Score One for Edwards

After Russ Feingold dropped out of the '08 sweepstakes I was a little bit surprised how quickly liberal bloggers (the Kossacks in particular) hitched themselves to John Edwards's wagon. I didn't care terribly for Edwards in '04, and I'm not that excited about his candidacy this time either. However, Edwards scored points with me when he made waves recently by stating that he would raise taxes to support his universal health care plan. I haven't seen much critical discussion of his plan, and the details I've seen reported are fairly vague. In other words, I don't know if his numbers are realistic or if the plan is a good one. But the mere fact that the man is willing to admit that it will cost money, and that those costs will have to be offset with higher taxes speaks highly to me of Edwards. We've been hearing about health coverage as a major issue for many election cycles at this point, but nothing has been accomplished (nor we have even come close to making progress), because delivering on health care promises will be expensive and painful, and while voters have expressed their desire for health care reform, they've never ratified any willingness to make sacrifices (in terms of taxes or other spending cuts) in order to make it happen. Of course, voters have never had a chance to do so, because politicians (on both sides of the aisle) are content to promise reform while pretending no sacrifice will be necessary. If real progress is to be made, we need to have a serious and frank discussion about what it will cost and how to pay for it. Edwards is the first candidate I've seen who seems to be willing to take part in that discussion. Kudos to him. I'm a long way from jumping on the Edwards bandwagon, but I'm now willing to start taking him seriously.

Disappointed With Slate

How in the hell did this story on Bush's tax cuts get past their fact checkers? The guy says nothing about where his numbers come from and they run absolutely contrary to those posted by the Congressional Budget Office. That report shows the tax rates on the top quintile dropping more on than any others, and that nobody's tax rate has fallen more than 11%. As a share of total tax revenues, the top quintile has dropped over the last 4 years, everybody else's share has increased to take up the slack. The Slate story is compete bullshit and they should be embarrassed to lend their (rapidly diminishing) credibility to it.

The Next Bloated Lobbyist-Feed Bill

The Washington Post editorial board put on their pork police hats for this editorial against the corporate tax bill, which follows in the grand tradition of the energy and medicare bills of handing out many billions of dollars to corporate allies while accomplishing little or nothing of any value. If I recall correctly, there is also a similar transportation uber-bill also winding its way through congress...

You Call Yourself a Patriot and a Republican?

From this article in today's NYT:

Today, Speaker J. Dennis Hastert was asked about Mr. McCain's view that Congress should not enact tax cuts during wartime because it keeps the public from developing the sense of shared sacrifice that war requires. Mr. Hastert, who was discussing tax cuts, the Republican budget and $50 billion for the war in Iraq, had had enough.

"Who?" asked Mr. Hastert as he heard Mr. McCain's name. "Where is he from? Is he a Republican?"

Then Mr. Hastert really unloaded on Mr. McCain, who sustained lifelong injuries as a prisoner of war in Vietnam.

"John McCain ought to visit our young men and women at Walter Reed and Bethesda," Mr. Hastert said. "There is the sacrifice in this country. We are trying to make sure they have the ability to fight this war, that they have the wherewithal to do it. At the same time we have to react to keep this country strong not only militarily, but economically. We have to have the flexibility to do it. That is my answer to John McCain."

According to Noted Now [ABCNews], McCain responded thusly:

"I fondly remember a time when real Republicans stood for fiscal responsibility. Apparently those days are long gone for some in our party."

Corporate Tax Evaders

CNN has this article reporting that more than 60% of U.S. Corporations did not pay any federal taxes from 1996 through 2000, according to a GAO report released April 2 (the report may be accessed here). The report studied the tax liabilities of both foreign and domestic corporations presumably to determine whether foreign corporations were evading their tax liabilities. The two most interesting factoids from the report: (1) fully 94% of all corporations reported tax liabilities of less than 5% of their total income, even though the federal tax rate is 35%; (2) there is nothing new about these numbers--corporations have long taken advantage of tax loopholes to escape paying.

In doing some quick research on the topic, I came across Warren Buffett's annual letter to his shareholders. In it, he has this to say on the topic:

Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934.

Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning. Today, many large corporations – run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs – pay nothing close to the stated federal tax rate of 35%.

In 1985, Berkshire paid $132 million in federal income taxes, and all corporations paid $61 billion. The comparable amounts in 1995 were $286 million and $157 billion respectively. And, as mentioned, we will pay about $3.3 billion for 2003, a year when all corporations paid $132 billion. We hope our taxes continue to rise in the future – it will mean we are prospering – but we also hope that the rest of Corporate America antes up along with us.

Building On Quicksand

Business Week, a magazine I'm becoming more and more impressed with recently, has a column by London Business School Dean Laura D'Andrea Tyson questioning the staying power of the current recovery. She cites the Bush tax cuts as having infused a significant amount of money into the economy which has temporarily inflated economic growth numbers without producing the sort of employment and compensation gains that should be typical at this stage of a recovery and which are critical to building a strong economic cycle. She also mentions the increasing dependency of the US economy on foreign investors to suck up the massive debt load, and questions how long this can be sustained in the face of increasing US fiscal weakness.

Re: Oh, the outrage

The Post has a great editorial on the issue. They disagree with Greenspan's assertion that the tax cuts should be made permanent, but commend his efforts to bring the issue of social security's long-term solvency into the national discussion. They also scold the President and his opponents for blowing off Greenspan's concerns. The Post concludes: "But at least Mr. Greenspan -- unlike the president and his allies -- acknowledges the need for trade-offs. Mr. Bush won't admit that something's got to give; his Democratic rivals seem determined to compete in fiscal dishonesty. And they all pretend to offer leadership."

As to the prospects of Kerry and his Clintonistas fixing the deficit, I'm considerably less than optimistic. There were three basic reasons why Clinton was able to balance the budget. 1) A substantial tax hike (which Kerry won't do), 2) a substantial reduction in military spending (which Kerry won't do), 3) the dot-com boom (which won't happen again). I fail to see any way that Kerry can either cut spending or increase revenue enough to even dent the deficit.

Short review of the Bush State of the Union

God Bless America.

Number of times "terror" or "terrorist" mentioned in the speech: 20.

Some notable quotes:
Different threats require different strategies. Along with nations in the region, we are insisting that North Korea eliminate its nuclear program.

We are seeking all the facts. Already, the Kay Report identified dozens of weapons of mass destruction-related program activities and significant amounts of equipment that Iraq concealed from the United Nations. Had we failed to act, the dictator's weapons of mass destruction programs would continue to this day.

Congress has some unfinished business on the issue of taxes. The tax reductions you passed are set to expire. Unless you act, the unfair tax on marriage will go back up. Unless you act, millions of families will be charged $300 more in federal taxes for every child. Unless you act, small businesses will pay higher taxes. Unless you act, the death tax will eventually come back to life. Unless you act, Americans face a tax increase. What the Congress has given, the Congress should not take away: For the sake of job growth, the tax cuts you passed should be permanent.

A strong America must also value the institution of marriage. I believe we should respect individuals as we take a principled stand for one of the most fundamental, enduring institutions of our civilization. Congress has already taken a stand on this issue by passing the Defense of Marriage Act, signed in 1996 by President Clinton. That statute protects marriage under federal law as the union of a man and a woman, and declares that one state may not redefine marriage for other states. Activist judges, however, have begun redefining marriage by court order, without regard for the will of the people and their elected representatives. On an issue of such great consequence, the people's voice must be heard. If judges insist on forcing their arbitrary will upon the people, the only alternative left to the people would be the constitutional process. Our nation must defend the sanctity of marriage.

The outcome of this debate is important, and so is the way we conduct it. The same moral tradition that defines marriage also teaches that each individual has dignity and value in God's sight.

Say It Ain't So, Wes

Wes Clark has been, in my opinion, the most palatable alternative to Dean among the Democratic candidates. However, yesterday he announced $30b tax cut plan. Is this man not aware of the $500b budget deficit we're running? Has it become necessary for every person who runs for office to announce a tax cut plan? Sure, he has some plans to pay for this, but as far as I'm concerned there can be no tax cuts until the deficit is covered and principal is being paid off on the national debt. Until that time comes I don't even want to hear the words "tax cut" pass a candidate's lips. I'm not giving up on Clark, but this is definitely a strike against him.

An End to Progressive Taxes

CSM is running an insightful story on how Bush's tax cuts are moving US policy towards a flat tax. I knew that the cuts were top-heavy, but I hadn't realized how far they went. If the Democratic candidates can't figure out how to make this play with the electorate they deserve what comes to them. They normally get scrared off by accusations of "class warfare". At some point they have to realize that, yes, it is class warfare, and they, along with 90% of the US population, are getting their asses kicked.

Article: US Plans to Send 20,000 More Troops to Iraq; and at the same time, Congress Hacks Taxes with a Machete

Wake Up CNN, NYTimes, and the Rest of the Slacker American Media!

We find ourselves in a pitiful state of domestic affairs when we who search for truth must find it in the foreign media. Especially on Memorial Day weekend, when you would expect that troops going out to defend the pax americana might make for a good news story. Even the Pentagon's own website, where you might expect some patriotic back-slapping bon voyage to the 20,000 troops and their families. What a disgrace. George, you have anything to say about sending 20,000 more troops to clean up your mess during today's radio address?

Why, of course. not. G.W. is too busy touting his tax-cut and spend policy. Someone needs to tell him that the federal budget deficit is not just monopoly money, and learn to trust his advisors, like Alan Greenspan, who sees little to gain from the cuts, according to this article in the Washington Times. The tax cuts are well summarized in this Christian Science Monitor article. Bush seems to be putting all of his stock in Treasury Secretary John Snow, who praised the tax cuts (his comments may be found here).

Discussion: Wealth Tax v. Income Tax v. Consumption Tax v. ???

I apologize for my prolonged absence. I was reviewing some old posts, and thought I would share a comment, however belated it may be.

In Joe's Post of April 17, 2003, , Joe advocated for a wealth tax system. He highlighted fairness, practicality, and wealth regulation as three arguments that favored his position. Discussing wealth regulation, Joe posited that wealth disparity is correlated with and leads to political instability:

Further, (and I'm sure this will get me into a great deal of trouble) I think there is a role for the government to regulate and redistribute wealth. It is unhealthy for any society to have too uneven a distribution of wealth. When wealth becomes too concentrated in too few places the social structure becomes inherently unstable. Additionally the presence of a strong middle class is vital to the healthy function of a democracy. Democracy can be corrupted all too easily by money, and as such allowing people to amass vast wealth subverts the democratic process and allows those people to exert a much greater influence over the political system than anyone else.

I share Joe's sentiment, but there is an article in the May/June issue of Foreign Policy discussing the causes for Civil War (entitled The Market for Civil War) that gave me some pause. In it, Paul Collier dismisses income inequality as a catalyst for internal strife:

For example, income inequality and ethnic-religious diversity are frequently cited as causes for conflict. Yet surprisingly, inequality--either of household incomes or of land ownership--does not appear to increase systematically the risk of civil war. Brazil got away with its high inequality; Columbia didn't.

Collier goes on to argue that economic conditions generally "remain paramount in explaining civil wars." That is, it is not the distribution of income, but average quality that matters most (the author argues "the risk reaches nearly 80 percent"). Natural resources also play a large role, according to Collier's analysis.

The story also notes that, much "to the dismay of demoncratization activists, democracy fails to reduce the risk of civil war, at least in low-income countries." Too late for that chunk of information. Afghanistan, Iraq: sorry. No harm, no foul?

Discussion: Taxation of Wealth and other ramblings

Joe, thanks for the clarifications on the flat tax. It still seems to me that it could be a very fair and simple method of taxation - the debate here seems to be about whether we tax all wealth in addition to (or excluding) income. This seems like a very challenging issue - exactly what wealth do we tax and how do we value it? Who decides the value? If I own land, should the number of trees, water resources, minerals, etc., be accounted for in determining its value? Some, but not all of these factors, may be accounted for in the present market value.

On another note, I am wary about letting the federal government have such access to wealth taxation. They seem to have proven themselves fairly incompetent at managing taxpayer funds. I would be reticent to give them any more. If there were an extensive wealth tax (whether flat, progressive, or whatever) I think that the state, county, or municipality should take precedence. All we need is another trillion dollars for our B2 bombers and missle defense that isn't worth my own ass. Yup, I know, Jefferson vs. Adams all over again. I don't think this debate will ever end (unless Dubya has the ring, of course). By the way, speaking of State vs. Federal rights, I thought you might find the commentary below on Mr. Ashcroft interesting. It's from the latest issue of The Economist.

FYI, I am also in favor of a forfeiture of wealth upon death, although I see no reason for the threshold to be so high. Any reason for $50 million, Barry? Who needs that much money? Another cool idea would be to allow the soon-to-be-dead dude to alot money over the threshold to soon-to-be-dead dude's favorite charities. Is there any such provision in current tax law? At any rate, I propose something like $1 million as the threshold for forfeiture.

In other news, I thought you might be interested in reactions to the Oxfam Fair Trade Report that have been published and are linked on the Oxfam web site. I haven't looked at them yet, but it appears that there are arguments for and against the Oxfam story.
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United States: Steamroller Ashcroft; Lexington
The Economist; London; May 3, 2003;

Volume: 367
Issue: 8322
Start Page: 56
ISSN: 00130613
Full Text:
(Copyright 2003 The Economist Newspaper Ltd. All rights reserved.)

Conservatives beware: an out-of-control attorney-general is trampling on your principles

SO FAR, the debate about John Ashcroft has focused mainly on the war against terrorism. Libertarians moan that the hyperactive attorney-general has hugely expanded the government's power to monitor citizens (by wiretapping their telephones and so on); that he has made it much easier to detain and deport immigrants and foreign visitors, particularly Arabs; and that he has ruthlessly accumulated power over the country's sprawling judicial system in his own hands. Conservatives wearily retort that wars force everybody to rethink the balance between freedom and security. Surely the attorney-general is duty-bound to err on the side of vigilance to thwart another September 11th?

Well, yes. But what if you examine Mr Ashcroft's record in other areas, such as medical marijuana, assisted suicide and the death penalty? You find precisely the same pattern of John-knows-best centralisation. The country's terror-fighter has also become the country's self-appointed moraliser-in-chief. And he is trampling all over two conservative principles he used to espouse: limited government and localism.

Begin with an idea precious to most Republicans: states' rights. Mr Ashcroft has prosecuted "medical marijuana" users in California despite a state initiative legalising the practice. He has tried numerous ploys to challenge Oregon's assisted-suicide law (including encouraging the Drug Enforcement Administration to revoke the licences of participating doctors), thus snubbing both the state, which has passed the law not once but twice, and the Supreme Court, which has explicitly left policymaking in this area to the states. He has repeatedly tried to bully local federal prosecutors into seeking the death penalty, despite a long tradition of local discretion in death-penalty cases.

Mr Ashcroft's new reverence for central government is beginning to seem downright Democratic, if not Gallic. The whole point of the American political system is its sensitivity to local differences. Federalism, as Justice Louis Brandeis put it, means "that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country." It also means that a huge country with a richly diverse population can try lots of different approaches to moral issues. People in rural Nebraska can adopt a different approach to lap-dancing from people in San Francisco; Vermont can demonstrate its uniqueness by favouring both gay marriage and tight controls on internet porn.

"Moral federalism" has deep roots in America. The English Parliament's Act of Toleration (1689) left religious issues almost entirely to local discretion. People with different religious views congregated in different regions--Puritans in Boston, Catholics in Maryland and so on. The Founding Fathers laboured mightily to keep the federal government out of dictating civic virtue. James Madison noted (in Federalist Paper 56) that different groups progress at different speeds. Alexander Hamilton (in Federalist 17) argued that any attempt to impose a centralised morality would be "as troublesome as it would be nugatory". The local administration of justice is "the most powerful, most universal and most attractive source of popular obedience and attachment".

This tradition of moral federalism would seem particularly practical now. The country is still basically split down the middle politically, and this political divide reflects a deeper division about values. When it comes to matters such as God and sex, many of the people who voted for George Bush live in a different moral universe from Al Gore's supporters.

There are clearly some areas where the federal government has to step in to protect individual rights. It was right to use its might to dismantle segregation in the South. Mr Ashcroft has legal grounds to argue that the constitution guarantees individual citizens the right to bear arms. But in general the Justice Department needs to err on the side of caution on issues where reasonable people can disagree. It should recognise that different communities have very different views: large cities, for instance, voted for Mr Gore by a 71% to 26% margin, while small towns and rural areas voted for Mr Bush by 59% to 38%. And it should try, as far as possible, to allow those communities to make decisions for themselves, rather than forcing them to bow the knee to Washington. Agreeing to disagree offers the country the best chance of avoiding an endless culture war in which both sides use the federal government to enforce their views.

Nobody should be more worried about Mr Ashcroft than conservatives. Hasn't it usually been the Democratic Party that has championed big government and Washington-knows-best morality? And hasn't it usually been the Republican Party that has stood for local variety? In the 1990s the Republicans owed many of their biggest successes--from welfare reform to school vouchers--to their enthusiasm for federalism. Mr Bush owes his job partly to the quintessentially federalist Electoral College.

A mistake by any measure

Mr Ashcroft's conversion into a centraliser is both hypocritical and short-sighted. It is hypocritical because Mr Ashcroft was once a leading critic of big government. As attorney-general and then senator for Missouri, he resisted a federal injunction to desegregate St Louis's schools so vigorously that the Southern Partisan, a neo-Confederate magazine, singled him out for praise.

It is short-sighted because, as an evangelical who refrains from smoking, drinking, dancing and looking at nude statues, Mr Ashcroft represents a minority in his own party, let alone the country. He has no chance of winning the culture wars: the forces arrayed against him, from the media to the universities, are too vast. The best he can hope for is a live-and-let-live attitude that gives minority views like his own room to flourish. Mr Ashcroft will come to rue his Faustian bargain with the federal government the next time a Democrat sits in his office.

Discussion: Arrival and taxation

I use mozilla (phoenix) almost exclusively and haven't had any problems with this site. BTW, you need to publish your posts as well. When you hit post it saves your text, but it doesn't put it on the web page. It will only show up on the page after you use the publish button..

I think there are a few issues with flat taxes. First and foremost is that they aren't progressive, as per the earlier discussion. In fact, with regards to wealth levels, a flat tax would be regressive. Going back to previous posts, if wealth is really what we're after, income is just an indicator of wealth. Income distributions, while very uneven, are not nearly as extreme as wealth distributions. Looking at our numbers, while the top 5% earned 22% of all income, the top 5% owned somewhere around 50% of all wealth. If income is important as an indicator of wealth, rather than being the focus in and of itself, then a "fair" tax would have to be flat across wealth levels rather than income levels. By this measure a flat income tax is regressive, with wealthier people paying a lower percentage relative to wealth than poorer people.

Second, the gains are, I think, not as great as is generally perceived. Much of what you do when you're filling out your taxes is documenting and calculating income. This wouldn't change. Income can come in many forms and from many sources. There is a limit to how simple the tax codes can be regarding specifying income. Software would likely still be used to prepare this data and consultants still employed to massage it. Additionally these things will probably continue to become more automated, efficient, and user-friendly as times goes on (for both the taxpayer and the IRS). Software tax tools are already pretty good..

Third, is that it takes a major tool away from the government. You mention yourself the value of taxing certain behaviors. These incentives are used for various purposes (educational credits, promoting home ownership, promoting charitable donations, promoting long term investing, etc). There was some talk during the last Presidential campaign of providing substantial tax credits for hybrid cars. These things are succeptible to backdoor legislation, but no more so than any other laws. That's more of a general problem with the legislative system.. If this ability to tinker with the tax system were lost these incentives would also be lost, or else would have to be legislated separately. And as far as bureaucratic overhead goes, I think we're better off wrapping them all into the tax system than to have a separate data collection and payment systems for each thing that congress wants to create incentives for.

Discussion: Arrival and taxation

Damn... I just found out that Mozilla doesn't take well to Blogger, so I lost my text. I'll try to recap briefly.

First of all, my apologies for the late arrival! Thanks to Barry for the reminder to log my ass in. Joe, I think the Diamond article sounds quite interesting. I'll plan to give it a read before the Boyz Weekend.

Regarding taxation, why not simply use a flat percentage tax? This naturally takes a bigger bite out of the wealthy (amount wise) and seems likely to be perceived as fair by everyone. Furthermore, it is (in theory) much easier to implement and presumably lest costly to implement by the government. My concern with more complicated tax schemes is that they get bogged down in bureaucracy, especially when some jackass legislator slips in a few extra rules for his homies. Honestly, would there be this tremendous need for accountants, lawyers, tax software, etc, with a flat tax? I realize there are still issues in determining what is income, but this seems minor in comparison. I am no tax expert, so feel free to enlighten me on this.

Next, I am in favor of a consumption tax in certain circumstances. In particular, I think they need to be used in health care. Consumption taxes, eg. tobacco, can be very effective in reducing the use of harmful substances. As such, it can be an excellent preventive health measure. Furthermore, the income generated from such income can be used in the health care necessary due to the use of such substances. Unfortunately, such taxes are not directly tied to health care funding at the moment.

Peace out

Discussion: Wealth Tax v. Income Tax v. Consumption Tax v. ???

FYI, Pete, Dave, and Ryan haven't responded to their invites yet (update: Pete just signed in too). Worthless slackers. Henry has signed himself up, so maybe we'll hear from him.

I can't say as I've ever spent much time considering tax systems. After spending a little while thinking about it, I have to prefer a wealth tax most and consumption tax the least. I very much agree with Dave's assessment of progressive tax systems, and would go a couple steps farther.

In addition to the fact that wealthy people most benefit from stable society, they are, quite frankly, most able to pay. As a society we tend to value people having access to things that we regard as necessities; food, water, shelter, clothing, medical care, education. For people with little wealth, these things can require their entire income to cover. At the least they use up a substantial portion of it, leaving little for discretionary spending. For a wealthy person these necessities require a much less significant proportion of their wealth to provide for. A much higher proportion of their wealth is available for discretionary spending. Since part of the job of the government (at least in my twisted mind) is to ensure that all people have the necessities, it seems counter-productive to take money from people for whom that money is vital to their ability to provide themselves with necessities. Rather, take a greater proportion from those who have the ability to pay it out their discretionary spending.

Further, (and I'm sure this will get me into a great deal of trouble) I think there is a role for the government to regulate and redistribute wealth. It is unhealthy for any society to have too uneven a distribution of wealth. When wealth becomes too concentrated in too few places the social structure becomes inherently unstable. Additionally the presence of a strong middle class is vital to the healthy function of a democracy. Democracy can be corrupted all too easily by money, and as such allowing people to amass vast wealth subverts the democratic process and allows those people to exert a much greater influence over the political system than anyone else.

So, for these three reasons (fairness (as per the discussion with Dave), practicality, and wealth regulation), I favor taxation on wealth. On the other hand the practicality element of it is largely cancelled out by the practical issues of administering the tax. It is much easier to impose taxes on transactions (income/consumption) rather than wealth, as they are discrete and easily quantifiable. Income tax offers some compromise in that income is relatively easy to track across a period of time and the tax can still be implemented in a progressive manner. Clearly there is a correlation between income and wealth. So using a progressive income tax system is a simpler, but less accurate, method of trying to tax wealth. A consumption tax would be quite difficult to implement in a progressive manner, and as such I don't care much for it.

Discussion: Wealth Tax v. Income Tax v. Consumption Tax v. ???

Well, Joe, I think you've begged the next question. What is the most effective method of taxation? I suppose that hinges on what the goals of taxation are. If anyone else has tuned into this page, I encourage your comments. I'm all for a consumption tax coupled with a forfeiture of all funds upon death exceeding some high threshold ($50 million, maybe). I will elaborate later, but in the meantime, what are all your thoughts?

Discussion: Progressive Taxes

I've spent about a half-hour trying to track down the document I based that on, without much luck. I will vouch that it was an authentic doc downloaded from the census.gov site. Looking at what I can find, however, I'm starting to think I was looking at the wealth numbers rather than income.

Update: I still haven't found the exact doc that I remember working from. But I have determined which numbers are being referenced. It is the a measure of wealth, and not the census either. It was the Federal Reserve Survey of Consumer Finance. You can find some relevant analysis here and here. Both cite numbers stating approx 1/3 of all wealth in the US is held by the wealthiest 1%, more than 1/3 is held by the next 9%, and the remaining ~1/3 is held by the remaining 90% of the people. It looks pretty much like the numbers I was using. How much that changes my conclusions, I'm not entirely certain, probably not much. But it does make the story that goes along with it a bit incongruous.

Discussion: Progressive Taxes

Joe, I think your numbers are suspect. Here you can find the most recent Census data on income, with a summary briefing here . Best I can tell, the chart detailing the "Share of Aggregate Income Received by Each Fifth and Top Five Percent of Households," at A-2 would capture the data needed to get your numbers. The lowest fifth (or two of ten) received 3.5% of the total income, the top fifth got 50.1%, and the top five percent received 22.4% of the total income. Two of the ten in our scenario, then, would each receive $245 in their paycheck (3.5% of $14,000, split two ways), the top two would take in $3507 each (50.1% of $14,000, split two ways)--the CEO, if he is in the top one of twenty, would at most take in $6272 (22.4% of $14,000, multiplied by two). I don't trust my own numbers, either, but I think MoJoJoJo's trying to pull something shady.

All the same, I think it's a fair argument that the progressive tax system may discourage the right people and encourage the wrong ones (I concede that there is probably a ceiling to the incentive argument. Does a billionaire really think about marginal value on that next buck he might make?). But I also think it's fair to urge that those with the most too lose by a regime change should pay the most to see that it doesn't happen.

Discussion: Progressive Taxes

Dave and I had a great discussion at lunch today regarding progressive taxation (amongst other topics), and he had a fantastic argument that I had never heard before. Just to be sure, progressive taxation (in comparison to proprotional taxation) is where the rate of taxation, not just the amount of the tax, increases with wealth or salary. (For a broad overview, see here). Anywho, Dave's argument for progressive taxation is that there is value in maintaining the existing structure and stability of a society, and the wealthy value that stability more than the poor or middle-class, so they should pay more to ensure that stability and structure. If chaos or revolution erupted, the wealthy might lose their relative status through a redistribution of wealth, so they have a vested interest in making sure that doesn't happen, whereas the poor would love to see a revolution (I'm sure some poor Iraqis made out quite well from all the looting).