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>"Economists really hate the Bush tax cuts (which McCain now supports making permanent) because they favor the non-working ultra-wealthy." I haven't seen that

>"Economists really hate the Bush tax cuts (which McCain now supports making permanent) because they favor the non-working ultra-wealthy." I haven't seen that argument made. Perhaps you could link to it? I have seen the tax cuts opposed on economic grounds because of the deficit. I have seen them opposed on philosophical grounds because the author believes the tax code should be even more "progressive". But I haven't seen that argument made based on economic reasoning.

mattmaroon 18y ago
Sure, here's a great summary by Krugman: http://www.rollingstone.com/politics/story/12699486/paul_krugman_on_the_great_wealth_transfer/print http://www.rollingstone.com/politics/story/12699486/paul_kru... Explains why capital gains is largely just a loophole in the tax code exploited by the uber-rich. Also, if you dig around through public data, you find that the top 10% of Americans make about 70% of the income and pay about 70% of the personal taxes. Sounds fair right? However, the top 1% make about 47% and pay only 39%, meaning the next 9% make about 23% but pay 31%. Is it just at all that the top 1% of America has a lower tax burden than the next 9%? Thank capital gains taxes for that. I can't find the data, but if you were to break this down even further by 10th of a percent, you'd probably find that even more exaggerated.
- DanielBMarkham 18y ago
  Seems like that assumes that the top one percent or so are some kind of trapped citizenry. Wouldn't they just move assets/gains/themselves offshore? Seems like if anybody had the ability to change their life parameters to avoid taxes, it would be the uber-wealthy. By taxing capital gains, you hit the millionaire store-keeper who sold his shop and is now retired living on investments, the startup guys just cashing out, the day-trader who made a mint. In short, the transitional folks. You keep slightly-rich people from becoming super-rich. The really rich don't seem to be encumbered by any one nation's tax laws. My opinion only. Sorry for butting in. I was hoping you guys would cover this point but I haven't seen it so far in your discussion.
  - mattmaroon 18y ago
    It sounds like you're describing the illegal hiding of money, which I'm sure does happen. But I would think that most wealthy people would rather not risk going to jail, and I do know that you cannot just move overseas to get out of taxes. You can renounce your US citizenship, but they can actually deny that if they think you're doing it to save taxes. But beyond that vague, general knowledge I certainly don't know much about ways the ultra-wealthy evade taxes. I do know that they didn't have the gaping capital gains loophole until now, and as far as I know they didn't all move to other countries.
    - DanielBMarkham 18y ago
      Then I believe you are saying "we gotcha", right? Or in other words we have a disagreement. My thesis is that the uber rich will generally find a way to avoid (not evade) taxes and I believe your position is that it is impossible/unlikely because we will catch/punish them. I would refer you to prohibition. It seems to me that at some point people will not willingly agree to ten times the taxes for the same amount of representation. Tax evasion is illegal, as we all know. But tax avoidance -- finding loopholes in the law -- is an American tradition. Think I could find as many loopholes with my 10K as somebody else could with their 10 mil? I kind of doubt it. I note that the income tax was passed in 1913 in the U.S. I think it was really low -- something like 6% on income over 200K. The very next year, the tax was raised to 85% on the wealthy as a way to finance WWI. Now practically speaking, do you think that all wealthy people actually paid 85% taxes? Just from a intuitive standpoint, doesn't it seem like this would sack the people at the low end of the wealth scale -- those without tax attorneys and multiple streams of revenue and corporate aliases -- not the truly rich, who saw the law coming and already found ways to protect their investments? I'm not a tax law specialist so I can't comment on specifics. But intuitively it seems like most people would act in their own self-interest. And it seems that the truly rich have many more options than most folks do. So as a general rule of thumb, I would think that at some point you are going to lose money by raising taxes. Just intuition, mind you. Lots of room for disagreement here.
      - mattmaroon 18y ago

mattmaroon 18y ago

Sure, here's a great summary by Krugman: http://www.rollingstone.com/politics/story/12699486/paul_krugman_on_the_great_wealth_transfer/print http://www.rollingstone.com/politics/story/12699486/paul_kru... Explains why capital gains is largely just a loophole in the tax code exploited by the uber-rich. Also, if you dig around through public data, you find that the top 10% of Americans make about 70% of the income and pay about 70% of the personal taxes. Sounds fair right? However, the top 1% make about 47% and pay only 39%, meaning the next 9% make about 23% but pay 31%. Is it just at all that the top 1% of America has a lower tax burden than the next 9%? Thank capital gains taxes for that. I can't find the data, but if you were to break this down even further by 10th of a percent, you'd probably find that even more exaggerated.

DanielBMarkham 18y ago
Seems like that assumes that the top one percent or so are some kind of trapped citizenry. Wouldn't they just move assets/gains/themselves offshore? Seems like if anybody had the ability to change their life parameters to avoid taxes, it would be the uber-wealthy. By taxing capital gains, you hit the millionaire store-keeper who sold his shop and is now retired living on investments, the startup guys just cashing out, the day-trader who made a mint. In short, the transitional folks. You keep slightly-rich people from becoming super-rich. The really rich don't seem to be encumbered by any one nation's tax laws. My opinion only. Sorry for butting in. I was hoping you guys would cover this point but I haven't seen it so far in your discussion.
- mattmaroon 18y ago
  It sounds like you're describing the illegal hiding of money, which I'm sure does happen. But I would think that most wealthy people would rather not risk going to jail, and I do know that you cannot just move overseas to get out of taxes. You can renounce your US citizenship, but they can actually deny that if they think you're doing it to save taxes. But beyond that vague, general knowledge I certainly don't know much about ways the ultra-wealthy evade taxes. I do know that they didn't have the gaping capital gains loophole until now, and as far as I know they didn't all move to other countries.
  - DanielBMarkham 18y ago
    Then I believe you are saying "we gotcha", right? Or in other words we have a disagreement. My thesis is that the uber rich will generally find a way to avoid (not evade) taxes and I believe your position is that it is impossible/unlikely because we will catch/punish them. I would refer you to prohibition. It seems to me that at some point people will not willingly agree to ten times the taxes for the same amount of representation. Tax evasion is illegal, as we all know. But tax avoidance -- finding loopholes in the law -- is an American tradition. Think I could find as many loopholes with my 10K as somebody else could with their 10 mil? I kind of doubt it. I note that the income tax was passed in 1913 in the U.S. I think it was really low -- something like 6% on income over 200K. The very next year, the tax was raised to 85% on the wealthy as a way to finance WWI. Now practically speaking, do you think that all wealthy people actually paid 85% taxes? Just from a intuitive standpoint, doesn't it seem like this would sack the people at the low end of the wealth scale -- those without tax attorneys and multiple streams of revenue and corporate aliases -- not the truly rich, who saw the law coming and already found ways to protect their investments? I'm not a tax law specialist so I can't comment on specifics. But intuitively it seems like most people would act in their own self-interest. And it seems that the truly rich have many more options than most folks do. So as a general rule of thumb, I would think that at some point you are going to lose money by raising taxes. Just intuition, mind you. Lots of room for disagreement here.
    - mattmaroon 18y ago