve to pay less in taxes than the poor of 60 years ago.
The entire discussion about the Laffer Curve misses the most important issue. Here in the land of the (stilll somewhat) free, our government was instituted in order to “secure the blessings of liberty.” The bigger that government becomes, the less liberty it can allow us to have, if only that we must work more hours in a month to pay for it.
So similar to the Laffer Curve, the Liberty Curve has zero liberty when we have 100% government (like in North Korea) and zero liberty at 0% government (like in Somalia).
Our goal as citizens must NOT be to tune the tax tables to optimize government revenues and thus government’s intrusion in our lives, it must be to tune the size and scope of government in order to optimize our liberty.
While the Laffer Curve is useful for this purpose, but we must pay more attention to the Liberty Curve instead.
Frederick,
I appreciate the information on Extreme Value Theorem. I am calculus deprived and did not know about it.
I take issue, though, with your statement: “They can choose not to listen to someone they assume is a right-wing nut but denying the validity of calculus is usually too much for them.”
The response to any fact when it does not support a leftist narrative is like Nancy Pelosi’s recent response to Kirsten Nielsen: “I reject your facts.” What would make rejecting calculus any different? Both would be ludicrous, just as Hank Johnson’s concerns about Guam tipping over, but such absurdity never stops a Progressive.
“I can only HOPE that she is stupid – stupid people, after a lot of work, can be made to learn.”
I disagree. I was in the Navy and had a man in my division who was not too bright. The Chief told me not to recommend him for retention in the Navy because he didn’t learn anything. When he was sent to do a job, you had to send somebody to watch him and make sure he didn’t screw up the job. Truly stupid people are difficult to train and can only be trained to do the simplest jobs. When I was on active duty the DoD was not supposed to take anyone with an IQ below 80 because of the training problem.
“. . . Hauser’s law was put forward as an empirical observation whereas the Laffer curve is a theoretical argument.” [Ewin Barnett @ 11:38 am]
I don’t think you are incorrect to point out the empirical/theoretical difference but that difference does not negate either observation; Hauser provides an empirical proof of Laffer’s theory. Furthermore, Laffer’s observation is based on a tautology (If at 0% the govt collects no income it collects no income) and common sense (at 100% taxation who would bother to work for the privilege of the govt taking it all?).
The latter point is like an old Soviet joke: “They pretend to pay us and we pretend to work.”
Actually, in thinking about Hauser/Laffer, I want to update my comment at 11:57 am. On the one hand, Hauser’s observation does provide some proof of Laffer’s theory (higher tax rates do not necessarily increase revenue w/ respect to the GDP). On the other hand, Hauser implies that there is a floor below which that revenue will not fall regardless of how high the tax rates go (short of 100%, of course). Laffer does not address this floor.
Any comments?
@T:Laffer’s theory.
Again, not Laffer’s theory. It’s a theorem from calculus.
If tax revenue is a continuous function of tax rate (which no one can prove it isn’t),
and
if it’s zero at rate 0%, and zero at rate 100% (which it is),
and
if it’s non zero somewhere in between (it is or the government would not collect it),
then calculus guarantees that there is a rate that generates maximum revenue and if you go past that rate you will lower revenue.
Again, Laffer didn’t develop any theory. He drew a curve on a napkin that he knew of from calculus class. Doesn’t make it not true of course.
Just want to see credit go where it’s due.
AOC has, I hear, a degree in economics.
Proof, I argue, that Columbia now has “diversity graduates”, i.e., peeps who graduated solely based on ethnicity goals, not educational merits.
Back this up by the fact that she was working for TWO YEARS post grad as a bartender!! (Not to jibe @ bartenders… But you ought to be able to get a job using your degree that pays better if you are vaguely competent at your subject)
She went to Boston University, not Columbia.
im sick of it when people talk about the rich it always means high income middle class.
the rich pay little in income taxes.
if a billionaire drops out and moves to a cabin he will still get dividends but will not pay FICA or income tax.
Buffet types give themselves small salaries 60-75 k , pay little in income tax or FICA and receive the rest in dividends and have every meal and trip paid for as a business expense.
if you want to screw rich libs, apply FICA to dividends and index income tax to net worth not income.
“Nor will electing AOC. She is “cute” if you are attracted to crossed bugged eyes and giant teeth. Not me.”
actually , I think she is like the woman on Seinfeld who depending o the lighting went from pretty too ugly.
the dancing video she looked a little like Michelle Rodriguez, other times she looks like a bug-eyed lizard with Robert Novak dentures.
“She went to Boston University, not Columbia.”
since she’s an affirmative action twofer, does that mean she actually deserves Bronx Community College?
since she’s an affirmative action twofer,
I don’t think you get Pokemon points in the admissions process for being a broad, though I do think the educational system is slanted in favor of the distaff side in other ways. The share of hispanics in fall enrollment (16%) exceeds the share of hispanics in the 18-24 age group (12%), so it’s a reasonable wager they’re benefiting big time from preferences.
“The share of hispanics in fall enrollment (16%) exceeds the share of hispanics in the 18-24 age group (12%), so it’s a reasonable wager they’re benefiting big time from preferences.”
of course the definition is nebulous and its illegal to query a self described Latino’s qualifications.
Hence Aryan blue eyed Visigothic Inquisitors like Jorge Ramos count, Conquistadoras like Eva Longoria count. Germans from Cuba, Mexico et al count, an ashkenazi Jewess from Peru counts, Sephadim count, Eichmanns Argentinain family would count etc etc
Neo: “Most people” have NOT heard of the Laffer curve.
Given the quality of moden eddimikashin, I think you are correct.
I think he (and I) expect a better level from your regulars and even most likely visitors… 😉
Today’s relative poor live about how many middle class people did then.
In terms of purchasable goods and services, yes. A great deal of improvement in living standards comes in the form of qualitative changes in extant goods and services you can purchase.
There are quality-of-life measures which don’t show up in national accounts, e.g your risk from street crime or the quality of certain public services. The world was more affluent in 1978 than it was in 1948, but I’m wagering the high school my mother attended was head and shoulders above any where I grew up.
I FULLY SUPPORT returning to the tax rates of the sixties, as long as we also return to the government spending levels of the sixties.
Does this mean we do it at the state level, too? Because FL had a 4% sales tax back then… i remember it well.
Art: peeps are much more affluent now than 1970, too. That schools suck is a whole different problem.
avi,
The current dividend income tax rate is 22%. It used to be 15% before Obama. Plus, in a high tax state like mine, CA, dividends are treated like ordinary income.
The logic of a special lower div. tax rate is that you as a partial owner of the company already just paid a 35% corp. tax rate (now 21%), before the free cash was generated. Then the dividend is paid out of that.
Using the old numbers, the net taxes you pay to get your after tax dividend cash is an effective 44.75% tax rate. With today’s numbers it is an effective 38.38% rate. Those are federal, and ignore state taxes.
This is why Warren Buffet tries to arrange for his companies to avoid paying dividends. If you’re like him, you accumulate capital gains until you get old (no taxes), then transfer those assets to a charitable trust (no taxes). The trust can then sell and realize those cap. gains without paying taxes. Sweet huh? Technically, you no longer control those assets and cash, but those trusts are rarely aggressively monitored.
If you want to stick it to the rich, go after their charitable trusts. Increase the minimum annual charity payouts. You could also wait for pigs to fly.
_____
You can pay no taxes (state & fed) with muni bonds. I also had a neighbor who repeatedly built a home, lived in it for two years and sold it as a primary residence, capital gains tax free. Not sure what the CA tax hit was.
“Technically, you no longer control those assets and cash, but those trusts are rarely aggressively monitored.” [Tommy Jay @ 5:00 pm]
A clarification: When one transfers assets to a charitable trust one no longer owns those assets. If you are the trustee, you still control>/i> them (buy, sell, trade, etc.) only now you manipulate them within the tax exempt trust. If the trustee is some other person or entity, then you are correct, you do not control them.
There is no point in trying to discuss tax policy or economics with people who don’t understand that 28% x $1 > 91% x $0.
Excellent point T.
If I may offer an observation, PostModern Liberals seem to operate on the McDuck vision of Wealth.
That is, they think Rich Bastards are all like Scrooge McDuck, whose wealth is all kept in a giant money bin, somewhere, denying everyone else the ability to “play” with it.
They side with the Beagle Boys, in trying to find ways to siphon money out of the bin.
Yeah, there’s whimsy there, but sadly, it’s Ha-Ha-Only-Serious. I assert that it actually DOES reflect an accurate perception of their notions as to how Real Wealth works in our society…
Thank you, Carl Barks… 😛
Also — some years back, when Buffet supported Obama’s tax increases with the comment that he paid lower income tax rates than his executive secretary, there are several things to note:
1 – his XS is a very high level employee probably clearing a couple million a year, not some temp out of the steno pool.
2 – they listed how much he paid in “income taxes”. I reverse calculated it assuming “all income” and got about 26 million dollars. It was likely a combo of dividends, etc., but that’s a good ballpark for what he’s “paying taxes” on.
3 – now, a decent investor, over time, is going to average about 10% a year as ROI. I think it safe to assert Buffet as a “good investor”. But PERHAPS it was a “down year”, and he only made 5% on his assets. Ok, at that time, Forbes put his wealth at around 25 BILLION. Yes, with a “b”. 5% of 25 BILLION is 1.25 BILLION. But he paid taxes on… 26 million. Right. The miracle of the modern tax-free trust. In which you own and control large amounts of assets, but none of it “belongs” to you… That jet they own? Fly it anywhere! That Condo in San Moritz? Yours anytime you want! That 60m dollar converted Minesweeper of a yacht? Hey, take it for a cruise!
And there are no “inheritance taxes”, all you do is accede control when you die (Buffet’s stuff gets joined with Bill & Melinda Gates’ stuff when he dies)
And here, of course, lies the real problem: the plans of these charlatans don’t Get After the very ones the average bozo is told they Get After.
Remember, the Income Tax (ca. 1912) was sold as a “soak the rich” scheme. But before it even gained any steam, the whole “charitable trust” scam for hiding your income/wealth had ALREADY BEEN PASSED in 1907.
“And there are no “inheritance taxes. . . .” [Obloodyhell @ 10:51]
Buffet is also in support of estate taxes (the death tax). People point to him as an example of the altruistic need for it (“Even Warren Buffet supports estate taxes.”).
What they do not realize is that the wealthy use life insurance to pay those taxes. For example, your advisors tell you to expect an estate tax of 1.2 million so you take out a 1.2 million dollar life insurance policy; it’s called wealth replacement.
Guess who invests in life insurance companies as a major asset? Warren Buffet and his Berkshire-Hathaway. Likewise his opposition to the Keystone pipeline is because he owns Burlington Northern Railroad (now Burlington Northern Santa Fe) which moves oil with tank cars. All he’s doing in trying to eliminate the competition and boost the worth of the assets he holds; no altruism or environmentalism about it.
“Ah, but this is all so hard and complex. It involves math, too. Much better to just ask the rich to pay their fair share—and of course, that won’t include us, right? ”
I’m always amused by people who think the rich are other people. I recall after Obamacare passed people were stunned to find out that their premiums were soaring and that they didn’t qualify for any relief. They made to much money. The networks and cable news networks were interviewing people in California and that was their common reaction. They supported passing the ACA until they found out that they were the rich people who were going to get soaked.
I am convinced that anyone who is still living in California, at least if they’re of working age, does not understand how money works. Some cities in California have passed laws to increase the minimum wage pretty dramatically. There were business owners and other employers who voted for it to “help out” their employees. One science professor at UCSF said she was glad people making minimum wage would make more money. Of course, she was going to have to fire her research assistant as she didn’t have the budget to pay the higher wage. I was left scratching my head; how exactly did voting for a higher minimum wage help out her lab assistant who would soon be making zero dollars an hour. I was amazed these people would go on national TV and advertise that they’re that stupid. Another employer, a small business owner, also supported raising the minimum wage. Naturally, he was going out of business because he couldn’t afford to pay his one employee the higher wage and he couldn’t run his book store by himself.
It’s the same all across the country. Raising the minimum wage crushes small business. Of course, that’s a benefit to big business and helps unions as usually the union wage is tied to the minimum wage by one of two widely used formulas. Usually labor unions negotiate an automatic pay hike for their members if the minimum wage rises, typically minimum wage plus x-dollars or if the minimum wage rises by x percent then the union wage rises by the same percentage. Also, larger employers will simply find it more attractive to replace unskilled minimum wage labor with fewer, higher paid, but more skilled labor and more automation. Of course, small business have no affordable options and neither do some industries such as house cleaning businesses or commercial janitorial services.
If I had to guess I’d say Occasional-Cortex is 70% fool and 30% knave. Sure, she has an economics degree but Marxist economics professors are a dime a dozen. Like most products of our modern education system I doubt she’ll ever get over her leftist programming. For instance, it’s insane to imagine we can eliminate fossil fuels in 12 years. Not “ambitious” as she puts it, but insane. For one thing it’s impossible. In just over a decade we’re going to eliminate our entire infrastructure and replace it? You can’t simply mandate that people must scrap their internal combustion powered vehicles and buy electric vehicles. Where are they going to charge them? What, are we going to tear down all the gas stations and replace them with charging stations? And where’s the electricity going to come from? We’re still going to have to burn fossil fuels unless we’re going to go entirely nuclear. That would be a political and logistical nightmare no matter how you cut it.
Moreover it’s entirely unnecessary. I follow a blog maintained by a polar bear researcher at polarbearscience.com. The polar bears have for some reason become the poster child for climate change. The canary in coal mine, the enviro Nazis would have you believe. It is true that ice conditions throughout the arctic varies from year to year. But I’m convinced that has more to do with changing patterns in deep water ocean currents than CO2. Svalbaard was ice free as of late November/early December although sea ice had returned to Norway’s other main Polar Bear habitat, Franz Josef Land, by then. But on the other hand the Polar bears on Hudson’s Bay are enjoying the earliest freeze-up in 25 years, and the greatest extent of sea ice by mid-November for the second year in a row.
And according to Norwegian biologists the bears on Svalbaard are doing just fine. They really aren’t as dependent on sea ice as the alarmists would have you believe.
Apparently the bears are also enjoying excellent denning conditions. The bears give birth at the end of December. So by mid-to late November the females like to be snug in den. Conditions that facilitated that existed throughout the entire Arctic.
Unfortunately a lot of people who pose as scientists are nothing of the sort. Sure, they have PhDs, but they are in fact political activists. But when challenged for evidence to support their alarmist claims they have to either admit they don’t have it or they have to hide behind completely unnecessary confidentiality and non-disclosure agreements. Unnecessary, that is, except that their goal is deception. It’s easier to produce research papers that arrive at the conclusions they want when they don’t have to prove anything. Frankly Polar Bears are doing just fine throughout their range.
Based on the evidence a “sustainability program” is completely unnecessary and no doubt counterproductive. Because even if the climate is changing the science is not settled. The climate is always changing. But the alarmism is ridiculous. People have survived a constantly changing climate for hundreds of thousands of years. People survive in the Sahara where the temperature can reach 140 dg Fahrenheit and they survive in the high Arctic where it can reach -80dg Fahrenheit. The science isn’t at all settled. Even if the climate is changing, we don’t know why. The earth’s atmosphere is 78% Nitrogen, 21% Oxygen, and .93% Argon. CO2 is just one of a dozen or so trace gases that comprise the other .07%. How much CO2 is due to human activity, no one knows. Of course, with 1,600 coal fired power plants either under construction or under contract with Chinese companies alone in 62 countries we could eliminate all fossil fuels in use in America and human-produced CO2 emissions will still skyrocket. If it’s mostly natural then eliminating fossil fuels won’t have any effect. If the climate is changing due to Multi-Decadal Oscillations there’s not much if anything we can do about that.
Essentially, if the climate is changing the best thing we can do is accumulate wealth. Totalitarians like AOC want to bankrupt us. The climate will still change, but it’s far better to have the money to deal with the changes instead of being broke and at the mercy of events outside of our control.
A WSJ opinion piece picked up on the AC interview of AOC, and her comment that her economic policies are similar to those “in the U.K., in Norway, in Finland, in Sweden.” Written by Villaverde (Penn) and Ohanian (UCLA), it’s called “How Sweden Overcame Socialism.”
Sweden had the 4th best income per capita globally in 1970 and after socialist programs it became number 14th in the early 90’s. Then they reversed course. Anyway, worth a read.
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