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View Diary: Taxing the rich: it's not about "fairness" (182 comments)

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  •  Exactly, I've Been Commenting to This Effect for (60+ / 0-)

    years.

    Well done --and we should make this case heavily based on our history. The conservatives stick with theory because their system never works. Ours not only does, it did. We governed our economy this way for half a century when, together with other countries following similar schemes, we created the only large middle class humanity ever saw. We have the history before those policies of great wealth and income concentration, and we have our present history of restoring that great concentration beginning immediately when we abolished compressive taxation at the beginning of the 80's.

    The point of the high upper marginal rates and taxes on other kinds of income is to prevent extreme compensation ever being sought or offered. So it's not "redistribution" that conservatives propagandize about. It leaves more money in the enterprise, which is encouraged to be shared with suppliers and the work force by business taxes.

    Since the high upper end taxes discourage jackpot compensation, businesses are managed for longer term more stable growth. A rich array of sectors can compete for investment and talent because the few like finance capable of creating huge compensation are discouraged from doing so by the taxes, among other policies.

    That means the masses have money to create demand, and the wealth of the rich can be usefully invested in innovation and production.

    With extreme wealth concentration there's little to do with wealth other than gamble on the behavior of investors, which is how we get panics and depressions, or engage in vulture capitalism buying businesses to dismantle them. Concentrated wealth is sociopathic.

    "Fair share" is a conservative frame because any tax rates that seem fair to the common person based on the scales familiar to them drives wealth concentration at the upper end. But so far, as Malloy and Case acknowledge, on this issue we have two conservative parties.

    Glad to see more people discussing the main purpose of progressive taxation.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Nov 25, 2012 at 01:09:57 PM PST

    •  demand drives an economy (31+ / 0-)

      An excellent, well-argued diary.

      I'd like to emphasize a point that Gooserock makes - wealth concentration in too few individuals suppresses demand for goods/services. If the lower ends of the economic totem-pole don't have enough cash, they cannot spend to propel an economy forward. This is a significant negative externality, even if one wants to use as limited a measure as Gross Domestic Product to determine the success of an economy.

      I have seen economists make the argument that the lethargic economic recovery is, at least in part, due to the  lack of consumer demand. Companies are not hiring new workers, nor are they expanding manufacturing, etc. (despite sitting on very high levels of corporate cash) because they fear they don't have the consumer demand for their products... and that is in part due to the fact that the consumers are broke, or not far from broke.

      Using the tax system to redistribute the wealth over a broader base would be an excellent economic stimulus.

      •  Broaden the base. (4+ / 0-)
        Recommended by:
        Nailbanger, elwior, Sychotic1, llywrch

        GOP points out that a broader tax base makes more people against taxes.

        Broader wealth and income base makes more people for growth.

         

        Barack Hussein Obama- Don't Mock the Constitution.

        by odenthal on Sun Nov 25, 2012 at 06:48:02 PM PST

        [ Parent ]

      •  In 2006/2007 residential construction in the U.S. (3+ / 0-)
        Recommended by:
        Sparhawk, Sychotic1, wbr

        was distorted to the point where 40% of new home construction went to 2nd home vacation units.

        40% to useless excess.

        Economically... insane. Both on the demand side, where next to none of that made sense. And on the supply side, where you're wasting the building materials.

        Survey eastern Pennsylvania for example after example. Same for mountain areas in Arizona. and on and on and on. Big houses where there are no local jobs.

      •  About that demand (1+ / 0-)
        Recommended by:
        wbr

        Our Tampa Bay Buccaneer home football games have been "blacked out" on TV because they couldn't sell out the stadium. Meanwhile, we have articles in the paper that our area's salary growth is among the lowest in the country. Do we see a connection? People can't friggin afford to go!

        The care of human life and happiness, and not their destruction, is the first and only object of good government. - Thomas Jefferson

        by deebee on Mon Nov 26, 2012 at 08:49:08 AM PST

        [ Parent ]

    •  Yes, indeed. The specific mechanism (4+ / 0-)

      by which income/wealth distortions and regressive tax structures damage society is simple:

      Long-term social investments are discouraged.

      The very rich do not need it. Investments in the society, itself, are not on their plate.  

      They do not need good public schools. They do not care much about public health. They only care about military preparedness if they own stock in the contracting companies. Thet don't care much about police and fire -- not big risks for them.

      They care about their own money.

      Having very, very, very rich people and lots of very poor people fxcks up any society.

    •  This only works if.. (0+ / 0-)

      investment income is also taxed as regular income. If people can't get fat compensation through classical business activity, they will get it in finance (or try to) with the ultra low flat taxes on dividends and capital gains. Often high risk activity, since so much of their losses can be socialized through deductions.

      All investment income should be taxed as regular income, whether in dividends or trades. Losses in trades should not be deductible. Losses in held stocks should not be deductible. That is the investor's risk, and should not be socialized.

      Allow only the money paid in the initial investment to be deductible at the time the investment is made. All gains will be taxed as income. All trades (even if made at a loss from the initial purchase price) also taxed, since the initially invested money was untaxed. Theoretically, this structure would encourage the investor class to keep a modest amount of their gains to live on, and put the rest back into investments or use it for other tax-deductible purposes.

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