Skip to main content

There's one word that strikes fear in the modern politician.

TAX
I'll give you a moment to recover....

It's OK. Deep breaths. Try to focus on your favorite spending for a moment and just forget about that terrible word.

Or, you could keep reading and we could have a discussion about one of the fundamental problems of modern liberalism.

An effective government needs taxation. Obviously, it needs the revenue that taxation provides to fund the activities of government. We like our roads, our shiny new tanks, and our Head Start programs, so we give the government our earnings so that it can do things for us. I call this system transaction taxation. You give us X percent of your earnings, the government gives you certain services of value Y.

Ideally, X=Y. Of course, we don't have an ideal government, so it's more like X=Y-Z, with Z being government waste, such as executive suites for generals on military transport plans or cushy contracts for ACA software developers. There's bipartisan agreement that Z sucks. Although candidates frequently trumpet their "government waste cutting" credentials, I can't think of a single candidate elected because they would cut government waste and their opponent wanted to keep it.

Post-Reagan Democratic Politics Is All About Spending

If X=Y-Z, or taxes equals spending minus waste, then the Democratic strategy over the past 30 years has all been about what to spend Y on. The Republicans, bless their hearts, like to spend money on three important things: 1) subsidies to big business, 2) defense, and 3) agriculture (often the same as big business, but not necessarily).

If elections were all about spending priorities, Democrats would never have lost control of Congress.  We like spending money on a ton of popular stuff.  Education, you betcha. Social Security and health care, check. Environmental protection, definitely. Housing subsidies, workplace safety, science and technology? Why not? Americans love these programs. In fact, it's hard to ever get less than a majority when a pollster asks whether a voter supports spending money on these items. Who wouldn't want some apple pie?

Here's a good case-in-point. President Obama ran his 2008 election on spending money on health care and education.  Candidate McCain ran on spending money on defense. Besides being a crotchety, befuddled old miser, McCain also supported spending money on the one thing a majority of Americans oppose spending money on. The result was a good ole electoral walloping. Democrats can win elections by promising to spend on the right things.

The One Chart That Rules Them All

So how did we screw it up? This chart says everything you need to know about why Democrats still lose.

This is a chart made from data compiled by The Tax Foundation.  It shows the top marginal tax rate that an individual would pay if they made $1.5 million dollars adjusted for inflation. It's amazing for several reasons.  First, the marginal tax rate was actually higher during part of the 1920s than it is today.  During those crazy, roaring twenties when the Vanderbilts and Rockefellers were gossip-page news for acquiring, by some estimates, more wealth than had ever before been acquired in human history, they were paying higher marginal tax rates.  In fact, the U.S. had a tax bracket that actually *gasp* increased the marginal tax rate as individuals gathered more obscene amounts of wealth to the point where individuals making more than $6 million (Bloomberg's middle class) were taxed 46%!!!!

We obviously saw no economic growth during this period of history because everything supply-side economics says is right.

The chart states the obvious.  Democrats lost their opportunity to make meaningful electoral promises in 1987. Elections are now about X, not Y.  They are about taxes, and how much we hate them.  Republicans have starved the beast.  They won while you were still crowing about Welfare reform and nth dimensional chess.  Guess what? There's no nth dimensional chess that can run a government based on Democratic spending priorities with such a paltry tax rate. Like your new corporate-provided health insurance? Head Start, Food Stamps, NASA, EPA, and NOAA were all sacrificed so that the government could provide health insurers a subsidy if not enough healthy people enrolled in the first year (this is tongue-in-check, the Medicaid expansion was a very valuable service that was expanded).

Income Inequality Starts With The Tax Code

Taxes are one of the few things that reminds wealthy people that there is a government. Income inequality didn't just rise to obscene heights because working people stopped receiving wage increases.  We stopped taxing rich people at 80% of their income. Government let rich people grow richer, and rich people rewarded the political parties that gave them more riches with political power and influence.

We need a marginal tax rate closer to 50% for incomes over $1 million.  We need more tax brackets for higher income individuals. We should treat capital gains as income. We need to take back money from rich people.  Think this sounds like class warfare? Well, we've been losing the war since the mid-1970s. Unfortunately, we're almost at the point of having lost the war. The rich have managed to form an international haven against taxation protected by the WTO and the OECD.

Capital, which is a fancy way of saying rich people's money, is now so free to fly around the globe at the merest mention of a tax that entire countries can be sacrificed to show the serious people in government just how little power they have to raise taxes. And why would you want to raise taxes anyway? In a few years the government people will be employed in cushy jobs helping rich people and earning enough to be well on their way to being a rich person.

Why Bill De Blasio's Fight for Pre-K is an Important One

In New York, income inequality is a way of life. Middle class has been defined for some city benefits as higher than $110,000!?!  But, I think Mayor De Blasio understands the problem better than most Democrats. When NY Governor Andrew Cuomo, the epitome of  a co-opted, rich-person Democrat, offered to fund his pre-K program by shifting state revenue rather than raising taxes, De Blasio stuck to his guns.  He continued to support imposing a tax on the richest New Yorkers because he understands that without revenue (or without a fight for X), the fight over Y will be about which other worthy program to cut.

I now define centrist Democrat as any Democratic politician who believes that Democratic principles can be achieved using the existing tax base. If they never mention raising taxes, they're not worth electing.

Originally posted to acommonconcernofhumankind on Sun Mar 09, 2014 at 12:56 PM PDT.

Also republished by Community Spotlight.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  How can you show a chart of the top marginal (4+ / 0-)

    federal income tax rates without some discussion in your diary of the Tax Reform Act of 1986 which completely rewrote the IRS code for individual taxpayers? TRA86 made fundamental changes in the code, including the ability to offset earned income with passive losses, in return for reducing the top marginal rate from 50% to 28%.

    "let's talk about that"

    by VClib on Sun Mar 09, 2014 at 01:12:27 PM PDT

    •  The point of my diary is the top marginal tax rate (13+ / 0-)

      not the Tax Reform Act of 1986.  I assume your point is that the compromises made in the Act compensated for the decrease in the top tax rate (and maybe that it was a good deal for Dems?).  Although $30 billion was saved by changes in the tax code eliminating then popular tax loopholes, many of those loopholes have since been recreated using a variety of other tax shelters (which is precisely what you'd expect given the voracious amount of money spent on tax lawyers in this country).

      There was also an increase in the corporate tax rate, but there are so many loopholes in the corporate tax code that most of the top-earning American corporations have found ways to evade taxes by keeping their earnings offshore.

      For awhile, capital gains was taxed as ordinary income, but that all changed in 1990 and the subsequent two decades demonstrated how explosive growth in the financial sector could produce income-earning vehicles for most wealthy Americans that would never be taxed at ordinary rates.

      The most telling statistic demonstrating just how bad a deal the Act was is that within five years the share of the nation's income going to the top 1% increased from 8.4% to 13.5%, more than five percentage points in five years.

      •  Long-term capital gains (3+ / 0-)

        were taxed the same as ordinary income for only a brief period of time--I want to say 1989 and 1990 or so.

        The point is that you cannot look at the top marginal rate in a vacuum.  For most of the period you discuss there were many ways that high-income tax payers avoided (legally, more or less) paying the highest rate, the capital gains exclusion and tax shelters being the most common.  Conservatively, I would guess that the effective top marginal rate of a reasonably well-advised high income taxpayer in the good old days was about half of the statutory top marginal rate.

        Otherwise, I generally agree with you--long-term capital gains should be taxed as ordinary income and the top rate should be about 50%.

        I would point out that many of the country's wealthiest taxpayers are already subject to a top rate of about 50% (or more) on ordinary income, once you take into account state and local income taxes.  Unlike the pre-TRA 1986 days, there are few opportunities to do much about that rate, at least with respect to ordinary income.

        "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

        by Old Left Good Left on Sun Mar 09, 2014 at 02:40:03 PM PDT

        [ Parent ]

        •  The CG tax was created to develop capital (4+ / 0-)

          And it was high to begin with so that it became expensive to sell with the extra 30% or so tax rate tied on. As capital gets cheaper through annual depreciation  and with some tax write-offs ideally you still spend to improve your capital. Eventually the tax burden is low enough to entice new owners and you take those returns and ideally upgrade.

          But now it is all for flipping. Buy and sell, buy and sell. Making it too easy has you running the risk of raising the price of capital excessively high only because of popular demand and not that the capital has improved in it's basic value. Which, without a tax penalty and too easy a market for flipping, bubbles easily form based on pure psychology. And the revenue return from higher taxes helps pay for itself if well managed as it has in the past. First, we must track values better with higher capital gains taxes.

          Better yet, if Democrats really value labor they should push for a reduction in payroll taxes. That money will spend plenty fast on useful goods if more cash gets into the hands of most consumers. Have capital gains paying the 30% rate. People making billions should have a flat tax of 49% from their total earnings. From there down scale it down with into the 40 percentile for the top couple percent by a number of new tax brackets. Once the economy is back strong, everyone goes back to the Clinton rates. That pain will subside in a year or two and our revenues would be improved.

          •  Payroll taxes go to social Security and Medicare (1+ / 0-)
            Recommended by:
            Noodles

            hospital trust fund. Reduce them and those programs have massive problems.

            Just raise the rate on capital gains to equal ordinary income.

            I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

            by samddobermann on Tue Mar 11, 2014 at 07:15:12 AM PDT

            [ Parent ]

      •  It's a nit but capital gains were never taxed (3+ / 0-)

        as earned income. For a few years after TRA86 capital gains and earned income had the same maximum rate, 28%, but capital gains were reported separately and its character was maintained such as carrying forward capital losses. As you recall for many decades prior to TRA86 the top long term capital gains rate was half of each individual taxpayer's top marginal earned income rate. The top earned income rate just prior to TRA86 was 50%, so TRA86 represented an increase in the capital gains rate for all taxpayers. The two rates only stayed the same for three years when the top rate rose to 31% under GHW Bush. Those three years are the only time in the history of the US income tax that long term capital gains and earned income had the same top marginal rate. Every country in the G8 has a lower rate for long term capital gains than earned income.

        The notion that the loopholes that were struck by TRA86 have returned is completely false. What has changed is the character of the income of the top 1/10 of 1% has become nearly all capital gains income and the long term capital gains rate fell from 28% to 15%. That rate is now 23.8% so it has been significantly increased during the Obama administration.

        "let's talk about that"

        by VClib on Sun Mar 09, 2014 at 05:21:45 PM PDT

        [ Parent ]

        •  I didn't say that the same loopholes have returned (6+ / 0-)

          but that certain tax structures, in particular lifetime trusts, have become the de jour method for wealthy tax payers to evade the ordinary income tax rate.

          My major point is that Democrats need to start using the income tax code to address the fundamental challenge of income inequality.  You're not going to do that with a historically quite law top marginal tax rate, especially a rate that treats your first million the same as your 60th million.

          The elimination of higher income tax brackets in the Tax Reform Act was the biggest long-term concession provided to Republicans.

          •  But the lower rates were the negotiated tradeoff (2+ / 0-)
            Recommended by:
            valion, Kvetchnrelease

            for a rewrite of the Code that eliminated nearly all the write-offs. TRA86 was legislation sponsored by Dan Rostenkowski, the Democratic Chairman of the House Ways and Means Committee. The legislation passed the Senate 97-3, and the House 292-136.  

            "let's talk about that"

            by VClib on Sun Mar 09, 2014 at 06:16:30 PM PDT

            [ Parent ]

            •  And it was still something of a sham, shifting (2+ / 0-)
              Recommended by:
              NoMoreLies, samddobermann

              the burden of taxation to the middle class and surprising a lot of folks who were expecting tax cuts.

              That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

              by enhydra lutris on Mon Mar 10, 2014 at 03:06:10 PM PDT

              [ Parent ]

            •  Don't forget carried interest, (0+ / 0-)

              also taxed at a lower rate - currently 23.8% as opposed to 39.6% top wage and salary rate.

              "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

              by SueDe on Tue Mar 11, 2014 at 08:50:19 AM PDT

              [ Parent ]

          •  Democratic Party Leaders don't (0+ / 0-)

            Get how non-progressive taxes are, with regards to low wage earners.

            I actually agree with Republicans who say that it would be better for low income people to have a more expanded Earned Income Credit than to have a raise in salary.

            For one thing, in those states where there are continual numbers of newly arrived immigrants there to take jobs, many businesses operate by hiring "under the table." Up thewages, and you are ensuring that practice to continue. And therefore you are taking jobs away from lower middle class people and offering them to undocumented people.

            •  the raise in the EITC comes out of taxes (0+ / 0-)

              the raise in the minimum wage comes from business. It is far more valuable to people than the EITC but we could have both!

              We still need more tax income for the governmental responsibilities. Especially if we raise the EITC.

              I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

              by samddobermann on Tue Mar 11, 2014 at 07:24:09 AM PDT

              [ Parent ]

          •  Hmmm... (1+ / 0-)
            Recommended by:
            misslegalbeagle

            Curious which lifetime trust mechanism allows someone to turn ordinary income into cap gain....  I'm pretty good with Sub J so I'd love the details

          •  Revokable trusts are taxed to the trustee (0+ / 0-)

            If that's what you mean.

            The main sweetener is the lower rate on cap gains and the essentially tax deferral on stock options etc.

            Steve Jobs famously took only $1 a year in salary — but he got stock options. His wealth was in stock but he only paid income taxes on what he needed to sell. So he avoided paying any payroll taxes and his wealth could accumulate tax free untill he needed to use it.

            I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

            by samddobermann on Tue Mar 11, 2014 at 07:20:58 AM PDT

            [ Parent ]

      •  Tax Reform Act of 1986 (2+ / 0-)
        Recommended by:
        samddobermann, fenway49

        Many of the "loopholes" benefited the lower classes:

        Being able to deduct usurious credit interest, for example.

        Pre-1986, all casualty and theft losses, and medical expenses were deductible.  The 1986 reforms raised the threshold to 7% of gross income.

        The wealthy still have their tax accountants and lawyers who can reduce their bill, but the loss of these deductions directly raised effective rates on the lower classes.  

        For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

        by Grey Fedora on Mon Mar 10, 2014 at 10:30:43 PM PDT

        [ Parent ]

  •  This is perfect. (4+ / 0-)
    I now define centrist Democrat as any Democratic politician who believes that Democratic principles can be achieved using the existing tax base. If they never mention raising taxes, they're not worth electing.
    Any monkey can shoot off at the mouth about free health care and college tuition, but who is willing to pay for it? I love this diary!!!! It is earth bound.

    New Republic: So are the left-wing blogs as bad as the Tea Party ones in this case? -------------------------Chuck Schumer: Left-wing blogs are the mirror image. They just have less credibility and less clout.

    by AlexDrew on Sun Mar 09, 2014 at 02:22:44 PM PDT

    •  The Monkey Replies (1+ / 0-)
      Recommended by:
      AlexDrew

      "Any monkey can shoot off at the mouth about free health care and college tuition, but who is willing to pay for it?"

      Health care would have been an easier sell to the American people if politicians were honest about it:

      "Sure, you taxes will go up to pay for it, but you (or your employer) are making the equivalent of a car payment to a private insurance company every month. In the worst case scenario, its a wash."

      For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

      by Grey Fedora on Mon Mar 10, 2014 at 10:42:00 PM PDT

      [ Parent ]

  •  We Need a Balance (7+ / 0-)

    Both major political parties are corrupt. One wants no taxes at all, and one wants way too much. Remember when Kennedy recommended slashing taxes by more than $13 billion in 1963? LBJ signed his provision in 1964. Unemployment went down 1.4%.

    What we need is balance. That's something that both Democrats and Republicans are unable to get their heads around.

    •  Even after Kennedy's tax cuts (9+ / 0-)

      the average effective federal tax rate on the super wealthy after deductions and exemptions was in the 40 to 47 percent range.  That is considerably higher than the 20 percent  or slightly less they pay today.

      Only a very few progressives are calling for a return to these tax rates.  I'd call it a good start. I would also give the rich a choice: either a special 65 percent tax rate for incomes over 5 million with no exemptions allowed and a progressive wealth tax starting at fortunes worth 25 million or you renounce all involvement in buying government and we have completely public campaign financing.

      •  What's the source of this statement? (2+ / 0-)
        Recommended by:
        VClib, Kvetchnrelease
        Even after Kennedy's tax cuts the average effective federal tax rate on the super wealthy after deductions and exemptions was in the 40 to 47 percent range.  
        It's certainly not consistent with CBO data.  CBO data (summarized here) only goes back to 1979, but in 1979, we still had that "Kennedy Tax Cut" top rate of 70%, and the 1% paid an effective individual federal income tax rate of 22.7%  (You can see the same data at the CBO web site).
    •  who woulda thunk it? Let people keep more of (3+ / 0-)

      their money and they can buy more things, aka stimulate the economy. Who didn;t see that coming?

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sun Mar 09, 2014 at 03:41:23 PM PDT

      [ Parent ]

      •  A billionaire does not buy 20,000 cars (0+ / 0-)

        to make up for the 20,000 middle class citizens with an annual income of 50K who can afford a car on that income. The keep more of your money buy more stuff only works up to a certain point.

        •  Duh. Thats why trickle down doesn't work. (0+ / 0-)

          And its also why I advocate to completely suspend FICA until we get back to FULL employment.

          FICA elimination would result in wage earners keeping $approximately $1.2 trillion more of their incomes for the year. Rich people don't pay FICA so they won't benefit.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Tue Mar 11, 2014 at 06:04:36 AM PDT

          [ Parent ]

          •  We've never had full employment. nt (0+ / 0-)
          •  And Social Security goes broke? (0+ / 0-)

            What are you smoking?

            Do you understand what payroll taxes are?

            Leave them alone and muck with the EITC which pays out money to lower income persons. Expand the top bracket of that. But leave payroll taxes alone. They buy future benefits.

            I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

            by samddobermann on Tue Mar 11, 2014 at 07:29:49 AM PDT

            [ Parent ]

            •  I'm sorry brother, but thats just not how it works (0+ / 0-)

              I'm sorry kevin, but that just not how it works.

              The only reason you would say that we need to "pay for" medicare and SS is that you must believe that Our national budget works the same exact way as your personal budget. Meaning you must believe that Our govt is dependent on income or borrowing in order to have money to spend.

              This is exactly the opposite of reality. We the people have absolute sovereign authority over our national currency. We can always create as much money as we want. Dollars are not physical, they do not exist in nature, We create them by fiat. Before the US, there were no US Dollars.

              The combined Euro currency GDP is somewhere around $15 trillion per year. Where did $15 trillion in Euro come from? There was no such thing as a Euro before the 90's.

              This stuff is macro 101, you really need to rethink your opinions on national budgeting and finance.

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Tue Mar 11, 2014 at 04:06:30 PM PDT

              [ Parent ]

              •  So how do "we the people" (0+ / 0-)

                do that?

                We the people have absolute sovereign authority over our national currency.
                Show me one example.

                I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

                by samddobermann on Tue Mar 11, 2014 at 05:12:59 PM PDT

                [ Parent ]

                •  The examples are everywhere. (0+ / 0-)

                  Do US dollars exist in nature? No.

                  Per the Constitution Article 1 Section 8, Congress shall have the authority "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

                  "http://www.usconstitution.net/...

                  Congress (We The People) have enacted all the laws that created the US dollar. Obviously, where else would they come from? Counterfeiting is illegal.

                  Don't believe me or the Constitution, then how about Former Fed Chairman Greenspan?

                  https://www.youtube.com/...

                  http://econproph.com/...

                  Or the most recent Ex-Fed chairman Bernanke?

                  Watch Ben on 60 min for 1 min starting at 7:20 and they'll lay it all out for you.

                  https://www.youtube.com/...

                  Or Ben in writing, the second quote prescribes cutting FICA.

                  "But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."

                  "In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money."

                  http://www.federalreserve.gov/...

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Tue Mar 11, 2014 at 05:40:04 PM PDT

                  [ Parent ]

                •  If not those 2 then how about former deputy (0+ / 0-)

                  Treasury Secretary Frank Newman:

                  Just 2 min starting at 26:00 min in here.

                  http://vimeo.com/...

                  Or you can google him and read anything he's ever written.

                  Maybe we should go back further in time?

                  NY Fed Chairman Beardsley Ruml from 1946:

                  http://www.huffingtonpost.com/...

                  The first great Fed Chairman Marriner Eccles (They named the Fed building after him):

                  http://monetaryrealism.com/...

                  Benjamin Franklin:

                  ""A legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need.   When your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment.   You do not have too many workers, you have too little money in circulation, and that which circulates, all bares the endless burden of unpayable debt and usury." Attributed to Benjamin Franklin - Ellen Brown and Reed Simpson, Web of Debt, 2008."

                  http://www.opednews.com/...

                  Henry Ford and Thomas Edison:

                  "But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way.

                  ” … if the Government issues currency, it provides itself with enough money to increase the national wealth at Muscles Shoals without disturbing the business of the rest of the country. And in doing this it increases its income without adding a penny to its debt."

                  http://prosperityuk.com/...

                  Or their original correspondence from the NYT archives (Warning, PDF):

                  http://query.nytimes.com/...

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Tue Mar 11, 2014 at 05:52:46 PM PDT

                  [ Parent ]

                •  And finally the grand Puba example of them all (0+ / 0-)

                  WWII.

                  25% of GDP deficits for 4 years. The modern equivalent of a $3.7 Trillion deficit each year. It would be like the Govt stopped collecting all taxes for 4 years.

                  Just ask yourself, would we ever lose a real war for survival because we ran out of nominal dollar entries aka money?

                  "We give up China, we will submit to your rule because we ran out of our own money, that only we can make."

                  The US Dollar comes from the USA

                  The Yen comes from Japan

                  The Yuan comes from China

                  The Euro comes from Europe.

                  China cant create Dollars and We cant create Yuan.

                  Like I said, examples and logic are literally everywhere. You just have to recognize them.

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Tue Mar 11, 2014 at 05:58:41 PM PDT

                  [ Parent ]

                •  How appropriate. Just found this great example (0+ / 0-)

                  this morning from the Bank of England.

                  Check out the video, or the original article the interview is based on (Warning: PDF)

                  Video:

                  https://www.youtube.com/...

                  PDF:

                  http://www.bankofengland.co.uk/...

                  Enough examples yet for you to rethink your position?
                  Or do you disregard everything and still think the Govt budget is the same as a householdd budget?

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Wed Mar 12, 2014 at 05:53:38 AM PDT

                  [ Parent ]

    •  I support balance too but what we have is (6+ / 0-)

      radically unbalanced in favor of the wealthy.  I think the three changes I mentioned would be ideal 1) increase the marginal top tax rate, 2) create new tax brackets with higher marginal rates for higher income-earners, and 3) tax capital gains as ordinary income.

      •  However, our society will continue to suck, even (1+ / 0-)
        Recommended by:
        samddobermann

        Were taxes to be raised on the ultra rich.

        Because right now, on both the state and federal level, far  too much money goes into the police programs, the prison program and the military.

        So reforming how the monies that are collected are to be spent needs to be a priority as well.

        My County here in Calif., which is very under-populated, has seen a loss of revenue to the schools of some 40 percent. The school district now tries to operate on 9.6 million dollars annually, down from 15.6 million back in 2008-09.

        Yet the County was recently awarded some 22 millions of dollars to refurbish, and remodel the local prison, which is a 100 cell/bed facility!

        We don't have a community swimming pool for the  kids in Lakeport, as officialdom cannot come up with the $ 40K for needed repairs, but we will have some really modernized prison cells.

        •  I agree (2+ / 0-)
          Recommended by:
          EliseMattu, samddobermann

          The over emphasis and exaltation of the police, military and prison industrial complex are hallmarks of a fascist or authoritarian society, not a functioning participatory democracy.

          Having such a national security state while everything else (infrastructure, education, the arts) deteriorates is also a priority of the power elite who want their interests protected. I agree with you that there needs to be significant redirection of priorities and investment in actually improving people's lives. That will result in a long term decrease in the need for such security-industry overspending. I'd start the cuts with the "war on drugs".

    •  wants way too much? (1+ / 0-)
      Recommended by:
      JerryNA

      Which political party wants way too much taxes? Arguably, some activists want way too much, but as far as the actual Democratic party is concerned, slight tweaks to the system are all I've seen proposed.

      In fairness, I've also not seen actual proposals from the Republicans removing all taxes. Just, again and again, attempts to lower rates on the rich.

      The Empire never ended.

      by thejeff on Mon Mar 10, 2014 at 05:18:10 AM PDT

      [ Parent ]

    •  You need to examine the Kennedy/Johnson tax (2+ / 0-)
      Recommended by:
      NoMoreLies, samddobermann

      reforms with a fine tooth comb and a ton of expertise to see what really went down. Yes, they "cut taxes" across the board, but they also significantly redefined "income" upward for the wealthy and corporations, by such measures as Subpart F and the rules on offshore grantor trusts.

      That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

      by enhydra lutris on Mon Mar 10, 2014 at 03:39:44 PM PDT

      [ Parent ]

  •  Sigh. Again the same mistake. (8+ / 0-)

    tYou are discussing top marginal rates as if that demonstrates how much in taxes "the rich" pay.  In fact, it does not, because it does not take into account how much income is subject to deductions or shelter. Charts like the ones in this diary that show top marginal rates are essentially MEANINGLESS in terms of giving any indication of what the richest people are actually paying in federal income taxes.  

    The measurement that takes those other things into account, and is FAR more relevant to seeing when the rich paid the most in income taxes, is the EFFECTIVE federal individual tax rate.  The CBO keeps track of the EFFECTIVE federal income tax rate.

    In fact, the top 1% paid more in federal income individual income tax rates under Bill Clinton, when top marginal rates were 39%, than they did in 1979, when the top marginal rates were 70%.  See the SECOND chart here.

    That's because the Tax Reform Act of 1986 eliminated many deductions and exemptions.  When you had those very high top marginal rates, rich people could deduct or exempt all kinds of stuff -- interest on credit cards, a big chunk of their housing costs if they did any work at home, lots and lots and lots of entertaining expenses, including almost all their parties as long as they invited some clients, for example, and -- most importantly for many - passive income losses and tax shelters.  

    After the last tax deal, we have raised the rates on the top 1% back to the Clinton-era level (the highest individual income taxes  on earned income ever, at least since the CBO began keeping score).  In addition, we've eliminated some additional deductions for the top 1% since Clinton's time.  So, people like the rich CEO's, doctors, working professional couples, will likely, in 2014, be paying the highest individual income taxes ever, at least since the CBO has been keeping score.

    That's why when you listen to Democrats talk about additional revenue, it's largely from businesses, not individuals.  With this last budget deal, you've gotten individual taxation on earned income as high as it's ever been.  Now, EFFECTIVE corporate tax rates are much lower than their stated rate of 35%, which is why much of the focus of raising revenue has turned to taxes on business.  

    People have to stop perpetuating a myth that marginal rates give you some indication of what people pay in taxes.  

    •  I know one thing that will for sure help the (2+ / 0-)
      Recommended by:
      VClib, EliseMattu

      economy, punish businesses by taxing them more. Sounds like a great idea, no wonder democrats are political loser so often.

      "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

      by Auburn Parks on Sun Mar 09, 2014 at 03:39:23 PM PDT

      [ Parent ]

      •  What needs to happen is to LOWER the statutory (12+ / 0-)

        corporate rate, and to bring UP the effective corporate rate.  

        Right now, the stated corporate rate of 35% is unduly high, but effective rates are much, much, much lower, and that disproportionately benefits big business which can do more in the way of legal tax avoidance.  

        We need to do with the corporate tax code the same thing we need to do with the individual tax code -- lower statutory rates, and have few if any deductions raising the effective rate for some, so that everybody at the same income level pays roughly the same, and you don't have tax "winners" and "losers" depending on who gets somebody to put some loophole in the tax code.  

        •  While I agree with your fairness point, (0+ / 0-)

          the fact remains that its bad policy to tax businesses. All taxes hurt economic activity by definition, but some are more useful than others for sure. All business revenue and spending is already taxed at the personal level already. Not to mention that only 6% of tax revenue comes from corporate taxes these days, the majority comes from FICA. I just don't see any purpose for corporate taxes, although to be fair, I understand that taxes do not fund federal spending so this is an easy position for me to take.

          "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

          by Auburn Parks on Sun Mar 09, 2014 at 03:51:09 PM PDT

          [ Parent ]

          •  I'm looking at what's realistic. (5+ / 0-)

            There's no way in today's political climate that the Congress will adopt your view.  

            Given that, I am strongly in favor of tax reform to make the Tax Code far more fair than it is, and -- this is just as important -- to eliminate, as much as possible, the present system where businesses often make decisions as much based on tax policy as they do based on what's good for business.  It's a horrible system where every time business makes a significant decision, what they do and how they do it is largely driven by the tax people.  

            •  Well, if you want to be even more realistic, (0+ / 0-)

              then I'd contend your proposal is just as fantastical as mine wrt the possibility of them getting passed by Congress.

              Realistically, when you say you want to make taxes more "fair" you are implying that big corporations with the ability to make and then take advantage of tax loopholes will pay more, and smaller businesses without that advantage will pay less. The thing is that the big corporations OWN the Congress and the Media so they won't allow your proposal either.

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Sun Mar 09, 2014 at 04:39:57 PM PDT

              [ Parent ]

              •  You just nailed it. (0+ / 0-)
                The thing is that the big corporations OWN the Congress and the Media so they won't allow your proposal either.
                That's why people who understand the tax system enough to argue about it (as here) have absolutely no effect whatsoever on the system.

                The wealthy ARE the tax system.  They rely on the ignorant, the bigoted, the religious and the just plain stupid to keep their system in place.

                They have made "taxes" such a toxic term that even people being screwed badly by the tax system refuse to raise taxes on the "owners," because taxes.

                This is not going to change.  It is impossible for it to change.  The system is now so completely rigged that a second revolution would be required to fix it.

                And who is going to fight a revolution to RAISE taxes?  In fact the idea of a revolution is absurd.  The wealthy are smart enough to keep the anger at a simmer, never letting it boil over.  THEIR media takes care of that.

                THEIR police state is there for backup.

                My God, I sound like a Marxist.  No, an Orwellian Marxist. And all I'm doing is telling the truth.  

                Ted Cruz president? Pardon my Vietnamese, but Ngo Pho King Way.

                by ZedMont on Tue Mar 11, 2014 at 06:54:09 AM PDT

                [ Parent ]

          •  I'd like to note, the diary didn't address (4+ / 0-)
            Recommended by:
            ozsea1, JerryNA, divineorder, NoMoreLies

            corporate tax rates.  I tend to believe that effective corporate rates are far too low, but corporate rates are different than individual rates.  I'd much rather have high individual tax rates and lower corporate rates to encourage reinvestment.  The problem with individual tax rates is that the lower capital gains rate for individuals tends to encourage rent-seeking rather than reinvestment.  That type of incentive is why we have companies like Bain Capital.

            •  Why do you think corporations have too much (0+ / 0-)

              money and so should be taxed more?

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Sun Mar 09, 2014 at 07:33:33 PM PDT

              [ Parent ]

              •  Its simple: many of them are not providing (2+ / 0-)

                added value to society, particularly in the financial industry. and they derive significant benefits from the public sector, including the legal system, transportation infrastructure, the military, police and the security apparatus.  They should cough up the bucks for these things if they expect to be participatory citizens. For example the oil companies should have ponied up the money to support the Iraq war which was supposed to benefit their interests; instead it was put on the national credit card and paid for by borrowed social security trust fund money. Now they don't want to pay it back or pay it back at a reduced rate; therefore the clamor for Social Security cuts.

                And, in case you are not aware, anything a company invests in its physical plant, product development, employee salaries, business inventory and other expenses of doing business is taken out BEFORE taxes. A very low or nonexistent tax rate on corporations simply helps them to siphon off more money to  investors (the financial industry), top management or ownership without the need to plow money back into business to reduce taxes on NET PROFITS.

                •  Ahh, see I never said that there shouldn't be (0+ / 0-)

                  "sin" taxes. If you want less financial speculation....tax it. If you want less carbon pollution....tax it.  If you want less income inequality....tax away the excessive wealth and income. etc etc etc.

                  However, none of these are the same as the corporate tax rate my brother in law pays in his small business with 15 employees.

                  Why do you think my brother in law has too much money and so should pay corporate taxes?

                  If you want less jobs and production....tax them.

                  "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

                  by Auburn Parks on Tue Mar 11, 2014 at 05:57:26 AM PDT

                  [ Parent ]

                  •  Small and local businesses get dinged while (0+ / 0-)

                    big business can offshore both production and income and avoid taxation. That should be more equalized.

                    Your BIL should not have to pay more taxes than GE etc.

                    I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

                    by samddobermann on Tue Mar 11, 2014 at 07:37:45 AM PDT

                    [ Parent ]

          •  Good to tax businesses (3+ / 0-)
            Recommended by:
            JerryNA, divineorder, NoMoreLies

            Businesses are taxed on profit, not on revenue. Business taxes encourage businesses to invest money back into the business and thus grow, rather than accumulate piles of cash. Similarly high personal marginal income tax rates encourage business owners to leave money in the business rather than take it as personal income where it will be taxed.

            FICA and other taxes (property and sales?) aside, since we're talking income taxes here.

            The Empire never ended.

            by thejeff on Mon Mar 10, 2014 at 05:27:22 AM PDT

            [ Parent ]

            •  thejeff - your view is widely held here (0+ / 0-)

              That higher corporate tax rates encourage investment. Anyone who has taken the first undergraduate finance class could tell you that notion is complete nonsense. High tax rates encourage capital to find lower tax investments. There are numerous software packages that help corporations rank their investment and capital spending decisions. Taxes of all kinds are included in the variables, and higher taxes always negatively impact the ranking of alternatives.

              Where do people get the idea that higher taxes encourage business investment? It's looney on its face.

              "let's talk about that"

              by VClib on Mon Mar 10, 2014 at 10:11:19 AM PDT

              [ Parent ]

              •  Yes, if you have already taxed money sitting aroun (3+ / 0-)
                Recommended by:
                divineorder, dconrad, NoMoreLies

                and you're looking for a place to invest it, that may well be true.

                If you're trying to decide whether to use not yet taxed revenue to invest in the business that generated it or to take it out and invest it elsewhere, then higher tax rates make it more effective to keep it in the business. If you can spend $100 growing your business or take it out and have $65 to spend elsewhere, that's a pretty good incentive. You'll need really big returns elsewhere to make it worthwhile.

                The Empire never ended.

                by thejeff on Mon Mar 10, 2014 at 10:35:24 AM PDT

                [ Parent ]

                •  jeff - a lot of possitive assumptions need to come (0+ / 0-)

                  true, the biggest is that you are building a business to sell so you are trying to defer the higher tax rate and convert it into a long term capital gain. That only works if you spend the $100 on something that can be a year one expense. Any capital purchase has to be depreciated so in year one you have spent the $100 and still have a tax liability for most of the invested capital. Are the items a one time purchase that builds you business or is it adding new annual costs, making your business less profitable and higher risk?

                  For most small business owners the answer it putting the $65 in your pocket and enjoying it. For the Fortune 500 it is moving capital to lower tax rate countries.

                  "let's talk about that"

                  by VClib on Mon Mar 10, 2014 at 11:49:15 AM PDT

                  [ Parent ]

            •  If high corporate taxes increase business (1+ / 0-)
              Recommended by:
              VClib

              investment, why are there no high growth countries with high corporate taxes?

              The most important way to protect the environment is not to have more than one child.

              by nextstep on Mon Mar 10, 2014 at 10:34:08 AM PDT

              [ Parent ]

          •  You "gotta" tax something. (2+ / 0-)
            Recommended by:
            dconrad, Simplify
            I just don't see any purpose for corporate taxes,
            Fundamentally, you can either tax flows (income taxes, sales taxes) or pools (real estate taxes, estate/inheritance taxes).

            There's no obvious reason why corporations should be exempted, and individuals targeted, or vice versa.  All economic actors should be in the pool.

            -7.75 -4.67

            "Freedom's just another word for nothing left to lose."

            There are no Christians in foxholes.

            by Odysseus on Mon Mar 10, 2014 at 11:02:15 AM PDT

            [ Parent ]

          •  So, if you give a business a $100K tax break.... (0+ / 0-)

            that means they will go out and hire 3 people at 30K per year?

            If only it were that simple.

            For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

            by Grey Fedora on Mon Mar 10, 2014 at 10:50:00 PM PDT

            [ Parent ]

            •  I'm not a right winger, so I would never say (0+ / 0-)

              something so stupid.

              You can't confuse the micro with the macro, if you do, it leads to poor economic decision making.

              Taxes DO NOT FUND federal Govt spending, whether tax collections are $1 or $100 trillion, the ability of the dollar sovereign to credit bank accounts on the Fed's computers is naturally infinite. Taxes should only ever be high enough to prevent too much inflation, they are not there because like you and I, the Govt needs revenue in order to spend.

              Once you understand the nature of our fiat monetary system, you necessarily look at taxes in a acompletely different light.

              Corporate tax rates are partly about global competitiveness.

              "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

              by Auburn Parks on Tue Mar 11, 2014 at 06:02:37 AM PDT

              [ Parent ]

    •  Your point on effective tax rates is fine, (5+ / 0-)

      but your criticism is misleading.  Yes, my hypothetical $1.5 million income earner would be taxed at a lower effective rate in 1979 than the stated 70% top marginal rate because of rampant tax loopholes.  But the principal reason that he'd pay a substantially lower effective rate is because most of his income was capital gains.  The rich paid less in taxes for the same reason they pay less in taxes today.  They earn interest on their wealth rather than through salaries or benefits.

      The top marginal rate deals with income, not capital gains.  Comparing the effective tax rate with the top marginal rate is comparing apples to oranges.  The effective rate always looks lower because it incorporates capital gains.

      •  not correct. the effective rates I quoted were on (2+ / 0-)
        Recommended by:
        joe from Lowell, VClib

        earned income.  If you look at my link, capital gains is in a separate chart.  

        •  The Brookings Institution calculates effective tax (0+ / 0-)

          rates by "dividing taxes by comprehensive household income."  Comprehensive household income is defined as "pre-tax cash income plus income from other sources."  Pre-tax income includes "taxable and nontaxable interest, dividends, realized capital gains."

          Brookings is working with aggregate data provided by the IRS that does not actually translate directly the proposition that we've "averaged" the tax rates of every 1% quintile earner for household income.

          I'm not saying the chart you provided is wrong, I'm merely saying that effective tax rates are difficult to calculate and are often influenced, as in this case, by the inclusion of interest, realized capital gains and dividends in the calculation.

    •  Agreed (1+ / 0-)
      Recommended by:
      joe from Lowell
      People have to stop perpetuating a myth that marginal rates give you some indication of what people pay in taxes.
      Basic and productive discussions of the difference between marginal and effective rates can be found online, rather easily.

      “Vote for the party closest to you, but work for the movement you love.” ~ Thom Hartmann 6/12/13

      by ozsea1 on Sun Mar 09, 2014 at 10:22:39 PM PDT

      [ Parent ]

    •  It blows my mind that credit card interest... (1+ / 0-)
      Recommended by:
      Odysseus

      used to be deductible.

      That's like something out of a Margaret Atwood book.

      Art is the handmaid of human good.

      by joe from Lowell on Mon Mar 10, 2014 at 09:58:40 AM PDT

      [ Parent ]

  •  Taxes DO NOT fund federal Govt spending (4+ / 0-)

    We The People issue the US dollar through Our Govt. Whether tax collections are $1 or $100 TRILLION, the ability of the fiat token issuer to issue its digital tokens is always infinite.

    This is the difference between all of us monetary Non-sovereigns wrt to the dollar and the Congress.

    With all that said, punishing and prohibiting wealth hoarding is a good reason for taxes, along with moderating aggregate demand and inflation, plus providing a baseline value for a fiat currency.

    "The Earth is my country and Science my religion" Christiaan Huygens. The gold standard ended on August 15, 1971, its time we start acting like it. If we can afford full employment killing Germans, we can afford full employment during peace-time.

    by Auburn Parks on Sun Mar 09, 2014 at 03:38:26 PM PDT

    •  Tipped 1000X (2+ / 0-)
      Recommended by:
      divineorder, NoMoreLies

      Our politicians proclaiming that spending must be cut somewhere ( never defense! ), to fund something else 'we the people' need, is outright fraud.

      It is a pathetic excuse for inaction - except for the needs of the rich.

      We've been falling for it for 40+ years now.


      The Fail will continue until actual torches and pitchforks are set in motion. - Pangolin@kunstler.com

      by No one gets out alive on Mon Mar 10, 2014 at 06:06:37 AM PDT

      [ Parent ]

  •  Contributing to the Common Good = Taxation (4+ / 0-)
    Recommended by:
    geez53, YankInUK, JerryNA, divineorder

    Tax Evasion Destroys Nations.

    •  Tax compliance in the US is among the highest (1+ / 0-)
      Recommended by:
      JerryNA

      in the world. In many other countries tax fraud is a civil matter. Countries like Italy and Greece have very poor tax compliance and as you note tax evasion can destroy nations.

      "let's talk about that"

      by VClib on Sun Mar 09, 2014 at 04:51:43 PM PDT

      [ Parent ]

  •  I contend, your average 6th grader could (0+ / 0-)

    write a balanced budget provided he/she were given honest non partisan information.  A budget that would enhance the national economy rather than damage it.

  •  Your formula is /should be wrong (5+ / 0-)

    It's not X=Y-Z, it's X + R = Y - Z - N.
    X is the taxes paid by "normal Americans". (define as you will - roughly those who pay FICA, or those making $500k, if you want to include brain surgeons)
    R is taxes paid by "non Americans" (the rich and corporations).
    Y is government spending on things that people see. (schools and potholes)
    Z is money lost to fraud. (we have to ignore waste - most "waste" is actually fraud)
    N is money spent on things people gain no visible benefit from. (money thrown away to defense contractors and health insurance companies)

    Note that I am changing the terms of the debate. That is what we have to do. We have to make distinctions - between people who live next door and people who live on the Riviera, between people who work for a living and people who make other people work for their living, between money that is spent on people who need it and money that is given away to people who kick some of it back.

    We also have to own up to some unpleasant facts, rather than knee-jerk denials of certain truths. Because of two income families and Reagan's doubling the FICA tax "real" people (as defined above) are not only working harder and making less, but they are paying more taxes, and compared to what they are making the rich are paying less.

    Truth, Knowledge, and Morality.

    •  A good start. (0+ / 0-)

      If you're arguing tax rates. you've jumped the shark.

      Winning elections is about messaging followed by performance.  First you have to say the right thing.

      If someone says he wants to cut taxes, he's not talking about your taxes.  He's talking about his taxes.

      "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

      by jestbill on Mon Mar 10, 2014 at 06:55:34 PM PDT

      [ Parent ]

  •  The Democratic party's problem with taxes? (9+ / 0-)

    You don't need graphs to articulate the Democratic party's problem with taxes, it is quite obvious.

    The Democratic party has been unable to articulate an effective value proposition on why the public should pay more for government services.  It is that simple.

    No one is going to want to pay more in taxes for some amorphous reason such as, "we will make things better".  People want to see tangible results if they hand over their hard earned paycheck.

    Example:  In Missouri, a pretty fiscally conservative state, they set aside a small portion of sales tax that is earmarked towards the department of conservation...when it came to a vote it passed by a landslide.
    t
    Here in Denver they had a vote in 2012 to increase property taxes to build a new High School and Elementary school just north of I 70, that passed easily.  

    In both cases it was made clear what you would get with  the increase in taxes.

    At same time, Colorado had a vote to increase taxes for "education" in 2013...it failed miserably, mostly because the voters could see a tangible benefit in raising their taxes for "education".  What would they get?  More teachers? More schools? Smaller classrooms?  What?  The proponents could never get their act together and articulate a value prop.

    Just think about this, every time someone has to go to the DMV, and waits for 6 hours to talk to someone, they are thinking "I am paying taxes for this!"  Now why hasn't some smart democrat figured out the answer is to say, "hey, if we could get an additional $3 a year from each colorado taxpayer, we could cut your wait to 30 minutes".  That tax increase would pass in a heartbeat.

    •  We live in a post-Reagan world where government (0+ / 0-)

      is always evaluated based on its cost-effectiveness (or lack thereof).  This is one of the consequences of conducting elections on the Republicans' home field. I believe that the Democratic Party can still promise big, but it needs to fight back against the temptation to say "and we can can do it for no cost to the taxpayer."  Instead, Democrats should be saying "and we can do it if we ask millionaires to pay the price of a Grande Soy Latte from Starbucks."

  •  Thank you for civil discourse (6+ / 0-)

    It's been a while since I've observed a civil discussion of taxation around here.  Mostly good and thoughtful comments all around.  No one proposing "Eat the rich because the bastards don't deserve ANYTHING".

    I appreciate the idea of fairness, and I think that this is an important concept to carry in any conversation about taxation.

    The far right makes more progress than the probably should by convincing poor people that they might win the lottery some day and wouldn't want to be taxed to death, then pointing to fraud and abuse (real or imagined) and getting people to rally around cutting taxes against their own interests.

    I think everyone should pay taxes (so they all have skin in the game).  I've been convinced (through civil discourse) that below the poverty line, taxation should be minimal.  I've been convinced that beyond some line (insert controversial value here... $1M?  $10M?) a 50 percent federal rate and significant inheritance tax is a reasonable way to keep capital circulating and pay for the services that we all need (no, I'm not a socialist, and no, I don't think that will eliminate the incentive of industrious people to produce or encourage them to leave the country).

    Someone else made the good point that the uber-rich are often not making "income" but rather capital gains... so taxing capital gains as income is a reasonable idea.

    The snake pit is in the deductions.  Would love to see more discussion about how to minimize and clarify those.

  •  The fundamental problem with US Taxes (5+ / 0-)

    is not about rates.  It's about complexity and the inability of normal people to get a fair shake on taxes.  The US Tax Code is somewhere around 75,000 pages in length.  (It was over 73,000 pages as of January 2011 and growing with ACA changes).  We need a radically simplified tax code that would make it impossible for giant corporations to avoid all taxes; indeed, to wind up getting tax refunds and concessions that means the average taxpayer ends up paying THEM.  Most people hate the government because they know it is unfair and incomprehensible at the sharp end-- that's the end that can take away everything you own because you messed up trying to comply with a tax code that is complex beyond human comprehension.  When the IRS itself says advice from its own IRS agents is not definitive nor will that advice, if followed, protect you from penalties and even jail time--then it is VERY hard to love government.  If the code was simple the rates could come down mightily and productivity, in real production and not paper shuffling and rules reading, would rise.  Hong Kong, for example, has a 4 page long tax form for all income tax payers.  It has a graduated tax that ends at 15% for real persons and 16.5% for corporate persons, with very few deductible expenses other than a general living allowance.  Yes, it has hidden taxes in property and many fees and charges related to use of facilities (roads, tunnels, airport departure tax, trash dumping and on and on), but these use fees and taxes are applied when the service is used and are simple charges meant to underwrite the cost of the service and facilities, and are adjusted up, or down, depending on those costs.  The key thing, user fees and taxes are mostly attached to services and the income tax and profit tax rules are very simple and comprehensible to the average person.  Government runs a surplus and business has a very low tax burden, not just in the rates, but also in the cost of compliance with tax laws.

    These Republicans have filibustered more . . . while accomplishing less . . . (and) while attempting to block more nominees than any other Congress in the history of our republic--Jon Stewart

    by monkeybrainpolitics on Mon Mar 10, 2014 at 02:15:37 AM PDT

    •  You're absolutely right, and the most common thing (0+ / 0-)

      that people forget is that the poor pay A LOT of taxes as a percentage of their income on sales and user fees. Our tax world is far too complicated.  However, I would argue that the system is not complicated enough for the top income earners.  There should be more brackets, at the very least, so that a dollar earned on a billionaire's 20th million is taxed far more heavily than a dollar earned by someone making $400,000.

      That's where income inequality really enters our tax policy. Our current system, because of the compromises in the Tax Reform Act mentioned by earlier comments, codifies the notion that every dollar earned after $400,000 is equal. If the rich are to acquire income in obscene amounts, our tax code must be equally aggressive in taxing that income at a higher rate.

  •  Here's my tax plan (3+ / 0-)

    The tax rate for people earning under $250,000 remains essentially the same.

    But goes to 50% of all gross income over $250,000 (no matter where it's made or hoarded), plus the real unemployment rate (or two times the reported unemployment rate), minus the the percentage of Americans earning three times the poverty line or more.

    With a minimum of 33%.

    Basically the point is to incentivize the "Job creators" to actually create good-paying jobs in America.

    You know how poor people only embrace the blessing of work if they are incentiviized by the threat of death or starvation, right? So this incentivizes rich people with something they truly hate and almost never do: The threat of paying for something themselves.

    "Forgive me for noting that conservatives seem to believe that the rich will work harder if we give them more, and the poor will work harder if we give them less." -- E. J. Dionne
  •  Earnings equals government services MINUS waste? (0+ / 0-)

    Seems to me that should be plus. Or am I missing somethingf undamental?

    Slow thinkers - keep right

    by Dave the Wave on Mon Mar 10, 2014 at 05:10:56 AM PDT

  •  T&R, though I think you are WRONG! (1+ / 0-)
    Recommended by:
    Odysseus

    I think this is a great discussion to have....

    We went off the gold standard in 1971.  You would almost never know it.

    We have a fiat currency.  Money is what we say it is.

    It's great to be sovereign nation!

    We have absolutely NO need to collect taxes to offset government spending.  We simply PRINT what we need.

    Taxes are indeed very useful to influence the behavior of people, and to correct inefficiencies and flaws in 'the system'.

    This is a fundamental truth that 'the powers that be' hope we never learn.

    We really ARE in control.

    We just have to act like it.


    The Fail will continue until actual torches and pitchforks are set in motion. - Pangolin@kunstler.com

    by No one gets out alive on Mon Mar 10, 2014 at 05:56:59 AM PDT

    •  State and local governments not so lucky... (3+ / 0-)
      Recommended by:
      joe from Lowell, JerryNA, Odysseus

      State and local governments are completely different - they cannot 'print' money.

      They are indeed far more like you and me.

      That's a big reason why there is so much federal money made available at lower levels for roads, schools, etc.

      A great debate to be had is where/how to draw the line between what 'We the people' as the Federal government should pay for, and what State and local governments should pay for.


      The Fail will continue until actual torches and pitchforks are set in motion. - Pangolin@kunstler.com

      by No one gets out alive on Mon Mar 10, 2014 at 06:14:02 AM PDT

      [ Parent ]

    •  I would disagree with the notion (0+ / 0-)

      that taxes are a useful way to influence behavior.  For the vast majority of individuals, we do not control enough of the timing or character of our income and expenses to be able to meaningfully change behavior in reaction to the tax code.   Plus, this assumes that the average tax payer has perfect knowledge of what the tax code is and how it affects his or her income and liability.    The tax code is simply too opaque to be an effective tool to influence behavior for 90% of Americans.

      For the other 10%, query whether we should be influencing the economic decisions of taxpayers through tax code manipulations.  

  •  Taxes Are Not Too High. Incomes Are Too Low. (8+ / 0-)

    This is all Democrats need to say about taxes. Then they need to get busy increasing incomes.

  •  The problem I have . . . (5+ / 0-)

    . . . in discussing this with many ignorant people, is that they think that a person will be taxed at that rate for their earnings below that threshold rather than upon each additional dollar earned above that threshold.

    I see a lot of ignorance about plain simple budgeting, saving, and investment just in my family.  There are a lot of people approaching retirement who failed to save very much and now think that they can make up for over 30 years of lost compounding in just a couple of years.  

    I was in for the long haul and was sorely jealous because I refused to spend on toys rather than saving.

    •  Compounding = greatest force in Universe, or it is (1+ / 0-)
      Recommended by:
      JerryNA

      “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

      Albert Einstein allegedly declared:

      compound interest to be "the most powerful force in the universe."

      Compound interest is man’s greatest invention.

      Compound interest is the greatest mathematical discovery of all time.

      Compound interest is the eighth wonder of the world.

      Compound interest is more complicated than relativity theory.

      The suppression of uncomfortable ideas may be common in religion or in politics, but it is not the path to knowledge, and there is no place for it in the endeavor of science. Carl Sagan

      by Kvetchnrelease on Mon Mar 10, 2014 at 09:39:17 AM PDT

      [ Parent ]

      •  Compounding helped me a lot. (0+ / 0-)

        Rather than chasing growth in equities, my strategy was to obtain decent monthly compounding first, growth second.

        But, this market puzzles me.  A low-wage economy, American value added manufacturing dead in the water, people tapped out, no inflation on the horizon, basic research in America in the doldrums, and equities doing quite well.

        •  Corporations are flush with heaps of cash (0+ / 0-)

          and the largest of them show positive balance sheets. The negatives you list (which are true) tend to produce not sudden, but long term impacts to the corporations. The stock market's event horizon is generally no more than 12-18 months at best, which explains why these long term trends can be ignored.

          A secondary consideration is the backstopping by the Fed which is ongoing. Its basically free cash on the balance sheets of the large financial institutions who have a symbiotic relationship with the other large corporations.

  •  Well, not really. (0+ / 0-)
    An effective government needs taxation. Obviously, it needs the revenue that taxation provides to fund the activities of government.
    But it's a useful fiction, and at least half-true.

    -7.75 -4.67

    "Freedom's just another word for nothing left to lose."

    There are no Christians in foxholes.

    by Odysseus on Mon Mar 10, 2014 at 08:34:50 AM PDT

  •  This diary seems sort of dated. (1+ / 0-)
    Recommended by:
    Odysseus

    Democrats have been openly campaigning on raising taxes on the wealthy since 2006. This fear of taxes criticism seems much better-suited to the Democrats of 1997 or 2003 than today.

    And income inequality most certainly does not start with taxes. Income inequality, and its troubling growth to dangerous levels, starts with deindustrialization, the decline of unions, and other alterations in the structure of our economy. Saying that the tax code should respond to this inequality, even saying that there are elements of the tax code that contribute to it, is fine, but that's not ultimately where the problem lies, and if you focus in too singularly on the tax code, you're going to miss most of the picture.

    Art is the handmaid of human good.

    by joe from Lowell on Mon Mar 10, 2014 at 09:53:07 AM PDT

    •  Partially agree, but note that I'm not making any (0+ / 0-)

      claim that this should be the sole focus of Democratic efforts. I think my modest point (stated grandly) is that Democrats can't keep running from raising taxes.  As to your claim that Democrats are supporting tax increases, I think you're mistaking some limited posturing for a sustainable trend. The types of large changes to the tax code that I'm suggesting here are not really being discussed by mainstream candidates. I'd love to hear someone really campaign on taxing capital gains as ordinary income.  So far, it's just been platitudes.

  •  Try a different point of view... (0+ / 0-)

    I will probably get flamed for this because few around here are willing to go revolutionary even though it makes sense.

    Obviously, it needs the revenue that taxation provides to fund the activities of government. We like our roads, our shiny new tanks, and our Head Start programs, so we give the government our earnings so that it can do things for us.
    That is not obvious.  Actually, it makes no sense.  Government is the sole issuer of the currency.  So, if taxation is required in order for the government to have the money to fund government activities, where does that money come from in the first place?  The government. Logically, then the government does not need the revenue in order to spend.

    The government needs the roads, tanks, Head Start and other stuff because that is what we as a republic have decided need to be done for the public good.  So, the government issue money in order to get real goods and services for the public good.  So, why have taxes?

    Two reasons:
    1) To create demand for the money.  By taxing a larger group of people there is demand for the money in order to pay those taxes, and the people who provide the goods directly to the government can use the money the government creates to pay them to buy food, clothing, and shelter.
    2) To control inflation.  If government spending is done by creating currency, then taxes destroy currency. If too much currency is created then there will be demand pull inflation.  So, taxes siphon off some of the demand in order to keep demand in line with supply.

    There are a whole bunch of consequences to these points that I don't really have time to get into, so I will give a link to some university professors writings on the topic.

    Start here for a primer:
    http://neweconomicperspectives.org/...
    And here for the latest:
    http://neweconomicperspectives.org/

  •  When you say individuals making $1.5 million (0+ / 0-)

    you should clarify that you mean $1.5 million in earned income.

    Mitt Romney makes much more that $1.5 million every year, and he doesn't pay anywhere near that marginal rate, because most of his earnings are in capital gains (carried interest).

    I know you know the difference, because I've seen you address it in other comments, but if you examine the language of the diary, at least in some places it is ambiguous.

    La majestueuse égalité des lois, qui interdit au riche comme au pauvre de coucher sous les ponts, de mendier dans les rues, et de voler du pain.

    by dconrad on Mon Mar 10, 2014 at 11:36:54 AM PDT

  •  Effective tax rates are much more even (0+ / 0-)

    historically.

    Marginal tax rates are meaningless.  I'll repeat that - meaningless.

    You guys that think the rich are paying much much less than they did in the 50's, conveniently ignore the fact that those 90% rates only applied to roughly 1% of the adjusted gross income above $200k.  In other words, hardly any income was taxed at the 90% rates, even for the very rich.

    Without the context of the tax laws that went along with those rates, the marginal rates don't tell you anything.

    The true picture (or closer to true, at least) can be gleaned from looking at effective tax rates.

    Look at these effective rates since 1980--

    Effective Federal Tax Rates and Income by Quintile

    Even better, read this:

    Historical Tax Rates: Rhetoric vs. Reality

    A more economically relevant measure of the individual income tax burden is the effective marginal rate. This rate measures the additional taxes paid on additional income earned, weighted by the distribution of total AGI. By this measure, the income tax burden has generally remained within a relatively narrow range.6 See the chart on the top of page 3.
    You analysis is further flawed because you do not account for borrowing.  X=Y-Z?  Nope. X + borrowing = Y-Z.  And, the interest on our debt will soon equal the DOD budget.
  •  For a lot of the higher maximum rate, there (0+ / 0-)

    was a cap (50%) on the rate applicable to earned income. The top rate only applied to unearned income. Today, that has been somewhat inverted with earned income often taxed at a greater rate that unearned income.

    That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

    by enhydra lutris on Mon Mar 10, 2014 at 03:03:25 PM PDT

  •  The dirty little tax secret (3+ / 0-)
    Recommended by:
    NoMoreLies, Simplify, Assaf

    is state and local taxes. In some states, the effective total tax rate (federal, state and local) on the top 1% is less than the effective tax rate on the bottom 20% of earners.

    The ultra wealthy have become very adept at avoiding paying their way in our society.

    Too soon old, too late smart (-7.25, -6.21)

    by Tim DeLaney on Mon Mar 10, 2014 at 06:02:55 PM PDT

  •  IMHO we should start talking bout total tax burden (0+ / 0-)

    All basic utilities - water, electricity, heating, basic education costs, even arguably part of your rent and food expenses - are essentially taxes. Their cost is controlled, and you cannot be a member of modern society without them.

    They are also controlled, one way or another, by the government.

    When the costs of these are added up, you discover that:

    The marginal overall tax rate on the rich barely changes because these expenses (not luxury living, just the very basics) are a small fraction of their income.

    The overall tax rate of most of the middle class is close to 100%.

    The overall tax rate on the poor is >100%, which means the rest of society must make up the difference just for the poor to be able to survive.

  •  Raising the Marginal Rate on Millions Insufficient (0+ / 0-)

    Raising the marginal rate on those making $1.5 million or more is not enough that is because there are not enough of them.  With 401(K) deductions, Child Care tax credits, mortgage interest deductions, personal exemptions, state and local income tax deductions and all sorts of other tax expenditures, the taxable income of middle income and upper middle income taxpayers (which is where most of the tax base is located) is drastically reduced which not only cuts the tax base but puts married couples making $100,000 into a 15% marginal rate and this rate is paid only on taxable income of a say $60,000 once all the deductions are taken into account.  So if this hypothetical couple paid 15% on $60,000 of taxable income, they would pay $9,000 in federal income taxes.  Then if they have two children that is reduced to $7000 for an average tax rate of 7,000/100,000 = 7%.  Of course, these folks are paying payroll taxes as well which would double their tax by adding another $7600.  But even if you take that into account their federal tax bill is 14.6%.   Do you really think that is too high?

  •  Simplify (0+ / 0-)

    The 300# gorilla in the tax room is the simple truth that for a large part of the electorate, folks who should by every social measure be Democrats -- folks that make a living fixing cars, or pounding nails, or doing any one of a million things as small businessmen, the federal tax code is a terrifying pain in the ass.  

    Every year they are required to spend money they don't have on accountants, OR as most chose, they file extensions, lose sleep, end with a low quality somewhat plausible account and hope for the best. They then spend the rest of the year waiting for an audit letter and becoming willing dupes for the Republicans.

    If the Democrats really wanted to connect with the average middle class voter they would propose junking the current Byzantine system entirely, in favor of a much simpler, honest, and transparent progressive tax without all the loopholes that allow the rich to avoid paying.

    Oh I forgot!   The Democrats would never actually do this because tax favors for the rich are the secret juice for ALL politicians, Republican or Democrat, in today's Washington..

    Labor was the first price paid for all things. It was not by money, but by labour, that all wealth of the world was originally purchased. - Adam Smith

    by boatwright on Tue Mar 11, 2014 at 12:33:23 PM PDT

  •  The problem is making the argument. Dems (0+ / 0-)

    have yet to master the defense against republican BS & CHILDISH GOSSIPY rhetoric.  Meanwhile Europe, especially Scotland and Ireland, have great politicians who can knock out any lie by a US republican.  Dems fall prey to the run around discussions that go no where and say nothing.  Rarely do you see a true knockout/killer response.  Most of the time readers holler, "Look! senator/representative so and so slammed republican so and so, and when I read it there's nothing "great" in what was said.

    "The most weak and vulnerable in society, instead of getting the protection and support they deserve will be interrogated and humiliated in an effort to get them off the meager levels of support to which they are entitled." McCloud - Scotland.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site