Fun with US Tax statistics.

[specious_reasons]

So, at lunch today, I decided to see the effects of recent tax cuts to the tax distribution:

http://www.irs.gov/pub/irs-soi/01in01ts.xls
http://www.irs.gov/pub/irs-soi/01in02ts.xls

Top 1 Top 5 Top 10 Top 25 Top 50
Adjusted gross income share (percentage):
1986 11.30 24.11 35.12 59.04 83.34
1987 12.32 25.67 36.90 60.75 84.37
1988 15.16 28.51 39.45 62.44 85.07
1989 14.19 27.84 39.00 62.28 85.04
1990 14.00 27.62 38.77 62.13 84.97
1991 12.99 26.83 38.20 61.85 84.87
1992 14.23 28.01 39.23 62.47 85.08
1993 13.79 27.76 39.05 62.45 85.08
1994 13.80 27.85 39.19 62.64 85.11
1995 14.60 28.81 40.16 63.37 85.46
1996 16.04 30.36 41.59 64.32 85.92
1997 17.38 31.79 42.83 65.05 86.16
1998 18.47 32.85 43.77 65.63 86.33
1999 19.51 34.04 44.89 66.46 86.75
2000 20.81 35.30 46.01 67.15 87.01
2001 17.53 31.99 43.11 65.23 86.19
Total income tax share (percentage):
1986 25.75 42.57 54.69 76.02 93.54
1987 24.81 43.26 55.61 76.92 93.93
1988 27.58 45.62 57.28 77.84 94.28
1989 25.24 43.94 55.78 77.22 94.17
1990 25.13 43.64 55.36 77.02 94.19
1991 24.82 43.38 55.82 77.29 94.52
1992 27.54 45.88 58.01 78.48 94.94
1993 29.01 47.36 59.24 79.27 95.19
1994 28.86 47.52 59.45 79.55 95.23
1995 30.26 48.91 60.75 80.36 95.39
1996 32.31 50.97 62.51 81.32 95.68
1997 33.17 51.87 63.20 81.67 95.72
1998 34.75 53.84 65.04 82.69 95.79
1999 36.18 55.45 66.45 83.54 96.00
2000 37.42 56.47 67.33 84.01 96.09
2001 33.89 53.25 64.89 82.90 96.03


Year bottom 50 bottom 75 bottom 90 bottom 95 bottom 99
Adjusted gross income share (percentage):
1986 16.66 40.96 64.88 75.89 88.70
1987 15.63 39.25 63.10 74.33 87.68
1988 14.93 37.56 60.55 71.49 84.84
1989 14.96 37.72 61.00 72.16 85.81
1990 15.03 37.87 61.23 72.38 86.00
1991 15.13 38.15 61.80 73.17 87.01
1992 14.92 37.53 60.77 71.99 85.77
1993 14.92 37.55 60.95 72.24 86.21
1994 14.89 37.36 60.81 72.15 86.20
1995 14.54 36.63 59.84 71.19 85.40
1996 14.08 35.68 58.41 69.64 83.96
1997 13.84 34.95 57.17 68.21 82.63
1998 13.67 34.37 56.23 67.15 81.53
1999 13.25 33.54 55.11 65.96 80.49
2000 12.99 32.85 53.99 64.70 79.19
2001 13.81 34.77 56.89 68.01 82.47
Total income tax share (percentage):
1986 6.46 23.98 45.31 57.43 74.25
1987 6.07 23.08 44.39 56.74 75.19
1988 5.72 22.16 42.72 54.38 72.42
1989 5.83 22.78 44.22 56.06 74.76
1990 5.81 22.98 44.64 56.36 74.87
1991 5.48 22.71 44.18 56.62 75.18
1992 5.06 21.52 41.99 54.12 72.46
1993 4.81 20.73 40.76 52.64 70.99
1994 4.77 20.45 40.55 52.48 71.14
1995 4.61 19.64 39.25 51.09 69.74
1996 4.32 18.68 37.49 49.03 67.69
1997 4.28 18.33 36.80 48.13 66.83
1998 4.21 17.31 34.96 46.16 65.25
1999 4.00 16.46 33.55 44.55 63.82
2000 3.91 15.99 32.67 43.53 62.58
2001 3.97 17.10 35.11 46.75 66.11


So, in 2001, the bottom 90% of taxpayers have 57% of the total income, and pay 35% of all taxes. a change from 54/33 in 2000, and 55/33.

2002 results aren't published yet.

So, are taxes becoming more or less fair and equitable?

[Ziggurat]

Originally posted by specious_reasons

So, in 2001, the bottom 90% of taxpayers have 57% of the total income, and pay 35% of all taxes. a change from 54/33 in 2000, and 55/33.

2002 results aren't published yet.

So, are taxes becoming more or less fair and equitable?

That depends quite a bit on your definition of fair and equitable. But do these statistics include taxes other than income tax? The social security tax, for example, is quite regressive. And is the income only earned income, or does it include dividends, capital gains, etc?

[specious_reasons]

It's strictly income tax, from what I understand.

[Ziggurat]

Originally posted by specious_reasons
It's strictly income tax, from what I understand.

OK, but then there isn't really enough information here. We can't really say that only the income tax is fair or unfair since that's only part of a person's tax burden - for example, would making only the income tax fair actually improve things if its unfairness was offfsetting the unfairness of another tax?

Last I heard, total tax rates were somewhere in the range of 25-30% average across the board for taxpayers of any income, when you include things like deductions, state taxes, sales taxes, and social security (the last two being rather regressive). It's easy to create the impression of an overly progressive tax system by doing things like only refering to the marginal federal tax rate for ordinary income, but that's not representative of total tax burdens, which is really the important thing.

[shanek]

Originally posted by specious_reasons
So, are taxes becoming more or less fair and equitable?

Does a burglar become more or less fair and equitable when he steals more from rich people than poor people?

[aerocontrols]

Originally posted by shanek


Does a burglar become more or less fair and equitable when he steals more from rich people than poor people?

I thought that question had long been settled (http://www.nottinghamshiretourism.co.uk/themes/robinhood/).

[Gem]

Does a burglar become more or less fair and equitable when he steals more from rich people than poor people?

Kinda funny, but a burglar doesn't provide national defense, free public education, roads, postal service or public parks.

As for fairness in taxes, there are only two models that can be reguarded as fair. Progressive and Linear. A linear is 10% tax for everyone, no matter what income, progressive is high taxes for the rich, lower for the poor. The debate is around that. I haven't really heard anyone doing a good job arguing in favor of a regressive tax.

Gem

[The Central Scrutinizer]

Originally posted by specious_reasons
So, are taxes becoming more or less fair and equitable?

That's an easy one. More.

[Jon_in_london]

Originally posted by shanek


Does a burglar become more or less fair and equitable when he steals more from rich people than poor people?

Is it your contention that taxation is a criminal offence?

[shanek]

Originally posted by Gem
Kinda funny, but a burglar doesn't provide national defense, free public education, roads, postal service or public parks.

Ah, so if a burglar steals your money and contributes to these various services then it's justified? A burglar can defend his actions based on what he did with the money? The ends justify the means?

[shanek]

Originally posted by Jon_in_london
Is it your contention that taxation is a criminal offence?

It is my contention that taxation is the forceful removal of money that legitimately belongs to a person at the point of a gun. And it is.

[Thanz]

Originally posted by shanek

It is my contention that taxation is the forceful removal of money that legitimately belongs to a person at the point of a gun. And it is.
Quick question: is income taxation in the United States constitutionally valid?

[specious_reasons]

Originally posted by The Central Scrutinizer


That's an easy one. More.

You know, I thought the distribution of tax burden was relatively fair during the Clinton years, but I it looks that the distribution hasn't changed that signifcantly. I was really curious about TY2002, but the IRS seems a little late in publishing the information.

One thing I don't like is the mild increase in tax burden of the bottom 50% and 75% I hope that does not turn into a trend under Bush.

[Tmy]

Originally posted by shanek


It is my contention that taxation is the forceful removal of money that legitimately belongs to a person at the point of a gun. And it is.

I dont get these "taxes are a crime" people. Is the goverment supposed to run on happy thoughts???

[Jon_in_london]

Originally posted by shanek


It is my contention that taxation is the forceful removal of money that legitimately belongs to a person at the point of a gun. And it is.

So if you were 'king' you would abolish all taxation?

[Suddenly]

Originally posted by shanek


Does a burglar become more or less fair and equitable when he steals more from rich people than poor people?

Relatively speaking, yes. He does become more fair and equitable.

[Tmy]

You're not forced to pay any taxes.

Dont want to pay income tax. Then dont work.
Dont want to pay sales tax. Dont shop.
Dont want to pay property tax. Dont buy any land.

You can take your tent and go live up in the mountains in a tax free paradise.


I think its worse to steal the last loaf of bread from a poor man than to steal 1 loaf of bread from the rich man who has 100.

[Suddenly]

Originally posted by shanek


It is my contention that taxation is the forceful removal of money that legitimately belongs to a person at the point of a gun. And it is.

Yep. Called government. The "point of a gun" is some nice drama as we could say the same thing w/r/t parking tickets. It is a point against government all together, even those acts of government that protect property.

[AmateurScientist]

Originally posted by Gem


Kinda funny, but a burglar doesn't provide national defense, free public education, roads, postal service or public parks.

As for fairness in taxes, there are only two models that can be reguarded as fair. Progressive and Linear. A linear is 10% tax for everyone, no matter what income, progressive is high taxes for the rich, lower for the poor. The debate is around that. I haven't really heard anyone doing a good job arguing in favor of a regressive tax.

Gem

Frankly,

I don't understand how you can claim that regressive taxes are obviously unfair, yet also claim that progressive taxes might be fair.

What is the rational, not emotional, basis for claiming that progressive taxes are "fair"?

AS

[AmateurScientist]

Originally posted by Tmy

I think its worse to steal the last loaf of bread from a poor man than to steal 1 loaf of bread from the rich man who has 100.

Hmmm. The implication is that society has a right to take property it decides is excessive from private property owners.

One might also call that socialism.

It is antithetical to the concept of individual rights and liberty. It is anti-American to claim such a thing.

I shake my head at anyone who claims to value individual freedom and who also champions income redistribution schemes.

They are utterly inconsistent.

AS

[Tmy]

The problems is that we have a financial burden that needs to be paid. Itd be nice if everyone could pay $1 and the country could run on that. Thats not reality. I dont think its so bad to ask a little more from people who can take the hit easier.

Since when have taxes ever been fair anyway?

[Cain]

It is my contention that taxation is the forceful removal of money that legitimately belongs to a person at the point of a gun. And it is.

I love the smell of proof-by-assertions in the morning.

And since we're being redundant:

I love the smell of proof-by-assertions in the morning. I do.

I shake my head at anyone who claims to value individual freedom and who also champions income redistribution schemes.

This position rests on the assumption that the "original distribution" (whatever that means) is just.

Money gets redistributed in a market economy all the time, every second. Hell, the transition to a market economy "redistributes" wealth in a way that otherwise would not take place. National defense entails redistribution. Virtually any type of regulation "redistributes" -- and the same holds for deregulation. If a hurricane strikes the coast-line, there will be a "redistribution."

This sort of typical knee-jerk reaction to the "redistribution" bogeyman is simply astonishing. But then I also have a problem with "that's anti-American!" observations. Misappropriations of the term "socialism" has annoyed me for a long time.

This is a bad morning.

[Tmy]

Originally posted by AmateurScientist


I shake my head at anyone who claims to value individual freedom and who also champions income redistribution schemes.


AS

"Income redistrubition". This term alwyas bugs me. The implication is that tax money goes from the top down. The rich pay taxes and get nothing. The poor pay little taxes and get all sorts of govt freebies!!!

I think this is a myth. Is $100 billion in tax dollars to the war an Iraq "income redistribution" to the poor tax payer? If anything the war in Iraq benefits the rich.

Govt Services. Everyones focus is on schools and police. And how the poor benefit from those services. What about the 1000's of other govt services? For example. THe US patent office. How many poor tax payers are using that service? Securities and Exchange Commission, the Civil Court system, the FAA etc...

The rich like to spin that they get nothing for their tax dollars but thats just not true.

[Drooper]

Looking at just 2000-2001 picks up the effects of the collapse in the stock market and corporate earnings, so the higher earners would be more adversely affected, as the income distribution stats show. But in terms of tax burden, the numbers show the following:


top 1%:
income fell 16%, tax fell 9%

top 10%
income fell 6% tax fell 5%

bottom 50%
income increased 6%, tax increased 2%


This VERY naive analysis shows that the tax burden increased at the upper income levels and fell at the lower ones.

[Cain]

Tmy- Linguist George Lakoff had an interesting article in the last issue of _The American Prospect_ on framing issues such as taxation in a progressive mindset. He discusses similar points:

Taxes look very different when framed from a progressive point of view. As Oliver Wendell Holmes famously said, taxes are the price of civilization. They are what you pay to live in America -- your dues -- to have democracy, opportunity and access to all the infrastructure that previous taxpayers have built up and made available to you: highways, the Internet, weather reports, parks, the stock market, scientific research, Social Security, rural electrification, communications satellites, and on and on. If you belong to America, you pay a membership fee and you get all that infrastructure plus government services: flood control, air-traffic control, the Food and Drug Administration, the Centers for Disease Control and so on.

Interestingly, the wealthy benefit disproportionately from the American infrastructure. The Securities and Exchange Commission creates honest stock markets. Most of the judicial system is used for corporate law. Drugs developed with National Institutes of Health funding can be patented for private profit. Chemical companies hire scientists trained under National Science Foundation grants. Airlines hire pilots trained by the Air Force. The beef industry grazes its cattle cheaply on public lands. The more wealth you accumulate using what the dues payers have provided, the greater the debt you owe to those who have made your wealth possible. That is the logic of progressive taxation.

No entrepreneur makes it on his own in America. The American infrastructure makes entrepreneurship possible, and others have put it in place. If you've made a bundle, you owe a bundle. The least painful way to repay your debt to the nation is posthumously, through the inheritance tax.

Those who don't pay their dues are turning their backs on our country. American corporations registering abroad to avoid taxes are deserting our nation when their estimated $70 billion in dues and service payments are badly needed, for schools and for rescuing our state and local governments.


http://www.prospect.org/print/V14/8/lakoff-g.html

Shanek and AS have their own framing: taxation is theft and redistribution is evil. It's not exactly well-founded, but it certainly presents a relatively consistent -- if simplisitc -- outlook on most issues.

[Suddenly]

Originally posted by AmateurScientist


Hmmm. The implication is that society has a right to take property it decides is excessive from private property owners. Not really. Remember we are discussing which is worse, not whether either is justified

One might also call that socialism.

It is antithetical to the concept of individual rights and liberty. It is anti-American to claim such a thing.

I shake my head at anyone who claims to value individual freedom and who also champions income redistribution schemes.

They are utterly inconsistent.

AS

Not really. The whole purpose of government is a collection of people that pool resources for the common good, such as defense, protection from crime, resolution of disputes, and so forth. Uniform agreement as to how to go about this is not practical, so we have an ordered system that decides how much to pool and where those resources come from.

I'm in favor of what you would call "redistribution" not becuase of some wealth hate or dislike of individual liberty or whatever. I'm for it because in the long run in benefits the safety and security of the country. If we want to deal with our own people in a civilized way, we need resources. In short, I'd rather spend money paying for someone else's education or job training than later putting them in prison for stealing my car. It of course gets more complex than this, but the general idea is clear. This isn't "charity," rather it is good sense. This is how I view all "social programs."

I will say I'm against just handing out checks and would rather resources be dedicated to solving problems of poverty rather than filling a bucket that is known to have holes. However, I'd think such activity is within the bounds of reasonable government. I'm not defending the status quo by any means, but I think "concern for the poor" or whatever isn't a question of compassion or charity, rather a legitimate issue with long term ramifications on the heath of the country just like having a strong military or decent roads.

As to why the rich pay more, it is because, as my present sig says, they have more to gain from the very existence of government.

[specious_reasons]

Originally posted by AmateurScientist


Frankly,

I don't understand how you can claim that regressive taxes are obviously unfair, yet also claim that progressive taxes might be fair.

What is the rational, not emotional, basis for claiming that progressive taxes are "fair"?

AS

I, personally, think that the progressive tax system is both fair and unfair. It is, of course, less fair to people with high income because they are shouldering more of the tax burden.

However, from a "social justice" standpoint, the more money we let the poorest people keep, the less they need to rely on government services. That's the whole point of Earned Income Tax Credit - reward people for not being a burden on the state.

I also think that regressive taxes aren't inherently unfair. I don't mind Social Security being regressive... It's not like Ross Perot can withdraw more from SS than my grandmother.

[specious_reasons]

Originally posted by Suddenly
(snip)

I'm in favor of what you would call "redistribution" not becuase of some wealth hate or dislike of individual liberty or whatever. I'm for it because in the long run in benefits the safety and security of the country. If we want to deal with our own people in a civilized way, we need resources. In short, I'd rather spend money paying for someone else's education or job training than later putting them in prison for stealing my car. It of course gets more complex than this, but the general idea is clear. This isn't "charity," rather it is good sense. This is how I view all "social programs."

(snip)


I was going to say something along these lines, only less clearly and eloquently.

[shanek]

Originally posted by Thanz

Quick question: is income taxation in the United States constitutionally valid?

Yes, thanks (or otherwise!) to the 16th Amendment.

Slavery was once constitutionally valid, too.

[shanek]

Originally posted by Suddenly
Yep. Called government. The "point of a gun" is some nice drama as we could say the same thing w/r/t parking tickets. It is a point against government all together, even those acts of government that protect property.

The point is, since government is force, its use is justified only where force is justified.

[shanek]

Originally posted by Cain
Money gets redistributed in a market economy all the time, every second.

Not by forceful means. There are only two entities who redistribute money by forceful means: criminals and governments.

[Tmy]

How would you fun the country Shanek? Do you expect the government to run on donations? With magic pixy dust?

[aerocontrols]

Originally posted by Tmy
How would you fun the country Shanek? Do you expect the government to run on donations? With magic pixy dust?

User fees.

You've got 1600 posts and you don't know how Shanek proposes we fund the government?

[AmateurScientist]

Originally posted by Tmy


"Income redistrubition". This term alwyas bugs me. The implication is that tax money goes from the top down. The rich pay taxes and get nothing. The poor pay little taxes and get all sorts of govt freebies!!!

I think this is a myth. Is $100 billion in tax dollars to the war an Iraq "income redistribution" to the poor tax payer? If anything the war in Iraq benefits the rich.

Govt Services. Everyones focus is on schools and police. And how the poor benefit from those services. What about the 1000's of other govt services? For example. THe US patent office. How many poor tax payers are using that service? Securities and Exchange Commission, the Civil Court system, the FAA etc...

The rich like to spin that they get nothing for their tax dollars but thats just not true.


Ummmm..... Excuse me. Please go back and look at your quote to which I was responding. You asserted in it that it is worse to steal the last loaf of bread from a poor man than one loaf from a man who has 100 loaves.

I wasn't referring to taxes at all. Nowhere in my post do I mention taxes. Nowhere. Everyone who responded with suppositions above my beliefs about taxes has simply put words in my mouth.

I was responding directly to your assertion, which implies a sort of legal (or moral, if you like) relativism based on the impact on the victim of a crime, rather than on the accused's conduct. I reject that sort of analysis. When deciding how culpable a wrongdoer's conduct is, it shouldn't matter what sort of impact it has. What should matter is the intent and actions of the wrongdoer.

You take issue with my use of the term "income redistribution?' Jeez, that's bizarre, considering your assertion about stealing loaves of bread. What is stealing if not redistribution of wealth (forget for the sake of argument that income and wealth are not the same)?

As you seem in your example to endorse (or at least excuse somewhat) stealing from the rich a la Robin Hood, I find such a proposition to be antithetical to the notion of freedom and personal property rights.

Fine. Some people don't believe the state should recognize the individual's right to own property. Yet, there it is, antithetical to the notions of individual liberty found in the Declaration of Independence and the U.S. Constitution. I feel safe in calling it un-American.

As to your comments in the above post which you think are responsive to mine, I don't care to respond. They are all strawman arguments, as I didn't make any of the arguments you refute.

AS

[AmateurScientist]

Originally posted by Suddenly

As to why the rich pay more, it is because, as my present sig says, they have more to gain from the very existence of government.

This is the point where I feel so many who defend progressive taxation miss the boat. Under a linear scheme those with larger incomes will always pay more in taxes than those with lesser incomes. That's what it means to pay linearly or proportionately (a flat rax rate). Therefore, such a system would already take into account the presumptively greater government resources the richer persons use.

I suspect you may mean that the "rich" use a disproportionately greater amount of government resources than the the less rich. I don't understand how or believe that this is necessarily the case.

In the case of national defense, for instance, each individual benefits the same as any other. Each of us, rich or poor, has only one life to lose. In the case of roads, the same would be true, even for those who do not own automobiles, as they can ride with someone who does have one or on public transportation. In either case, they get the same benefit--the opportunity to use those roads. Of course, roads are a different matter because in part they are in fact funded by "user fees" in the form of gasoline taxes. Clearly, poorer persons who do not drive do not pay as much in "user fees" as richer persons who drive gas guzzling SUVs.

Education is available to all children, rich or poor. If you want to bring equities in benefits derived into the argument, then how is a property tax to fund schools fair to property owners with no children? This is one case where Teddy Roosevelt's argument completely fails.

The presumption of greater use of government resources business does not justify progressive income tax schemes. Flat rate taxes accomplish the same thing, without shifting a disproportionate burden onto higher income earning taxpayers.

Sorry, but I just don't buy it. It's nothing but class warfare fodder.

AS

[AmateurScientist]

Originally posted by Tmy
How would you fun the country Shanek? Do you expect the government to run on donations? With magic pixy dust?

Well, interestingly enough, our country ran just fine without income taxes until 1913.

AS

[Tmy]

By "income redistribution" I meant its common Bill Oreilly useage that means taxes from the rich being redistributed to the poor. A common argument in these tax debates.


Defore 1913 we didnt have 250 mill people, two world wars, an international military, an interstate highwy system etc....

And we still had taxes. Jesus paid taxes, there nothing new.

[Thanz]

Originally posted by shanek


Yes, thanks (or otherwise!) to the 16th Amendment.
Then, if my understanding is correct, nothing short of a constitutional amendment will get rid of the income tax. I do not know the US constitution amending procedure, but I imagine that it is fairly difficult to get a constitutional amendment (as it should be). Realistically, I do not see this happening in our lifetime.

Nobody likes taxes. They are, however, accepted by most as necessary for the proper functioning of government. And a properly functioning government is seen as necessary for a stable society, from which all benefit. So, I think that you really are tilting at windmills when you work to try and abolish income taxes. It just isn't going to happen.

Slavery was once constitutionally valid, too. So what?

Slaves did not have the freedom to go to where they would not be slaves. Some managed to do this covertly - escaping to places like Canada. However, this was quite dangerous.

No such danger exists for you. If you really feel that taxes are theft, and the government is a bunch of incompetant crooks, move to some place without income taxes. Move to a nice tropical island like Grand Cayman that has no income taxes. Vote with your feet. Why stay in the US and get continually robbed?

I am not saying "America - love it or leave it!". I am saying that your philosophy seems to be directly at odds with the country, and that it would appear that you would be happier some place else. I have been to Grand Cayman. Its nice. Felt a little like home, only a lot warmer. A Canadian bank on every corner.

[AmateurScientist]

Originally posted by Cain
Tmy- Linguist George Lakoff had an interesting article in the last issue of _The American Prospect_ on framing issues such as taxation in a progressive mindset. He discusses similar points:



I find it interesting that Holmes' so often quoted remark, which is on the IRS Building in Washington, was made in 1904, before federal income taxes became legal. He didn't advocate a progressive income tax structure. He wasn't discussing income taxes at all.

The quote comes from this case:

Compania de Tabacos v. Collector, 275 U.S. 87, 100 (1904).



Shanek and AS have their own framing: taxation is theft and redistribution is evil. It's not exactly well-founded, but it certainly presents a relatively consistent -- if simplisitc -- outlook on most issues.

Where have I said any such thing? I have never called taxation theft. I would appreciate your not lumping me or my ideas in with those of Shane's.

AS

[Ziggurat]

Originally posted by AmateurScientist

In the case of national defense, for instance, each individual benefits the same as any other. Each of us, rich or poor, has only one life to lose. In the case of roads, the same would be true, even for those who do not own automobiles, as they can ride with someone who does have one or on public transportation. In either case, they get the same benefit--the opportunity to use those roads.


Here's a slightly different way to look at the benefits of government: if you were to hire a private security firm to guard your posessions, the cost of that security would depend rather greatly on how much you were having them defend. Government serves that purpose for most people. It enforces property rights. If you've got more property, you're getting more benefit from government rather automatically. That is the single greatest source of government benefit for the rich, and it's a pretty damn big benefit too.


If you want to bring equities in benefits derived into the argument, then how is a property tax to fund schools fair to property owners with no children? This is one case where Teddy Roosevelt's argument completely fails.


The benefit comes in rather easily, in two ways: first, education lowers crime rate, and therefore indirectly protects your property (real estate and otherwise). More directly, if you don't have any children, then when you grow old it will be other people's children you will need to depend upon, even if you're still working (because when you get old, the workforce is going to remain primarily younger people). You will derive benefit from that workforce being well-educated.

The thing that always bugged me about libertarians, and your argument strikes me as being fairly libertarian, is a disregard for the necessity of families. Society depends on families, we can't function without them. Even when you are an adult, EVERYONE benefits from the sacrifices parents make to perpetuate society through their children. So I don't buy into arguments that just because YOU might not have kids you can't be obliged to contribute to this necessary function of society.


Sorry, but I just don't buy it. It's nothing but class warfare fodder.


That's funny, I seem to recall hearing a lot of rich people advocating progressive tax structure. Sure must be a lot of traitors to their own class.

Class warfare is certainly something we should avoid, and the rich shouldn't just be viewed as some tap from which we can extract as much money as we want. But extreme economic inequality is unhealthy for society as a whole (regardless of fairness, it creates stresses that are harmful to everyone, and that's not a statement of class warfare), and we need to make sure that our society is structured so that economic inequality isn't ever-increasing. One way to do that is a progressive tax structure. If you want to go with a flax tax system (and again, you need to make sure that you're not just implementing flat income tax, because that would make overall taxes regressive), you can still keep inequality in check by instituting a rather stiff estate tax (possibly with a high deductible to allow for small family businesses, family farms, etc), so that if you want to be really rich you need to earn most of that money yourself. A steep estate tax is something Andrew Carnegie, for example, was very much in favor of.

[AmateurScientist]

Originally posted by Tmy
By "income redistribution" I meant its common Bill Oreilly useage that means taxes from the rich being redistributed to the poor. A common argument in these tax debates.


Well, Jesus H. Christ, if you are going to assign special definitions to ordinary words, I wish you would tell me first before I use them.

Since I don't watch or listen to Bill O'Reilly, I have no idea what he means by the term.

When I used the term, I gave it its plain meaning. There was no ideological rhetoric behind my usage. It happens to be an appropriate phrase, although in the example I was responding to, perhaps "wealth redistribution" would have been more accurate. I suspect it would have provoked just as much ire on your part as "income redistribution," however.

Again, I wasn't talking about taxes. I was referring to your example of stealing bread.



Defore 1913 we didnt have 250 mill people, two world wars, an international military, an interstate highwy system etc....

And we still had taxes. Jesus paid taxes, there nothing new.

Nowhere in this thread or elsewhere have I advocated abolishing taxes. You are building strawmen to knock down.

Besides, your complexity argument, as I will call it, isn't a very good one. We certainly fought several wars and provided for the national defense prior to 1913. With fewer people, fewer government services would have been needed. We had a railroad system and we didn't have the Panama Canal for most of that time, so intercontinental travel was much harder and more expensive in constant dollars.

All of these things got financed before the imposition of a federal income tax.

Furthermore, as about 42% of the national budget is for social security, Medicaid, and Medicare payments, yet overall we enjoy a much higher standard of living than those living in 1913 did, this just doesn't make sense. Our country should have needed much more public assistance as a percentage of federal outlays when the standard of living was lesser.

AS

[Tmy]

Actually I was using the common definition of "income distribution" when its being used in a rich vs poor tax burden discussion as in this thread.

Sorry if I thought the bread discussion was literal, I thought it was an analogy for taxes. Silly me.

[Thanz]

Originally posted by AmateurScientist

Furthermore, as about 42% of the national budget is for social security, Medicaid, and Medicare payments, yet overall we enjoy a much higher standard of living than those living in 1913 did, this just doesn't make sense. Our country should have needed much more public assistance as a percentage of federal outlays when the standard of living was lesser.

Don'tcha think that maybe, just maybe, one of the reasons for the increased standard of living was increased spending on things like healthcare and social security?

[shanek]

Originally posted by Thanz
Then, if my understanding is correct, nothing short of a constitutional amendment will get rid of the income tax.

Well, no, the Constitution doesn't say they have to run an Income Tax, just that they can. You wouldn't need an amendment to get rid of it...but to keep rid of it, yes, you'd need to repeal the 16th Amendment so that the government would not have the Constitutional authority to run an Income Tax.

I do not know the US constitution amending procedure, but I imagine that it is fairly difficult to get a constitutional amendment (as it should be).

Amendments must be proposed by either two thirds of both Houses of Congress, or by two-thirds of the states calling for a Constitutional Convention. After that, it must pass in the legislatures of two thirds of the states, or three fourths when done by convention (to this date an amendment has never been passed by convention).

They are, however, accepted by most as necessary for the proper functioning of government.

And so the challenge is to get people to realize that the Income Tax is harmful and unnecessary.

So, I think that you really are tilting at windmills when you work to try and abolish income taxes. It just isn't going to happen.

They said that with slavery. They said that with Prohibition.

Slaves did not have the freedom to go to where they would not be slaves.

Doesn't matter. It's still the case that just because something happens to be in the Constitution doesn't make it right.

[shanek]

Originally posted by Thanz

Don'tcha think that maybe, just maybe, one of the reasons for the increased standard of living was increased spending on things like healthcare and social security?

Except, as I've shown before, increases in our standard of living measured as median yearly family income (adjusted for inflation) actualy levelled off a great deal after these measures were put in place.

http://www.harrybrowne.org/articles/Econom2.gif

Note that the programs of the "Great Society" resulted in much lower overall income than would have resulted if the previous trend (projected in the dotted line) had been allowed to continue.

[Occasional Chemist]

Originally posted by shanek
Note that the programs of the "Great Society" resulted in much lower overall income than would have resulted if the previous trend (projected in the dotted line) had been allowed to continue.

That graph looks like a misuse of a linear curve fit to me. Who says that the median yearly income should grow linearly for all time?

Why stop in the late 40s (edit: Early 50s, perhaps - silly axis labelling)? Wouldn't it be more interesting to stretch the graph back to when the country began?

(Further edit: Is it just my eyes going bad from grading student assignments today, or did a crackhead label the y axis?)

[AmateurScientist]

Originally posted by Ziggurat


Here's a slightly different way to look at the benefits of government: if you were to hire a private security firm to guard your posessions, the cost of that security would depend rather greatly on how much you were having them defend. Government serves that purpose for most people. It enforces property rights. If you've got more property, you're getting more benefit from government rather automatically. That is the single greatest source of government benefit for the rich, and it's a pretty damn big benefit too.



Well, I can turn your argument on its head. When Germany bombed the hell out of London, Londoners died, rich and poor. The poor lost their possessions, as did the rich. Presumably, rich persons lost more in aggregate property value than poor persons. They weren't compensated by government, so rich persons bore a greater burden of the war than poor persons.

Can't we just say that the nation collectively benefits from national defense and that it is agreed by everyone that it's necessary? Trying to contend that some groups benefit more from the defense of and prevention of the destruction of the country really gets you nowhere.

An individual's private security force, no matter how expensive, is going to be no match for the relatively limitless resources of most sovereign nations that might be realistic threats to national security. Therefore, your argument breaks down right there.


The benefit comes in rather easily, in two ways: first, education lowers crime rate, and therefore indirectly protects your property (real estate and otherwise).


Hmmm. I didn't realize educating residents' kids in my neighborhood would prevent criminals from other neighborhoods from committing crime in mine. Do you really contend this or something similar to it?

Actually, I think you are confusing cause and effect. Schools are placed in neighborhoods when demand (number of kids living there) calls for new ones nearby. The schools themselves do not prevent crime any more than trees do. "Good" schools nearby attract buyers to homes in the area, and thus raise property values. "Good" schools result from having desirable homes and homeowners and desirable neighborhoods, which also means low crime rates.

A neighborhood with a high crime rate will always have "bad" schools in it. "Bad" schools are "bad" because they are located in "bad" neighborhoods and "bad" kids live there and attend them (this has nothing to do with the quality of education one has an opportunity to get there). Property values are depressed in those neighborhoods because fewer parents want their kids to attend those schools and fewer non-parents want to live in the "bad" neighborhoods because of the high crime rate and because of undesirable neighbors.


More directly, if you don't have any children, then when you grow old it will be other people's children you will need to depend upon, even if you're still working (because when you get old, the workforce is going to remain primarily younger people). You will derive benefit from that workforce being well-educated.

The thing that always bugged me about libertarians, and your argument strikes me as being fairly libertarian, is a disregard for the necessity of families. Society depends on families, we can't function without them. Even when you are an adult, EVERYONE benefits from the sacrifices parents make to perpetuate society through their children. So I don't buy into arguments that just because YOU might not have kids you can't be obliged to contribute to this necessary function of society.



Actually, I just asked how an examination of one's usage of government resources approach could be used to justify using property taxes as a basis for funding schools when some of those property owners didn't have kids. I don't think your arguments demonstrate that property owners without kids benefit as much as parents who are property owners. It should be obvious that all other things being equal, my neighbor with a similar property value to mine who has four school age kids in public school will derive a greater benefit from his property tax dollars than I will with no kids.

In short, you haven't convinced me of the equity of the approach. I do agree that the society as a whole benefits from having an educated citizenry. I do not and have not advocated the abolition of public schools or public school funding. I simply asked how the property tax funding was equitable using the benefits derived approach. I think it's a fair question in context.


That's funny, I seem to recall hearing a lot of rich people advocating progressive tax structure. Sure must be a lot of traitors to their own class.


Sure, the Kennedys are one hell of a rich family who all seem to advocate progressive taxes and other liberal Democrat redistribution schemes. We call them limousine liberals. There's lots of 'em in the Democratic Party. Nearly all of the ones who win high elected offices in state and federal government are rich. It never stopped them from engaging in demagoguery or class warfare, did it?


Class warfare is certainly something we should avoid, and the rich shouldn't just be viewed as some tap from which we can extract as much money as we want.
[/B

I agree.

[B]
But extreme economic inequality is unhealthy for society as a whole (regardless of fairness, it creates stresses that are harmful to everyone, and that's not a statement of class warfare), and we need to make sure that our society is structured so that economic inequality isn't ever-increasing.


Come on, compared to our own country's past, or compared to most other countries, do we really have "extreme economic inequality?" For God's sake, the vast majority of U.S. households has at least one color TV and an automobile. No one in this country needs to starve. Shelters are freely available in nearly every urban area with a significant homeless population.

Extreme economic inequality on a widespread basis simply doesn't exist in this country. Do we have very rich persons? Sure. What does that have to do with persons on the other end of the economic scale? Nothing.

The reason you had popular uprisings in European countries in the past was because of subjugation of the poor by the rich landowners at the point of an arrow or gun. In contrast, Bill Gates isn't rich because he stole his money from poor people. Rich Americans, for the most part, are rich due to entrepreneurialsm, not oppression.


One way to do that is a progressive tax structure. If you want to go with a flax tax system (and again, you need to make sure that you're not just implementing flat income tax, because that would make overall taxes regressive), you can still keep inequality in check by instituting a rather stiff estate tax (possibly with a high deductible to allow for small family businesses, family farms, etc), so that if you want to be really rich you need to earn most of that money yourself. A steep estate tax is something Andrew Carnegie, for example, was very much in favor of.

This is nothing but Robin Hood in disguise. You are advocating redistributing wealth in order to reduce "extreme economic inequalities." That's Robin Hood.

As for your last sentence, it is nothing but appeal to authority. So? Carnegie was wrong. Estate taxes contribute very little to the national tax revenue compared to other sources. They are little more than confiscatory schemes which discourage entrepreneurial success and encourage bizarre economic behavior (tax shelters) for the sole purpose of attempting to defeat the tax. That's not a desirable thing for any society to encourage.

AS

[Suddenly]

Originally posted by AmateurScientist



I suspect you may mean that the "rich" use a disproportionately greater amount of government resources than the the less rich. I don't understand how or believe that this is necessarily the case.

Nope. I mean they benefit from govenment more in general. The benefits go beyond distribution of resources. Stark example, a homeless person and righ business owner. Who benefits more from the rule of law? The educational system's focus on occupational training? Security regulation?

In the case of national defense, for instance, each individual benefits the same as any other. Each of us, rich or poor, has only one life to lose. In the case of roads, the same would be true, even for those who do not own automobiles, as they can ride with someone who does have one or on public transportation. In either case, they get the same benefit--the opportunity to use those roads. Of course, roads are a different matter because in part they are in fact funded by "user fees" in the form of gasoline taxes. Clearly, poorer persons who do not drive do not pay as much in "user fees" as richer persons who drive gas guzzling SUVs. Is the user fee thing supporting your argument or mine? Since my premise is that those that benefit most should pay more, so fine. Government defends and protects property rights, so those with more property...

As far as national defense goes, it isn't just about life or death. Who has more to lose when the evil British invade and sell us into slavery? Someone making $6 an hour at Wal-Mart or Bill Gates? Would a Wal-Mart employee notice much difference?

Education is available to all children, rich or poor. If you want to bring equities in benefits derived into the argument, then how is a property tax to fund schools fair to property owners with no children? This is one case where Teddy Roosevelt's argument completely fails. Are you serious about that first sentence? Maybe available but hardly equal, and that is before we start looking into later job training when industries change and new skills are in demand.

Or if you mean that only the children in school benefit from public education, I'd again disagree. Public schools are to a large extent subsidized occupational training. Heck, schools as job training was part of the stated rationale for _Brown v. Board_. A few years ago my local (at the time) school board reorganized its high school curriculum using what they called "a school to work" model. I was running one of the bigger buisnesses in my town, so I was invited to be on the "transition team" with mostly local representitives from large businesses with local ties. We were basically there to decide how the schools could better train students so they could step out and work for us. Some might call this "innovative practical education." I call it a very significant hidden subsidy and fooling the public into absorbing the cost of business. To some extent everyone benefits by public education, even though I'd like to see more education w/r/t critical thinking and less simple job training, but I benefit in some way nonetheless.

As to the second sentence, again I don't take a narrow view of benefits. I have no kids, nor am I likely to have kids. I benefit because more education equals more oppertunity which equals less chance of crack dealers next door.

The presumption of greater use of government resources business does not justify progressive income tax schemes. Flat rate taxes accomplish the same thing, without shifting a disproportionate burden onto higher income earning taxpayers.

Sorry, but I just don't buy it. It's nothing but class warfare fodder.

AS

What I don't get is how a flat percentage, that results in higher tax payment to the rich is somehow fundamentally different from a progressive payment that does the same thing, just to a larger degree. My beef is more with the concept that the rich should pay no more in total dollars. I'd be cool if with funding the whole shebang through property and estate tax. I'm no fan of the income tax, but I find no fault in theory with those who have more property (real and personal) paying more to support the national interests.

[AmateurScientist]

Originally posted by Thanz

Don'tcha think that maybe, just maybe, one of the reasons for the increased standard of living was increased spending on things like healthcare and social security?

No, and I'll agree with what I presume Shane K's position on this to be, although he can certainly speak for himself.

The government is woefully inefficient in administering large programs like Medicaid, Medicare, and Social Security. Taxes to support such programs act as a huge brake on the economy. If that brake didn't exist, then the standard of living would have increased at a greater rate than it has.

Those in favor of government programs for the less fortunate among us tend to overlook that free markets create jobs and provide valuable goods and services. Those do in fact benefit all of society. When more jobs are available there are fewer unemployed and fewer poor persons in need of handouts. When more goods and services are available for purchase, overall standard of living goes up. That's how we measure standard of living.

I'm afraid you've missed the mark entirely with your sarcastic, rhetorical question to me.

Contrary to your assertion, I think our overall standard of living has increased in spite of the existence of programs like Medicaid, Medicare, and Social Security. I wish very much that those genies could be put back in the bottle.

They will be the eventual ruin of our society as we know it in the coming decades. It's simple demographics. The ever increasing demands upon these programs as our aged population increases in proportion, and the ever diminishing number of persons contributing to them in taxes, yield the inevitable result that they cannot continue as they exist today. They are already a tremendous burden on our ecomony. They will cause it to rupture in the next few decades unless drastic and fundamental changes are implemented.

AS

[Suddenly]

Originally posted by Occasional Chemist


That graph looks like a misuse of a linear curve fit to me. Who says that the median yearly income should grow linearly for all time?

Why stop in the late 40s (edit: Early 50s, perhaps - silly axis labelling)? Wouldn't it be more interesting to stretch the graph back to when the country began?

The graph shows no growth in the 80's after Ronnies tax cut and some growth during the Clinton administration after Bush I put in his little tax raise. The anti taxers better hope it's wrong.

I wonder if this exact graph hangs in Reagan's Presidential Library? :p

[AmateurScientist]

Originally posted by Suddenly
Nope. I mean they benefit from govenment more in general. The benefits go beyond distribution of resources. Stark example, a homeless person and righ business owner. Who benefits more from the rule of law? The educational system's focus on occupational training? Security regulation?


Rule of law? Pretty nebulous concept, don't you think? The homeless guy isn't nearly as burdened by OSHA regulations or worker's comp regs or taxes or any number of government requirements placed upon the business owner. Therefore, the homeless guy "benefits" more by being burdened less.

Being protected by police? The homeless guy probably has closer association with the police on the beat because they are more visible to him on a daily basis. Their visibility probably prevents more assaults on him than they do on the business owner who lives 15 miles away in the suburbs. Thus, the homeless guy probably benefits more from police protection, at least to his personal safety, than does the businessman.

See what I mean? You can turn the benefits argument around entirely. I don't like it as a justification for inequitable tax treatment because it's just an academic justification. We could examine how all meat eaters benefit from USDA regulations concerning safe meating handling. Should vegetarians then pay less to account for their non-use? The quibbles could really get ridiculous.

I say better to choose another approach for trying to justify inequitable tax treatment, if you are going to take taxes inequitably at all.


Is the user fee thing supporting your argument or mine? Since my premise is that those that benefit most should pay more, so fine. Government defends and protects property rights, so those with more property...


Only some government services can be regarded as protecting property rights. Street sweeping, garbage pickup, and fire protection, for example, I'll grant you. What about eminent domain? For those adversely affected by it, it's hardly a protection of property rights.

Anyway, I suggested the user fee thing only as a distinction between road use and national defense, because in fact there already is a user fee of sorts in the way of gasoline taxes. I'm not necessarily advocating user fees for all governmental services. That's probably Shane, as far as I know.


As far as national defense goes, it isn't just about life or death. Who has more to lose when the evil British invade and sell us into slavery? Someone making $6 an hour at Wal-Mart or Bill Gates? Would a Wal-Mart employee notice much difference?

Property rights are only one consideration. Our country was founded to secure ideals and freedoms, not just to keep our stuff from the Brits. Slavery involves far more than abolition of property rights. The Wal-Mart guy loses just as much personal freedom to go to a Yankees game when he wants as Bill Gates does when he's sold as a slave.


Are you serious about that first sentence? Maybe available but hardly equal, and that is before we start looking into later job training when industries change and new skills are in demand.


Of course I'm serious. It's the whole premise of public education. All children are afforded the opportunity to be educated from K-12. No one said each school would be equal, and no one in his right mind would try to assert that such a thing is even remotely possible.


Or if you mean that only the children in school benefit from public education, I'd again disagree. Public schools are to a large extent subsidized occupational training. Heck, schools as job training was part of the stated rationale for _Brown v. Board_. A few years ago my local (at the time) school board reorganized its high school curriculum using what they called "a school to work" model. I was running one of the bigger buisnesses in my town, so I was invited to be on the "transition team" with mostly local representitives from large businesses with local ties. We were basically there to decide how the schools could better train students so they could step out and work for us. Some might call this "innovative practical education." I call it a very significant hidden subsidy and fooling the public into absorbing the cost of business. To some extent everyone benefits by public education, even though I'd like to see more education w/r/t critical thinking and less simple job training, but I benefit in some way nonetheless.

As to the second sentence, again I don't take a narrow view of benefits. I have no kids, nor am I likely to have kids. I benefit because more education equals more oppertunity which equals less chance of crack dealers next door.


Please see my response to Ziggurat above. I fully recognize and support the societal benefit derived from public education. That's not what we were talking about. You were asserting that property owners benefit more from public education than non-owners. That may or may not be true. What you cannot show is how a property owner without kids derives the same benefit from his property tax dollars as the property owner next door who has school age kids attending public school.

There is in fact a disparity there when one uses the benefits derived approach to justifying tax treatment.

Look, I fully recognize that this part of the discussion has gotten utterly academic and very far afield from practical solutions or realistic proposals. I'm not terribly fond of beating this into the ground, and I'll bet you aren't either.

AS

[Suddenly]

Originally posted by AmateurScientist



Look, I fully recognize that this part of the discussion has gotten utterly academic and very far afield from practical solutions or realistic proposals. I'm not terribly fond of beating this into the ground, and I'll bet you aren't either.

AS

Pretty much. We are at a point where mostly details are being argued. The only real disagreement is that I want to be really general about the idea of "benefit" and you want specifics as to same. That part of it has nowhere to go but straight into the ground, as part of the reason behind general taxation is that the benefits derived from government are nearly impossible to accurately and completely measure. Very complex, kind of like if I give a homeless crack addict a c-note. Who benefits? The addict? A dealer? The guy who sells really gaudy jewelery? OutKast?

Who knows? At some point it becomes more a philosophical question than a factual one.

I say without government the poor would steal all the rich guy's stuff and leave him with nothing but a barrel with shoulder straps.

You say without government the rich guy will hire thugs to make the poor guy wash the rich guy's socks with his tongue.

And we are both likely right to some extent, and arguing who and by how much is not really likely to result in clairity,

[shanek]

Originally posted by Occasional Chemist
That graph looks like a misuse of a linear curve fit to me. Who says that the median yearly income should grow linearly for all time?

Why stop in the late 40s (edit: Early 50s, perhaps - silly axis labelling)? Wouldn't it be more interesting to stretch the graph back to when the country began?

(Further edit: Is it just my eyes going bad from grading student assignments today, or did a crackhead label the y axis?)

[sigh] I really don't feel like explaining the difference between linear and logarithmic scales again... Suffice it to say it is a proper curve, normailzed to a line. Just read about it here:

http://www.harrybrowne.org/articles/RatioScales.htm

As for your other question, 1947 is the earliest year this statistic is available.

[shanek]

Originally posted by Suddenly
The graph shows no growth in the 80's after Ronnies tax cut and some growth during the Clinton administration after Bush I put in his little tax raise.

What does the tax level have to do with this? This is income before taxes.

[AmateurScientist]

Originally posted by Suddenly

You say without government the rich guy will hire thugs to make the poor guy wash the rich guy's socks with his tongue.


Thanks. That's hilarious.

:D

AS

[Suddenly]

Originally posted by shanek


What does the tax level have to do with this? This is income before taxes.

Funny. I could have sworn somebody claiming that a lower marginal income tax rate would encourage economic growth. I guess nobody was claiming that lowering taxes on the rich would increase growth then? My bad.

By the way that is a nifty graph showing how the American economy grew quite sharply for twenty years right after World War II. It is almost like most everyone else was rebuilding their industry from some sort of cataclysmic destruction while America had free reign to expand it's commercial reach.

Actually the growth on that chart levels off at the approximate time of my birth. Maybe it is my fault. :eek:

[Occasional Chemist]

Originally posted by shanek
[sigh] I really don't feel like explaining the difference between linear and logarithmic scales again... Suffice it to say it is a proper curve, normailzed to a line. Just read about it here:

As for your other question, 1947 is the earliest year this statistic is available.

Ahh, it's supposed to be a log scale - well, sorta. It'd be nice if they actually labeled it like an engineer would.

Now on to the graph ... what's it supposed to show, really? Are you assuming that some government programs are affecting a trend from a selected group of points in part of the graph?

[shanek]

Originally posted by Occasional Chemist
Ahh, it's supposed to be a log scale - well, sorta. It'd be nice if they actually labeled it like an engineer would.

That's how most economists do it. It actually makes better sense of the economic numbers that way.

Now on to the graph ... what's it supposed to show, really?

It's supposed to—and does—debunk the notion that government social programs raise the standard of living.

Actually, the latest Intro/Macroeconomics episode talks about how the standard of living is raised. I'm going to as usual post a partial transcript in the thread when I get it typed. Anyone who understands this will not be fooled by that big government argument again.

[Occasional Chemist]

Originally posted by shanek

It's supposed to—and does—debunk the notion that government social programs raise the standard of living.

I'm more concerned with this line on the graph. Is it supposed to represent some sort of linear growth in median income? I guess what I'm not so sure of is WHY you expect this parameter to keep rising at the same rate, and blame a government program for leveling it off.

Now as for the programs that seem to have been discussed (social security and health care), why would these be expected to have a great influence on average income?

You'd expect a healthcare program, perhaps, to have more influence on figures like infant mortality or life expectancy, or incedence of diseases, etc.

Also, what's the correlation with income tax?

[shanek]

Originally posted by Occasional Chemist
I'm more concerned with this line on the graph. Is it supposed to represent some sort of linear growth in median income?

No, because the graph isn't on a linear scale. It's on a growth scale; a ratio chart. Meaning that we should be able to expect it to grow at the same ratio as it did before. And it wasn't.

I guess what I'm not so sure of is WHY you expect this parameter to keep rising at the same rate, and blame a government program for leveling it off.

The transcript for this week's episode will explain all of that.

[Gem]

Note that the programs of the "Great Society" resulted in much lower overall income than would have resulted if the previous trend (projected in the dotted line) had been allowed to continue.

I'm afraid your graph has a flaw or two.

First, it doesn't show the data pre 1945. After world war 2, I assume there is a large increase in spending (GI bill, returning veterans) which could explain the long increase.

The other thing is, if we followed it linearly, the median income would be $120,000 a year! And that's inflation adjusted.

I could also use the same graph to show that the OPEC embargo leveled off the yearly income. (because the dates coincide)

Gem

[Ziggurat]

Originally posted by AmateurScientist

Well, I can turn your argument on its head. When Germany bombed the hell out of London, Londoners died, rich and poor. The poor lost their possessions, as did the rich. Presumably, rich persons lost more in aggregate property value than poor persons. They weren't compensated by government, so rich persons bore a greater burden of the war than poor persons.


The rich have never born a greater burden of war than the poor, because the poor are killed disproportinately. Try again.


Hmmm. I didn't realize educating residents' kids in my neighborhood would prevent criminals from other neighborhoods from committing crime in mine. Do you really contend this or something similar to it?


Don't be silly. Local taxation is a very imperfect solution, precisely for the reason that you point out. Nevertheless, every member of society, with or without children, benefits from the general education of children. So perhaps that property tax would be more fairly spent on a national level, but I have no sympathy for the idea that because you don't have kids you should get out of the burden of paying for educating children. Since local property taxes is a big part of how that's done right now, childless homeowners can suck it up until a better system is put in place for everyone.


Come on, compared to our own country's past, or compared to most other countries, do we really have "extreme economic inequality?" For God's sake, the vast majority of U.S. households has at least one color TV and an automobile. No one in this country needs to starve. Shelters are freely available in nearly every urban area with a significant homeless population.


It's a lot better than a lot of places, but economic inequality has been increasing significantly over the last few decades. It's that upward trend, more than the current level, that has me concerned. And TV's mean nothing economically. Houses mean something, and it's not getting any easier to buy a home.


Extreme economic inequality on a widespread basis simply doesn't exist in this country. Do we have very rich persons? Sure. What does that have to do with persons on the other end of the economic scale? Nothing.


The middle class is being squeezed right now. Bankruptcies are at record levels. It's harder than ever to buy a home. These things matter. So does the fact that the very wealthiest people in the country control more of the nation's wealth, and hence political power, than has been the case since before WWII. And that concentration of political power has consequences (California recal election, Scaiffe's crusade against Clinton, etc). We are not at a crisis point, but there's a lot of room for improvement.


As for your last sentence, it is nothing but appeal to authority. So? Carnegie was wrong. Estate taxes contribute very little to the national tax revenue compared to other sources. They are little more than confiscatory schemes which discourage entrepreneurial success and encourage bizarre economic behavior (tax shelters) for the sole purpose of attempting to defeat the tax. That's not a desirable thing for any society to encourage.


Sorry, but I don't buy it. When you're dead, you're dead. I've never seen any evidence that estate taxes actually discourage people from making money. And I see no inherent right anyone has to inherit huge sums of money. Your only legitimate point here is that tax structures shouldn't encourage bizaare economic behavior, but if congress was willing to actually implement something strong, that wouldn't be a big problem.

[shanek]

Originally posted by Gem
First, it doesn't show the data pre 1945./quote]

Because, as I said, the statistic isn't available before 1947.

[quote]After world war 2, I assume there is a large increase in spending (GI bill, returning veterans) which could explain the long increase.

No, it couldn't, and you'll see why when I post the transcript in the other thread.

The other thing is, if we followed it linearly, the median income would be $120,000 a year! And that's inflation adjusted.

So? Are you saying that would be a bad thing?

[shanek]

Originally posted by Ziggurat
And TV's mean nothing economically. Houses mean something, and it's not getting any easier to buy a home.

Neither of these sentences is true. TVs are a very good measure of wealth because they're not a necessity; they're there to increase the quality of life. And it's actually easier than it ever has been to buy a home, especially with the technology for manufactured homes as well as increased efficiency in the building of stick-built homes.

[Thanz]

Originally posted by AmateurScientist


They will be the eventual ruin of our society as we know it in the coming decades. It's simple demographics. The ever increasing demands upon these programs as our aged population increases in proportion, and the ever diminishing number of persons contributing to them in taxes, yield the inevitable result that they cannot continue as they exist today. They are already a tremendous burden on our ecomony. They will cause it to rupture in the next few decades unless drastic and fundamental changes are implemented.

Well, that is certainly a doom and gloom forcast. The ruin of society as we know it in the coming decades. I disagree with the severity of your forcast. I agree that the aging boomer generation, combined with greater medical technology will cause changes to be made in many programs. I do not see it as the ruin of society.

On a broader note, countires with a more comprhensive social safety net including health care (like Canada and Scandanavian countries) consistently rank quite high on the UN list of best places in the world to live. They have not ruined the economies of these places, and certainly the citizens enjoy a quite high standard of living. I don't recall the US ever topping this list.

[Shane Costello]

Originally posted by Thanz:
On a broader note, countires with a more comprhensive social safety net including health care (like Canada and Scandanavian countries) consistently rank quite high on the UN list of best places in the world to live. They have not ruined the economies of these places, and certainly the citizens enjoy a quite high standard of living.

The Swedish economy went through a dire recession in the early nineties that necessitated a radical overhaul of their welfare system, I believe. In the case of France and Germany, their economies are indeed being ruined by comprehensive social safety nets and unsuitable demographics.

Can anyone explain why the 19th century as a whole saw rapid advances in human development, be it social, economic or otherwise, without massive government programs and income taxes?

[Thanz]

Originally posted by Shane Costello

The Swedish economy went through a dire recession in the early nineties that necessitated a radical overhaul of their welfare system, I believe. In the case of France and Germany, their economies are indeed being ruined by comprehensive social safety nets and unsuitable demographics.
There was a recession in the early 90's in North America as well. I don't know much about France or Germany, but I do know that they are not considered Scandanavian countries. Norway, Sweden, Denmark, Finland, Canada all seem to be near the top of the UN list each year.

Can anyone explain why the 19th century as a whole saw rapid advances in human development, be it social, economic or otherwise, without massive government programs and income taxes?
Can you explain why this is relevant? Perhaps some saying about correlation and causation is applicable here....

I am not saying that countries must have a greater social net - I am just trying to refute the idea that a greater social net means ruin for society as we know it.

edited to add Norway, number 1 in 2001

[BillyTK]

Originally posted by Shane Costello
Can anyone explain why the 19th century as a whole saw rapid advances in human development, be it social, economic or otherwise, without massive government programs and income taxes?

I don't know, was it anything to do with the wide-spread threat of communist revolution?

[Tmy]

Originally posted by Shane Costello




Can anyone explain why the 19th century as a whole saw rapid advances in human development, be it social, economic or otherwise, without massive government programs and income taxes?

Methinks the incoem tax filled 20th centry had even more advances.


Even if they get our money from alternate taxation instead of income tax its still the same difference. SO they take from the right hand instead of the left. You still end up with the same pot o money.

[Shane Costello]

Originally posted by Thanz:
There was a recession in the early 90's in North America as well.

It was worse in Sweden. (www.immigration-usa.com/wfb/sweden_economy.html)

Although Prime Minister BILDT's center-right minority coalition had hoped to charge ahead with free-market-oriented reforms, a skyrocketing budget deficit - about 14% of GDP in FY93/94 projections - and record unemployment have forestalled many of the plans. Unemployment in 1994 is estimated at around 9% with another 5% in job training.

Can you explain why this is relevant? Perhaps some saying about correlation and causation is applicable here....

Possibly. It just seems to me that an expansive government and high rates of income tax aren't necessarly a prerequisite for human progress. Indeed the argument that these act as a brake on progress is persuasive. (www.techcentralstation.com/060702N.html)

[Shane Costello]

Originally posted by BillyTK:
I don't know, was it anything to do with the wide-spread threat of communist revolution?

"Das Kapital" wasn't published until 1848.

[AmateurScientist]

Originally posted by Thanz

Well, that is certainly a doom and gloom forcast. The ruin of society as we know it in the coming decades. I disagree with the severity of your forcast. I agree that the aging boomer generation, combined with greater medical technology will cause changes to be made in many programs. I do not see it as the ruin of society.

On a broader note, countires with a more comprhensive social safety net including health care (like Canada and Scandanavian countries) consistently rank quite high on the UN list of best places in the world to live. They have not ruined the economies of these places, and certainly the citizens enjoy a quite high standard of living. I don't recall the US ever topping this list.

You miss the point. It's not about offering medical care to a broader base. It's about a remarkably high number of net recipients of social welfare compared to net providers of funds for that welfare. The numbers are already in place. The aging baby boomers will likely get out of the job marketplace at some point in their lives, and many of them will become net recipients of welfare payments, which includes social security payments and medicare. They will also live longer, on average, than their predecessors. This means a longer period of time for them as beneficiaries of SS and Medicare, and more spent on health care for them due to their longer life spans.

(Medicaid is for younger persons who qualify based on means testing. It could remain relatively static in constant dollars, or could increase if the cost of medical care continues to rise faster than the CPI.)

The generations following the baby boomers are much smaller, except for the so-called "echo boomers," who are mostly the children of the baby boomers themselves. Once the baby boomers are retired and receiving SS and Medicare, there will be more of the elderly living and receiving those benefits than at any other time in our nation's history. Remember also that they will live longer, meaning that the length of time they receive benefits will increase, meaning in the aggregate they will receive a far greater amount in total benefits than anyone ever before. As if that were not bad enough, the problem is compounded by the fact that a smaller proportion of working persons than ever before will be paying the taxes necessary to support those social welfare payments, which means quite simply that the rate of taxation will have to be increased substantially.

This will place a tremendous burden on younger workers, who will find it very difficult just to make ends meet, much less to become net savers, due to their overwhelming and historically inordinately high tax burden. They resultant lack of net savings in the aggregate will mean less entrepreneurship, less capital for capital markets, less liquidity, less consumerism, and an overall slowdown in the economy. The combined effects could easily lead to a severe depression not just for this country, but for the entire globe.

I don't think it's overstating the case to project economic disaster, and thus a ruining of society as we know it today, unless drastic changes take place, either deliberately, or through unforeseen and fortuitous beneficial circumstances. I'm not generally a gloom and doom proponent, but this looming disaster is hard to overlook, given the demographics which already exist. In other words, the die is already cast. The challenge is to make politically difficult decisions now, before it becomes too late to stem the tide of rising red ink.

Here's a link to a brief description of the problem from the Social Security Advisory Board's own website (it is a bipartisan board appointed by the President and Congress to study the problem and to make policy recommendations):


When Baby Boomers Retire (http://www.ssab.gov/rep5iv.html)

AS

[Gem]

So? Are you saying that would be a bad thing?

Let me try to be VERY clear so that you don't misunderstand me. If the median income is supposed to be linear, then in 2000 the median would be $120,000 income. That's impressive. What I find more impressive is that if you would theoreticly follow the line backward in time, you'd find that after the civil war you'd have a whoping $0 median family income.

I noticed a slight distortion on the graph. The rows of 30-40,40-60 and 60-80, are not perfectly straight.

Where did you get the graph, anyway?

Gem

[AmateurScientist]

Originally posted by BillyTK


I don't know, was it anything to do with the wide-spread threat of communist revolution?

I think most historians and economists would disagree, BillyTK, and reply correctly that it was mostly due to the industrial revolution and the greater labor productivity it yielded.

Communist threats had nothing to do with it.

AS

[Ziggurat]

Originally posted by shanek

Neither of these sentences is true. TVs are a very good measure of wealth because they're not a necessity; they're there to increase the quality of life.


Wrong. TV's do not substantially increase quality of life. Home ownership does. TV's aren't a necessity, but people don't go bankrupt over TV's either. People do go bankrupt trying to make mortgage payments.


And it's actually easier than it ever has been to buy a home, especially with the technology for manufactured homes as well as increased efficiency in the building of stick-built homes.

You're arguing that it's easier to buy a home because it's easier to manufacture a home. The later may be true without the former being true, because there's a lot more to a home than the structure it's built on. Home ownership for those under 55 has been decreasing, not increasing. I'm not sure how you can argue that home ownership has gotten easier over the past few decades.

[Gem]

I think most historians and economists would disagree, BillyTK, and reply correctly that it was mostly due to the industrial revolution and the greater labor productivity it yielded.

Communist threats had nothing to do with it.


Industrial Revolution, waves of immigration, no minimum wage or labor laws.

The threat of communism came when those were in place as a reaction against entrenched laissez-faire. They tried to solve problems that indutrial capitalism brought with it.

Gem

[Suddenly]

Originally posted by AmateurScientist


I think most historians and economists would disagree, BillyTK, and reply correctly that it was mostly due to the industrial revolution and the greater labor productivity it yielded.

Communist threats had nothing to do with it.

AS

Maybe the point is that conditions created by an emphesis on growth brought about conditions in which threats of communism became credible.

This is a big problem with "hands off" policies. Not that they discourage growth, rather that that growth is going to be in cycles and cause some radical inequality. Add to that that people in general aren't rational, and at first sight of a downward trend or radical inequality there is going to be a backlash in the name of fairness.

While a more hands off policy will seemingly result in extra growth over time, a violent swing downward could derail the whole system, by causing violent unrest or some such. Safeguards to try to mitigate these swings carry a price in long term growth rates, but they also reduce the possibility of a cataclysmic downturn.

The whole point being that it isn't all about rates of growth. There is value in stability.

[AmateurScientist]

Originally posted by Suddenly


Maybe the point is that conditions created by an emphesis on growth brought about conditions in which threats of communism became credible.

This is a big problem with "hands off" policies. Not that they discourage growth, rather that that growth is going to be in cycles and cause some radical inequality. Add to that that people in general aren't rational, and at first sight of a downward trend or radical inequality there is going to be a backlash in the name of fairness.

While a more hands off policy will seemingly result in extra growth over time, a violent swing downward could derail the whole system, by causing violent unrest or some such. Safeguards to try to mitigate these swings carry a price in long term growth rates, but they also reduce the possibility of a cataclysmic downturn.

The whole point being that it isn't all about rates of growth. There is value in stability.

I agree. You could have summarized and simply said "the grass is always greener."

:D

AS

[Mike B.]

What came first the chicken or the egg?

Was Scandanavia prosperous because it was Scandanavia? And the government while not hurting per se, worked with an already prosperous system and tweaked it?

Or was it the programs that made countries like Sweeden prosperous?

:confused:

[Shane Costello]

Originally posted by Mike B:
What came first the chicken or the egg?

Was Scandanavia prosperous because it was Scandanavia? And the government while not hurting per se, worked with an already prosperous system and tweaked it?

Or was it the programs that made countries like Sweeden prosperous?

Apparently a Swedish diplomat once told Milton Friedman that in Sweden there weren't any poor people. To which Friedman replied that there was a distinct lack of impovrished Swedes (or people of Swedish ancestry) in America as well.

[Jaggy Bunnet]

Originally posted by Thanz

On a broader note, countires with a more comprhensive social safety net including health care (like Canada and Scandanavian countries) consistently rank quite high on the UN list of best places in the world to live. They have not ruined the economies of these places, and certainly the citizens enjoy a quite high standard of living. I don't recall the US ever topping this list.

Because of the way the UN chooses to calculate the statistics. For example in its human development report, the ranking is based on three indices.

Firstly, life expectancy is measured based on the average life expectancy over an arbitary target life expectancy (85). In both cases the figures are reduced by 25 before calculating the percentage.

Secondly, adult literacy (2/3 weighting) and enrolment in education (1/3 weighting) are combined to give an education index based on simple percentages.

Finally an economic rating is given. This is based on the percentage of the log of average GDP against the log of a target rate ($40,000). Using a log ratio is justified as "human development does not require unlimited income".

Clearly the use of a log scale for income means high income is given a much lower emphasis than high school enrolment. For example the US has average GDP approx 41% higher than Sweden, but has a GDP index of 0.97 compared to 0.92.

The US does badly because of relatively poor life expectancy (76.9) compared to the rest of the top 10 (ranging from 78.2 to 81.3). However the index is made even worse because 25 is removed from both numerator and denominator in the calculation. Without the adjustment, the US would have an index of 76.9/85 or .905 compared to Sweden's 79.9/85 or .940. With the adjustment, the figures are .86 and .91.

As the US overall (equally weighted average of life expectancy, GDP and education indices) is .004 behind Sweden, the rankings are directly affected by arbitary decisions on target setting such as deducting 25 from life expectancy and using a log scale for income and a target of $40k. Amending these would result in significant changes to the rankings.

[AmateurScientist]

Originally posted by Shane Costello


Apparently a Swedish diplomat once told Milton Friedman that in Sweden there weren't any poor people. To which Friedman replied that there was a distinct lack of impovrished Swedes (or people of Swedish ancestry) in America as well.

No wonder Inga down the street is indifferent to my offers of table scraps for sex.

AS