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View Diary: Open thread for night owls: austerity (106 comments)

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  •  common sense vs defense of the rich (6+ / 0-)

    Your arguments are weak.


    Banks and all other corporations have no independent existence, they are ultimately owned by people either directly or through pension plans and insurance policies and IRA's etc.

    the majority of people who are taxed in this country do not "own" banks. Most people don't have pensions, insurance policies or IRAs. Your statement should read, "Banks and all other corporations are ultimately owned by rich people". The idea that if we tax them they will move off shore might be true. Fine with me. Let someone else bail them out when their gambling fails the next time. If they don't want the benefits of living in the USA, good riddance.

    1. Peacetime?

    Besides, the problem is not that we are undertaxed at 21% of GDP when the economy is healthy, it is that we are pushing spending to 25% of GDP, which is beyond the levels we have ever spent in peacetime.

    I'm assuming you don't have any family members currently serving in Afghanistan or Iraq. You do realize we are fighting two wars right now, right?  How many wars would we have to be fighting for you to consider us not to be in "peacetime"

    1. Taxing consumption vs saving?

    Wouldn't it make more sense to tax consumption rather than saving?

    No. Who "saved" more money this year? The bottom 90% or the top 10%? Corporations have more cash on hand than ever and the elites had a fantastic year hoarding more wealth while unemployment continued to go up. The only people saving right now are the rich. Tax them. Companies like Johnson and Johnson are laying off people while they have record amounts of cash on hand. They benefit from all the taxes paid by the "little people" in this country. If they want to operate that way, tax them.

    1. Leprechonimics

    An asset tax would be a powerful disincentive for people to save money.  Let's think, do we buy a 2 year government bond paying 2% interest, pay tax on the interest and then pay another 1% of the total bond value as an asset tax?  Precisely who will be lending low interest loans to the government under that scenario?  While we are entertaining fantasies why don't we suggest all American leprechauns descend on Washington and hand over their pots of gold as a way to balance our budget without austerity

    The idea is that you don't tax people for saving a little money but for hoarding large amounts.

    And your government bond argument is flawed. "Precisely who will be lending low interest loans to the government under that scenario?"  The Chinese. We can't tax them.

    And finally,the problem with the economy right now is that the people who have money aren't spending it. They are hoarding it. Banks, corporations, the elites. How about giving them some incentive to spend it to create some new jobs?

    You make a nice case for why the rich shouldn't pay taxes. And they haven't been. How is that working out?  Great for them.  Not so well for the other 80%.

    •  Disagree (0+ / 0-)

      Of course most financial assets are owned by the wealthy, but they do pay taxes.  If you look at all income taxes by income  levels, the top 1% and top 10% pay a huge fraction of the taxes paid in the US, the bottom 50% pay almost none.  Our income tax system is in fact highly progressive.  What is not progressive is sales taxes and payroll taxes, but the  first are state imposed and the second fund Social Security.  A look at the total tax burden of all  kinds by income level show a  mildly progressive system.  I think we do need to raise taxes once this economy is mended, it worked for Clinton and undoing the Bush tax cuts are a good idea, but to suggest we don't need to either raise taxes or cut spending is fiscal nonsense.
      We are not at peace, but the Iraq war commitment is winding down rapidly, and while Afghanistan is costing 7 billion/year, that is not a material factor in our deficit, even if we shut that war down we still would have a mammoth structural deficit at full employment (unsustainable 4% of GDP).  As to  asset taxes, they can work, but  with lots of negatives, I just think you have not properly thought through the consequences of such a system on the economy, savings, and investing.  One of the problems we have had is too little savings.  An asset tax will exacerbate that.

      •  Since they have nearly all the wealth (0+ / 0-)

        of course they pay a huge fraction of the taxes.

        However, the highest actual rates aren't paid by the top 1%, but by the rest of the top 10%.

        The Plastic Surgeon making 500k pays pretty hefty taxes - a much rate than the 15 million dollar a year hedge fund manager.

        Afghanistan is costing us over 100billion a year in direct short term costs, not counting the wear and tear on equipment or the costs to the VA.

        Where you got 7 billion from is beyond me.

        "The road to Hell is paved with the good intentions of people who refused to listen to Paul Krugman." ~ Drew J Jones, mostly.

        by JesseCW on Fri Jul 16, 2010 at 09:23:34 AM PDT

        [ Parent ]

        •  Meant to say 7 billion per month (0+ / 0-)

          It is about 7 billion per month in AFghanistan, I miswrote, but our deficit currently is 1.3 trillion, the Afghan war is a fraction of that.  It is not correct to sum the total spending on the wars over the last 10 years and use that as an argument that we don't have a deficit issue going forward.  

      •  if the tax burden (0+ / 0-)

        is targeting the rich and the little guy is paying nothing, how is it that the rich keep getting much richer much faster?

        Is it that they are that much smarter?  

        Your willingness to dismiss the costs of Afghanistan and Iraq and the fact that we are at war and occupying two countries pretty much makes everything else you say suspect.

        Sure doesn't look like Iraq is winding down to me

        Or how about this?

        According to a Congressional Budget Office (CBO) report published in October 2007, the U.S. wars in Iraq and Afghanistan could cost taxpayers a total of $2.4 trillion dollars by 2017 when counting the huge interest costs because combat is being financed with borrowed money. The CBO estimated that of the $2.4 trillion long-term price tag for the war, about $1.9 trillion of that would be spent on Iraq, or $6,300 per U.S. citizen.[9][10]

        Stiglitz, former chief economist of the World Bank and winner of the Nobel Prize in Economics, has stated the total costs of the Iraq War on the US economy will be three trillion dollars in a moderate scenario, and possibly more in the most recent published study, published in March 2008.[11] Stiglitz has stated: "The figure we arrive at is more than $3 trillion. Our calculations are based on conservative assumptions...Needless to say, this number represents the cost only to the United States. It does not reflect the enormous cost to the rest of the world, or to Iraq."[11]

        A recent study indicated that the long term health care costs for wounded Iraq war veterans could range from $350 billion to $700 billion.[14]

        •  Income Disparities (0+ / 0-)

          Tax rates are not the deciding factor of income disparities, which is why we can have rising income inequality even though the tax system is mildly progressive.  There are many factors that have helped the rich.  We live in an increasingly winner take all economy, where the very best get the lion's share, see Alex Rodriguez or Kobe Bryant or Steven Spielberg.  There has been a collapse of earning power for the minimally educated, you can't get a middle class blue collar job with a high school diploma anymore, there is increased competition from illegal immigrants at the lowest end of the job market pushing down wages, there is a tendency for educated males to marry professional females, the doctor now marries another doctor instead of a nurse, concentrating income in upper bracket households, single motherhood is more common but it depresses wages and household income, poverty rates for married couples are much lower than single mothers, and the increasing professionalization of the workforce concentrates income in the upper 20% with advanced education, our punitive criminal justice system puts lots of poorly educated males into the prison system, both white and black, causing lifelong harm to their income potentials, etc etc.  Tax rates have little to do with those much more potent forces at work.

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