Neptunus Lex

44 responses so far ↓

• 1 Bomber Guy // Jan 12, 2007 at 8:02 pm

  Great!

  The media, who loudly proclaim themselves to be the guardians of our freedom, apparently have limited their reading to the First Amendment.

• 2 The Owner's Manual // Jan 12, 2007 at 8:17 pm

  If growing and consuming pot within the confines of one’s own property can be federally regulated as falling under the Commerce Clause, then providing for the general welfare by income redistributive taxation would seem a slam dunk.

• 3 John Carmichael // Jan 12, 2007 at 9:34 pm

  SCREAM IT FROM THE HIGHEST MOUNTAIN!

  These are the same ideologues that are firmly of the belief that “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. ?¢‚Ǩ‚Äù” is guaranteed in the US Constitution!

  I love fun I can have with the discussion that ensues! The always enjoyable battle of wits with an unarmed person!

• 4 PeterGunn // Jan 12, 2007 at 11:34 pm

  The purpose of the tax code is the redistribution of the wealth? What are those people thinking… or smoking? How could they think that is true, much less publish it? Unbe-freaking-lievable!!!

  As Carmichael said, it’s interesting to quote the Constitution to so-called “thinking people” … all Hell breaks loose! However, it’s not so entertaining when you realize that’s what they really believe!

• 5 Guy // Jan 13, 2007 at 4:57 am

  Unbelievable…These are the same people that promise equal outcome as opposed to equal opportunity…and the selfish-me first crowd, always seeking ways to benefit from other folk’s hard work, swallow this tripe…hook line and sinker.

• 6 Michelle // Jan 13, 2007 at 5:51 am

  Maybe now I get the difference between “right wing” and less right wing. I won’t argue the US Constitution with you, but considering the fact that in my country, income tax was brought into force as a “temporary” measure to assist the gov’t during time of war (no, not the GWOT), might not we consider that whatever its origins, its purpose might have changed somewhat?

  Re: the difference between equal outcome and equal opportunity, could we agree that there are SOME in society for whom true equality requires more than just “equal opportunity” - for example, if I am in a wheelchair and the only way for me to access a “public service” is up two flights of stairs in a building without an elevator, do I have the same chance to get there as you, don’t I? If I am deaf and mute and need to attend for emergency medical care, do I have the same access to care as you, if I cannot communicate effectively with the dr without assistance? Just a couple of examples.

  I have the sense that some prefer “charity” to gov’t assistance - does that harken back to the days of the poor houses? Can’t there be a place for both forms of asssitance? Especially considering that the selfish-me first crowd, tends to be so not great with donating to “good causes”? What about donor burnout and the fact that there are a hell of a lot of “good causes” out there?

• 7 Michelle // Jan 13, 2007 at 5:57 am

  On reflection, the right wing comment was not necessary to my remarks, I retract it. The rest I let stand.

• 8 Lee // Jan 13, 2007 at 8:36 am

  Great, using the First Ammendment not only gives you the ability to be a history revisionist, you can be a Constitution Revisionist as well. I always thought Bill Shakespear was right about lawyers, now, maybe I’m thinking he should have said Journalists instead!

• 9 RonF // Jan 13, 2007 at 9:57 am

  A similar concept was stated by a Chicago alderman on the floor of the Chicago City Council, that the purpose of government was to redistribute income.

• 10 Justthisguy // Jan 13, 2007 at 10:05 am

  I’m more annoyed by the Roscoe Conkling interpretation of the 14th Amendmendment, that limited-liability corporations have the same rights as real live natural people. I hate those damyankees who did that.

• 11 CPT J // Jan 13, 2007 at 10:12 am

  Michelle,

  You make some great points. Yes, I too believe there is a place for both kinds of assistance, but that individual choices are the energy that must drive them, not a social fiat.

  At a basic level, government exists to *restrain* the strong, so that at the weak are not *trampled*. These are negative rights, not positive ones. That doesn’t mean that the strong should be stopped in their tracks while everyone else catches up; or robbed by the envious for being successful, because it would stifle the individual innovation and drive that makes all surplus [and also all tax revenues] possible. Neither does it suppose that the weak are totally helpless either, doomed to perpetual victim status. Individual choices and attitudes still determine our fates.

  Witness the successful immigrants in both Canada and the U.S. who arrive with nothing and soon have prosperous lives created by their own effort, while native-born Americans and Canadians who started out with this advantage have made nothing of their opportunities –and visibly resent others who do. Corrosive envy may be a short term political strategy, but it will eventually destroy those who indulge in it, because envy has no limits.

  Relative inequality of outcomes will always be with us, because no two person’s backgrounds and desires are alike. The tax code is meant to pay for things like common defense that individuals can’t [not won't] do for themselves. Government’s legitimate role is first to protect us all from common threats, and then to ensure equality of opportunity made possible by that common security. It can only try to open doors that we must still walk through on our own initiative. Freedom isn’t about everyone forced to arrive at the same place, but having a path clear to proceed by our own choices from where we happen to be. Advocates for the disabled or any group, benefit all of us when they help remove obstacles to individual movement, not when they set up collective rent-seeking toll booths.

• 12 Michelle // Jan 13, 2007 at 12:11 pm

  CPT J
  I can’t and won’t argue with any specifc point you make but my gut sense is that I am advocating a more “interventionist” sense of goverment policy. You’re right, there are many stories of those who “came from nothing” and rose to be very succssful. And probably many more stories of those who started out with relative advantage who went on to make very little of their lives. Point taken.
  But what is wrong with the tax system redistributing wealth to a point? I don’t mean to the point where you stifle business, make it pointless for people to work because they are paying it all to the state, an envy tax because you are sucessful. People who work hard deserve to be rewarded for that but at the same time isn’t some redistrubtion of wealth, some sense of responsiblity (even fiscal responsibility in some cases) for our brother really what the social contract is all about?
  Yes, gov’t provides defence (police and military), education, roads and other infrstructure for us all. And it does so with tax dollars. In my world, it also provides a base level of health care. But what of a social safety net? Is that really such a BAD thing? Sure, anything can and will be abused - I firmly believe that ANY concept, no matter how noble, the human mind can develop, another human mind will turn to a perverse use. But, at the risk of using a cliqued term, I don’t think that means the solution is to throw the baby out with the bath water.
  What I am trying to say is that I just don’t get what appears to be such a strong, almost visceral reaction in this thread - a reaction along the lines of “How nuts are these people to think that the tax system should mitigate inequality?!” - surely not its only purpose, but why is it so far out for it to be one of its purposes?

  You said: “Advocates for the disabled or any group, benefit all of us when they help remove obstacles to individual movement, not when they set up collective rent-seeking toll booths.”

  Can you do me a favour and expound a little on this one for me? I agree there is certainly a line be drawn somewhere; I’m just trying to see more clearly where you, personally, would draw it.

• 13 lex // Jan 13, 2007 at 12:26 pm

  Well, the top 5% of wage earners in this country already carry 50% of the tax burden, so it’s not that our code isn’t progressive. The Times is consistenly worried that the wealthy aren’t paying enough, and that the solution is to soak them a little more.

  Things that we wish to encourage we subsidize, while we tax those things we want to discourage. Punitive taxation is taxing, or punishing, success. Which is a bad enough in itself but providing for the common good is a necessary evil. The flip side of redistributionary tax policy is that you end up subsidizing failure.

• 14 jpr // Jan 13, 2007 at 12:28 pm

  When you refer to, “…native-born Americans and Canadians who started out with this advantage have made nothing of their opportunities ?¢‚Ǩ‚Äúand visibly resent others who do…,” are you referring to earlier immigrants, or native Americans? In the latter, I can see them as being a bit jealous as we took everything from them and evicted them from their lands for our benefit.

  Certainly the work ethic of various immigrant ethnic groups is different and some clearly do better than others. I won’t name names, they know who they are.

  Not necessarily do I believe in this, but for argument’s sake, why shouldn’t those who prosper more be made to pay more in taxes? How much do people, really, feel penalized for making a lot of money?

  Wouldn’t the country, as a whole, benefit? Aren’t we all in this together? Especially when we’re in a GWOT with the price of the war going nowhere but up? How will we as a country pay for that? Cut taxes? Cut spending? On what? The deficit crazy large and growing.

  By eliminating welfare as we know (knew?) it, we can avoid the argument that money from a self-made millionaire goes directly to the pockets of a willingly unemployed coke-head mom with 4 kids and a bitchin’ ride. They don’t need our money and I, for one, don’t want to perpetuate the welfare class. Help those who can’t, not won’t, help themselves.

  Would rich people feel better about higher taxes if they knew their money was specifically going toward, say, the war effort? Or going specifically to pay down the deficit?

  And also, keeping with the Chicago theme from RonF, Mayor Richard Daley the Elder once said, correct me if I’m wrong, during the riots of 1968 Democratic Convention, “…the police aren’t here to create disorder, they’re here to preserve disorder.”

  Back to you in the studio…

• 15 dick // Jan 13, 2007 at 1:10 pm

  My whole problem is with the concept of redistribution of income. Who sets the levels for redistribution and on what basis. What affect does this have on investment and job creation. Once you start on the path of redistribution, where do you go for appeal. How do you insure that it is not being done to penalize a group.

  All you have to do is look at the shouting about the tax cuts for the rich. The top 5% as stated above pay almost 50% of the taxes and many more people were exempted from paying taxes at all. Yet to read the leftist pundits there is a plutocrat out there who is stealing your money and we have to take his money to stop him.

  Then we hear all about how the middle class is penalized or not. Check the definitions for who is middle class against the people who think they are middle class.

  Then into this situation plug in the concept of redistribution as defined by people who don’t have a clue what chili is or who don’t know what a bar code is. The thought is chilling to say the least.

• 16 jpr // Jan 13, 2007 at 2:31 pm

  I would guess that Congress is the means by which any sort of “redistribution” plan would be. And conceiveably they could change the tax laws everytime its control changes hands.

  And the only way Congress could get away with that is if the one party in control had a veto-proof majority. How long has it been since one party had that?

  I’m (we are, I should say) not rich. I would love to have more money, but not from my rich neighbors. My personal feeling is if I want more income, I’ll get a better job, ask for a raise or go down to my local Starbucks or Borders and get a part-time job. That’s just me.

• 17 fliterman // Jan 13, 2007 at 2:41 pm

  Well, it didn’t clear it up, did it?

  Be wary of excessively narrow thought involving multiple purposes. To wit: If I were to say an F-18 was “supposed” to be fast, agile, and well-equipped and armed, would that not be true? And wouldn’t that still be correct, even though it’s not an F-18’s fundamental and primary purpose — which is to put its weapons on target?

  Similarly, the NYT editorial author’s statement does absolutely nothing to dispute or contradict what our tax system is “supposed” to do as so stated in our Constitution. It merely expands upon it. To mollify your apparent disgust, perhaps he should have stated, “In addition to the fundamental purposes spelled out in our Constitution, our tax system is also “supposed to mitigate inequality.”

  Indeed, does not our progressive tax system, aside from funding Article 1. purposes, “soak the rich”? Is not one of its purposes to mitigate inequalities and redistribute wealth? Don’t Conservatives carp constantly about the “death tax” that FDR originally set up for the purpose of limiting the accumulations of great wealth from passing to one generation to the next?

  The editorial’s author never said inequality mitigation was the “principle function” of the tax system. He merely said it was “supposed to” mitigate inequeality ?¢‚Ǩ‚Äú among other things. And as is apparent, he was quite correct.

• 18 lex // Jan 13, 2007 at 3:10 pm

  We disagree, fliterman. How very surprising. The difference is that I’m a little less prone than some to loosely throw out words like “narrow thought” and “disgust” when I merely disagee with someone or something on principle.

  One might as plausibly “expand” upon the Constitution to say that the taxation system is supposed to rectifly colorblindness. Merely putting it forth as an unsupported yet foundational assumption doesn’t make it so.

• 19 Dbl D // Jan 13, 2007 at 3:27 pm

  I do not envy my rich neighbor, do not covet his possessions, nor do I want him to pay more than his fair share. I am happy and content with what I have and if I want more I simply want the opportunity to work for it.

• 20 Michelle // Jan 13, 2007 at 3:57 pm

  I would really rather not argue the specifics of the American tax system (of which I am essentially ignorant); actually I only followed the link and read the editorial now. My initial comments were only in reference to the thoughts as to whether or not one of the goals of a taxation system should be to redistribute wealth to some extent.
  But progressive or not, if the top 1 percent of households pocketed an extra $128 billion while the share of after-tax income going to households in the middle of the income distribution fell by $29 billion during the same year, the editorial may have a point as to how “fairly” the system is working. Of course that proposition is only valid if you expect/require the taxation system to be “fair” in the first place.

  I don’t know if I can completley buy into this “punitive taxing” concept; perhaps at one time we taxed that which we wished to discourage, but now it seems that we tax just about everything - food, gasoline, services, as well as income. Do you really begrudge the “ncessary evil” of providing for the common good? I mean, if I presume to think that I have some sense of you as a person, then I really don’t think you do, yet it feels like I hear that sentiment lurking in your writing.

  jpr, if we “eliminate welfare as we know (knew?) it”, what system will you use to assist the “worthy” poor? Everyone’s favourite icon seems to be the willingly unemployed coke-head mom with 4 kids. But what about those who through no fault of their own do require assistance? Some on a temporary basis; some permanently. Not because they’re not willing to work, not because they’re spending all their money on alcohol or other drugs, but because they ….. fill in the blank - are physically or mentally unable to work, temporarily cannot find a job, have small children needing care or work at a minimum wage job (I freely admit that I have no idea how much minimum wage is there, I assume it varies by state) with no benefits?
  How will we meet our obligation to those people? I agree that most (all?) welfare systems need reforming, I just never hear too many concrete answers as to how they should be reformed other than getting rid of all those cokehead mothers. I agree with you that for most of us, if we want more income, we should get a better job, ask for a raise or get a part-time job. It’s just that for some, those aren’t viable alternatives.

  dick, I read the editorial to say that there were now more wage earners at the top end of the income scale that were exempted from paying taxes. As to the legitimate concerns inherent in who makes the decisions and how far it goes, I can’t see how we can in good conscience use that as a reason to NOT redistribite income, not when you look at how much people in need actually need.
  So there you have it, you have a wealth redistribution advocate lurking in your midst. But despite that, I’m not all bad, trust me.

• 21 fliterman // Jan 13, 2007 at 4:23 pm

  #18 — Reductio ad absurdum?

• 22 lex // Jan 13, 2007 at 4:24 pm

  Michelle, I believe that the taxation system is both necessary and evil. It’s a terrible idea to quote oneself, but “I believe that taxes are a necessary evil. The fact that they are necessary should not obscure the fact that they are evil. You work to provide for your family, and the government asks a share of the bread wrung from the sweat of your brow. Societies have responsibilities, but only because they collectively choose to. There is a social contract in effect: We do owe our less advantaged brothers and sisters the chance to pull themselves up out of the mire. But they owe it to us to take that chance.”

  It’s also fundamentally coercive - you don’t pay, and sooner or later a man with a gun shows up to take you away.

  In general, I’m in favor of less government - defend the borders, deliver the mail. That sort of thing.

• 23 CPT J // Jan 13, 2007 at 4:34 pm

  Michelle and jpr:

  Thank you both for the clarity of your questions, pondering them I hope I can offer a useful reply.

  I would agree that too great a distance between wealth and poverty is dangerous for any democracy. Certainly a safety net is a good thing, provided you have enough net-makers who can sustainably contribute to it’s upkeep. Too great a proportion of non-contributors strains the net to the breaking point. Adding everyone to the net without incentives to contribute and maintain it will cause massive failure, sooner or later. The major visceral reaction to this question seems to be the individual’s ability to pay. The person who is already paying progressively higher income taxes, and those who may or may not be paying income tax but who cannot afford things like acceptable health care have the same reaction, though for different causes.

  My own feeling is that corporations are not paying sufficient taxes relative to the true cost of the security , commerce and infrastructure benefits that currently only government provides. Corporations today are not paying the same proportion of their revenue as taxes that they did in the 1960s. I would not increase the personal tax rate to punish the rich –that is a disincentive to every present and future entrepreneur. Instead, I would very gradually reduce or eliminate the corporate tax loopholes now in place, and change some aspects of the corporate ‘personhood’ advantages they now enjoy over real people.

  Corporations need stability, and would adapt over time to these changes. Nobody would like it at first, especially shareholders, but if the alternative is a collapsed social contract this is an offer they couldn’t refuse. And it goes both ways –government will eventually be forced by demographics to operate with at least something like the efficiency of the private sector, or be displaced. For big-ticket items like health care, there is no other alternative.

  So I would be for holding corporations to paying their fair share of taxes, as an incentive to press governments through their lobbying influence to get more efficient. Enlightened self-interest.

• 24 FbL // Jan 13, 2007 at 5:44 pm

  Michelle, another thing to consider about the “conservative” attitude toward taxing is that there is among many an underlying resentment of having one’s money taken without having a direct say in where it goes.

  A recent academic study showed without equivocation that those of a conservative political philosohy were far more generous in donating to charitable activities than liberals (and Americans as individuals are by far the most financially generous on earth). So, I suspect there’s a certain (maybe half-conscious) thought among conservatives that “I know the organizations I give my money to and I trust them. I don’t trust the government to take my money and do charitable acts with it.”

  It requires a delicate touch to assist without creating dependence. And the government doesn’t do “delicate.”

  Of course, this is only one aspect of many conservatives’ problems with the tax system and the role of government in American society….

• 25 PeterGunn // Jan 13, 2007 at 6:59 pm

  Fancy words, these, and high thinking too. My problem with “is supposed to mitigate inequality” is that as a small business owner, I’m being “mitigated” into no expansion, no growth.

  My withholding taxes on just a few people average in excess of $1,000/person/month. I know of a sharp young man, a legal immigrant as a matter of fact, whom I want to hire. I must consider not only his compensation, but also the added load of another $1,000 per month tax expense.

  The way I understand legitimate mitigation of inequality is if and when there is some exploitation present. I’m fine with that. Please don’t keep me from natural growth, expansion and providing more opportunities by means of a cumpulsory, almost punitive tax (redistribution) system. This isn’t philosophical I know; just file it under “Real Life in the Small Business World”.

• 26 unkawill // Jan 13, 2007 at 7:34 pm

  FBL says “It requires a delicate touch to assist without creating dependence. And the government doesn’t?¢‚Ǩ‚Ñ¢t do ?¢‚Ǩ?ìdelicate.?¢‚Ǩ¬ù”

  Amen Sister, My main problem with the Gov in all its pugnacious forms is that approximately 20% of the population derives it’s income from tax revenues.

  IMO that level is unsustainable, and I for one am tired of paying it.

• 27 unkawill // Jan 13, 2007 at 7:41 pm

  Peter, I am an SBO also and you “Hit that one outta the park.”

• 28 Michelle // Jan 13, 2007 at 7:59 pm

  Lex, I’m glad you quoted yourself, I agree with many, probably most, of your beliefs, at least in the abstract.
  CPT J I am all for closing corporate loopholes. Personally I think that’s long overdue. Of course there will be those who cry Foul and how we just don’t UNDERSTAND how doing so will set the economy down the path to destruction.
  Peter, far be it from me to argue with you as a small business owner. I, too, am a small business owner, unfortunatley, only a business of one ie) self-employed. I believe that small business and entrepeneurship needs to be encouraged. Not that corporations are evil, just that often they seem to take on a larger life than that of the real people who need to put food on the table. And yes, I know they employ real people and that their shareholders are real people too.
  FBL I had heard about the study showing that conservatives gave more to charity than others. Frankly, it suprised me, but also pleased me. Perhaps, just perhaps, there is hope…. But my problem with relying on private charity is that it won’t get money (or enough money) to all the places it needs to go.
  BTW Justthisguy, just noticed your comment about the lunacy of granting corporations the same rights as real people - I would like to say “Only in America” but am ashamed to admit that the same ridiculousness is parroted here.

• 29 FbL // Jan 13, 2007 at 8:07 pm

  Michelle, I wasn’t arguing that only private charity should be supporting those in need. I was merely pointing out that conservatives are somewhat uncomfortable about the government’s role in that area. Perhaps a more accurate description might be “conflicted,” because most run-of-the-mill conservatives understand the need for government involvement, but aren’t happy with the way it has worked out.

• 30 andreas04: close to attraction // Jan 13, 2007 at 8:44 pm

  [...] *Ahem* (Clears throat, closes one eye…) Neptunus Lex makes the correction. Well, no, actually. According to Article I of the Constitution,?Ǭ† the tax system in the United States is designed to, ?¢‚Ǩ?ìpay the Debts and provide for the common Defence and general Welfare of the United States.?¢‚Ǩ¬ù But it was an easy mistake to make, if you believe that the one of the principal functions of government is to redistribute income away from those who earn more of it - place a sin tax on success, in other words - in order to purchase the ongoing dependency of those who earn less. [...]

• 31 badbob // Jan 13, 2007 at 9:01 pm

  I don’t see where Lex is in any way incorrect. He stated facts. They were not his “beliefs”.

  When the Federal income tax in the US was inaugurated IT was supposed to be temporary, too. Fat chance of that. And BTW, it wasn’t put in place to “mitigate inequality”, it was put in place to generate more revenue for the federal government of the time.

  Where the NYT’s does have it “right” is that since the depression and F. Roosevelt, Democrats have expanded and tweaked the tax codes to attempt to “redistribute the income” and of course attempt to fund pet social programs. Their “beliefs” became sort of a fact..to them. Thus, the essential difference between conservative and liberal.

  “Mitigating inequality” to create social justice, or whatever, doesn’t make it legal, moral or “right”.

  b2

• 32 PeterGunn // Jan 13, 2007 at 9:06 pm

  Michelle, as you seem to be in some other place, I’m not sure about your government or tax situation. One thing, however, remains the same in the world of an employer, be they of corporations or not. That one thing is the regular and consistent need to meet the PAYROLL. That is never done by any employee or government on behalf of the business, corporation or owner. Many the time that my family had “beans” so I would not default come payday.

  The first year start-up cost for creating a new job in my industry runs from $40-50,000; $20,000 being taxes, training and benefits.

  Entrepeneurs venture and are asked to “minimize inequality” with their hard won gain? … if there is a gain of capital above the new life and family sponsored by the opportunity to work.

  All I’m trying to say is that the self-employed owner, or corporation, is made of “real people” too. We serve and serve well, with no regrets. The role of the government for me? Just please don’t, in Archie Bunker’s words, STIFLE!

• 33 Jeff // Jan 13, 2007 at 9:11 pm

  CPT J,

  A comment regarding your ?¢‚Ǩ?ìfeeling is that corporations are not paying sufficient taxes relative?¢‚Ǩ¬¶?¢‚Ǩ¬ù in #23. My view is that successful corporations don?¢‚Ǩ‚Ñ¢t pay any taxes; they pass the cost of taxes on to the customer. If you increase the amount of taxes they pay, and they can?¢‚Ǩ‚Ñ¢t pass it on, say through increases in product prices, they go out of business. I believe this was Ronald Reagan?¢‚Ǩ‚Ñ¢s argument back in the 80?¢‚Ǩ‚Ñ¢s when he was roundly criticized by the left. Any way you cut it, only individual citizens pay taxes, if you work and are moderately successful.

• 34 Max Damage // Jan 13, 2007 at 11:48 pm

  There are three economic systems that have been tried over the past century. Capitalism, Fascism, and Socialism. The definitions of each are fairly simple: if private people own the means of production and government does not interfere, it is capitalism. If private people own the means of production and government tells them what to produce, it’s fascism. If government owns the means of production and says what to produce, it’s socialism.

  I think it’s safe to say that socialism failed, fascism only works when an entire economy needs to be targeted towards a foe, and capitalism tends to work the best for the most.

  So, the best economic model is to let me do what I can for what I can make. That makes sense — if I want to improve my lot in life I can do what is required to earn more, or I can stay where I am with no additional effort.

  The thing about a progresive tax is as I improve my own situation a greater portion of the benefits are siphoned off for others. That does not provide me with an incentive to improve, nor does it provide any incentive for those receiving from me to improve. I can eat beans for nothing or I can eat pork chops for a bit more, but I can’t afford steak until I can pay for both steak *and* beans for those who can’t afford pork chops.

  Now then, if we wish to reward behavior that benefits society and discourage behavior that does not, a progressive tax system is the wrong way to go. There is an incentive to take income off the book whenever you’re near the next tax bracket. As for corporations, they have a duty to the shareholders and those shares are my retirement investments. Corporations don’t pay taxes, they pay expenses and pass along those costs in their goods and the wages they pay. So taxing corporations merely means they’ll pay me less now as an employee or less later in my pension or 401K or retirement account.

  If I ever get a job from a bum living on the dole we might have to re-visit this whole idea that income needs to be redistributed to assure equality, but last I saw there were few people of no wealth creating jobs for others.

  Finally, on health care, when do we take it to the proper level? If health care is a right, do I not then have a right to the time, and thus a portion of the life of, a person in that field? If I have a right to medical care, do I not then get to waltz into hospital with an ingrown toenail and demand it be excised with no promise of payment? “I’ve a toe that hurts, fix it, and if you want money for your time take it from somebody with a deeper purse” seems to be the result here. So, as a doctor, what incentive would I have to do more than the minimum necessary? As a citizen, what incentive would I have to use a toenail clipper before the toenail becomes ingrown? As a rich guy with excess cash to invest, why would I invest in medicine knowing a single idiot with an ingrown toenail could wipe out the day’s revenue?

  If there is no cost in using a service there is no penalty for using it at a whim. This is especially so if the cost can be passed on to others. If there is no reward in training to that service members of that service will find more productive uses of their time, hence fewer doctors available for all those ingrown toenail vicims and a greater waiting time to see them.

  From an economic point of view, rights cannot impose an obligaton upon others without causing reason for the system to collapse.

  Best regards,
  Max

• 35 Michelle // Jan 14, 2007 at 6:24 am

  But none of us have pure capitalism - our systems may be mostly capatilist but clearly (by virtue of gov’t) we are not relying just on market forces. I have little problem with what you say in regard to the “bum” who chooses not to work, but what of the “bum” who can’t work? Shall we let them die on the street? Well I guess it would create employment, street cleaning and all.
  Health care, IMO, can be a “limited” right. You have the right to a certain level of care but not the right to abuse that right. Or something like that. So take your ingrown toe nail to your family dr and you will soon be forced to recognize that there are some services that are not “covered”, as part of your right to care.
  BTW

• 36 Michelle // Jan 14, 2007 at 6:33 am

  Sorry, that last one got away from me. As I was saying:
  If its impossible to have any “rights” without imposing an obligation capable of crushing the system, shall I expect no right to “public safety” either; it will indeed be an even more violent and chaotic world than it already is if, as I go about my business, I can’t expect the state to attempt to provide at least some level of safety to my person and possessions. A stretch perhaps, but I still think it makes a point.
  Peter, I’m in Canada so its really not all that different.

• 37 CPT J // Jan 14, 2007 at 1:51 pm

  Max and Jeff: You’re enlightening me, please elaborate. I realize that successful corporations treat taxes as pass-through expenses. However they do enjoy many public goods [public safety for one, as Michelle points out] paid for by all of us that, as the corporation grows larger and more successful, enables a substantial advantage over their smaller brethren. Nothing wrong with that success, but how much of it are individuals and small businesses –the largest job generators–subsidizing at their own cost, with relatively less ability to bear that cost?

  I don’t agree with the premise of the website below [progressive-soak the rich, etc.] but do look at their take on govt. statistics for corporate vs. income taxes and tell me what you think:

  “Tax Shift #4: From Corporations to Individuals

  Since 1962, the share of federal revenues contributed by corporations has declined by two-thirds, while the share contributed by individuals and unincorporated small businesses has risen 17%.

  Sources of Federal Revenue, 1962 & 2003

  1962 Individual Taxes: 77%
  1962 Corporate Taxes: 21%
  1962 Other Taxes: 2%

  2003 Individual Taxes: 90%
  2003 Corporate Taxes: 7%
  2003 Other Taxes: 3%

  [Source: Congressional Budget Office, ?¢‚Ǩ?ìThe Budget and Economic Outlook: Fiscal Years 2005 to 2014,?¢‚Ǩ¬ù January 2004, Table F-3. ?¢‚Ǩ?ìIndividual Taxes?¢‚Ǩ¬ù includes income, social insurance (payroll), excise, and estate taxes. ?¢‚Ǩ?ìOther?¢‚Ǩ¬ù includes customs duties and miscellaneous receipts.]

  In 1965, U.S. federal, state and local corporate income taxes were 4.1% of U.S. gross domestic product. In 2002, the last year for which full federal, state and local figures are available, U.S. corporate taxes plummeted to only 1.5% of U.S. GDP. [13]

  Corporate lobbyists claim that the U.S. overtaxes business. But corporations are lightly taxed in the U.S. compared with our trading partners. In a survey of industrialized countries by the Organization for Economic Cooperation and Development, the U.S. came in 22nd out of 29 countries in terms of corporate taxes as a percentage of GDP in 2000. If other countries?¢‚Ǩ‚Ñ¢ corporate tax shares remained the same, reports Citizens for Tax Justice, the U.S. would have had the lowest tax share in 2002 of all the other countries except Iceland.[14]”

  http://www.faireconomy.org/Taxes/HTMLReports/Shifty_Tax_Cuts.html

• 38 lex // Jan 14, 2007 at 2:08 pm

  I think we’ve got some reason on both sides of this discussion. Like Max and Jeff, I agree that corporations don’t pay taxes, they merely collect them on behalf of the government.

  On the other hand, there’s plenty enough politically-based corporate welfare and earmarking going on that could and probably ought to be rationalized. It’s all oxes and goring though, as one person’s corporate welfare is another’s business incentive.

  The thing that too often gets lost in soaking the rich discussions is that fundamentally, some folks think that success is immoral, or that there is honor in poverty. Neither is true, income is in itself morally neutral - it’s what we do with our wages that is morally distinguishable. Some folks would like to make those choices for others. ‘Cos they’re smarter, maybe. Or just better people, I guess.

  The soak-the-rich crowd also seems to presume that the wealthy - which I hazard to say few of us in this community are - sit in their vaults and run their fingers through their ill-gotten lucre like some modern day Scrooge McDuck. As has elsewhere been pointed out, they tend instead to invest what they don’t consume, and either choice is good for the rest of us: Jobs, innovation and entrepreneurial energy are what has made our engine run so well for so long.

• 39 Michelle // Jan 14, 2007 at 4:09 pm

  Isn’t income received from corporations (dividends) more favourably taxed then income from employment?

• 40 Max Damage // Jan 14, 2007 at 6:52 pm

  Cpt J, thank you for the kind words. My long-winded screed was more or less intended to explain the economics of the debate. Two excellent sources on economics that I highly recommend are the writings of Dr. Walter Williams, available at , and author and humorist P.J. O’Rourke’s excellent book “Eat the Rich.” The latter is side-splittingly funny and gives an excellent high-level view of global economics in general.

  A company does not exist to provide jobs or produce a product in a capitalistic system, it exists to create wealth for the shareholders or owners. The money that a company takes in as profit (generally between 7 and 10% of overall revenue, called the profit margin) either goes to the shareholders as dividends, or is used to fund things such as R&D, expansion, and the like with the hopes of further increasing the value of the company and hence enriching the owners of that company. If you tax the _income_ of a company you are basically just reducing the profit margin by some amount. That loss in profitability is either made up with higher prices for the consumer, reduced dividends for the shareholders, or reduced spending for expansion, R&D, and such. The latter two would be mean less taxable income from new employees, contractors, and my shareholders. The former would cost me market share, reducing my ability to compete against a similar business that did not have the additional burden and likely causing me to employ fewer workers because I’m selling fewer goods. That’s global trade in a nutshell, really, and why tariffs are imposed to protect domestic manufacturers against foreign manufacturers with lower production costs.

  Now then, it is true that corporations benefit from many public services. Infrastructure to move their goods, police and fire protection, a stable government, and a legal system that ensures both corporation and customer abide by the same set of rules. However, a corporation is not a living entity, so I think it’s safe to say that they would not take advantage of public services such as homeless shelters, Medicare, mass transit, public television, or the like.

  Many of these services are paid for through use taxes and local taxes, such as sales and property taxes in your city or state, the gasoline tax, highway taxes on commercial vehicles, and the like. The tax code generally applies these taxes to any entity, so Wal-Mart pays property tax on their store the same as its employees do on their homes, pays sales tax for those goods and services it purchases, etc…

  Additionally, corporations pay the unemployment insurance and half of the FICA taxes for each employee, a tax burden not shared by the consumer. So corporations do pay taxes, but it is just another expense of doing business. The key is if those costs place it at a competetive advantage or disadvantage in the marketplace.

  Where it gets fun is in the case of tax breaks, or “corporate welfare.” South Dakota has no state income tax on businesses, while neighboring Minnesota and Iowa do. Thus South Dakota entices companies with a lower tax burden, but has a 3.2% unemployment rate, while Iowa has 3.4% and Minnesota has 3.9%. South Dakota thinks the loss of potential revenue from a business income tax is made up through the increased employment. Likewise, large-scale projects like refineries, power plants, and the like often have local governments offering tax waivers for some time, thinking the economic expansion of the region will overcome the loss of this potential tax revenue.

  So the tax code is really about rewarding behavior you want and discouraging behavior you don’t want while meeting the basic needs of your society. The real question is not if taxes are necessary, but at what level they become counter-productive.

  The comparison of 1962 federal tax revenue figures against 2003 figures gives one look at where the tax burden has shifted. What it does not show is what caused this shift or what the consequences would be if the tax code had not changed since 1962, perhaps in lower total revenues or higher unemployment rates or fewer domestic businesses.

  Best regards,

  Max

• 41 Max Damage // Jan 14, 2007 at 6:58 pm

  Michelle, income received from dividends is generally taxed as any other income. Income from capital gains, that is income due to an increase in value of something, is generally taxed at a lower rate to encourage investment. An example, if I buy stock in LexCorp at $1/share and get $5000 each year as a dividend, that increases my income tax according to my income bracket. If I sell that stock at $2/share after some number of years, I pay a lower tax rate for that capital gain on my investment.

• 42 alen // Jan 15, 2007 at 8:36 am

  Max,

  Taxing capital gains is just wrong. We tax an individual who takes AFTER TAX earnings and invests them in a corporation in order to make a profit, and encourage economic growth. We then Tax that corporation (and the taxes are paid by the consumer in the form of higher prices, not the corporation)for any and all profit that it makes in a given time period. The corporation then pays out a dividend based on it’s AFTER TAX profit for the year, which we then tax AGAIN. To top all of that off, if the value of the corporation increases and the investor decides to sell, for any reason, the government gets it’s cut AGAIN.

  For any and all members of the more liberal political parties I have the following questions:
  “What percentage of my income should I give over to the government? The current tax scheme forces the top 5% of tax earners to pay ~50% of all personal income tax revenues. What percentage of income tax revenues should the top 1, 3 and 5% pay? We have over 20% of the lowest earners in this country not paying any taxes at all, or receiving more from subsidies than they pay in taxes. Should this be increased to 25, or 30% just to make the country more fair? Is the only way to close the federal deficit raising government tax receipts, or should we require more fiscal restraint? Are you willing to see a freeze in the government budget at todays spending levels (NO ICREASES WHATSOEVER) for a period of 5 years, if it will provide for the elimination of the federal deficit? If not, why not?”

  We have government waste on a scale unimagined by our founding fathers. The Dept. of Education can lose BIllions of dollars a year and not be held accountable. We have redundant programs wasting millions of dollars every year with no measurable effect. (I give you state run education)

  Every time a suggestion is made to give the power to make decisions back to the “people”, politicians start howling. NO to school vouchers, NO to privatizing Social Security.

  The simple fact that the more “liberal” minded in Congress can raise taxes without affecting 50% of the voters, gives them enormous power over us. Stick it to the rich….yeah, that’s the ticket, their all Mr. Scrooge, they deserve to be punished for being successful.

  At age 32, I am virtually guaranteed to never see a dime of my Social Security. There is NO “Trust Fund”. There is only a little slip of paper saying “The United States owes Alen $X.” Can I sue the government for false advertising, and extortion because they keep moving the retirement age or level of return on me?

  I like the Fair Tax system. Check it out at http://WWW.FAIRTAX.ORG it is probably not perfect, but I think it is a good starting point.

  Final point on taxes. All elected politicians (state, local, federal) should be forced to pay taxes on all income at the highest tax bracket, and should be allowed only one deduction equal to the poverty level of their district/state. all other deductions are disallowed.

• 43 CPT J // Jan 15, 2007 at 10:07 am

  Max, I see and I learn –many thanks. P.J.O’Rourke is one of my favorites.

  A report from the Congressional Budget Office sheds further light:

  “Receipts of corporate income taxes increased by 47 percent in 2005, following a similar growth of 44 percent in 2004. As a result of those two strong years, corporate receipts as a share of GDP have risen from 1.2 percent in 2003, their lowest point since 1983, to 2.3 percent of GDP in 2005, their highest percentage since 1980. Changes incorporate tax law in recent years have contributed to the swing, as investment tax incentives enacted in 2002 and 2003 reduced corporate receipts; those incentives expired at the end of calendar year 2004. Most of the strong growth in receipts in 2005, however, probably reflects robust economic activity in both 2004 and 2005.”

  http://www.cbo.gov/ftpdocs/68xx/doc6837/11-2005-MBR.pdf

  This is a different conclusion from the “soak-the-rich” website I cited earlier, whose agenda is to keep the estate tax, and so conveniently ignore the CBO updated figures that don’t help their case.

  If job creation as a side benefit –not the primary purpose— of corporate activity were better understood, the efforts and priorities of government might be better applied. If state, local, and municipal governments devoted a higher budget priority to infrastructure than direct human services, it follows that the overall conditions for job creation to occur, and the resulting additional revenues to sustainably fund human services along with other public goods would almost certainly improve, correct?

  Of course that’s the long-term view. In the political and emotional short-term, bridges, culverts and fiber optic cable don’t suffer pain, fear, or harbor envy. Most importantly, they don’t vote. They are not capable, like certain voting segments are, of “caboose braking” as Thomas Barnett calls it:

  http://www.thomaspmbarnett.com/glossary.htm

  So if we agree the tax code is about rewarding appropriate behavior, and no one should be left in the dust [right, Michelle?] then encouraging and supporting as many individual engines of opportunity as possible is going to more fairly distribute the weight of those public goods most important to living people. Investment passive income is a more powerful engine than people’s own hourly wage labor–so increasing one’s individual share of a growth engine you can own is smarter than only relying on vulnerable jobs that nobody owns.

  Mute infrastructure is not vocally “compassionate”. It doesn’t commiserate with victims or offer scapegoats to blame for individual, family or community failure, whatever the causes may be. It just offers silent choices between the inevitable pain of changing, and the suffering of staying stuck.

• 44 Max Damage // Jan 15, 2007 at 11:38 pm

  Cpt J, you are one enlightened individual. I cannot believe my writing brought you to those insights but they are correct. Oh, and I fumble-fingered Walter Williams earlier — he’s at townhall.com and worth every one of those recycled electrons used to bring his columns to your screen.

  Alen’s reference to the Fair Tax opens up a number of side debates which we should probably not take up Lex’s bandwidth pursuing, but the principal advocate of the book on the matter is radio talk show host Neal Boortz and boortz.com is his platform for sharing the word.

  As a final note on this subject, the tax code may exist to make one pay his fair share of the upkeep of society, and it may be used to influence behavior, but it seems to me it has become so complex as to be incapable of achieving either purpose well.

  As example, I own 50 acres of land in a Midwestern state. I pay, thanks to tax laws in that state, $38/year in taxes on that property. The land is presently valued at about $8K/acre. My home costs me closer to 4% of assessed value in taxes, or closer to $6K/year, in another Midwestern state.

  Such a discrepancy can hardly fit the definition of fair, nor can it be solely to influence my behavior since I let the 50 acres lie fallow and untouched while I live and work at the higher-tax residence.

  Look at the minimum-wage bill recently passed by the House. It has an exception for American Somoa. Why Somoa? Could be that Somoa is where tuna is fished and the cost of tuna fishing would go up a lot if $3.50 jobs were mandated to pay $7.50, or we’d just let Somoa remain unemployed and buy our tuna from the Japaese for less and have a lot of unemployment insurance to cover.

  Now ponder, cogitate even, if Somoa can’t compete because through the stroke of a pen somebody just priced you out of business, what could be so fair about an imposed tax that then that does the same?

  It’s all in the economics.

  Best Regards,
  - Max

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