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View Diary: Socialism — what it isn’t (117 comments)

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  •  Those "distortions" you mention... (2+ / 0-)
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    84thProblem, DarthMeow504

    ...are a necessity, to encourage behavior that has as its object to lessen the (currently yawningly wide) chasm between rich and poor.

    You seem to think, like a lot of economic libertarians, that efficiency is the highest good. What I'm saying is that other factors (economic fairness, the destabilizing effects of wealth concentration at the top) ought to be considered too.

    If effective rates are your big thing, why not give the rich higher nominal rates, in order to direct the deductions toward making life better for their fellow citizens?

    The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts. -Bertrand Russell

    by mftalbot on Thu Apr 04, 2013 at 04:40:04 PM PDT

    [ Parent ]

    •  Actually, what I'd do (1+ / 0-)
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      ozsea1

      perhaps is simplify the tax code dramatically so that marginal rates are much closer to effective rates.  You'd lower marginal rates, and eliminate deductions, so that the top 1% all pay around an effective rate of 25%, instead of on household making $500,000 paying an effective rate of 15%, and one household making $500,000 paying an effective rate of 30%.  

      You can have progressive stair-step rates -- exempt the first $50,000, then 5% up to $x, 10% on income from $x - $y, 20% on income from $y to $z, etc..  

      There are ways of figuring out what the effective rate would be at each income level -- and it would be far more accurate with fewer (or no) deductions/exemptions/shelters. You could structure it so you'd know how much, as a percentage of GDP, it would bring in, and keep that at around 18-19% of GDP.  You'd want to structure it so that each level of income is paying about the same percent of the overall tax burden as they are paying now, i.e., where the top 1% pays maybe 35-36% of the income taxes.  The difference is that it would be spread out more evenly among the 1%.  And their decision making -- especially those small businesses that file as individuals -- would not be distorted by tax policy.  I'd do something similar for the corporate tax rates.  The goal is for  businesses to make decisions based on what's best for business as opposed to what gets the best tax break.  

      I'd say perhaps because that's the direction I'd go.  I'd want to see the numbers before making a final decision.  

      •  asdf (3+ / 0-)
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        84thProblem, DarthMeow504, unfangus

        My premise is that it is a good thing for the government to do things that restrain capitalism's tendency to concentrate wealth at the top.

        And their decision making -- especially those small businesses that file as individuals -- would not be distorted by tax policy.

        That's one of those things that sounds great, but the net effect of making efficiency the highest good is that you eventually end up sacrificing justice on efficiency's altar.

        I reject your apparent premise that introducing "distortions" into the economic system is always and everywhere bad.

        Bringing things back to Ike's era: if high marginal tax rates are bad, why were the 1950s and 1960s remembered as a sort of golden age for American workers?

        The unvarnished truth is this: your average American worker has been running in place for 30 years. During that time, productivity per worker has increased by over 40%, and those workers' pay has barely budged.

        Almost 25 percent of American children are on food stamps. The combined number of un- and underemployment, even after four plus years of “recovery,” is still almost 16 percent. Half of all Americans struggle to feed themselves. People whose collars are blue and whose hands are callused are staring every day into a continuing economic abyss that is killing their friends and making their neighbors homeless.

        The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts. -Bertrand Russell

        by mftalbot on Thu Apr 04, 2013 at 05:23:00 PM PDT

        [ Parent ]

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