Some points (4.00 / 3)

1) My understanding is most job growth in the country comes from business that are growing.  Kind of makes sense.  That means they are typically small businesses that are growing into larger businesses.  That is where the half-truth lies.  (Pun unintended originally, but left in on purpose.  Think I'll use that more often.)

2) Taxes are based on profit.  One way to drop your marginal tax rate is to hire more people, which qualify as an expense.  High corporate taxes can actually lead to more people being hired, not less.

3) How the hell did Democrats miss this moment?  How did they miss the 'stimulus' moment?  This should be our time to really push back on the myth that tax cuts pay for themselves with our own easy message: getting money into the hands of normal people is good for the economy and largely pays for itself.  Money in the hands of the rich just disapears at best and creates bubble economies at worst.  Hell, the 'worst' half gets even worse than that.  We even have the benefit of being correct.

---

by: Mark Matson @ Tue Sep 14, 2010 at 14:18:12 PM CDT

Yes, There's LOTS To Be Said Here (0.00 / 0)

I wanted to break form and write something really simple for a change.

But, just to expand a bit, it's totally disingenuous to equate personal income tax rates and anything having to do with business entities.

All one has to do to separate the two is incorporate the business as an independent entity (not a sole proprietorship, where all the income goes into Schedule "C" and thence directly to your 1040).  That's it. Once you do that, you can control your tax rate by adjusting the salary you pay yourself.  And you can also, of course, give yourself all sorts of goodies via expense accounts that others might have to pay for.

So, really the only connection here is one that people have chosen.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

---

by: Paul Rosenberg @ Tue Sep 14, 2010 at 15:09:15 PM CDT

[ Parent ]

It's a False Argument IMHO (4.00 / 3)

To my mind, this is exactly what comes of agreeing that wealth begins at $200,000 a year income. That's what Republicans, corporate Democrats, and others sympathetic to Big Money want you to believe. But it is completely untrue. We will tie ourselves in knots disproving their points and have no energy left to tackle the real problem with taxation in the US: the tax rates on the super wealthy.

A much more meaningful debate would center around wealth creation. For example, should taxes encourage the bottom 99% (or 99.5%) to save and invest money to build wealth over decades? If that's a worthy goal, then capital gains should be taxed heavily if that's your only income, the same as normal wages. But wages from a legitimate company, not a trust fund or shell company, should be taxed lightly up to some number, for arguments sake let's say $100k. And if you make capital gains by saving your money, maybe you pay capital gains of 5% (zero, as now, if you invest in a long term 401k or pension plan). And maybe if you make poverty level, where you start to pay taxes, maybe you could avoid taxes by investing that money instead up to some amount. There are many ways to encourage saving, self-reliance, and all the rest using the tax code and aiming it at the vast majority of Americans while taxing the super wealthy for real (and fair) amounts of money.

If you agree setting up taxes to help 99% or 99.5% of people create wealth over decades, then you also tax real wealth (say, for argument sake, dollars earned over $1-2 million a year) at heavy rates. So dollars over $100 million earned in a year would be taxed at 100%.

We never get to this sort of meaningful debate because the Republicans and their co-dependents insist wealth begins at $200k. They do that to ensnare large numbers of people who truly are not wealthy in comparison to the people who are the source of our budgetary (and social inequality) problems. Certainly if and when we get obscene wealth under control, then we can address the middle tier, the doctors and lawyers and others who earn between, say, $100k and $1 million in a year. But today they're taxed somewhat well compared to the super wealthy (20-35% compared to 15% for the latter group).

It's also true that the de-taxation of the super wealthy has created an economic and public menace, a real threat to the stability of governments and economies. For example, hundreds of millions of dollars invested in a hedge fund is more likely to be used to speculate in commodities like wheat that people rely on to eat, as happened a few years ago. And the same dynamic led to the creation of exotic financial instruments designed to soak up this excess income. Taxation is not an arcane topic. It lies at the heart of any society and determines who wins and loses in that society.

Perhaps this is a fool's argument. But saying wealth begins at $200k/year is a rhetorical strategy Republicans deliberately use to short circuit debate about the purpose of taxation in our society and how we might tax more fairly to achieve our larger social goals. The problem is not small business people. It's not the lawyers and the doctors. It's the overpaid CEOs. It's the hedge fund managers. It's the trust fund babies. Indeed, it might even be the movie stars and athletes (although I've heard reasonable arguments against that position).

We should keep our eye on the ball, in other words.

---

by: TSlavin @ Tue Sep 14, 2010 at 15:24:48 PM CDT

50% (4.00 / 1)

Although I would certainly vote for your 100% rate for the filthy rich, I prefer 50%.  Perhaps I'm mad (shhh) but I think 50% has the possibility of becoming embedded as a cultural norm.  It just fundamentally sounds fair that after a certain amount of wealth, all else has to be shared 50/50.  While 100% certainly makes sense right now, it won't always feel right and eventually the pendulum swings back.

But 50/50 could become an actual cultural moral, like home ownership or other morals promoted by law.

Of course, we could compromise and set 50% at one million and 100% at 100 million.

---

by: Mark Matson @ Tue Sep 14, 2010 at 15:45:28 PM CDT

[ Parent ]

The Numbers are Fungible (0.00 / 0)

For one, the effective tax rate will always be different than the published rate. I'd expect a stair step tax rate depending on how much you make. I'd simply like to see 100% kick in at some very high number no one can disagree with. Both for fairness and to discourage obscene compensation packages. And it would be neat if the numbers were almost mnemonic, like 50/50, to reinforce the idea. That would make the rates harder to change.

I'm less concerned about the details and more concerned to get to a larger discussion about what constitutes a fair tax for all different situations then get that sort of program passed. Instead of what we have which is a debate that seems rigged to let the wealthiest win every time, every way.

---

by: TSlavin @ Tue Sep 14, 2010 at 16:31:05 PM CDT

[ Parent ]

With All Due Respect (0.00 / 0)

This isn't a simple argument at all.  One must both criticize the whole framework of debate and pick off the easy targets as well.

"Walk and chew gum" as I like to say.

I had originally intended to write a much more systemic/analytical piece hung on this simple data point.  But seeing how I'd overloaded both myself and others on some fairly dense arguments of late, I decided it would be both refreshing and instructive to show how simply one might dispatch a prime example of their mythologizing.

So, while I wholeheartedly agree with the positive thrust of your comment, I don't agree that making the argument I'm presenting here is taking our eye off the ball.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

---

by: Paul Rosenberg @ Tue Sep 14, 2010 at 15:53:02 PM CDT

[ Parent ]

Agreed (4.00 / 1)

Sorry if that was the implication. I'm speaking in a broader sense not accusing any one person. And you're correct that we do have to walk and chew gum at the same time.

I only want to point out that the debate is deliberately distorted and, therefore, the real issues are never debated (starting with what is a fair tax for various incomes and how might taxes encourage and/or reward virtuous behavior, if we can define virtuous behavior?). We never get to that real debate because we spend time fighting on their terms, that wealth begins at $200k/year. The issue isn't where wealth begins. The problem is how to tax extreme wealth, in what ways and what amounts.

---

by: TSlavin @ Tue Sep 14, 2010 at 16:19:18 PM CDT

[ Parent ]

Agreed (4.00 / 1)

I think it might be useful to consider drawing up a set of principles, rather than trying to articulate just one, that ought to properly guide our thinking about taxes.

If we could start by getting people to think in terms of basic principles, and balancing them, so as not to plunge headlong into a single-minded focus on one short-sighted goal, that might be a very good foundational goal to aim for.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

---

by: Paul Rosenberg @ Tue Sep 14, 2010 at 17:01:37 PM CDT

[ Parent ]

Hiring Disincentives (4.00 / 2)

Taxes, at least small changes in the tax rate, are not a major incentive or disincentive for hiring people.  In some small businesses like doctor's offices the major disincentive to hiring more people are snide comments from less successful doctors.  Being cheap.  Being "lean and mean" is far more culturally acceptable in certain circles than hiring enough staff to easily get the job done.

The losers here tend to be mostly at the bottom of the wage scale.  Rather than hiring file clerks, computerized systems with scanning are favored.  Rather than hiring phone workers, systems with call forwarding and caller menus are favored.  In the case of the phones, this may be less effective as some people hang up.  A lost call can mean a lost appointment or a lost surgery.

How many times to hear or see the anti-tax attitude presented as fact.  How often is the "lean and mean" glorified rather than "effective."  Our problem is partly cultural.

---

by: David Kowalski @ Tue Sep 14, 2010 at 15:29:08 PM CDT

Stocks go up when the CEO fires people! (4.00 / 1)

So, indeed, there's a totally misguided mindset which celebrates NOT employing people. That's outright nasty. What happened to the good ole times when the success of a business was measured in how many people it employs?

---

by: Gray @ Tue Sep 14, 2010 at 16:08:38 PM CDT

[ Parent ]

It's the Government, For One (4.00 / 3)

I did a QH yesterday to flag the last in a series of articles by Tim Noah at Slate that, among other things, described how government policies and attitudes plus unionization enforced income equality in the decades after WWII. JFK even got a corporation to cancel price increases by calling out their increase in public as selfish. It was only when the government no longer actively supported workers, and consultants ran around teaching companies how to get around the Wagner Act, plus other things, that the social climate against workers and for management started in earnest.

Indeed, the social climate for management today is made of the same fragile dynamic that supported workers decades ago, with a different winner. We could go back to the earlier focus on workers but it would take politicians, government regulation, Congressional action, and other high profile actions to reset the balance between workers and management.

---

by: TSlavin @ Tue Sep 14, 2010 at 16:25:36 PM CDT

[ Parent ]