I read a startling article in The Atlantic by Michael Kinsley. Here is the link-
http://www.realclearpolitics.com/2010/07/17/restore_the_estate_tax_237758.html
The author argues in phraseology that is socialist if not Marxist.
I am always disappointed when argument is based on sentiment and emotional manipulation rather than fact. That the former is much more common than the latter, and generally more effective, has not diminished either my disappointment or my contempt for such argument.
There is not the tiniest question that raising tax rates does NOT increase tax revenue. While this is counter-intuitive, it is true. Obviously there is a boundary to this. If followed to its logical extreme, no taxes would produce infinite revenue. Within the historical sleeve of total tax rates, raising rates reduces income to the government.
The reasons are perfectly clear, and well known. The wealthy are quite adept at avoiding high tax rates through a variety of perfectly legal means of sequestering money. Further, confiscatory rates, rates designed to take from the wealthy their ill-gotten gains, are especially useless. The lower top end rates get, the more money is generated from top earners.
There are examples from both sides of the Atlantic. When England made their top rate 95%, the few people to which this rate applied simply left the country. Led Zeppelin and The Rolling Stones became tax exiles until the rate was repealed. England did not get more money; it got nothing. The same is true when top US rates were 75%. Income trusts and charitable trusts were created, allowing wealthy individuals to pass money tax free, and to have a nominally low income while enjoying the advantages of enormous assets. Charitable trusts owned these people's homes and planes completely tax free.
Not only is an increased tax rate mathematically a failure, it is a failure of conception. The article refers to the earnings of the wealthy as if they were an affront to others. That money was not earned by stealing; it was earned through working harder than most people want or can work. In the article comments, there is a claim Bill Gates did not take a vacation for the first 5 years of Microsoft's existence. Many company owners can tell you they are the first to come to work, and the last to leave, and take the fewest vacations.
It is little different with educationally based earnings, like those of attorneys and doctors. Very few people are willing to spend the time in school necessary to be a professional. This is followed by a period of intense work, whether as an intern or a junior partner in a law firm.
Further, the evil wealthy provide jobs for hundreds of thousands of people who need and want to work. I have been privileged to make an excellent living. My partner and I also provide employment to 13 other people, whose combined income is greater than ours. Yet I personally pay more tax than my entire office staff put together. While I am happy to pay my taxes, it is a conceptual folly to claim I do not pay 'my fair share'.
Every country has conceptual and foundational values, typically based in its history. It is not possible to understand the differences between France and Germany without understanding the differences in their histories. The same is true of the US. Socialism, Marxism, Communism, Monarchy, Despotism, have all been tried, and all have failed.
I do not think it is an accident that the US has the longest running continuous form of government in the world. For all of its inefficiencies, it has worked. A significant part of what makes it work is individual reward for individual effort. Sadly, we have become a country that values not what we make, but what we have, not what we can give, but what we can get.
The poor are always jealous of the wealthy, but the lazy or stupid are rarely envious of the industrious and intelligent. When this desire dichotomy is allowed to make policy, when the poor get their income by redistribution by the government from the wealthy, all it does is destroy and punish the very source of national prosperity.
Articles such as Kinsley's are mathematically incorrect, historically wrong, and governmentally and socially wrong. I am alarmed as any about our budgetary failures and deficits, but there is no question they can not be solved by taxing the wealthy. They can only be solved by reducing spending, and that means reductions in entitlement. Since there are more dependent voters receiving entitlements than working voters, I suspect his ideas will play very well, while financially responsible behavior will not. Nonetheless, it is important to call out false reasoning and bad socio-political thinking, and Kinsley's Atlantic article is both.
Ted
http://www.realclearpolitics.com/2010/07/17/restore_the_estate_tax_237758.html
The author argues in phraseology that is socialist if not Marxist.
I am always disappointed when argument is based on sentiment and emotional manipulation rather than fact. That the former is much more common than the latter, and generally more effective, has not diminished either my disappointment or my contempt for such argument.
There is not the tiniest question that raising tax rates does NOT increase tax revenue. While this is counter-intuitive, it is true. Obviously there is a boundary to this. If followed to its logical extreme, no taxes would produce infinite revenue. Within the historical sleeve of total tax rates, raising rates reduces income to the government.
The reasons are perfectly clear, and well known. The wealthy are quite adept at avoiding high tax rates through a variety of perfectly legal means of sequestering money. Further, confiscatory rates, rates designed to take from the wealthy their ill-gotten gains, are especially useless. The lower top end rates get, the more money is generated from top earners.
There are examples from both sides of the Atlantic. When England made their top rate 95%, the few people to which this rate applied simply left the country. Led Zeppelin and The Rolling Stones became tax exiles until the rate was repealed. England did not get more money; it got nothing. The same is true when top US rates were 75%. Income trusts and charitable trusts were created, allowing wealthy individuals to pass money tax free, and to have a nominally low income while enjoying the advantages of enormous assets. Charitable trusts owned these people's homes and planes completely tax free.
Not only is an increased tax rate mathematically a failure, it is a failure of conception. The article refers to the earnings of the wealthy as if they were an affront to others. That money was not earned by stealing; it was earned through working harder than most people want or can work. In the article comments, there is a claim Bill Gates did not take a vacation for the first 5 years of Microsoft's existence. Many company owners can tell you they are the first to come to work, and the last to leave, and take the fewest vacations.
It is little different with educationally based earnings, like those of attorneys and doctors. Very few people are willing to spend the time in school necessary to be a professional. This is followed by a period of intense work, whether as an intern or a junior partner in a law firm.
Further, the evil wealthy provide jobs for hundreds of thousands of people who need and want to work. I have been privileged to make an excellent living. My partner and I also provide employment to 13 other people, whose combined income is greater than ours. Yet I personally pay more tax than my entire office staff put together. While I am happy to pay my taxes, it is a conceptual folly to claim I do not pay 'my fair share'.
Every country has conceptual and foundational values, typically based in its history. It is not possible to understand the differences between France and Germany without understanding the differences in their histories. The same is true of the US. Socialism, Marxism, Communism, Monarchy, Despotism, have all been tried, and all have failed.
I do not think it is an accident that the US has the longest running continuous form of government in the world. For all of its inefficiencies, it has worked. A significant part of what makes it work is individual reward for individual effort. Sadly, we have become a country that values not what we make, but what we have, not what we can give, but what we can get.
The poor are always jealous of the wealthy, but the lazy or stupid are rarely envious of the industrious and intelligent. When this desire dichotomy is allowed to make policy, when the poor get their income by redistribution by the government from the wealthy, all it does is destroy and punish the very source of national prosperity.
Articles such as Kinsley's are mathematically incorrect, historically wrong, and governmentally and socially wrong. I am alarmed as any about our budgetary failures and deficits, but there is no question they can not be solved by taxing the wealthy. They can only be solved by reducing spending, and that means reductions in entitlement. Since there are more dependent voters receiving entitlements than working voters, I suspect his ideas will play very well, while financially responsible behavior will not. Nonetheless, it is important to call out false reasoning and bad socio-political thinking, and Kinsley's Atlantic article is both.
Ted
AMEN!!!!!!
ReplyDeleteI agree strongly with everything enunciated in this article.
I just wish most of our congressmen thought like this...(sigh)
David Graham