In his post Lying About Tax Myths Professor Maule responds point by point to my recent post More Lies About Tax Lies.
I have published Maule’s entire post below. After each of his assertions, I give my rebuttal.
1. Maule’s Assertion:
Peter Pappas is at it again.
My Rebuttal:
I agree, I am at it again. “It” being the refusal to allow left-wing ideologues to brand those with whom they disagree liars.
2. Maule’s Assertion:
In More Lies about Tax Lies, [Pappas] attempts to rebut the points I made in Tax Myths, Tax Lies, and Tax Twisting. In his effort, he engages in the same sort of twisting and misrepresentations that are at the root of what I set out to debunk. Though the myths I discussed were those presented on another web site, Pappas persistently refers to them as “Maule’s . . . Myth” in a blatantly obvious attempt to cause his readers to think that I developed the myths. No, I simply was commenting on a list developed by someone else.
My Rebuttal:
This is really a silly complaint. I never suggested that Maule is the first to asssert that the various statements made by conservatives about taxes are myths, only that he supports and defends those assertions. The truth is it doesn’t make a lick of difference whether Maule was the first to think of these assertions or is merely a regurgitator of them. He believes in them.
UPDATE: I have to make this clear because Mr. Maule now believes that I am saying he believes in the statements (he calls them myths) the right tells about taxes. We don’t call them “myths” Mr. Maule. We call them facts. You have labeled them myths, therefore, they are your myths. Got that? Our facts and your myths. So when I say that you believe in the myths, I mean that you believe that the rights statements about taxes are myths.
In the end, though, this isn’t about Professor Maule. Its about the legion of Saul Alinsky leftists who believe that their peculiar ends justify any means, including the defaming of their opponents as liars, cheats, oppressors and imbeciles.
3. Maule’s Assertion:
Pappas claims that “No serious person on the right has ever suggested that the poor should pay more taxes because the wealthy are over-taxed.” I suppose Orrin Hatch is not a serious person. He’s not the only one complaining that the poor, and the middle class, should pay more. So when Pappas claims that “Conservatives want everyone to pay less taxes,” his assertion flies in the face of what has been said. But in missing this reality, Pappas is trying to deflect attention away from the original point, which is that the failure to use the phrase “federal income” before the word taxes, in other words, the failure to be precise, creates an impression that is erroneous but intended.
My Rebuttal:
Nobody in his right mind reading the headline “47% of Americans pay no taxes” believes it means 47% don’t pay any taxes. Everyone with a pulse knows that when we talk about the 47% we are talking about income taxes and not, say, sales taxes. This is especially true if they happen to read the headline while sipping on a Starbucks’ Frappuccino they just bought for $4.00 plus sales tax.
Either Maule is not telling the truth or he thinks the average American is too stupid to know that even poor people have social security taxes withheld from their wages and pay sales taxes when they purchase goods.
Incidentally, Social Security withholdings are not a true tax. They are, in effect, loans taxpayers make to themselves. The loans are repaid when they reach retirement age. And the truth is that many of the people that don’t pay federal income taxes will receive more Social Security benefits than they pay into the system.
Finally, when we have a tax system that allows nearly half of all Americans to avoid paying any federal income taxes we create an electorate that has a built-in bias in favor of bigger government. Why? Because the people supporting a bigger government don’t have to pay for it. They have, as the saying goes, no skin in the game. And paying into the Social Security fund doesn’t count because that fund is supposed to be a separate trust fund and the moneys in it are not supposed to be commingled with general fund moneys.
The failure to use the words “federal income” before the word “taxes” is not dishonest because everyone knows we are talking about federal income taxes. Nobody reading that statement thinks it means that poor people are not paying sales tax when they buy their iPods, Xboxes and big screen TVs. What is dishonest is claiming that conservatives are lying and suggesting that people are too stupid to know that the debate is about income tax levels.
Maule doesn’t like the statistic so he deflects attention from it by accusing those who cite it of being liars.
4. Maule’s Assertion:
Pappas then again tries to deflect attention from the error by claiming that the omission of the phrase is designed to rebut an alleged lie, that is, that the rich don’t pay their fair share of income taxes. Aside from the fact that an opinion about fairness cannot be a lie because there is no truth or falsity to an opinion, an attempt to rebut a statement, whether opinion or asserted fact, ought not be made by offering an imprecise statement that implies a falsehood. Pappas demonstrates the futility and desperation of his position when he claims that the fact that the “top 50% pays 100% of the federal income taxes” means that “the assertion that the top 50% does not pay its fair share is false.” Why? Because the assertion is that “the rich don’t pay their fair share of income taxes” which is a different question from whether the “top 50%” is paying a fair share. Lumping the top 1% with the next 49% is a sad gesture of trying to hide the wealthy among the middle class.
My Rebuttal:
Maule is right. An opinion about fairness is subjective, but an opinion about “fair share” is not. The key word is “share”, not “fair.”
Maule defends the left’s fair share lie on the grounds that it’s merely a subjective determination. This is nonsense. By any measure, statistic or evaluation the rich fund the lion’s share of the federal government. There is no escaping that fact, except to lie about it. When folks like Maule spout that “the rich aren’t paying their fair share” they are intentionally trying to mislead the public into thinking that the rich are gaming the system and cheating.
It’s a lie, they know it’s a lie and they don’t care that it’s a lie.
5. Maule’s Assertion:
Finally, Pappas gets to the root of the problem. He claims “Maule knows that we are and always have been talking about federal income taxes.” Of course. That’s not the issue. The issue is my concern that typical Americans who are not tax professionals don’t know that. When they ask me about what they are hearing and reading, they demonstrate the pernicious effect of deliberate lack of precision. The liars know that they might not have much of a chance of fooling some of us, but they certainly are taking their best shot at fooling most of us. Pappas then claims that because I object to these misstatements, it proves I am a liar. Yet Pappas admits that the critical words “federal income” are left out. So how am I a liar when my claim is that those words have been left out, and that by leaving them out, the statement implies something other than the truth? The answer is Pappas’ claim that I labeled the statement “47% of Americans don’t pay federal income tax” as a lie. I challenge Pappas to show us where, in any of my posts, I have asserted that the statement “47% of Americans don’t pay federal income tax” is a lie. I asserted that the statement “47% of Americans don’t pay tax” is a lie, and Pappas’ only defense is that the two statements are the same. They’re not, and the inability to tell the difference between the two says a lot about Pappas and his argument.
My Rebuttal:
Apparently, I think much more highly of the great unwashed masses than Mr. Maule, who purports to hold their interests paramount, does. I think the typical American assumes and knows that the statement “nearly half of all Americans pay zero taxes” means that “nearly half of all Americans pay zero income taxes.”
And think about it, it would take a more, not less sophisticated reader of that statement to think it means anything other than income taxes. People who are not tax professionals would not even consider that the statement refers to state and local sales taxes, property taxes and Social Security fund payments. Maule has it backwards.
In any case, I, unlike, Mr. Maule, do not think that the typical American is juggling village idiot. Americans know the discussion is about income taxes.
6. Maule’s Assertion:
When Pappas then claims that I plan to “confiscate wealth” from the haves, he climbs even deeper into the pit of rhetorical nonsense. All I have argued, for years, is that the Bush tax cuts were unwise, especially during a war. Letting the Bush tax cuts expire is not confiscation of wealth. And when he repeats the claim that no one has ever said that “47% of Americans don’t pay any tax at all” he conveniently ignores supporters of his outlook on taxation such as the Rev. Rick Warren, who told his followers, “HALF of America pays NO taxes. Zero.” So who’s the liar and who’s the propaganda minister?
My Rebuttal:
I suspect that everyone in the audience knew that Warren’s assertion meant that half of American weren’t paying federal income taxes, not that they weren’t paying sales taxes and social security trust fund payments.
Because people know this is why you don’t have to specify that it’s federal income taxes. Everyone gets it because that’s what the debate is about. How much federal income taxes should people pay and are the rich not paying their fair share.
7. Maule’s Assertion:
Pappas then turns to the second myth, that “The American people and corporations pay high taxes.” He ignores the fact that I pointed out that the word “high” is “more difficult to parse.” Instead, he asserts that tax rates in other countries are meaningless. That could be so, but there are plenty of tax-reduction and tax-elimination advocates who point to tax rates in other countries as warnings of what will happen if taxes are not reduced even more. The worst part of his attempt to deal with the second myth is the way Pappas attributes things to me for which he has not proof. For example, he claims, “Most Americans don’t want to be like France, even if Professor Maule does.” Again I challenge Pappas. Show us where I have taken that position. Pappas follows that sentence with a footnote, but was I ever disappointed to discover that the footnote lacked any citation or link to proof of his assertion. Actually, I wasn’t disappointed. I was elated, because the lack of the proof demonstrates that Pappas is making up facts. After all, if he had proof, surely he would have provided it.
My Rebuttal:
A man can want America to be more like France without specifically saying he wants it to be more like France. The way he does this is by repeatedly comparing favorably the policies of France with those of America. Anyone reading Mr. Maule’s blog as I have over the past few years would readily agree that he prefers France’s progressive tax system over that of America’s.¹
8. Maule’s Assertion:
When Pappas gets to the third myth, he asserts that “Maule knows very well that many, if not most, conservatives don’t want to raise government revenues at all.” Of course I know that. My point is that although they want to reduce government revenue, the tax-cut proponents argue the opposite, perhaps because they know that they would lose votes if they admitted they want to cut government revenues to the extent they intend. In other words, when tax-cut advocates claim that they want to cut taxes in order to raise revenue, they know they aren’t coming clean with America.
Tax cut advocates don’t want to cut taxes in order to raise revenue, but rather, in order to stimulate the economy, the byproduct of which will be increased revenue. There is a difference between the two and Maule should know it.
Those on the right believe that lower tax rates create jobs and wealth. It, therefore, follows that they would believe that lower tax rates create more aggregate tax revenue. That does not mean, as Maule suggests, that tax cut advocates have as their goal an increase in government revenue.
9. Maule’s Assertion:
Pappas then tries to take apart the third myth by claiming that tax cuts do create jobs and that the President has admitted that tax cuts create jobs. What the President said, however, is consistent with my point, namely, that tax cuts for the 99% generate jobs. Why? Because those cuts are an application of demand-side job growth. The tax cuts that bring joy to the wealthy, however, rest on the disproven [sic] and failed supply-side approach.
Let me see if I got this right. Maule agrees that tax cuts for 99% of all taxpayers creates jobs but calls tax-cut advocates liars for suggesting that tax cuts create jobs. That’s not only unfair, it’s absurd.
And what an improbable coincidence it is that the precise percentage of the population (99%) that has been co-opted by the Occupy Wall Street crowd happens to be the exact percentage of Americans to whom Maule believes giving a tax cut would create jobs and stimulate the economy. What, pray tell, are the odds of that?
Maule uses the 99% versus the 1% comparison, not because there is a statistic or study that supports this division between those whose taxes should be cut and those whose taxes should be increased, but rather because it packs a huge emotional wallop. And who in his right mind wouldn’t take the side of Maule and the 99 percenters against those evil 1 percenters?
This is demogoguery, folks, and demogoguery is a form of dishonesty.
10. Maule’s Assertion:
Pappas then tries to attribute to me a goal of increasing the top rates to the 70% to 90% range, but at least this time he buys himself some leeway by using the phrase “I suspect even Maule, himself [takes that position].” By phrasing it this way, he has an out when he fails in my third challenge, which is to demonstrate that I have made such an argument. That he wants to take my goal of letting the top rate return to 39.6%, where it was when the economy did well, and recast it as a claim that I want it to reach double that rate is quite revealing. He adds to that an unconditional claim that I favor increased government spending. Here’s yet another challenge for Pappas. Show us where I’ve taken that position.
I cannot know whether or not Maule, if he gets the 40% top tax rate he desires, will claim that there is still deep inequality between the rich and the middle class and, therefore, the top tax rate should be raised even further. But I do know that the arguments he makes now for increasing the top tax rate on the rich would apply equally no matter how high the top tax rate becomes.
In the end, though, it doesn’t matter whether or not Mr. Maule himself believes the top tax rate should be 39%, 50% or 100%. There are legions of folks on the left who think the rich have too much damned money and should be taxed at the highest rate possible.
Finally, I have assumed that Mr. Maule favors increased government spending because he favors increased government revenues. If he thinks all of the increased revenues should be used to pay down the national debt, I have not heard him say so on his blog. It seems to me that he wants to use at least some of the new government revenue generated by increased taxes on the rich for reinvestment in America’s infrastucture.
11. Maule’s Asssertion:
Pappas doesn’t like the statistics, widely accepted, showing economic growth and tax rates, and relies on the idea that correlation is not causation. He claims that “myriad other factors” contribute to economic performance. That, however, does not remove tax rates as a factor. Some of the factors cannot be controlled, such as weather damage or overseas political conflicts, but tax rates can be controlled. Tax rates were cut in 2001. How have you fared since then?
I don’t like or dislike inanimate constructs like statistics, but I am smart enough to know that the fact that we had high tax rates at a time when the economy was thriving doesn’t mean that high tax rates caused the economy to thrive. Conversely, I know that the fact that we had low tax rates at a time when the economy was diving doesn’t mean that low tax rates caused the economy to dive.
It could very well be that, in the first case, had tax rates been lower the economy would have thrived even more than it did and, in the second case, had tax rates been higher the economy would have sunk even more than it did. I don’t know the answer to this question and neither does Mr. Maule. The difference between us is that he claims to know the answer.
Finally, I am not qualified to know the definitive cause of our boon and bust economies. However, I do have common sense. And common sense tells me that if a millionaire business owner is debating whether or not it would be cost effective for him to open a new branch of operations that would create jobs, the fact that, as a result of lower tax rates, he gets to keep more of the money he earns makes him more and not less likely to do so.
Footnotes:
¹ From the website French-Property.com:
The tax rates and bands for 2012 (for income earned in 2011) applicable to each ‘part’ in a household are set out below. The rates are applied on a sliced basis so that each ‘part’ of the income is charged on a progressive basis. Thus, if a couple have net income of €30,000 in the year, then there are two ‘parts’ of €15,000, with each part taxed using the scale rates. There are five tax rates and bands, as follows:
French Tax Brackets In Euros – 2012
Income Share Tax Rate Up to €5,963 0% Between €5,964 – €11,896 5.5% Between €11,897 – €26,420 14% Between €26,421 – €70,830 30% Above €70,830 41%
Sur Tax on the Rich: In addition, those fortunate few with an annual income (including income from capital) of between €250,000 and €500,000 are liable for a special tax (taxe sur les hauts revenus) of 3% on income between this range, while those with an income above €500,000 will pay at the rate of 4% on any income above the threshold. The tax is imposed on net income, after determination of the tax liability under the standard scale rates.
If Mr. Maule does not prefer the French tax system to America’s current tax system, I would like to hear him say so.
20 responses so far ↓
1 James Edward Maule // Jan 28, 2012 at 4:10 pm
Pappas: “I never suggested that Maule invented the Myths he spouts on his blog, only that he supports them and defends them. The truth is it doesn’t make a lick of difference whether Maule was the first to think of these myths or is merely a regurgitator of them. He believes in them.”
Truth: I set out to DEBUNK the myths. I don’t support the myths. Amazing, just amazing
Pappas: “Nobody in his right mind reading the headline “47% of Americans pay no taxes” believes it means 47% don’t pay any taxes. Everyone with a pulse knows that when we talk about the 47% we are talking about income taxes and not, say, sales taxes.”
Truth: I have had conversations with hundreds of people, outside the “legal world,” at the gym, with friends, with friends of friends, who either carefully ask if the “47% don’t pay taxes” really means that, or, worse, claim that because they heard that “47% don’t pay taxes,” it must be true. Even though Pappas and others are so brilliant that they can read between the lines or fill in missing words of precision, most people don’t have that skill and don’t have the legal education that Pappas has. Perhaps if he circulated more among the 99% and less among his beloved 1% whom he defends so courageously (but foolishly), he would come to understand what the typical American reads and believes. These aren’t stupid people, they’re people who aren’t expertised in tax or in the nuances of taxation.
Ponder this: Pappas claims the debate is about income taxes, that everyone knows the debate is about income taxes, he implicitly admits that pretty much everyone (perhaps not infants) pays taxes, yet he claims that the 47% have no skin in the game and aren’t paying for government. Where does he think those sales taxes go? To a non government?
Pappas: “I think the typical American assumes and knows that the statement “nearly half of all Americans pay zero taxes” means that “nearly half of all Americans pay zero income taxes.””
Comment: Pappas must circulate among a very elite, well educated segment of society. Pappas is smarter than the polls. Amazing, just amazing. But I’m sure when Pappas reads the polls that show an overwhelming majority of Americans want the Bush tax cuts repealed, he’ll tell us how uninformed and misled the typical American is.
Pappas:”A man can want America to be more like France without specifically saying he wants it to be more like France. The way he does this is by repeatedly comparing favorably the policies of France with those of America.”
Comment: Conceding the point he can’t find proof, Pappas turns to his mind-reading skills, with the sort of “thinking” from which prejudice begins. Someone who opposes the Bush tax cuts, per Pappas, is per se an advocate of adopting the French system of taxation. What an absurd leap. So, again, where have I ever compared U.S. tax policy with the tax policy of France? Nowhere. Proof, Peter Pappas, proof. That’s what lawyers do to make their case. You haven’t.
Pappas: “I cannot know whether or not Maule, if he gets the 40% top tax rate he desires, will claim that there is still deep inequality between the rich and the middle class and, therefore, the top tax rate should be raised even further. But I do know that the arguments he makes now for increasing the top tax rate on the rich would apply equally no matter how high the top tax rate becomes.”
Comment: Marvel of marvels. Pappas admits he doesn’t know what’s in my brain. Yet he claims a return to where the rates were when jobs were far more plentiful is a step onto a slippery slope that leads to where the rates were when the nation was at war. Yet is that not true, that each cut brings us closer to a zero rate, which would raise no revenue no matter what the economy does? Thank you, Peter Pappas, for inadvertently demonstrating the dangerousness of slippery slopes, especially the ones on which tax cuts slide.
Pappas: “Finally, I have assumed that Mr. Maule favors increased government spending because he favors increased government revenues.:
Comment: You assumed wrong, Peter. I want to use the increased revenue to pay back the debt incurred to finance a war fought without revenue and tax cuts financed by debt.
Pappas:”Finally, I am not qualified to know the definitive cause of our boon and bust economies. However, I do have common sense. And common sense tells me that if a millionaire business owner is debating whether or not it would be cost effective for him to open a new branch of operations that would create jobs, the fact that, as a result of lower tax rates, he gets to keep more of the money he earns makes him more and not less likely to do so.”
Comment: Pappas’ millionaire friend is not going to open a new branch of operations if he has no customers because the bulk of the population has no money to buy whatever it is Peter’s friend is selling. But, hey, we’ve done so well under the tax-cut policies of 2000-2008 that we should just have more of the same. I’m sure America wants a repeat of 2000-2008, more tax cuts for the rich, more job losses, and perhaps even another unfunded war.
2 Peter // Jan 28, 2012 at 11:05 pm
James,
Good lord! I understand perfectly well what you set out to do. You are being disingenous when you suggest that I am suggesting that you support the “myths” you claim the right tells about taxes. That would make you a tax-cut advocate like me and render moot this entire exchange.
You and/or others have labeled various tax statements made by conservatives “myths.” Therefore, they are your myths. In other words, they are our facts and your myths.
In any event, lest there be any further confusion, I have revised my post to make it crystal clear that I am challenging your challenge of various statements made by the anti-tax right. I have also inserted, immediately after the offending paragraph, the following update.
3 Peter // Jan 29, 2012 at 12:07 am
James,
1. Your assertion that I pal around with 1 percenters is ridiculous. All of my family, nuclear and extended, all of my friends and their extended families, and, to the best of my knowledge, all of my social acquaintances and their extended families are part of the 99%. I don’t associate with a single 1 percenter. In other words, I don’t know, much less associate, with anyone who has a net worth of more than $9 million (see Joshua Kennon’s article of September 2011 How Much Does it Take to Be in the Top 1% of Wealth and Net Worth in the United States). The truth is, the only people I associate with are 99 percenters!
2. Again, you have it backwards. A non-expert is more, not less, likely to assume the statement “47% of Americans pay no taxes” to mean federal income taxes. When I say to a 99% have you done your taxes, they always know I am referring to their federal income tax returns and not their sales tax returns or property tax returns of even their state income tax returns. Everyone, even those in your spinning class, know we are talking about federal income taxes.
3. You can’t win the debate so you attempt to demean me my insinuating that I am out of touch with the rank and file and hob nob only with multi millionaires. This is merely one of many insidious stereotypes you liberals love to perpetuate about anti-tax conservatives. You assume that the only reason anyone would oppose tax increases on millionaires is if they were millionaires themselves or had good friends who were millionaires. This is silliness. I oppose tax increases because, a) the government is inefficient and wasteful; and b) the rich already fund the bulk of the federal government. Or, as Mitch Daniels said in his response to Obama’s State of the Union, I don’t believe in trickle down government.
4. Once again, I take you at your word that you have not directly compared the US tax policy to the tax policy of France. But I know that you favor a 39.6 percent top tax bracket and a sur tax on the rich and the mega rich. The French have a 41% tax bracket and a sur tax on the rich and the mega rich. Doesn’t seem like a stretch to me to say that you want America’s tax system to be more like France. But enough of that. Let’s put the matter to rest. I don’t need “proof” that you want America to be more like France if you confess that you want America to be more like France. So, do you or don’t you find the French progressive tax system preferable to our current tax system? Be honest.
5. You claim that I pretend to know what’s in your brain because I assume that you would prefer an even higher rate of tax on the rich than the 40 percent we would have were the Bush tax cuts to expire yet you have regularly imputed to me motives that I don’t have and have said I don’t have. You have several times said that I and people like me who don’t want taxes to be increased on the rich are either greedy, dishonest or dupes. Pot calling the kettle black?
6. Would you or would you not use some or all of the new tax revenues for infrastructure spending? If yes, I was right, you do favor increased government spending. If no, you have changed your position.
7. Your claim that my “millionaire friend” can’t open a new branch without customers fights my hypothetical. The case I put to you was the case of a millionaire who is considering opening a new branch, therefore, the implied assumption is that he has sufficient new business to justify such expansion. Surely you will concede that even in the worst of economies some business do expand and hire. But even if we changed the hypothetical to suit you, if you truly believe that new tax revenues generated by increased taxation of the rich should go to reducing the deficit, how would these new tax revenues create jobs for the 99 percent? How would they put more money in their pockets to buy my friends goods? They wouldn’t, unless the they were redistributed to the 99 percent via infrastructure projects and government entitlement programs.
8. We agree that slippery slopes are dangerous. I happen to believe, and I think there is abundant evidence to support this, that many if not most on the left would like to see the top tax rates in the US be much higher than the 39.6% they would revert to were the Bush tax cuts to expire.
9. Finally, you say,
“But I’m sure when Pappas reads the polls that show an overwhelming majority of Americans want the Bush tax cuts repealed, he’ll tell us how uninformed and misled the typical American is.”.
You’re wrong again. I say the exact opposite. The typical American wants to let the Bush tax cuts expire because he’s informed, not uninformed. He knows that if the Bush tax cuts expire, rich folks will have to fund even a larger portion of the federal government than they are already funding. He also knows that if the rich pay more in taxes, his children and his grandchildren will pay less in taxes in the future. In other words, the typical American is smart enough to know a good deal when he sees one. Why not tax the rich? Why not tax the guy behind the tree? It’s no skin off his hide.
Yes, Jim, the typical American feels entitled to have someone else will foot the bill for him. Why does he feel this way? Because he’s been taught by decades of liberal entitlement policies that he is a victim of the rich man’s oppression and greed and that he’s powerless to change his plight because the system is rigged against him. Dammnit, then, why not make those rich bastards pay more?
P.S. I suspect that if I told 99% of Americans we could confiscate 80% of the wealth of the top 1% and give each of them a $100,000 check they would overwhelmingly favor of it. But it means nothing, other than, perhaps, that the 99% is every bit as greedy as it accuses the 1% of being.
4 James Edward Maule // Jan 30, 2012 at 11:10 am
You can call them facts. The people who laughed at Columbus not only claimed that his eventual falling off the edge of the flat earth claimed that the flatness of the earth a fact. The fact is that all sorts of people from every walk of life have come up to me and asked me why they, or their friends or family in the bottom 47%, are being accused of paying no taxes when in fact they do pay taxes. I reply that the statement should be a statement that they pay no FEDERAL INCOME taxes. The reaction is, “Then why don’t they say that?” I reply, “What do YOU think?” The point is that there are people who take things literally. That makes them susceptible to imprecise statements.
5 James Edward Maule // Jan 30, 2012 at 11:14 am
Your question: “So, do you or don’t you find the French progressive tax system preferable to our current tax system? Be honest.” As between the current French system and the current U.S. system, I prefer the latter. Of course, if you widen the choice, they both lose. The French system fails because it steps up the rates too quickly (that is, the bracket boundaries aren’t right). The U.S. system fails because it lumps people earning billions with people earning $500,000. What I do prefer from French politics is the efficient and non-wasteful way government regulates development and avoids sprawl.
6 James Edward Maule // Jan 30, 2012 at 11:19 am
Yes, I have accused the anti-tax crowd of being greedy, dishonest, or dupes. Some are greedy. I’ve met and had contact with anti-tax people who have said that to me. I’ll quote one, “It’s my money, I want to keep all of it, that will let me make more money, and I’ll end up so rich I can do whatever I want.” Maybe that’s greed for power, but it’s greed. Many are dishonest. They keep justifying tax cuts for the wealthy on grounds that even some other anti-tax advocates don’t dare advance because they’re really not true but they sell just as well as a rumor that gets dispelled long after it does its damage. And as for dupes? Sure, they’re out there, too, people of all backgrounds and achievements who think that higher taxes on the wealthy will cause their own taxes to go up. Why can’t the anti-tax crowd simply say, “We want to reduce government at the same time the populations is growing, so that government services are reduced on a per capita basis. This will permit businesses to get away with more pollution, more worker mistreatment, more importation of defective products made by overseas affiliates. This will permit forcing government out of people’s lives except, of course, where we, the conservatives, do want government in people’s lives, like family planning.”
7 James Edward Maule // Jan 30, 2012 at 11:24 am
You ask, “Would you or would you not use some or all of the new tax revenues for infrastructure spending? If yes, I was right, you do favor increased government spending. If no, you have changed your position.” Picture the world without the Bush tax cuts, and what I want is to get us as close to possible to where the world would have ended up. So I would pay back debt. In turn, that reduces interest payments on the debt, which further reduces the annual deficit. Yes, I would raise the fuels tax, or, better yet, replace it with a mileage fee, to bring those revenues back to where they were in real dollar terms before the “don’t raise taxes” crowd pushed our infrastructure into a condition making us equivalent not to France but to an undeveloped nation. In the meantime, the paying back of debt puts cash into the hands of the debt holders who now must find a place to invest their money. If the market works properly, and I’m willing to give the market the chance and its advocates to redeem themselves on this argument, that money will flow to where the demand is, which is infrastructure repair, cyberdefense for private enterprises, and improvements in education and health care. At some point, the performance of the economy might end up justifying a small reduction in federal income tax rates.
8 James Edward Maule // Jan 30, 2012 at 11:26 am
Incidentally, your millionaire who wants to open a branch and hire people gets a 100 percent tax reduction because the compensation he pays is deductible. The incentive for hiring people to do work for a business already exists and has existed for a long time. Plus, he can hire a veteran or any of the other types of people listed in the various hiring tax credit provisions and get even a bigger break. That’s why the argument that tax rate reductions is the incentive for creating jobs is misleading.
9 James Edward Maule // Jan 30, 2012 at 11:28 am
You say, “We agree that slippery slopes are dangerous. I happen to believe, and I think there is abundant evidence to support this, that many if not most on the left would like to see the top tax rates in the US be much higher than the 39.6% they would revert to were the Bush tax cuts to expire.” Unless the left is 70 percent of the population (and I don’t think it is), then it’s not just the left that wants the Bush tax cuts to expire. And unless the left is only a small fraction of the population, the majority of the left is not arguing for tax rates higher than 39.6 percent.
10 James Edward Maule // Jan 30, 2012 at 11:30 am
You write: “The typical American wants to let the Bush tax cuts expire because he’s informed, not uninformed. He knows that if the Bush tax cuts expire, rich folks will have to fund even a larger portion of the federal government than they are already funding.” He knows that rich folks will need to go back to funding the share of government they were funding when things were going well for rich, middle, and poor alike. Some also know that the rich can reduce their tax burdens by making deductible expenditures to hire workers and to fund charities.
11 James Edward Maule // Jan 30, 2012 at 11:37 am
You write, “Yes, Jim, the typical American feels entitled to have someone else will foot the bill for him. Why does he feel this way? Because he’s been taught by decades of liberal entitlement policies that he is a victim of the rich man’s oppression and greed and that he’s powerless to change his plight because the system is rigged against him. Dammnit, then, why not make those rich bastards pay more?” I don’t agree that the typical American feels this way. Yes, there are people trying to get by with little or no input and a large output. There also are people who cannot generate input but need output (think of people born with crippling congenital problems). But most Americans are annoyed that they are getting less and less out of a system into which they contribute in the form of all sorts of taxes. They experience reduction in services (cuts in fire fighting, cuts to police, potholes, long lines at eye tests at license renewal centers, etc) and see the people who don’t need to worry about those things not only get tax cuts but then increase their tax evasion activities by opening even more bank accounts offshore. To the extent there is disdain for the haves, it not only arises from the disdain of the haves for the have nots, but from the individual experiences of typical Americans in their dealings with the rich. They experience loss of jobs to downsize a company while the overpaid CEO, CFO, CIO and others get pay hikes. They watch the rich buy votes, gerrymander districts, and use their money to influence legislation. They observe the increasing slice of ownership of America by corporations, PACs, private foundations, and offshore entities that answer to no one and that are controlled by the wealthy. They are angry, and attempts have been made to direct that anger at a supposedly “too big” government alleged to be the cause of their pain. Fortunately, they’re waking up and figuring out that the hiring of a deputy sheriff is not the reason they’re getting mugged.
12 Peter // Jan 30, 2012 at 1:35 pm
James,
Okay, I got it. I retract my statement that you want us to be more like France.
13 Peter // Jan 30, 2012 at 10:31 pm
Jim,
1. You are confusing tax avoidance, which is perfectly legal, with tax evasion, which is a felony. It’s not illegal to put your money into an offshore account.
2. The haves don’t disdain the have nots. They employ them. They also contribute billions of dollars every year to charities that help the have nots. Your disdain for the rich makes you assume the very worst about them. That’s what I consider class warfare. I can assure you it isn’t poor people who are funding The Red Cross, Amnesty International, Planned Parenthood and thousands of other non-profit organizations that help the less fortunate.
3. You say that workers are angry because they are being laid off while CEO’s give themselves raises. Well, that CEO may be a greedy bastard, but he’s responsible for creating more jobs than the workers who complain about him. Don’t you think its the height of hypocrisy for someone who has not created a single job to attack another who has created thousands of them merely because that someone now only creates hundreds of them?
Here’s an illustration of this absurdity:
Person A owns a company that has employed 1,000 people for the last 20 years. In 2011, because of a downturn in demand for his product, he lays off 500 of those people.
Person B is a worker. He worked for Person A for 20 years before he was layed off in 2011.
Person B now says that person A, who kept him employed for 20 years, is greedy and selfish.
Question: If Person A, who has created thousands of jobs for the have-nots, is greedy and selfish, what does that make Person B who has never created a job for anyone?
4. The only vote buying I see is when Democrats create entitlement programs designed to make voters dependent on them and then, when the Republicans inevitably say that we need to cut those programs, exploit the issue in their campaigns. Influence peddling is another story. I think union money should stay out of politics and we should pass a constitutional amendment overturning Citizens United. (I think Citizens United was decided correctly, by the way, given our current constitution, even though I think there is too much money in politics)
5. Rich people don’t gerrymander districts, political parties do. And I am quite sure that poor blacks didn’t mind the gerrymandering of districts that got black candidates elected to Congress in the 70′s and 80′s.
6. You think because the free market is imperfect that a cabal of government elites should monitor and correct it. I think they are likely to make things worse.
7. I think there are great discrepancies in the talents, motivations, energy levels and intelligence of Americans and that these discrepancies, rather than any rigging of the system, cheating, or desire on the part of the rich to see people suffer, is why we have great income and wealth inequality.
14 Peter // Jan 30, 2012 at 10:35 pm
James,
You can raise the top tax rate to 80% and rich folks will still be doing well. That, of course, is not the appropriate standard, unless you happen to live in Venezuela. I think its a good thing that rich people can reduce their taxes by contributing to charity. The charities agree with me.
15 Peter // Jan 30, 2012 at 10:40 pm
James,
I am unmoved that a majority of people want a minority of people to pay more taxes so they won’t have to. If we had a referendum on the question of whether we should confiscate 90% the wealth from rich Americans and give every non rich American $100,000 it would probably pass. That wouldn’t make it right.
16 Peter // Jan 30, 2012 at 10:47 pm
James,
I find it hard to believe that you would suggest that more money in the hands of businessmen via reduced taxes (e.g. extension of Bush tax cuts) won’t cause at least some businessmen to either, 1) not layoff workers they otherwise would have laid off; or 2) hire new workers. I think this is basic economics. When a business has more capital, whether its from increased revenues, lowered expenses or tax cuts, it is more likely to expand operations than when it has less capital.
17 Peter // Jan 30, 2012 at 10:56 pm
James,
Okay, I understand your position, but what is so sacred about the 39.6% rate? It seems arbitrary to me. Or is there some study out there that says this is the optimal rate? The reason I bring this up is because if this rate is merely arbitrary, as I suspect it is, what’s to stop pro-tax advocates like you from demanding that it be raised again?
Finally, I think its just too damn easy for politicians to ask for more money instead of doing the hard work of budgeting and eliminating waste. By not giving them the money they ask for we force them, I hope, to roll up their sleeves and do the work we pay them to do. As long as they know they can just grab more money from rich people, they won’t touch the third rail of entitlement programs with a ten foot pole.
Incidentally, I have never known a government agency to appear before Ways and Means and say this:
“We don’t want more funding. We have everything we need.”
Government agencies have agendas of their own and they compete with one another for tax dollars. This, I think, causes waste and makes spending cuts almost impossible.
18 Peter // Jan 30, 2012 at 11:27 pm
James,
1. It’s not greedy to want to keep the money you earn and it’s not greedy to want to be rich.
2. You can find nutcakes on either side of the issue. There are people on the left who would like us to follow the Chavez model, for instance. Neither party has a monopoly on lunacy.
3. The fact that you think there are no sound, principled reasons one might have for opposing tax increases on the rich makes you a very difficult person to debate with. I have on at least a half dozen occasions laid out my reasons for opposing tax hikes and you still attribute to me motives that I not only don’t have, but have specifically denounced.
4. I don’t want lower taxes to save myself money. I don’t want lower taxes so my rich friends can get richer. I don’t want lower taxes because I want other people to pay higher taxes.
I think the federal government has exceeded its scope. The tenth amendment is clear and it has been violated. By both parties.
Powers not specifically granted to the federal government are reserved by the states.
5. You have shown that advocates of more government regulation and higher taxes have a debating advantage over those of us who want smaller government. You can always point to something that the government does or could do that we would have to do without if taxes were not increased. For instance, you said that if we don’t raise taxes (to the arbitrary 39.6% rate you would like) we will get more pollution, more defective products and more worker abuse. This is a very powerful emotional argument. It may even frighten some people – the ones whose taxes won’t be raised – into agreeing with you.
But this argument would apply equally were the tax rate now 39.6% and you wanted to raise it to, say, 50%. You could still credibly argue that the government will use the extra revenue to stop pollution, protect workers and prevent defective products.
6. If you assume that everything the government does is good, then you’re a fool not to want higher taxes. If you assume that most of what the government does is either wasteful or harmful, then you’re a fool not to oppose higher taxes.
7. Finally, even you have a limit as to how high you think the top tax rate should go. And once you get to the point above which you are not willing to go, someone else will come along and use your argument against you i.e. if you don’t let us raise the rate to 45%, we will have more pollution, more worker abuse, etc.
P.S. Being in favor of smaller government does not mean you are in favor of no government. The former is conservatism, the latter anarchism. There are some things only the federal government can do. I just want it to do them efficiently.
19 Peter // Jan 30, 2012 at 11:31 pm
James,
I honestly don’t think the omission of the word “federal” is intentional. I have always assumed we were talking about federal income taxes and assumed others would assume the same. There really is no reason to lie about this. “47% of Americans pay no Federal Income Taxes” packs as much of an emotional wallop as does “47% of Americans pay no taxes.”
20 James Edward Maule // Feb 1, 2012 at 12:34 pm
Lots to answer here, and tough to keep the thread coherent. So I’ll try to summarize thusly:
1. I don’t disdain the rich. I disdain the policies that favor the rich and that are enacted by those catering to SOME of the rich. I’ve had conversations with people in the top 1%. Some agree with me. Some disagree. Some of the ones who disagree have changed or begun to change some or all of their premises or analyses. There’s no disdain for them personally.
2. It’s one thing for a CEO to lay off workers because revenues have declined, and there are no more available cuts. This happens in small business operations where the owner will reduce his take-home until he reaches “survive” levels. On the other hand, there are companies that in the face of declining revenues cut the workforce while giving raises to the CEO.
3. All those workers create a job for the CEO, and for the people who manufacture the supplies purchased by the company, and for the people who are hired to produce the goods and services purchased by the worker for personal use. That’s why the economy tanks when the disposable income of 99% of the population falls. That CEO who has to lay off workers because revenues have declined is dealing with decreased demand arising from the reduced income of his customers.
4. Yes, Democrats created entitlement programs. So did Republicans (e.g., Medicare prescription drug program). Republicans also create entitlement programs in the tax code, but they refuse to consider getting rid of those because they “aren’t spending.” They might not be spending but they contribute to the deficit. And they’re no less a government “intrusion” into some aspect of national life than is a spending program. They’re simply easier to hide.
5. The political parties that gerrymander are funded by whom?
6. The government elites to whom you refer are temporary visitors from the imperfect free market. The revolving door still revolves. So in some respect, the battle is between governmente elites and free market elites, who then switch places and continue to battle. Meanwhile, the rest of the people become collateral damage.
7. There are way too many non-talented, troubled, unmotivated trust fund babies, and way too many talented youngsters with arrested development because of the sad state of their schools and neighborhoods to consider the monetary haves and have-nots concomitant with the talent and motivation haves and have-nots.
8. Letting the Bush tax cuts expire is not the same thing as raising the taxes on a few in order to reduce taxes on others. I’m not advocating reducing taxes on anyone when I advocate letting the Bust tax cuts expire.
9. More money in the hands of business in the form of extending the Bush tax cuts will bring us more of what the Bush tax cuts brought us. More 2002-2010? The point is that aside from the absurdity of cutting taxes while spending money on war, the Bush tax cuts did not do what was promised. It was tried, it did not work, and now it’s someone else’s turn to try.
10. When the top rate was 39.6%, the economy did well. It did not do well at 35% nor at 50%. Maybe the ideal top rate is 38.9% or 39.7% but my point is to leave well enough alone. But instead, Bush’s handlers decided to take a deficit, and rather than paying down debt (imagine the stimulus that would provide), decided to return the deficit 50 times over, chiefly to the wealthy.
11. So if your justification for reducing taxes is to shrink government, why not be direct about it? Why not stand up and propose the elimination of spending $x for program Y, and point out that if you succeed in your attempt, taxes will go down z%? Won’t the promise of tax relief bring people flocking to your cause? In some instances, yes. But in most instances, no. And those some instances are chicken feed and do nothing to deal with the deficit. Go down the list. Defense? Medicare? What can you cut to eliminate the deficit without touching revenue (let alone reduce taxes even more)? The reason government shrinkers are hiding behind taxes is that they are afraid to stand up and present their new budget because they know they’ll get nowhere with that approach (other than with someone I know who advocates denying medical care to “old people” (which he does not define because he’s, well, he’s over 40!)).
12. My argument against a 50% tax rate is that I argued for repeal of a tax cut, not an increase in tax rates from what existed before the tax cut.
13. I don’t think everything the federal government does is good (ditto for state and local governments). But I also don’t think almost everything the federal government does is wasteful or harmful (ditto for state and local governments). I do think that without restoring the pre-2001 rates (aside from making up the wasted foregone revenue), the deficits are harmful, and cutting existing programs to eliminate the deficits also is harmful. Both are more harmful than letting the Bush tax cuts expire.
14. In the world in which we live, a small government can be equivalent to no government. One sheriff in a Wild West town of 10,000 people is small governmnet, but also for all intents and purposes, no government. Our population is more than double what it was when I was born. The number of relationships among people that pose the threat of crime, fraud, whatever, has multipled by huge orders of magnitude. It is not surprising that government of and by and for the people has grown concomitantly.
15. Finally, coming back to the original point. You and I know the meaning of “47% of Americans pay no taxes” when uttered by certain people in certain circumstances. But many people do not, they take it literally, and it pack way more wallop because it says to them, not “You may no federal income taxes” but “You pay no taxes.” That confuses them, befuddles them, and then angers them. And there’s no need to leave out those two words. No need at all, other than to convey an impression that is far from the truth.