by publius
I’ve made a lot of snarky references lately about how various Republican policies are really about helping rich people. As I plan to continue this line of snark, I should probably back it up with some substance. And the surtax debate gives me a good opportunity to do that.
Before I do, I should tell you about the ridiculously awesome iTunes U section, which I've recently "discovered." For those unfamiliar, this service allows you to essentially audit various college classes by downloading the lectures (MIT/Berkeley/Stanford have good collections). And it’s free! I’ve been listening to Professor Charles Anderson’s political philosophy class (which is very good thus far, though I’ve only listened to Hegel and Marx – Karl, not Richard).
Listening to the Marx lectures reaffirmed my take on him. Basically, I find his descriptive critiques of capitalism and ideology very persuasive. And I find his normative recommendations to be loopy and dangerous.
His ideology critique, though, is especially interesting. Marx didn’t necessarily say that ideology was a conscious strategy to deceive. As Anderson explained, Marx saw it in more Darwinian terms – a given ideology was adopted because it was useful to the people currently in power. It is “selected” for its usefulness, like any other biological trait. Thus, the ideology of “divine rights of kings” was useful to justify power relations in feudal society.
That’s basically how I see modern anti-tax ideology. It’s not so much that I think people are lying, or are making conscious efforts to deceive. Instead, I think people aren’t seeing the extent to which anti-tax narratives are useful in defending extreme concentrations of wealth and income.
Think about the reality of the surtax debate. Think about what’s really at stake. The actual policy debate is whether to increase tax rates on the top 1.2% of households by a few percentage points. There’s not much there there.
And that’s true of the larger tax debate. Although we need more tax revenues, it’s not like we’d be ushering in a socialist society even if, say, Crazy Communist Publius Hilzoy got to decide the appropriate tax rates (I’ll taunt her until she’s forced to return).
If progressives had their way, tax rates on the very rich would go up by maybe 10 or 15 percentage points. The “merely rich’s” rates would go up somewhat less, and most people’s rates would be essentially unchanged or up just a bit (in exchange for offsetting benefits like health care coverage). Them’s the stakes of our tax debate. It’s not exactly Russia 1917.
The anti-tax ideology, however, obscures the reality of this debate. To listen to Chris Wallace today interviewing Orszag, you would think that a massive redistribution is at issue. But it’s not – the tax debate in our country is about whether to shift the marginal rates on the fairly well-to-do by a few points.
In this respect, the anti-tax ideology – essentially everything you hear about “raising taxes” or “hurting small businesses with taxes”, etc. – is obscuring reality. It's not that I think people are consciously lying. They’re just not seeing how this ideology is really only useful to protect massive concentrations of income.
That’s what burns me about Ben Nelson and Susan Collins and Evan Bayh. They act like they’re populist crusaders defending yeoman farmers from socialism or something. What they’re really doing is preventing those people from getting valuable services by treating tax hikes on the wealthy as something other than what they really are.
To sum up, there’s a debate about how to fund things in this country. The anti-tax ideology expressed so loudly in conservative and “centrist” circles doesn’t really protect the middle class from significant tax increases – that’s not really on the table anyway. What is on the table is redistributing money from those most able to bear it – ones who most benefit from "bailouts" – to ensure that no American will ever again toss and turn at night worrying about pre-existing conditions. It’s not all that much to ask.
All that said, maybe you think concentrating wealth is the best way to go about spreading welfare, etc. That’s fine – but let’s at least be up front about it. Let’s not pretend that taxes on the very very rich are somehow the same as taxes on middle America.
You should also check out the Open University's lecture series on political philosophy. Some brilliant discussions by Quentin Skinner and Jeremy Waldron on Machiavelli, Hobbes, Locke, and more.
Posted by: Russell Dees | July 20, 2009 at 04:45 AM
This makes little sense: Traits get selected for adaptive advantage, in regular evolution it's success at reproduction, in politics it's success at being elected. So you've skipped a step: Even assuming that the ideology that's being selected for aids defending extreme concentrations of wealth, why would that help you get elected? Because it would inspire Soros to give you money? Oh, wait, we're talking about Republicans...
Try this out: Being opposed to taxes helps Republicans politically, because their base doesn't like taxes. Just like being in favor of government spending helps Democrats because THEIR base likes lots of government spending. And, contrary to your expectation that the voters (should?) act like amoral maximizers of short term self-interest, Republicans don't much like taxes even when somebody else is paying them, while Democrats really like government spending, even when somebody else is getting the money.
The ideology at the top is a reflection, (Quite warped, of course!) of something like an ideology at the bottom.
Posted by: Brett Bellmore | July 20, 2009 at 06:19 AM
How much taxes are 'enough' for the poor, the middle class, and for the wealthy?
How much?
15% of income?30%? 50%?
Exactly how much is enough? And 'more than yesterday' is not an acceptable answer.
Posted by: ReasonableCitizen | July 20, 2009 at 07:48 AM
How much taxes are 'enough' for the poor, the middle class, and for the wealthy?
Well, back when I was a kid, and Eisenhower was president, things seemed to work pretty well. So, 90% for the very wealthy.
Posted by: rea | July 20, 2009 at 07:52 AM
I like Brett's view on contrasting ideologies where ideology is what's in play. I wonder what percentage of voters are actually in some significant way ideological or principled in their views about government. I know plenty of people who really liked what they heard from Obama during the campaign but when I try to talk to them about what is going on now their eyes glaze over - they just don't have much understanding of these events and what kind of change we face if he gets the legislation he is pushing. In the Republican camp (dems as well but not to the same extent), anti-tax has more than a single focal point. There are those who are principled and view taxation as a taking of private property and thus evil (a necessary evil until abused and then an absolute evil), and then there are those who oppose taxation, not from a governing philosophy standpoint but just because they are into wealth accumulation for its own sake, sometimes called greed. We have witnessed a lot of this in the events leading up to our current economic malaise. This view may be an ideology but it is not a political or governing ideology.
I observe behaviors within families (my own included) that I personally think gives me insights into how philosophies or ideologies can work. In one case, one or both parents, operate with a view to controlling the direction of events in the lives of children with varying degrees of effectiveness depending on how the emerging personalities of the children react to this control. Of course, these parents would not view that they are doing anything that could be viewed negatively, and they would rarely recognize or concede that they are exercising dominion or power over these children. Other parents handle these responsibilities in a more laissez-faire fashion and create a different atmosphere. Most people fall somewhere in center and may not actually sense these contrasts.
Posted by: GoodOleBoy | July 20, 2009 at 08:07 AM
One more point to complete the thought of my last comment. The anti-tax position as an ideological position is more directed at avoiding increased government control over the individual than it is at avoiding a reduction in individual wealth. For the greedy, the opposite.
Posted by: GoodOleBoy | July 20, 2009 at 08:16 AM
Good Ole Boy: The anti-tax position as an ideological position is more directed at avoiding increased government control over the individual than it is at avoiding a reduction in individual wealth.
Yes, but this position - insofar as anyone actually holds it - is just complete garbage, held only by people who prefer not to actually think about politics in any logical way. You've got to remember that these are just simple Republicans. These are people who like to call themselves libertarians. The common clay of the new right-wing. You know... morans.
Posted by: Jesurgislac | July 20, 2009 at 08:30 AM
Personally I'd prefer to see wealth distributed more equitably up front, rather than trying to increase taxes on the wealthiest after it's been distributed in order to raise funds for social programs.
Policy proposals along those lines would, of course, cause far more heads to explode than any tax regime ever will.
When folks talk about the evils of raising top marginal rates, I find myself coming back to this:
The US economy has expanded enormously in the last 35 years. Nearly all of the increase in household income created by that expansion has gone to 1/5 of the population.
And the inequality of household wealth dwarfs that of income.
The top marginal tax rate was 91% in 1963. It was 70% until 1980, and 50% until 1986. It was just shy of 40% for nearly all of the go-go 90's.
People built enormously successful businesses. Lots and lots and lots of people grew enormously wealthy. Nobody's personal liberty was compromised in any meaningful way that I'm aware of.
If taxes bug you, then work on spreading the wealth created by the economy more equitably. Otherwise, we should probably just accept a progressive tax regime as the price we pay for the opportunity to become absurdly, obscenely wealthy.
Posted by: russell | July 20, 2009 at 08:32 AM
'Yes, but this position - insofar as anyone actually holds it - is just complete garbage, held only by people who prefer not to actually think about politics in any logical way. You've got to remember that these are just simple Republicans. These are people who like to call themselves libertarians. The common clay of the new right-wing. You know... morans.'
Every time you post, you make me laugh. What are morans?
Posted by: GoodOleBoy | July 20, 2009 at 08:34 AM
Agree in part: those who select these 'cover stories', and those they select to publicize & promulgate them are in fact lying (my opinion).
Those who bite, and who spread these cover stories as if they were true are - while not, in their own minds, lying - nonetheless are every bit as dangerous as the liars. Moreso, in fact, as they argue for the lie with the passion of true believers. The same worm lies at the heart of such evangelists as is found deep within true believers of any stripe: the worm of fear, fear that they are wrong - fear that they are in fact making a terrible, terrible mistake.
This is why the conversion or demonization of contrary opinion is so important. It is this gnawing, ever-hungry worm of fear that breeds fascism...and causes otherwise sane, well-meaning people to believe things that can't actually stand up to scrutiny.
Posted by: chmood | July 20, 2009 at 08:41 AM
russell,
You correctly identify the conditions that create the state we are now in and I pretty much agree with your outline of the facts. Kevin Drum has an article titled 'Conservatives and Healthcare' where he reaches a conclusion that the conservatives can see that we have a healthcare problem but can find no free market solution. Something similar may be the case for income and wealth distribution.
Posted by: GoodOleBoy | July 20, 2009 at 08:44 AM
@ GoodOlBoy - "Blazing Saddles" reference - with "moron" tragically misspelled (too bad Jes!)
Posted by: chmood | July 20, 2009 at 08:47 AM
Dear Rich Folks:
Remember "Freedom Isn't Free!"
So shut the fuck up and pay your goddam taxes, dickweeds!
Posted by: Woody | July 20, 2009 at 08:50 AM
with "moron" tragically misspelled
are you not aware of all internet traditions?
Posted by: cleek | July 20, 2009 at 08:53 AM
This goes along with the operational approach I (mostly) endorse. What's the proper response to a budget surplus? Tax cuts. What's the proper response to falling revenues? Tax cuts. If you want to encourage home ownership/charitable giving/civic virtue/patriotism what's the best way to do so? Tax cuts. When the response to just about every circumstance is 'tax cuts', you get the impression that modern 'conservatism' is, at its core, about tax cuts. Well, to be fair, it's also about eternal vigilance and being able to respond to the Yellow Peril/Godless Communists/Terrorists.
Notice how the concerns of the Thinking Conservative haven't changed all that much since, oh, 1900? This is still the idea that either the Proles or the Furriners are coming to Take Their Money.
Posted by: ScentOfViolets | July 20, 2009 at 09:19 AM
It's been a while since I looked at Marx, but my understanding was that ideologies in his sense essentially limited debate. There are the options we debate about. Then there are the options we never even consider, the unproven assumptions we appeal to in debating, etc. That, as I understand it, is ideology. (But correct me if I'm wrong!)
We are actively debating about whether or not to raise taxes, however. Being anti-tax isn't obviously ideology. I don't mean this point to be pedantic. I think it points in favor of Brett's claim: we're having a debate about taxes, and people vote for anti-tax politicians because what those politicians say makes sense to them. People are conscious of why they are supporting the policy they are supporting, rather than the rival policy.
There might still be unconscious stuff involved. But this should show up in assumptions both sides of the debate appeal to, or options they both refuse to consider, or facts that neither side will bring up even though they are relevant, because it just strikes them as too unbelievable. Maybe the claim that lowering taxes increases revenue, if that's being made a lot and no one is challenging it, would count. I don't know, I haven't been following this debate very closely.
Posted by: DBake | July 20, 2009 at 09:22 AM
I am, of course, aware of ALL internet traditions - having first gone online in the Eighties...but lacked a link to that particular pic (which, sadly, contains no "Blazing Saddles" reference.
An acceptable alternate to 'moran' would be 'maroon' (cf Bunny, Bugs)...but still no "Blazing Saddles"....
Posted by: chmood | July 20, 2009 at 09:24 AM
I don't know .. I think Chris Wallace IS consciously lying, because not to do so would jeopardize whatever concentration of wealth he has garnered by working for Rupert Murdoch.
I think Ronald Reagan was the only person who quit his job because of the high tax rates during the 1950s, when he consciously turned down movie work.
Then again, Bonzo may not have wanted to work with him again, following Jane Wyman's lead, and Donald O'Conner already had the "Francis" franchise in the bag.
On second thought, I think he made that up on on the fly during the Presidential campaign -- not a conscious lie --- consciousness being something not particularly useful to the John Birtchers of Southern California.
Warren Buffett started Berkshire Hathaway about the same time Reagan's career (along with Huntz Hall's and Leo Gorcey's)
gave up the ghost.
True, Berkshire's structure had some tax advantages, but then Buffett was both conscious and imaginative.
Posted by: John Thullen | July 20, 2009 at 09:24 AM
If this thread continues on, which I think it will, we're probably going to rehash some arguments we've seen before. So I'm going to start with my strong belief that the extremely wealthy benefit most from the institutional framework in place in this country. (The same can be said for those in other countries, too, but let's just talk about the US.)
That framework must be maintained at a cost. Someone has to pay for it, and historical marginal tax rates have been covered. Things worked out previously with higher rates at the top. It's nothing new. I'd also say that the people who believe that extreme wealth (or any wealth to one degree or another) must be protected from taxation are wrong for two reasons.
One is that, as I wrote, the wealthy benefit most from our institution framework (courts, police, markets, banks, etc.) and that, were that framework to weaken for lack of funding, those same people would suffer the most in terms of lost wealth, if not actual sufferring like homelessness and hunger that poorer people would. But it's wealth we're talking about here, so that matters.
Another reason I think we need to tax extremely high income at higher rates is that I think it would be a good thing to disincentivize earning those last marginal dollars more and more as they pile up. Given the recent bubbles we've had and the few people who made bundles of money at the expense of others without producing anything, I'd say that disincentivizing making the next few millons on top of the last few millions might curb the willingness of major players to game the system. And I'd say that the truly creative and productive top-earners wouldn't really care either way. They're in it for it and not the money. The money comes to them, but that's not what motivates them. So I think that higher marginal rates for very high income levels would do much more to reduce bad behavior than reduce good behavior on the part of our economic elite.
Posted by: hairshirthedonist | July 20, 2009 at 09:42 AM
Well, yes, you can tell just what flavor of anti-tax most people are by the other stuff. A lot of anti-tax people, for example, also think the government should provide certain services they deem essential, and for which there is obviously enough money if one simply eliminates wastefraudandabuse. They're typically the ones who are against foreign aid, thinking it should be 'lowered' to ten or twenty percent of the Federal budget. These are the cadres of sincere front line soldiers who protect the steely inner core.
These are the anti-taxers who think that government shouldn't be in the business of much more that Protecting Their Stuff. So they want their taxes to go to the military, police, etc, but pretty much everything else is either wastefraudandabuse, or encroaches on their 'liberty'.
If you look at any table of nondiscretionary spending, you can see who is pretty much having it their way; in fact, their way is 2/3 of this spending, despite their relatively puny numbers.
Posted by: ScentOfViolets | July 20, 2009 at 09:55 AM
There may be a chicken and egg problem here in Marx's analysis of ideology -- assuming that what we think is determined by our circumstance (e.g. who has power), and our ideas serve little more than justifications of what already exists.*
But that seems to assume that we as human beings, or as a society, didn't construct this system in the first place -- or, if we did, we did so blindly and stupidly, with ideas unable to guide us, as they come only after the fact.
Yet, as I understand it, the US had a pretty progressive tax rate -- so they knew what it was like -- which Reagan more or less explicitly campaigned against. So the idea -- anti-tax ideology -- was itself the cause of our current predicament.
(tbc)
*With the exception of Marx himself, and the ideas he was drawn to.
Posted by: Point | July 20, 2009 at 10:02 AM
Personally I'd prefer to see wealth distributed more equitably up front, rather than trying to increase taxes on the wealthiest after it's been distributed in order to raise funds for social programs.
Policy proposals along those lines would, of course, cause far more heads to explode than any tax regime ever will.
Yeah, the anti-tax folks are always up for a good discussion on raising the minimum wage.
Posted by: hairshirthedonist | July 20, 2009 at 10:06 AM
Woody - take that elsewhere. Next time, you're out.
Posted by: publius | July 20, 2009 at 10:09 AM
These are the anti-taxers who think that government shouldn't be in the business of much more that Protecting Their Stuff. So they want their taxes to go to the military, police, etc, but pretty much everything else is either wastefraudandabuse, or encroaches on their 'liberty'.
Maybe even narrower: police where they are themselves. Whether the police is funded where the have-nots are is of less importance. The logical conclusion is privatized police as afaik can already be found in the context of gated communities. Let's call it blackwaterization.
Posted by: Hartmut | July 20, 2009 at 10:16 AM
I think a more fruitful debate would concern whether a "surtax" for a particular program is the right way to go. Especially when the surtax is unrelated to the program being funded.
If the government needs more tax revenue to fund all the stuff they are spending money on and they clearly do; that's what a deficit is), then they ought to be honest enough to say to the people "we need to raise taxes to pay for all the stuff we are doing for you." Should taxes be progressive (which is what the Republicans object to in principle)? Yes. As anybody with two brain cells knows, you cannot effectively tax people who don't have enough income to eat regularly (to take the obviously extreme case). So you have to be progress at some level. So the real question is, how progressive?
The arguments I have mostly seen for not going more progressive is that it removes incentives for people to work harder for more income. But is that really true? At some point, you are making more money that you can spend on anything that you really need enough to justify working longer and harder. Except for the need to score points off those who are not making quite as much, which you can do equally well regardless of what your tax rate is.
A similar argument goes for whether to tax some forms of income (e.g. capital gains) at lower rates than other forms. Anybody want to argue that, if all forms of income got taxed the same, someone would choose to spend their money rather than invest, and make up the difference by digging ditches? I sure wouldn't!
As rea noted above, America did quite well building the economy during the 1950s and 1960s, with top tax rates far, far above what they are today. Granted, I think a 90% marginal tax rate is a bit much. But it does suggest that the world would not end (economically) if rates were higher than 35%.
Posted by: wj | July 20, 2009 at 10:18 AM
When people talk about the wealthy benefiting from institutions, I get the sense that this rather abstract formulation is what they mean. May I suggest that they also in a very tangible ways get much more from the government than the commoners.
Right now, there is a large apparatus devoted to putting out the message that 'the rich' are sticking five dollars into the kitty for every one dollar us non-rich contribute. Well, that's not really true, but it's also beside the point. Let me illustrate with an example:
Suppose I have lunch with a coworker at a restaurant, and he blows $90 on a five-course spread, plus drinks while I have a grilled cheese and tea. When the check is presented, he's ten dollars short, and doesn't even tip. I sigh, fork over the $10 as well as paying for my own lunch and tip as much as I am able to cover for both of us.
Back at the office, he tells his buddies that when we went to lunch, he spent $80 and I only spent $20, with the strong implicit suggestion that I was being carried, and they all congratulate him on being such a generous fellow. I'm going to be just a little bit hot about this attempt to deploy such misleading propaganda.
And so it is with government services. As far as I can tell, I'm not benefiting very much from government spending; in fact, there's a big chunk of my tax dollars that are going to the accommodation of people much wealthier and better connected than I.
Posted by: ScentOfViolets | July 20, 2009 at 10:18 AM
(con)
Broadly speaking, there are three things pretty much everyone wants from a government budget -- spending*, tax cuts**, and deficit reduction. The problem is they can't have all three.
There are two questions we could ask -- which "good" is most important? And, given that, which one do we need to cut the most to get these things?
If you're a like me, you think we need to spend more on services (like HC, infrastructure, etc.), and the best way to pay for them is to return to a progressive tax system, which involves raising taxes. (Thus I am referred to as a "Tax and Spend Liberal", which, for some reason, is also an epithet.)
If you're like many hard line conservatives, you see tax cuts as the greatest good -- the less government involvement in the economy the better -- and you want to see less spending in general to pay for them. (Or, if your the Bush Administration, you just think "deficits don't matter".)
But there are stranger versions of this still...
(note to follow, then tbc)
Posted by: Point | July 20, 2009 at 10:25 AM
*Even those opposed to military spending would, it seems, feel less strongly on it if we didn't need to tax or borrow to maintain it^ -- if the Pentagon were eliminated tomorrow, some would want the money to go to spending on other things (e.g. fixing health care), others would want to pay down the debt, and others still would just call for a bigger tax cut ("fine, we'll buy our own damn bazookas!").
**I realize many here would like to see higher tax brackets for the sake of reducing inequality, but if social spending didn't need tax money^, I'm thinking that would be a minority view.
^(Yes, it's an economic fantasy, but to make a point -- that spending on something, anything, is almost always only seen as bad because that spending has to come from somewhere, and we generally only want to tax ourselves or others for the money).
Posted by: Point | July 20, 2009 at 10:27 AM
"And I'd say that the truly creative and productive top-earners wouldn't really care either way. They're in it for it and not the money. The money comes to them, but that's not what motivates them."
This rings pretty true to me as well.
From my experience and observation, the most productive and creative people are productive and creative because they enjoy Doing Interesting Stuff. Everybody likes to make lots of money if they can, but the most creative and productive folks like to get a lot of money on the table because it means they can do bigger and better interesting things.
After a certain point, more money, as a practical matter, is just noise. Some folks enjoy it as a "mine is bigger" marker but after, frex, your third house it's hard for me to imagine having five more houses making your quality of life that much different. On the contrary, you end up having to pay people just to deal with it all.
Productive people will always be productive. Creative people will always be creative. People with excess money to invest will always invest it.
Maybe under a system like Soviet Russia those things might not be so, but nothing *remotely* like that is on the table here.
Posted by: russell | July 20, 2009 at 10:35 AM
"That’s basically how I see modern anti-tax ideology. It’s not so much that I think people are lying, or are making conscious efforts to deceive. Instead, I think people aren’t seeing the extent to which anti-tax narratives are useful in defending extreme concentrations of wealth and income."
He thinks they are stupid. That they just don't realize. Why can't they get a clue, he wonders.
Posted by: D'd'd'dave | July 20, 2009 at 10:35 AM
(con, to end)
The weirdest thing about modern conservative economic thinking is to think that the balance I described somehow doesn't apply to them -- that tax cuts on the wealthy pay for themselves, through dubious (at best) economic ideas such as the Laffer Curve.
It is this central delusion -- more than any other class dynamics -- that made and makes anti-tax ideology so destructive. It's one thing to argue for a minimalist government -- but to say that a budget without trade offs is possible is to take the entire debate down to the depths of human ignorance. It is the most destructive of BS.
Anyway, that' my (long*) point.
*Sorry about that -- guess it's been a while, and the bug itched.
Posted by: Point | July 20, 2009 at 10:47 AM
The arguments I have mostly seen for not going more progressive is that it removes incentives for people to work harder for more income.
The most ridiculous aspect of this appeal is that, in the real world, it holds up less and less well as the incomes in question are higher and higher. The fact is, the richer you are, the *less* hard you have to work to make more and more money ('it takes money to make money'). If you have $20 million, you don't have to do anything at all to produce a very nice income. If you have $200 million, your only hard work is trying to decide how to spend it faster than you're making it. If you have a billion or two, your 'hard work' is figuring out how to give it away fast enough.
And this is aside from the fact that, for most people (normal people) there is no direct correlation between how hard people work at something and the precise dollar amount they earn from that work. Clearly, it's a ratio of enjoyment/satisfaction vs pay vs need.
I once had to hire a drummer who had the reputation of a 'monster' (a good player). I was warned, though, that he was expensive - expensive but worth it. When I called him to ask his rates, he said, 'For $200, I bring TWO drums; for $300, I bring THREE drums..'etc. I hired him that once, because I was desperate, but never again. He had technique, but was, in fact, a bad ensemble musician. He was also an exception, which is why I remember him.
Imagine if every worker had the attitude ascribed to capitalists in the rationalization above: 'for $10/hr, I'll be on time 3 days per week; for $12/hr I'll smile at customers once per day; for $15/hr I'll concentrate 70% of the time...'. the direct correlation is for me but not for thee...
Posted by: jonnybutter | July 20, 2009 at 10:52 AM
One is that, as I wrote, the wealthy benefit most from our institution framework (courts, police, markets, banks, etc.
I actually have a different take. I think what the wealthy benefit most from, and in fact, what makes them wealthy, are the values of the society they are located in. Put Rush Limbaugh, Brad Pitt, or A-Rod in any one of 150 different countries, and even in a free market, their skill set would render them welfare recipients. But in America, they're worth millions. If a Burger King and a 5 star restaurant open in the same town, my bet is the 5 star restaurant goes under before the Burger King. And it's not because the BK franchisee is a better business man necessarily than the owner of the 5 star restaurant. It's because people would rather eat crap.
And to my way of thinking, if someone is the beneficiary of a society's values to such an extent, then they should consider themselves extremely fortunate and contribute more to the overall well being of the society that put them where they are. But that's just me.
Posted by: Frankie | July 20, 2009 at 10:56 AM
@ Brett Bellmore: "Try this out: Being opposed to taxes helps Republicans politically, because their base doesn't like taxes. Just like being in favor of government spending helps Democrats because THEIR base likes lots of government spending. And, contrary to your expectation that the voters (should?) act like amoral maximizers of short term self-interest, Republicans don't much like taxes even when somebody else is paying them, while Democrats really like government spending, even when somebody else is getting the money."
Try this instead: Republicans are opposed to taxes because conserving the wealth and privilege of old - and huge - money is what keeps getting them elected; the base agrees with them because they have been intentionally misleading whoever would listen since the early 60s. In other words, in order to gain and stay in power, the Republicans decided they needed their base to vote against their own self-interest and *for* the self-interest of the extremely rich.
We're talking ancient, hereditary money - the kind that doesn't buy stuff, but the kind that buys people, and industries, and political parties - and legislation. Over time, this extremely-tiny, extremely-wealthy slice of the US population has bought pretty much *every* nationally-elected Republican, and has set their agenda; it has also set the stage with the base through an incessant virtual carpet-bombing via talk-radio & Fox News, until "the base" is thrilled to feel like they know which side to be on, and are never permitted the opportunity to actually examine the proposals - or the behavior of the people they're giving their (uncritical) allegiance to. Even now, Republicans are busily circling the wagons in order to prevent calls for Ensign, Sanford, et al to "walk it like they talk it". Their conscientious willingness to distort every issue into terms the bast has already been prepared for is just one example of the basic dishonesty of Republican "principles".
Of course, "Republicans don't much like taxes, even when somebody else is paying them" - they've been conditioned not to, by professionals, over decades. For these poor souls, "taxes" aren't how we pay for parks and traffic lights and roads, "taxes" are theft at gunpoint by a government that hates the people that voted it into office. Fortunately for the people who own the Republican Party and its politicians, the media apparatus required to keep this level of conditioning in place is readily-available - and already operating at near-capacity. As any practiced brainwasher knows, once the targets of the brainwashing begin to defend the brainwashers and the brainwashing itself from charges that they're brainwashing people, success has been achieved.
All this can be overturned, broken up by one single question, seriously considered: "WHAT IF I'M WRONG?"
Posted by: chmood | July 20, 2009 at 10:59 AM
Publius wrote:
Marx saw it in more Darwinian terms – a given ideology was adopted because it was useful to the people currently in power.
So by your definition, Obama and the Democrats are raising taxes because it is "useful" to them (they are in power).
Surely, you will be equal in your application of Marx's words.
Posted by: Serenity | July 20, 2009 at 11:17 AM
There are those who are principled and view taxation as a taking of private property and thus evil
seems odd to call blinkered selfishness a principle. but, i suppose "principle" is a morally neutral concept. anyway...
and if you think the economy begins with your own paycheck, MINEallMINE is a reasonable way to think about things. but, as many people above (and on previous threads) have pointed out, everyone who earns money in the US does it inside a framework that's guaranteed in part by the work the government has done using taxes paid by previous earners. yesterday's taxes maintain the roads used for today's earning; and today's taxes keep things in shape for tomorrow's earnings.
only a "conservative" would see himself as an island, laboring apart from the rest of society, distilling money directly from the sweat of his brow.
Posted by: cleek | July 20, 2009 at 11:20 AM
So by your definition, Obama and the Democrats are raising taxes because it is "useful" to them (they are in power).
Surely, you will be equal in your application of Marx's words.
The power being discussed is the power of wealth in this case, and the Democrats (as a mind-hive) are probably less willing to raise taxes than they should be because of the phenomenon Publius describes. So, yeah, the Democrats are just somewhat less beholden to wealthy corporate interests than the Republicans now are, but I'm not sure that is somehow inconsistent with anything Pubius wrote.
Posted by: hairshirthedonist | July 20, 2009 at 11:34 AM
Publius -- for another great source on a Marxian's reading of Capital, you should check out David Harvey's online lectures.
Posted by: mike3550 | July 20, 2009 at 11:38 AM
Actually, there's another word for those who "view taxation as a taking of private property": thieves. If you use something, you pay for it. It's that simple. So 'tax and spend' is just a perjorative way of saying, 'pay for what you use'. Anything else is just trying to fob off costs onto other people.
Posted by: ScentOfViolets | July 20, 2009 at 11:47 AM
"As rea noted above, America did quite well building the economy during the 1950s and 1960s, with top tax rates far, far above what they are today."
Oh for the ability to have concrete experiments in macro-economics. The rest of the world be destroyed by WWII helped a lot too.
Publius I think you are close to the problem about taxes, but it is much broader than just Republicans.
People want government to do more, and they want lower taxes. These are all the same people, but there is enough overlap that both those who want more stuff out of government and those who want lower taxes can simultaneously have a majority in the US.
The thing I don't like about the surtax is that it is just a continuation of exactly the same problem, but by liberals. No one wants to admit that increasing government services on the magnitude contemplated will involve noticeably higher taxes on the middle class. Trying to get everything we want out taxing the rich just won't get enough money (and really will hit the Laffer curve problem at some point) because there aren't enough of them.
I'm not opposed to this particular surtax. Go for it, I guess. But I'm firmly opposed to the idea that we can or even should try to fund much of government through taxes exclusively aimed at the rich.
It isn't wise to have the majority of people believe that they can have far reaching policies where the costs can be forced on to other people. People just don't make wise cost-benefit choices when they believe that the benefits come to them and the costs can be made externalities.
BTW, the parts of Marx you seem to like aren't particularly good criticisms of capitalism per se. They are criticisms of nearly all human institutions. Which is why his normative recommendations end up being crazy--he doesn't seem to realize that most of criticisms he identifies still operate even when not in a capitalist setting.
Posted by: Sebastian | July 20, 2009 at 12:04 PM
"So 'tax and spend' is just a perjorative way of saying, 'pay for what you use'. Anything else is just trying to fob off costs onto other people."
What is voting for very expensive programs and voting for other people to pay for it?
Posted by: Sebastian | July 20, 2009 at 12:05 PM
Brett Ballmore:
"Being opposed to taxes helps Republicans politically, because their base doesn't like taxes. Just like being in favor of government spending helps Democrats because THEIR base likes lots of government spending."
This may largely explain how Congress and the Executive campaign, but crucially it doesn't explain how they govern. In a thousand and one ways, centrist Democrats and Republicans govern in the interests of the top 1% of the population that has 40% of the nation's wealth.
But of course, no politician runs on "I rigged tax laws to help multimillionaires" and no pundit proudly asserts that "I only happen to find evils in regulations that impinge upon the liberty of large, very wealthy corporations".
Free-market, anti-tax ideology is selectively employed by politicians and pundits during elections, and then selectively employed when governing: all in such a way as to uphold the interests of a dynamic class of elites.
Posted by: b9n10nt | July 20, 2009 at 12:17 PM
Sebastian: What is voting for very expensive programs and voting for other people to pay for it?
Being a Republican, isn't it?
Republican administrations habitually spend like drunken sailors on shore leave after Jack Aubrey captured a fleet of quicksilver merchants, and habitually vote for other people to pay for their spending: passing regressive taxes that cause the poorest to proportionally pay more, and going massively into debt to ensure that their children and children's children will still be paying for what the Republicans voted for.
Isn't that what you meant, Sebastian?
Posted by: Jesurgislac | July 20, 2009 at 12:41 PM
Nope, that is unneccesarily reductive. Republicans certainly did it. And Democrats are about to...
Posted by: Sebastian | July 20, 2009 at 12:59 PM
I just got back from 5 miles walking on the trail. Trying to stay in good health, you know.
While I was walking I was thinking about the wealth and income gap that russell and others, including myself, believe is a big part of our problem. One of the taxes that anti-tax advocates have pushed to reduce or eliminate in recent years is the income tax on corporations. What would be the effect if, instead of eliminating corporate income tax, a corporation could reduce that tax, dollar for dollar, for amounts paid out in profit-sharing to employees of the corporation, with stipulations on how that distribution must occur, frex, no higher income employee could get a higher percentage of income as profit-sharing than a lower income employee and some upper limit beyond which such payouts would cease to offset tax liability, say twice the median salary? Is this the kind of thing someone suggested would make heads explode?
Posted by: GoodOleBoy | July 20, 2009 at 01:05 PM
GOB: That's very intriguing.
Posted by: Eric Martin | July 20, 2009 at 01:14 PM
GOB -- that's the kind of stuff people would constructively engage on.
Posted by: publius | July 20, 2009 at 01:20 PM
Suppose there was a proposal on the table to CUT taxes ONLY for people making under $100K per year. Would an anti-tax ideologue who makes $1M per year support, or oppose, that proposal?
I'm trying to figure out what "anti-tax ideology" means, here. Surely, "ideology" must mean something different from "self-interest", or else we would not bother with the distinction. If you're making $1M a year, my hypothetical tax cut does not directly affect you one way or the other. Your self-interest doesn't come into it, to first order. You can support or oppose the "under $100K tax cut" on straight ideological grounds.
So: do you? If yes, say no more. If not, why not?
--TP
Posted by: Tony P. | July 20, 2009 at 01:27 PM
GOB: I'm feeling rather cynical today, so I'm going to vote for head-explodey.
That or it'd just die in comittee or have a loophole written in to create executive "sunob"s that count as some new kind of thing that's "profit-sharing", and not a bonus or regular salary.
It certainly wouldn't get any support in the anti-tax faction, I'm betting, for all the reasons publius mentioned in his initial post.
Posted by: Nate | July 20, 2009 at 01:46 PM
What is voting for very expensive programs and voting for other people to pay for it?
it's one of the many possible outcomes of a democratic government.
Posted by: cleek | July 20, 2009 at 02:10 PM
What would be the effect if, instead of eliminating corporate income tax, a corporation could reduce that tax, dollar for dollar, for amounts paid out in profit-sharing to employees of the corporation, with stipulations on how that distribution must occur, frex, no higher income employee could get a higher percentage of income as profit-sharing than a lower income employee and some upper limit beyond which such payouts would cease to offset tax liability, say twice the median salary? Is this the kind of thing someone suggested would make heads explode?
Gosh that sounds awfully familiar.
Posted by: Ugh | July 20, 2009 at 02:18 PM
I think the effect of highly-unequal incomes on creativity and productivity is much worse than neutral, actually. The first problem is that very-unequal incomes tend to cause bidding wars among those with high incomes - who after all don't have much else to do with it - which drives up the prices of those things for everyone else. The #1 example of this is housing, and anyone who lives in a very expensive area knows how that works: housing in the most desirable areas is massively bid-up, which would be fine (just live in the next town/neighbourhood over) except that it radiates from the most expensive areas outwards. In order to keep up, people who are not making those very high incomes have to either leave the area, spend a huge percentage of their income on mortgage payments, and finally, and this is the part that particularly hurts creativity/productivity, they have to look for jobs that pay well enough to buy a house, rather than jobs that might be more creative, or being able to take a chance on starting a new business or spending a year or two working on an idea.
The result is what you saw on Wall St, with physicists and other very smart people working on financial maneuvering of very little real-world value. But it applies up and down the scale; there are mid-level employees at those companies who would rather be teachers or nurses, but who know that choosing those routes in a big city means living in very modest circumstances or commuting for hours every day.
I think the corrosive effects of this bidding up and the pressure to keep up are significant factors in favour of heavily-progressive taxation on its own merits (that is, without even talking about what you'd do with the money). Contra what seems to have taken root as Obviously True, people do not tailor the amount or quality of their work to what they get paid, nor are industries that bring a lot of personal income necessarily "wealth-creating" for anyone else. (e.g. bank robbery is highly-paid but socially unproductive.)
The other big problem with low taxation is that it encourages the accumulation of large fortunes that make the bidding-up problem still worse. It's bad enough having to compete with overpaid investment bankers for a house, it's much worse when your competition is inherited wealth with extremely deep pockets.
By flattening the income curve sharply, high marginal rates greatly decrease the bidding-up effect, because the difference between the amount that bankers and teachers get paid becomes maybe 10-20x instead of 100-200x. And by reducing that bidding-up problem, you also reduce the amount of rat-race stress on everyone, including high-income people. Of course, what you don't do is drive up the price of real estate (and other assets) to the degree you would otherwise. If you happen to be an owner of large amounts of real estate that might not seem so appealing; unfortunately a lot of mere homeowners have been deluded into thinking that house-price appreciation is always a good thing and they mustn't do anything to slow it down. (I always wonder what they think their kids are going to do for housing if it always appreciates 10%+ a year; perhaps they think it would be okay for the next generation to live in cardboard boxes, but I'd like my kids to be able to buy a house on a moderate salary without too much stress.)
Another effect of higher marginal rates is a decreased incentive to wreck the long-term prospects of corporations in search of short-term gains. If you only get 10c on the dollar by doing so it isn't going to be as worthwhile as it is when you can expect to keep 80% of the gains. It pushes executives to compete in other ways than purely income. You know, old-fashioned ways, like putting money into R&D, and making the highest-quality goods on the market, or even that old standby, producing good returns for shareholders. There used to be more to American corporate values than just having the highest-paid CEO.
Posted by: Jacob Davies | July 20, 2009 at 02:23 PM
"What would be the effect if, instead of eliminating corporate income tax, a corporation could reduce that tax, dollar for dollar, for amounts paid out in profit-sharing to employees of the corporation"
Sounds promising to me. I'd extend it beyond profit sharing to equity.
I'd further say that if you want to fire someone other than for clear and obvious cause, you have to buy out their share of the business.
My general position is that the people who work for a company generate an enormous amount of the value that, in a well run business, turns into wealth. They should get some of that wealth.
Any fair way to make that happen is fine with me.
We need to get out of the "labor market" model and into a model where labor is seen as a partner. That also ought to incur additional responsibilities on labor, but there needs to be an incentive on the table.
Right now there is not.
"When I called him to ask his rates, he said, 'For $200, I bring TWO drums; for $300, I bring THREE drums..'etc. "
Dude, I want to know where you live. I regularly play local club gigs for $75.00, and I can introduce you to a lot of guys with serious resumes (like "formerly played with Sir Paul McCartney") who will do the same.
Seriously, what market are you in? I wanna move there.
Posted by: russell | July 20, 2009 at 02:24 PM
All of my musings immediately upthread to the side, I think GOB's idea is excellent, and is the kind of idea that would make a real difference. It also gives businesses a concrete incentive to play, which is necessary for "good ideas" to turn into "reality".
Thanks GOB
Posted by: russell | July 20, 2009 at 02:26 PM
What would be the effect if, instead of eliminating corporate income tax, a corporation could reduce that tax, dollar for dollar, for amounts paid out in profit-sharing to employees of the corporation ... ?
Intriguing indeed. I assume "profit sharing" is different from just plain higher wages (which also reduce taxable corporate "profit" dollar-for-dollar) because wages are fixed in advance but profit sharing is variable, and after-the-fact.
But what's in it for the stockholders? The corporation has, say, $100M taxable profit. It can pay $35M to the IRS, and distribute $65M to the stockholders as a dividend. If I read GOB correctly, the corporation could choose instead to distribute the $35M to its employees as profit-sharing instead. The stockholders would not get any more money, but they would have a happier workforce. So far so good.
Now, how about the Treasury? It collects taxes, from the stockholders, on the $65M in dividends either way. It loses the $35M in corporate income tax. Sure, it collects income tax, from the workers, on that $35M. Given GOB's sensible rules about distribution of the profit-sharing, that $35M of income ends up getting taxed at maybe 20%, so the Treasury gets about $7M. Net loss of revenue: $28M.
If the goal is to reduce government revenue, GOB's suggestion is a winner -- and certainly preferable to, say, cutting the tax rate on dividends. If the goal is to nudge the nation's income distribution a bit toward flatness, maybe the suggestion helps.
But if we need to make up that lost $28M in tax revenue somehow, we need more suggestions.
--TP
Posted by: Tony P. | July 20, 2009 at 02:36 PM
I should probably temper my pessimism above with an observation that GOB's idea is a pretty good one, for all I think it's both too radical to pass in our politics and not really radical enough. It'd definitely be a step in the right direction.
Posted by: Nate | July 20, 2009 at 02:38 PM
"What would be the effect if, instead of eliminating corporate income tax, a corporation could reduce that tax, dollar for dollar, for amounts paid out in profit-sharing to employees of the corporation"
Forgive me, I don't know much about corporate accounting, but isn't this exactly what they can already do by just paying people more? If you pay people more you reduce the net income of the corporation by a "dollar for dollar" amount, thereby reducing any income tax paid. No?
But most corporations don't pay run-of-the-mill workers a decent share of the profits. And when the workers demand more of the profits by striking, corporations generally start wishing they could still call out the Pinkertons to start bashing people's heads in.
I think most businesses should be run more like (partial) co-ops; I think it'd be better for both shareholders and employees. But doing so means going against the ingrained MBA mindset that workers are the enemy of the corporation's interest, instead of people who have a big stake in its continued success.
I'm hopeful (because I'm an optimist) that the reformed GM & Chrysler, with large chunks of them owned by the worker's union, may wind up showing that a semi-employee-owner structure can be effective.
I believe it was a poster around here recently who neatly made the old point about why CEOs are paid so much: they're paid a lot because they're the people who decide how much they get paid.
Posted by: Jacob Davies | July 20, 2009 at 02:43 PM
For TP,
Note that my scenario was an alternative to eliminating the corporate income tax so the revenue result comes out positive for the treasury when compared to eliminating the tax. The so-called anti-tax group does not get exactly their druthers but some of those people (me) will be pleased to see the money in the hands of consumers (workers) instead of the government. All other things being equal, businesses that avail themselves of this would be more competitive for labor. Somebody with a lot more insight than me will have to figure out the downside or how this could be gamed to negate the apparent benefits.
Posted by: GoodOleBoy | July 20, 2009 at 02:52 PM
What GOB describes is much like what we have today except that (a) it appears he's replaced the deduction for contributions for an employee's share of profits with a $ for $ tax credit, in which case as Tony P. notes much of cost of the plan has been shifted to the US treasury, and (b) the employee would be entitled to, and pay tax on, the earnings now rather than having them deferred in, e.g., a 401k.
Posted by: Ugh | July 20, 2009 at 02:55 PM
"Forgive me, I don't know much about corporate accounting, but isn't this exactly what they can already do by just paying people more?"
I work for a company that has a pretty good profit sharing plan. The basic idea of profit sharing vs just paying more is that (a) you don't know if you can afford to pay the higher amount until you see how the numbers turn out, and (b) providing some compensation as profit sharing is a pretty good incentive for employees to work harder to make the company profitable.
Net/net it's not a bad way to go.
Here is a pretty useful site on the general topic of employee ownership, which can take a few different forms. I know folks who have worked for employee owned companies, and have done very well, as in "can send their kids to college, own their own home outright, and retire at 55 and have a second career if they like", where, in one case, "second career" was piano tuner, just because the guy thought it would be fun.
The labor market model is a screwed up, adversarial way of managing what ought to be partnership toward a common goal.
There's enough money flowing even in the current economy so that most folks should be able to lead a decent life, without having to live day by day with intense financial anxiety. It's perverse that so much of the wealth that is created by the productive sectors of the economy goes so disproportinately to so few people.
Posted by: russell | July 20, 2009 at 02:59 PM
Oh I see: you're not talking about a dollar-for-dollar reduction in net income, you're talking about a dollar-for-dollar reduction in tax paid.
I am sure this idea is meant in good faith, and I think it's pretty much just as important to think about ways to distribute income from corporations more fairly as to look at ways to reduce income inequality through taxation.
But, the net effect of this would be that the employer would get a government subsidy for paying their employees. A reduction in $1 of tax liability is worth more than $1 in pre-tax income to a corporation. So the obvious dodge would be to reduce salaries and compensate by increasing this subsidized profit-sharing, at the expense of corporate income tax revenues.
I think some kind of mandate on paying profit sharing would be a better approach. There's no lack of money. There's a lack of will to pay it to run-of-the-mill employees.
Posted by: Jacob Davies | July 20, 2009 at 03:11 PM
Obviously, the reason I broached the subject of corporate income tax is that this has been a recent favorite area for the anti-tax types. Points they make: (1) the US businesses are at a disadvantage globally because we have one of the highest corporate tax rates, (2) results in double taxation for amounts paid out to shareholders as dividends. If we think in terms of revenue neutral, i.e. a way must be found to make up the lost revenue to Treasury, we seem to be back to the notion of whether or not we believe government is the better choice to spend our money. On the other hand, maybe there are other sources for the lost revenues that work better.
Posted by: GoodOleBoy | July 20, 2009 at 03:17 PM
Forgive me, I don't know much about corporate accounting, but isn't this exactly what they can already do by just paying people more? If you pay people more you reduce the net income of the corporation by a "dollar for dollar" amount, thereby reducing any income tax paid. No?
No, it would be a tax credit, not the corporate equivalent of a deduction, which paying people more in salaries would be.
Posted by: hairshirthedonist | July 20, 2009 at 03:20 PM
Dude, I want to know where you live.
russell: This is a market nobody can move into - Minneapolis in the late 70s (and it was a private party, which kind of gig always paid well). Yes, there was a time when you could make a modest-or-better living being a non-famous working musician. Quaint idea, isn't it? I gave up playing for a living (but not for love!) many years ago.
Speaking of Marxist crit., I remember complaining on another thread about this sort of thing, and being informed by another commenter that creative people, teachers, et. al. *should* be paid very little because they are 'compensated with satisfaction' - and some 'centrist' types sort of agreed, or at least acceded to it. That this spiritually squalid, puritanical view of work is really fairly mainstream - perhaps not liked, but accepted as CW - is a stark indication, to me, of how much has changed since the pre-Reagan days. Americans foolishly think that 'crackdowns' are for other countries. Ho ho ho. I wouldn't say things were *rosey* pre-80s, but there was a little wiggle room. Everything is monetized now - 'factored-in'. Anyway, that world is utterly gone.
Posted by: jonnybutter | July 20, 2009 at 03:37 PM
'I am sure this idea is meant in good faith, and I think it's pretty much just as important to think about ways to distribute income from corporations more fairly as to look at ways to reduce income inequality through taxation.'
Actually, in the long run, I think a different corporate model for reducing the income gap will be far superior to trying to accomplish it through tax policy. You correctly identified how a corporation might behave to take advantage of the 'subsidy'. Another consideration if they did that is if there were no profits or low profits, there would be no tax liability to offset but the business might be operating paying less than competitive labor rates which is probably not sustainable.
I spent much of my life being led to believe that a corporate entity is essentially legally equivalent to a natural person and have always thought of this as pretty much OK. Maybe this is not even close to the truth but INAL so I don't know. But my thought now is that maybe this should get another look because of the level of abuse we have had often involving corporate executives and government officials. Anti-trust concepts and some enforcement have given some protection to the marketplace but our recent experience with the notion of 'too big to fail' shows that somewhere along the way we missed the boat.
Posted by: GoodOleBoy | July 20, 2009 at 03:45 PM
Note that my scenario was an alternative to eliminating the corporate income tax so the revenue result comes out positive for the treasury when compared to eliminating the tax.
Got it. And if the choice were between your suggestion and eliminating the corporate income tax altogether, you'd have my vote.
I can be persuaded, BTW, to consider abolishing the corporate income tax altogether coupled with taxing dividends and realized capital gains at ordinary income rates. We'd have to haggle over what ordinary income rates should be, of course.
I also feel the need to point out that the self-employed are the ultimate in "employee-owned" businesses. The "employee" has 100% profit-sharing, and 100% of the risk. What self-employed people do not have is a decent mechanism for income averaging, year-to-year. The tax code cannot make the risk of a couple of bad years in a row go away, of course. But it could be better about letting the self-employed "manage their risk" across the years.
--TP
Posted by: Tony P. | July 20, 2009 at 03:50 PM
"Yes, there was a time when you could make a modest-or-better living being a non-famous working musician. Quaint idea, isn't it?"
Dude, you're gonna make me cry.
"I remember complaining on another thread about this sort of thing, and being informed by another commenter that creative people, teachers, et. al. *should* be paid very little because they are 'compensated with satisfaction' - and some 'centrist' types sort of agreed, or at least acceded to it."
IMVHO, people rarely have any idea how freaking hard it is to make any remotely creative thing happen, at any level, in any field.
Also IMVHO, people rarely have any kind of mental model for understanding the value of people who can do that.
"But my thought now is that maybe this should get another look because of the level of abuse we have had often involving corporate executives and government officials."
Amen to that.
Posted by: russell | July 20, 2009 at 03:59 PM
There's an even better word: imbeciles.
With regard to Marx's views on ideology, I'm not an expert there, but at face value the argument is not convincing to me. Ideology does not need to be counter-rational, but it frequently is--and people hold all sorts of irrational belief systems that have a net negative effect on their survival--whether biological or social.
Similarly, I think it's too simplistic to reduce conservative shibboleths like "taxes bad" to one source, such as "[b]eing opposed to taxes helps Republicans politically, because their base doesn't like taxes", or to a caricature of evil or mendacity.
Some are all about the "small government", and pretty much at that level of detail. Taxes are the government taking from you, a symbol of government power, therefore more taxes = more government, less taxes = less government. Many conservatives really don't think about or understand the issue any deeper than this, and there's really no need to dwell on it. Some do--and I'm not sure whether or not this is actually to their credit--some do attempt to map their small-government philosophy onto an actual understanding of the issues and laws, and the result of this is discredited nonsense like supply-side economics.
Now in fairness, there is some truth behind the theory that tax cuts raise revenue, just as it is true to say that in orbit you need to slow down in order to speed up. But in both cases, that simplistic description only gives you part of the truth, and someone ignorant of the math behind the principle might assume that it is always true. If you keep slowing down in orbit, eventualy you're going to reenter the atmosphere, and you will indeed be going fast--up until the point where you burn up or hit the ground. And if you reduce taxes, you will eventually reach a point--zero percent--where no revenue is generated. Long before then you'll reach a point where things like the police and military--and civilization--cease to exist.
So the question for these people, as has been posed many times before: tax rates of 0% and 100% are unserious non-starters. The question is not whether to levy taxes, and never will be again--the question is, what is the appropriate rate?
For some, it comes down to "I got mine." This caricature of conservatism holds some truth. When you hear arguments that begin with "why should my tax dollars pay for X", where X is a non-military expenditure, you are listening to someone whose self-centered view of government gets in the way of comprehending that everyone's tax dollars pay for /something/ they don't like, and that "I don't want my taxes to pay for this" is not a serious policy argument.
The same people who don't think they should pay for other people's health care are frequently silent about paying for other people's roads, police or military. Oh, if you bring those up they'll regurgitate all sorts of reasons why butthatsdifferent, all of which hold about as much water as a tea infuser. Or, if they prefer, a tea bag.
Those aren't the only reasons the anti-tax jihadists have behind their views. But these are the most common sincerely-held beliefs that I've seen. I take no position on the deliberately dishonest.
Posted by: Catsy | July 20, 2009 at 04:03 PM
IMVHO, people rarely have any idea how freaking hard it is to make any remotely creative thing happen, at any level, in any field.
Agree, but it isn't as if anyone thinks teaching school isn't hard; nonetheless, the same rationalization obtains - teacher's satisfaction is 'factored into' their compensation. The idea is that the less you hate your job because of its meaninglessness, the less you should get paid. It's perverted! I don't think all truly wealthy people think quite this way; it's more the pov some in the resentful-semi-upper-middle-hoi-polloi-who-think-they're-elites believe they *ought* to have. Rich people, OTOH, often value beautiful things/creative exponents (e.g art, teachers) and pay a lot for them.
Posted by: jonnybutter | July 20, 2009 at 04:45 PM
Catsy,
I read through your comment and there is no special exception I would take. I do consider myself to have an anti-tax attitude but I acknowledge the need to pay taxes to be a responsible member of our society. I've been in the workforce for over 50 years and I've paid taxes, federal, state, and local, income, property, sales and other, I would guess in excess of a million dollars in current dollar value, and as far as I am aware I have paid all taxes legally due. I don't have a problem with this. Biggest issue I have is everything having been moved to Washington. I've expressed this many times here but I don't get very far with these one person, one vote majoritarian democrats. Anyway, that has a lot to do with my anti-tax attitude, too much government at the wrong level.
Now that we have a few states in budget difficulty, we should have a nice show. California has never impressed me as a state not able to pay for its public needs but look where we are. And we already have some saying they should look to Washington for help. I believe that would be wrong. I believe many things done with the involvement and money from Washington are wrong and more wasteful than they need be. But I'm in a losing battle. I just hope I'll be gone before we try to move to one world government. That seems to be the logical end game. I don't think I would like that at all.
Posted by: GoodOleBoy | July 20, 2009 at 05:08 PM
Johnnybutter: "This is a market nobody can move into - Minneapolis in the late 70s (and it was a private party, which kind of gig always paid well). Yes, there was a time when you could make a modest-or-better living being a non-famous working musician. Quaint idea, isn't it?"
And it wasn't the evils of the capitalist system that killed this, unless you want to count the innovation of cheap recording devices as an evil of the capitalist system. (Which I suppose you can if you insist on a very strong anti-innovation position).
Catsy:
And for some, being a liberal comes down to "I can feel really good about being generous...with your money". This caricature of the left holds some truth.
But if we don't want to caricature sides, there is a common thread: that lots of people are willing to foist responsibility off onto everyone else. Stereotypical conservatives do it by trying to keep the money from being spent. Stereotypical bleeding heart liberals do it by trying to make sure lots of people outside of their own class pay for it (see charity figures as well as tax-the-rich schemes).
If you want change you have to work to convince people that a large portion of it has to come from them. Then we have a chance.
Posted by: Sebastian | July 20, 2009 at 05:18 PM
@ GOB: Relax on the one-world government - it's vastly more likely to be imposed from the top down by Bushes and Harrimans and Kissengers than to be demanded by dat ol' socialist ACORN.
Or have you not noticed that all this is top-down stuff?
Posted by: chmood | July 20, 2009 at 05:30 PM
'@ GOB: Relax on the one-world government - it's vastly more likely to be imposed from the top down by Bushes and Harrimans and Kissengers than to be demanded by dat ol' socialist ACORN.'
Well, I have noticed the top-down stuff, but I have to say it looks equally likely to me regardless of who's in Washington.
Posted by: GoodOleBoy | July 20, 2009 at 05:37 PM
I'm not sure I'm reading this right. It sounds like we're saying you have to convince a large portion of people that they have to pay for a large portion of it. While I don't entirely disagree, I'm not sure what you're suggesting in this context, and I don't know that emphasizing the cost of anything is a winning political strategy.
As far as caricatures go, I did qualify my statement with "some". I realize that's something of a weasel word, but I don't really know how else I can describe the existence of an attitude that does in fact exist among "some" conservatives without having hard numbers or needlessly speculating about how many hold that view.
In addition, I think you're drawing an inapt equivalence here for the sake of false balance. I have had actual conversations with many actual conservatives whose actual arguments against various social services, when pressed, boil down to "I don't want to pay for something that I don't think benefits me". As in, real people--plural--have spoken the words to me, "I pay for my own health insurance, why should I pay for everyone else's?" They are apparently unaware that they are already doing so.
This isn't a caricature, although "I've got mine" is a caricature of that attitude and that's why I noted it as such. These are actual arguments of real people I know personally. That's not, except in the most general sense of the term, "foisting responsibility off onto everyone else". It's just cherry picking which parts of our nation's social contract they feel apply to them, based on whether or not it benefits them. There's nothing noble or principled in that.
On the other hand, I'm having a hard time identifying very many grains of truth in the liberal caricature you mentioned. I don't even know what the "outside their own class" argument is even supposed to mean--you mention charity and progressive taxation as if either supports the stereotype. But you're surely aware, if you've examined the demographics of charitable giving, that the real positive correlations are with religiosity and wealth (not ideology per se), both of which skew decidedly conservative and have no connection to tax policy. And I have a hard time credibly linking "tax the rich" with the idea of shifting the burden to those "outside" one's own class, given the social class in which 99% of the people enacting these laws live. There may be some liberals who think that way, but I have yet to meet any or see that argument put forth.
Posted by: Catsy | July 20, 2009 at 06:03 PM
And it wasn't the evils of the capitalist system that killed [being able to make a living as a musician]
I'm not against the capitalist system; I'm against capitalism-as-religion.
I was going to add in my previous comment (but relented because I thought I'd ventured too far off topic) that a big reason for the demise of paid live musicians in the US is technological changes, and that a lot of the 'professional' musicians from the days of yore were actually pretty bad anyhow. But someone who aspired to something better could at least learn their craft and survive. Now? Forget it. These days the MUSICIAN pays, quite often.
Other countries have technology too, but some in those countries don't feel the need to put an industrial value onto everything - music, feelings, pride, satisfaction, etc - in a word, culture. They value, for example, live/original music enough to pay people to make it.
I honestly think things will change in this country when artists figure out their network marketing schemes, when micropayments on the web are viable, etc. But the old industrial model still holds sway now, and it's nothing
to be very proud of. Good things may have happened by accident in the old days, but they happened. Pretty bleak right now, culturally.
Posted by: jonnybutter | July 20, 2009 at 06:07 PM
Stereotypical conservatives do it by trying to keep the money from being spent. Stereotypical bleeding heart liberals do it by trying to make sure lots of people outside of their own class pay for it (see charity figures as well as tax-the-rich schemes).
Interesting here how "liberal" gets the modified "bleeding heart," while "conservative" gets no modifier at all.
I'll also point out to you, as I have to others, that when it comes to "charity figures," that -- as you are so fond of pointing out! -- just throwing money at a problem doesn't fix it. Quite often, "bleeding heart liberals" are the ones out there doing the actual work that leverages the money given and turns it into something. And they do so uncompensated.
Anyway, we don't even have to go very far to find an example of the kind of "I've got mine" conservative that Catsy is talking about; we only have to read the comments of our very own d'd'd'dave, as this is his exact argument against pretty much everything.
Posted by: Phil | July 20, 2009 at 06:30 PM
"On the other hand, I'm having a hard time identifying very many grains of truth in the liberal caricature you mentioned."
Look at nearly every mention of necessary tax hikes on this blog over say the past month--posts and comments. From the liberal side of the game you will almost always see a focus on tax hikes on 'the rich'. You don't see similar talk about tax hikes on the middle class, though they are equally necessary to get anywhere near the kind of money we are talking about for say comprehensive health care reform much less anything else you want to add on top of that.
I have a hard time finding examples where the caricature I mentioned doesn't have a large measure of truth in it. And that is here, at a fairly reasonable blog.
Externalizing costs leads to poor cost-benefit analysis. That is as true in taxing and spending decisions as it is in mortgage loans or environmental issues.
Posted by: Sebastian | July 20, 2009 at 06:32 PM
BTW Seb, I was complaining about the Reagan Revolution, not capitalism. I'm pretty sure we had capitalism in this country before 1980. We just didn't deify the Market as the One Universal Truth and Perfect Model for Everything.
Posted by: jonnybutter | July 20, 2009 at 06:37 PM
No argument on any of that--but then, I'm something of a contrarian when it comes to music, and my reaction to a lot of things that are cherished by lovers of classic 20th century music is, "what is that godawful noise?"
I think you're fairly on target with blaming technological changes for the decline of music (and other art forms) as a viable career, but not because of MP3 piracy--I actually think the MP3 format is one of the best things that ever happened to the music industry. No, music as a career is suffering from its own accessibility: it is easier than ever in history to make music and share it with other people. This has created a market glut, in that the kid with a garage band or a computer older than he is can now reach the entire world--there are more than 7 million bands on MySpace alone.
Music is a product, a commodity, and a career in music is subject to market forces.
Posted by: Catsy | July 20, 2009 at 06:39 PM
Sure, I never said there wasn't. What I said was that the description of this as coming from a desire to soak those outside of one's own class--e.g. shifting the costs onto others--was inaccurate.
There's a reason for the emphasis on the "rich", here. I'll give you a hint: it has nothing to do with class.
Posted by: Catsy | July 20, 2009 at 06:50 PM
"I'm pretty sure we had capitalism in this country before 1980."
We arguably even had it under the Eisenhower administration, and those 90% top marginal tax rates.
Posted by: Gary Farber | July 20, 2009 at 07:15 PM
Music is a product, a commodity, and a career in music is subject to market forces.
Culture is not a commodity in the normal sense of that word. Of course cultural artifacts, once they're released, are indeed commodities, but their value is not measured by supply and demand in the same way pork bellies are. A pork belly is a pork belly, but a piece of art isn't interchangeable with any other piece of art. Culture is not simply about bulk, Catsy.
I am not implying that the music of the 20th century is all great and the 150 million diy bands out there now are all crappy. I'm saying that if you don't care about excellence as a value unto itself, and disregard it (or even fear it) for long enough; and if your culture is strictly moderated by accountants for long enough, you end up with - in our case - everyone having the means to make technologically-competitive work, but no one having much of anything to write about (exaggeration to make a point!). Everything gets comoditized when it gets put onto the market, but in the past, not everything was completely comodotized before it was even written. Some was and some wasn't. The stuff that was, and is, is almost always forgettable, and is indeed forgotten very quickly. It's actually *designed* to be forgotten after the money is made. Accountants don't like 'mistakes'.
As I said before, I don't think the future is all gloom and doom. This is a transitional time, probably.
Posted by: jonnybutter | July 20, 2009 at 07:54 PM
Certainly, and I don't disagree with much of anything you said, but it's kind of orthogonal to my point. In order to meaningfully answer the question of why it's so hard these days to make a successful career in music, you have to look at it as a product competing in the free market--because ultimately this is what determines the success or failure of a musical career, as a self-supporting career.
Posted by: Catsy | July 20, 2009 at 08:01 PM
Catsy
"The same people who don't think they should pay for other people's health care are frequently silent about paying for other people's roads, police or military. Oh, if you bring those up they'll regurgitate all sorts of reasons why butthatsdifferent, all of which hold about as much water as a tea infuser. Or, if they prefer, a tea bag."
I think this is not exactly true. The current political debate is about adding a health care program and adding taxes to pay for it. With or without the new health program there is already a baseline tax regime that pays for roads, police or military. Obviously there is a deficit and the baseline tax regime may not be sufficient but that is another matter. It is entirely reasonable to argue that roads, police, and military are another matter because they are an EXISTING matter that is more or less funded while a new healthcare program and it's supporting taxation do not currently exist.
Also in the context of people saying this: "I pay for my own health insurance, why should I pay for everyone else's?" you said this: "It's just cherry picking which parts of our nation's social contract they feel apply to them, based on whether or not it benefits them. There's nothing noble or principled in that." Again, I think this is not exactly true. The current political discussion is whether to have a new healthcare program and how it should be paid for. While it may be true that in your circle there is no question of whether it should be done. As of now the healthcare program has not become law. It is still in the realm of debate and as such it has not yet become part of the nation's social contract. In that light, one who say "I pay for my own health insurance, why should I pay for everyone else's?" is not cherry picking. He is asking a question which is fair to debate still.
Phil,
If you think I am against all taxation you have not read me correctly.
Posted by: D'd'd'dave | July 20, 2009 at 08:28 PM
(1)And one of the lowest personal income tax rates. If you want to shift from one to the other, say so. If you just want to lower taxes by ratcheting them down at one end while refusing to look at the other . . . ain't gonna happen.
(2)This makes no sense; you aren't taxing people, you're taxing corporations. So there is no such animal as 'double-taxation' in this scenario. Insisting that this is the case is tantamount to saying you want to give up limited liability.
Iow, you're not allowed to switch definitions when it's convenient.
Posted by: ScentOfViolets | July 20, 2009 at 08:28 PM
In order to meaningfully answer the question of why it's so hard these days to make a successful career in music, you have to look at it as a product competing in the free market....
Of course you're right. My point is that intention matters. We're in an awkward moment where the marketing *is* the product, or at least the greater part of it, and the product itself (at least in terms of music) is kind of an afterthought, at least in terms of quality. When there is a developed, network-aware free market for music or any other art, there won't be much demand for 300k bands (say) which all sound basically the same, since they will be hard to tell apart. I believe there will be a market for sincere - and yes, even excellent - work, because it will stand out.
It's hard to figure out how to get 'aggregated' nowadays. I really think that will change, but it's tough at the moment.
Posted by: jonnybutter | July 20, 2009 at 08:30 PM
So, Seb, you got any quotes from posts of yours from a while back complaining that 'the rich' got more of a tax break than the middle class? Something tells me you weren't complaining then. So why complain now when the reverse holds? Does this make you a caricature conservative?
In other words, wanting to raise taxes on the wealthy isn't a particularly liberal idea. In fact, I see a lot of popular sentiment for just this thing.
You don't get to declare by fiat that wanting to raise taxes on the rich is something particularly weird or 'liberal'. Wanting to do so, though, is pretty much boiler-plate conservatism.
Posted by: ScentOfViolets | July 20, 2009 at 08:34 PM
Publius wrote:
"That’s basically how I see modern anti-tax ideology. It’s not so much that I think people are lying, or are making conscious efforts to deceive. Instead, I think people aren’t seeing the extent to which anti-tax narratives are useful in defending extreme concentrations of wealth and income."
From my point of view, the purpose of taxes is to finance services that the citizenry jointly need and use. It is NOT to either defend or attack 'extreme concentrations of wealth'.
Sometimes I wonder, Publius, if you have taken note of the changes in the concentration of wealth that have taken place since the time of Marx. In the 1880's, 93% of the land in Scotland was owned by 1,758 individuals. And In the British Isles as a whole, 66% of the land was owned by only about 11,000 individuals. [Table 1.1, The Decline and Fall of the British Aristocracy]. Similar concentrations existed across most of europe at that time. Such concentrations were mostly gone by the end of WW2. Sure, new rich appear all the time. But they disappear nearly as fast. It is now rare for family wealth to last more than three generations. In the time of Marx most countries had rich aristocratic families who had held wealth for many hundreds of years.
In recent times, let's say since 1975, the middle and lower classes of america have not pocketed much of the increase in national income. Does this mark a return to times of old? No. For during the same time, vast numbers in the rest of the world have moved from poverty to middle class status for the first time in hundreds of years, if not forever. The economy has gone global. You can't look at the american lower class as lower class anymore. It is part of the global middle class.
So. Marx. In my view, class warfare is dated. I know that he is about more than class warfare. In his time, capital, land, and political power were all concentrated in the hands of the few old family aristocrats who kept it to themselves. It is just not true anymore. Capital, property, and political power are now in the hands of and accessible to the people. In the case of capital: how easy has it been over the last 15 years for 18 year-old programers to raise millions for goofy tech startups. How easy has it been for people with no down payment and little income to buy property.
Please recognize that the world is different.
Posted by: D'd'd'dave | July 20, 2009 at 09:13 PM
sov said:
in recent years "'the rich' got more of a tax break than the middle class"
I don't accept that this statement is true even though it is a well worn mantra of some. I didn't go double check in the last few moments, so my memory could be wrong. But, as I recall, the after tax income distribution immediately after the Bush tax cuts was flatter/more favorable to the lower brackets then it was immediately before the Bush tax cuts. Sure, maybe the top guy saved more actual dollars then the bottom guy. In my view, the cuts caused a more progressive tax regime, not a less progressive one.
Whether tax cuts should have occurred at all in the face of deficit spending for a war is another matter.
Posted by: D'd'd'dave | July 20, 2009 at 09:25 PM
Sigh. Typepad is eating my post with charts. I'll try breaking it into multiple posts.
This is largely nonsense.
See here.
See here.
Posted by: Gary Farber | July 20, 2009 at 09:33 PM
Next:
See here.
Second chart:Posted by: Gary Farber | July 20, 2009 at 09:34 PM
"In my view, class warfare is dated."
Your view is factually incorrect in light of the facts and numbers I have just cited. I suggest taking the actual facts into account in your view, rather than just imaging a view of a different reality than we actually live in.
If you'd like to make the argument from authority, show us your John Bates Clark Medal, which was awarded to Emmanuel Saez for producing the work which I above cited facts and charts from his studies.
Posted by: Gary Farber | July 20, 2009 at 09:38 PM
This is an incredibly insightful post on the way the Democrats couch the debate. The Republicans don't want this or don't want that. Marginal tax rates of just a few points shouldn't matter, etc.
This debate is always about more than that. The Republicans do want something, less increase in government spending. Even after setting record debt and deficits, the last two Republican budgets significantly reduced the deficit.
I am happy to discuss whther they have been good at it or not, not as good as I would like, but it is not correct to say they only say no.
This debate should also be about what government spends its money on. The original discussions were around a budget neutral solution, now they are around a deficit neutral solution. The difference in those two things is 580B in taxes.
That is a discusssion that, in President Obamas words, is the kind of discussion that families have around the kitchen table when economic times are tough. Not "who do we get more money from", it's "where do we spend less so we can afford something different".
Let me offer that, given that mandate, we could take 25B a year out of projected defense spending and then find 250B a year in ineffective programs and then worry about the rounding error of 80B each year. That would be a proposal that I would back.
As for the addition of the marginal tax rates across those people who can pay, let me say that is a huge generalization.
Fo a 55 year old father of 4, let's say, who worked thirty years at middle income wages and none of his pension plans ended up being worth anything it is a big deal. Lets assune you take 10% more of his income(he finally makes (260k for the first time in his life)but he has the debt from sending 4 kids to the college and is just now at a point where he can save for retirement, that marginal tax difference means he can retire at 70 or not.
Where is that tax difference going? Well right now it goes primarily to 100k workers who could be 30 years old with a lifetime to save for retirement.
These are just examples of how unfair it is to just take an income number and say anyone that makes that can afford more.
Posted by: Marty | July 20, 2009 at 09:40 PM
"In my view, the cuts caused a more progressive tax regime, not a less progressive one."
Again, this is total fantasy, and utterly factually wrong. You don't enhance your credibility by making statements that are so definitively factually wrong.
Posted by: Gary Farber | July 20, 2009 at 09:40 PM
The charts above all have their right sides cut off as produced here; this is important; please click on the original links to see the full charts. Thanks.
Posted by: Gary Farber | July 20, 2009 at 09:42 PM
"Let me offer that, given that mandate, we could take 25B a year out of projected defense spending and then find 250B a year"
Typo 250B ayear should be 250B.
Posted by: Marty | July 20, 2009 at 09:44 PM
"Even after setting record debt and deficits, the last two Republican budgets significantly reduced the deficit."
Actual figures.
Posted by: Gary Farber | July 20, 2009 at 09:48 PM
Gary,
As you and I have agreed before, the top 1% have increased dramatically. I would like to see the difference in those making that money from regular income. I think the charts you have above reflect all income(?). I believe the difference would be much less in wage earners.
Posted by: Marty | July 20, 2009 at 09:49 PM
"These are just examples of how unfair it is to just take an income number and say anyone that makes that can afford more."
Why is it unfair to say that if someone has an income of $100,000,000 a year, that they can afford to pay a higher tax rate than they are currently paying?
How about if we "just take" an income of $10,000,000 a year? Why is it unfair to say they can afford to pay, say, 7.5% higher marginal tax rates, compared to someone earning the median income?
If we take someone "merely" making $1,000,000 a year, and compare the median income:
How, then, is it unfair to suggest that the million-dollars -a-year income earner can better afford to pay more than those earning from from $33,437 to $45,113 a year?"Fo a 55 year old father of 4, let's say, who worked thirty years at middle income wages and none of his pension plans ended up being worth anything it is a big deal. Lets assune you take 10% more of his income"
But no one is proposing anything remotely like that; this has nothing whatever to do with reality. It's completely a straw man argument about a "proposal" no one is making.
"I think the charts you have above reflect all income(?). I believe the difference would be much less in wage earners."
I'm not following what point you are making: why should we not look at total income, when the rich largely don't make their money from "wage-earning."
Back to the Wikipedia cite: "1.93% of all households had annual incomes exceeding $250,000." That's income of every variety. Counting only wages winds up with an even tinier proportion of tax-payers earning that high an income.
Meanwhile, "Households in the lowest quintile had incomes less than $19,178 and the majority had no income earner."
I'm just a little more concerned about those people, who number 22,629,000 Americans.
Who don't have many lobbyists in Congress.
Hell, 2,566,000 American households earn $2,500.00 a year or less! A little over 7,000,000 American households -- that's households, not individuals -- earn under $10,000.00 a year.
Why should we worry about the problems of millionaires having to pay a few thousand more dollars, by comparison, and saying it's unfair, and not focusing on the unfairness of not helping those in the bottom quintile achieve the ability to support their family with minimal needs of housing, food, and medical care?
Posted by: Gary Farber | July 20, 2009 at 10:06 PM
In response to Gary at 9:48
You are correct, I should have referenced the last two before the economic downturn, but as your chart shows it was the last 4, which surprised me.
Posted by: Marty | July 20, 2009 at 10:07 PM