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The goldfish is fine! In fact he is tweeting!
March 12, 2012 8:26 AM   Subscribe

Though no longer a Republican presidential candidate, Herman Cain has resumed publicizing his bold, marginally practical flat-tax plan (previously). Cain Connections has released several new videos including: "9-9-9 The Movie: Slaying the Tax Monster," [YT] a 5-minute animation, and "This is the Economy on Stimulus," a bleak, child-narrated criticism of the stimulus.

"This is the Economy on Stimulus" was criticized for its goldfish cruelty, however Cain Connections has provided the fish with a twitter account to assuage any concern. Stephen Colbert took note of the ad, and released his own "Solutions of Stephen (S.O.S)" video on March 8th's Colbert Report.
posted by obscurator (113 comments total) 4 users marked this as a favorite

 
I experimented with The Colbert Report's new video editing feature. Unfortunately, my linked clip begins roughly 20 seconds before the Cain-related segment.
posted by obscurator at 8:30 AM on March 12, 2012


Cain's teachers should take him aside and patiently explain to him that his phantastikal notions of a "flat tax" are cute, but the adults are talking now, so he should hush. Offer him some juice.
posted by clvrmnky at 8:40 AM on March 12, 2012 [6 favorites]


"This is the Economy on Stimulus" was criticized for its goldfish cruelty, however Cain Connections has provided the fish with a twitter account to assuage any concern.

This is brilliant.
posted by shakespeherian at 8:42 AM on March 12, 2012 [2 favorites]


I'm so glad I never got off the Cain Train.

HURMAN CANE EAT THE SOCIALISM
posted by mccarty.tim at 8:45 AM on March 12, 2012 [1 favorite]


the adults are talking now, so he should hush.

Well, a robot and a weirdo.
posted by Artw at 8:49 AM on March 12, 2012 [7 favorites]


the first person I ever heard mention a flat tax was an accountant friend -- that is, accountant for maybe three months of the year (income tax time), punk rock party animal the rest of the year. His scheme was along the lines of:

1. set a realistic poverty level (around $15,000 at the time -- mid 1980s)

2. tax EVERY dollar past that at 25 percent (this way there'd be no built-in disincentive to keep making money past a certain point)

"It would put me out of work," he said, and then he cracked another beer.
posted by philip-random at 8:52 AM on March 12, 2012 [4 favorites]


This is the only Herman Cain video you ever need to see. Ever.
posted by dbiedny at 8:56 AM on March 12, 2012 [3 favorites]



"It would put me out of work," he said, and then he cracked another beer.


It would put a shit ton of other people out of work too.
posted by spicynuts at 8:56 AM on March 12, 2012 [9 favorites]


His scheme was along the lines of:

1. set a realistic poverty level (around $15,000 at the time -- mid 1980s)

2. tax EVERY dollar past that at 25 percent


I like how the very first element of your friend's flat tax plan is to make a progressive tax instead of a flat tax.
posted by gauche at 8:56 AM on March 12, 2012 [44 favorites]


tax EVERY dollar past that at 25 percent (this way there'd be no built-in disincentive to keep making money past a certain point)


1. I don't understand why people think a flat percentage is more "fair" than "look how much money each person would have left after taxes."

2. I deny that anyone has ever decided to forgo an opportunity to make more money solely because they'd also have to pay more taxes.
posted by straight at 8:57 AM on March 12, 2012 [16 favorites]


New York Times columnist Bruce Bartlett (who worked in both the George H.W. Bush and Ronald Reagan White House administrations) broke down the 9-9-9 plan this week, but also struggled through the analysis due to the lack of information. In closing, he called the Cain plan "a distributional monstrosity":

The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase. Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived.


*bangs head on table* American progressives just can't get past this illusion that the tax code is a means of redistributing wealth when it should only be a means of raising revenue.

9-9-9 isn't a bad concept, only the numbers are too low. Make it 25%, 25%, 25% so "the rich" don't get a tax cut, but end the illusion of progressive taxes.

HURMAN CANE EAT THE SOCIALISM

Herman Cain is more of a socialist than most people on this board. He proposes basically that everyone should pay taxes. The horror!

In Sweden - which is about as socialist as you can get and still have a decent economy - the tax rate on individuals is 28% from the first kronor earned up the the median income level (about 50,000 per year) and then another 31% on incomes above that. There is some "progressiveness" in the tax code, but it is not done to shield lower income people from paying taxes, but rather to raise needed revenue. Everyone pays 25% VAT on most purchases. And then employers pay 45% "social fees" on salaries from 1 kronor and up.

Everyone pays a lot of tax. Everyone has skin in the game. Rich and poor alike and the result I see with my eyes everywhere is not a whole lotta poor people and a pretty damned high standard of living (which is why I choose to live here.) There is not one part of Sweden that looks like West Philadelphia (which is why I moved away from Philadelphia.)

What have progressive taxes produced in America but huge disparities in wealth and an eye-watering national debt? The rich don't pay their "fair share", "carried interest" gets special tax treatment instead of being treated as all other income, the poor don't pay anything, and the middle class gets squeezed.

What Herman Cain proposes what is basically a socialist tax code although again the numbers are too low.

Everyone pay 25%, no deductions for anything. Everyone pays 25% national sales tax (VAT), and investments are taxed at 25% and given no preferential treatment. Whatever gap is left between revenue and spending access an additional flat tax on high incomes.

Of course progressives like using the tax code to buy votes and influence people's behavior as much as the conservatives do so ain't never gonna happen, but at least let's have a fair discussion about the Cain proposal.
posted by three blind mice at 8:59 AM on March 12, 2012 [4 favorites]


I'd like to see what other parts of the US you'd probably want to move away from would look like after the first 3 years of your plan, Three Blind Mice.
posted by spicynuts at 9:02 AM on March 12, 2012


There is not one part of Sweden that looks like West Philadelphia

I think it's hilarious that you think you can attribute this to the non-progressive aspect of Sweden's tax code. (Or to any single cause, for that matter.)
posted by straight at 9:07 AM on March 12, 2012 [4 favorites]


Cain Connections has provided the fish with a twitter account

And unsurprisingly, a 140-character goldfish tweet is more intelligible than the entire Cain campaign.

What Herman Cain proposes what is basically a socialist tax code although again the numbers are too low.

Saying so doesn't make it so, but that's less than 140 characters, so at least it'll fit in a goldfish tweet.
posted by octobersurprise at 9:09 AM on March 12, 2012


2. tax EVERY dollar past that at 25 percent (this way there'd be no built-in disincentive to keep making money past a certain point)

A progressive tax plan doesn't create a disincentive to keep making money. The marginal return decreases as the marginal tax rate increases, but you still have a net gain. Your accountant friend evidently doesn't understand marginal taxation and thinks that once someone enters a higher tax bracket the marginal tax rate is retroactively applied to that person's entire income.

What have progressive taxes produced in America but huge disparities in wealth and an eye-watering national debt? The rich don't pay their "fair share", "carried interest" gets special tax treatment instead of being treated as all other income, the poor don't pay anything, and the middle class gets squeezed.

We have a nominally progressive tax code but in reality it's hugely regressive: Social Security and Medicare taxes are regressive, sales taxes and excise taxes are regressive, the regular income/capital gains distinction is regressive, the deduction and credit system is regressive in many ways.

And you're repeating a lie: the poor pay taxes, even if they don't pay income tax. They pay Social Security and Medicare taxes, sales taxes, excise taxes, and property taxes.

We don't need to get rid of the progressiveness of the tax code. We need to eliminate the regressiveness.

A flat tax is patently unfair because the utility of money is nonlinear. There's is nothing fair about taking 25% from someone who makes $15,000 per year and 25% from someone who makes $15,000,000 per year. That $3750 is far more painful for the first person than the $3,750,000 is for the second.
posted by jedicus at 9:09 AM on March 12, 2012 [47 favorites]


Hang on, I'll call the exterminator again. They said their work was guaranteed.
posted by tommasz at 9:15 AM on March 12, 2012 [3 favorites]


Hmm, no capital gains tax, eh? Methinks I smell a rat.
posted by deathpanels at 9:17 AM on March 12, 2012 [5 favorites]


I can't hear the words 'West Philadelphia' without having the Fresh Prince of Bel-Air song pop into my head.
posted by box at 9:18 AM on March 12, 2012 [15 favorites]


Lots of people don't seem to understand marginal taxation. Even people who keep scrupulous track of their money (hi grandma) don't seem to understand that the tax bracket rates only apply to income within the bracket. For example, every millionaire's tax I'm aware of only applies to income made over $1 million. Romney's (non-capital gains) income from the first dollar he makes to the millionth would be taxed at lower rates.
posted by postel's law at 9:19 AM on March 12, 2012 [1 favorite]


three blind mice: What have progressive taxes produced in America but huge disparities in wealth and an eye-watering national debt? The rich don't pay their "fair share", "carried interest" gets special tax treatment instead of being treated as all other income, the poor don't pay anything, and the middle class gets squeezed.

The first bolded part has nothing to do with the second bolded part. Seriously, your critique makes no sense; your strongest condemnation of progressive taxation are the regressive exceptions to it.

Your other concern, that not enough people pay tax, doesn't fly either. It seems paradoxical (or "socialist" to use your turn of phrase) for the Right to call for broadening the tax base- but it makes sense once your realize this is just Reagan's "welfare queen" scaremongering with an attempt at intellectual veneer.

The fact that the poor don't "buy into" the system is a made up problem. Their missing tax revenues don't really hurt the budget because a) they have little to give and b) the money we spend on them helps the overall economy in the long run because abject poverty costs more money in terms of crime, social destabilization and reduced consumer spending. (If you're poor, you spend because you can't afford to save.)

It also doesn't create a moral hazard, or perverse incentives, or whatever you want to call it. The poor are at a disproportional disadvantage when it comes to influencing policy. Their nearly absent voice is politics means their so-called "free lunch" has very little consequences beyond the dollars spent. It's not creating an entitlement society because there are no Super Pacs for food stamps.

But you know who does have interest groups? It's the people who actually get the most entitlements; old people and the middle class. Medicare gets protected by the AARP; the mortgage interest deduction is virtually sacrosanct. There are people big loan programs for college. I have no problem with this- the middle class needs special treatment because far more than the rich or the poor, they drive our economy and ultimately create more of the wealth that we share- but let's have no illusions where the "entitlement society" comes from. Remember "get your government hands off my Medicare"?
posted by spaltavian at 9:20 AM on March 12, 2012 [20 favorites]


I think Rachael Maddow nails it when she insists that Cain was never a "presidential candidate", but rather is a performance artists.

I hate just about everything that comes out of his mouth as a policy position, but love his act, it is Andy Kaufman-esq for the political age.
posted by edgeways at 9:23 AM on March 12, 2012 [4 favorites]


I think Rachael Maddow nails it when she insists that Cain was never a "presidential candidate", but rather is a performance artists.

The problem is, he was a presidential candidate, and a fair amount of the GOP voter based liked his ideas. Pretending that he isn't real is ignoring the fact that half the political powerbase in the United States is in a constant, close struggle between the inmates and the guards.
posted by spaltavian at 9:28 AM on March 12, 2012 [5 favorites]


There is no evidence, NO EVIDENCE, that anyone in history has EVER opted not to earn another million dollars a year just because the additional money would be taxed at a slightly higher rate than their first million.

To think that anyone might seriously consider foregoing $500,000 in extra income just because they weren't able to keep the whole million is farcical. It's a right-wing lie that exploits ignorance of marginal tax rates.
posted by darkstar at 9:28 AM on March 12, 2012 [17 favorites]


three blind mice, when are you going to learn that new laws in the US are passed so the backers feel good about themselves and give the other guys a turn to do the same? If new taxation schemes actually worked the game would be ruined.
posted by michaelh at 9:28 AM on March 12, 2012


There's is nothing fair about taking 25% from someone who makes $15,000 per year and 25% from someone who makes $15,000,000 per year. That $3750 is far more painful for the first person than the $3,750,000 is for the second.

To clarify: 25% of ever dollar AFTER $15,000, so if you made $15,000 even, you don't pay a penny of tax. If you made $16,000, you pay $250 ... and so on. Sure it's not fair at the lower levels of income versus the higher levels, but what if it's not about being "fair"?

What if it's about three basic things?

A. making sure nobody pays tax on anything until they've made enough money to actually survive with a modicum of decency? (ie: no sales tax, no tax on your first $15,000 ... or whatever the relevant figure actually is, I'm sure it's significantly higher now than it was in 1985)

B. removing all discouragement from folks who want to keep working long and hard after that initial $15,000 (ie: 25% flat tax). ***

C. making sure the government etc has enough incoming revenue to do what it needs to do (roads, hospitals, schools, cultural concerns, etc)

*** I realize that there's an assumption here that those who make more than $15,000 are just harder workers. This is bullshit obviously. It's just as likely they're better connected, went to better schools, come from wealthier families etc. But like I said already, who cares if it's fair? Who determines what is or isn't fair? What works should be the only question? What resolves the three basic concerns I mention?
posted by philip-random at 9:35 AM on March 12, 2012 [1 favorite]


I'm fascinated that people obsess about "fairness" without ever defining it. I mean, as the dictionary goes, it basically just means that a principle is applied consistently and are in keeping with the laws and ethics of the land.

You want fair? Confiscate every dollar made over $60,000. Period, end of story. Simple metric, fairly applied.

Maybe something that ensures there's an incentive to work harder? Everyone in the country pays $20,000 a year to keep living in the country. Period, end of story. Simple metric, fairly applied -- no favoritism.

At the end of the day 'Fairness' requires that the goal and the principles be defined and agreed upon. Otherwise it's just a rhetorical club.
posted by verb at 9:37 AM on March 12, 2012 [10 favorites]


Who needs all those extra ? marks.
posted by philip-random at 9:37 AM on March 12, 2012


a fair amount of the GOP voter based liked his ideas.

well when a fair amount of the GOP voter base takes Santorum seriously as he spouts off his Christian-Taliban idiocy and the only thing that kept Ricky from wiping the floor with Romney is that occasionally Santorum actually says something "reality based" in regards to how government actually works... I think we have larger problems then Cain managing to hoodwink some voters for a few weeks.

"Flat tax" has been around even longer than Steve "Rabid Chipmunk" Forbes' promotion of it. And yeah horrible idea. Not as bad as some ideas Ron Paul keeps pushing though.
posted by edgeways at 9:38 AM on March 12, 2012 [2 favorites]


There is not one part of Sweden that looks like West Philadelphia

In Rinkeby stadsdel born and raised,
On the lekplats was where I spent most of my days...

posted by Jehan at 9:38 AM on March 12, 2012 [17 favorites]


B. removing all discouragement from folks who want to keep working long and hard after that initial $15,000 (ie: 25% flat tax). ***

If there's any evidence that this kind of thing (i.e., discouragement from working harder, more, whatever) due to marginal tax rates, I'd love to see it.
posted by darkstar at 9:38 AM on March 12, 2012 [3 favorites]


There is no evidence, NO EVIDENCE, that anyone in history has EVER opted not to earn another million dollars a year just because the additional money would be taxed at a slightly higher rate than their first million.

To think that anyone might seriously consider foregoing $500,000 in extra income just because they weren't able to keep the whole million is farcical. It's a right-wing lie that exploits ignorance of marginal tax rates.


False. Remember in the 60's when John Galt stopped working and the country collapsed over a railroad takeover? And the depression that last all the way through the Carter administration until Our Lord Savior Ronald Reagan (blessed be his name) cut the tax rate again to molify the rich and stop communisim in Russia? And we're just now seeing the benefits of the country's rich slowly returning to work after Obama nationalized the banks, we can't afford to have them quit again like they did in 2001 and 2008. We can't mess with the tax code or they might destroy the country all over again.
posted by T.D. Strange at 9:39 AM on March 12, 2012 [14 favorites]


(this way there'd be no built-in disincentive to keep making money past a certain point)

If we're going to have literacy requirements for voting, let's also have some tax questions as well.

Q. Suppose income tax rates are 10% for all income at or below $100,000; and 20% for all income above. For simplicity, assume that all income is taxable, and no other taxes apply.

How much more income, after taxes, does a $110,000 earner retain over a $100,000 earner?

a. $8,000 more
b. $2,000 less
c. both their taxes are too high
d. any of the above
posted by kurumi at 9:40 AM on March 12, 2012 [2 favorites]


But honestly, how can 99% of US women use birth control on a regular basis, yet Santorum gains any traction whatsoever?

That's some serious cognitive dissonance, right there.
posted by darkstar at 9:40 AM on March 12, 2012 [2 favorites]


Well at least Cain's 9-9-9 plan has supporters over on YouTube.
posted by xedrik at 9:42 AM on March 12, 2012



The problem is, he was a presidential candidate, and a fair amount of the GOP voter based liked his ideas. Pretending that he isn't real is ignoring the fact that half the political powerbase in the United States is in a constant, close struggle between the inmates and the guards.
The thing is, we never saw Cain backpedalling the way Romney has, and Santorum must if he earns the nomination. Center-right voters, independents, and Libertarian camp will not back an open fundamentalist. Cain went straight for the party's base positions – anti-tax theology, contempt for the working class, run the government like a business, et cetera. The fact that he made no effort to soften his image right around the time every serious candidate was jockeying for position made it appear that his was an ego campaign. Just another rich guy who wanted to run for president. Nothing to see here.

No, the more terrifying fact is that Rick Santorum, a man who wants to give states the right to ban contraception, stands a chance at winning the nomination. This should be a pants-shitting moment for all freedom-loving people.
posted by deathpanels at 9:43 AM on March 12, 2012


So, I take it nobody's concerned for the plight of the goldfish...
posted by obscurator at 9:46 AM on March 12, 2012


To clarify: 25% of ever dollar AFTER $15,000, so if you made $15,000 even, you don't pay a penny of tax. If you made $16,000, you pay $250 ... and so on.

Like I said above, this is a progressive tax, not a flat tax. It basically says that, if you make less than a certain amount, your tax burden will be lower than if you made more than that amount. In this case you've put the threshold very low, and there are only two tiers in your progression, but once you acknowledge that the 15,001's dollar has less marginal utility to the earner than dollars 1 through 15,000, you've acklowledged the basis of a progressive tax. Now we just disagree about implementation: I think there should be more tiers than your plan has, and maybe that the top-tier rate should probably be higher.
posted by gauche at 9:47 AM on March 12, 2012 [4 favorites]


There is not one part of Sweden that looks like West Philadelphia

In Rinkeby stadsdel born and raised,
On the lekplats was where I spent most of my days...


Chillin' out, maxin', relaxin' and coolin'
Playing some street hockey out by the skola
When a coupla pojken who were up to no good
Started causin' trouble in my neighbourhood

I got in one little fight, min moder got spooked
Said "you're movin' with your uncle and auntie in Malmö!"
posted by gompa at 9:47 AM on March 12, 2012 [8 favorites]


But honestly, how can 99% of US women use birth control on a regular basis, yet Santorum gains any traction whatsoever?

At a guess, because the GOP's primary-voting rank and file is disproportionately populated by angry old white men who've seen their privileged position in the country and in the world erode steadily for decades.

What I really don't understand is how any sane rich person dumps money into a campaign like Herman Cain's. I get why Cain does it; I can even understand how a certain wealth-worshipping Republican becomes a supporter. But why would you waste millions of hard-earned dollars on this guy? Why not just go buy yourself an actual circus sideshow? It'd probably be cheaper.
posted by gompa at 9:53 AM on March 12, 2012 [3 favorites]


Are you the Färsk Furste av Malmö, gompa?
posted by Talez at 9:56 AM on March 12, 2012 [1 favorite]


I like how the very first element of your friend's flat tax plan is to make a progressive tax instead of a flat tax.

gauche, every "flat tax" plan I've heard of (with non-psycho supporters) has included a minimal wage level, and therefore fit your definition of "progressive tax". Steve Forbes' plan springs to mind: 17% on everything past the first $33k (which equates to 8.5% at $66k and 11% at $100,000/year).
posted by IAmBroom at 9:58 AM on March 12, 2012


Are you the Färsk Furste av Malmö, gompa?

Ord, yö.
posted by gompa at 9:59 AM on March 12, 2012 [1 favorite]


(I shouldn't have said your definition of "progressive tax", since it fits mine as well... provided the threshold income is forever untaxed. My apologies.)
posted by IAmBroom at 10:00 AM on March 12, 2012


Jesus that 999 video is complete rubbish. And makes outrageous and unspooprted claims that somehow just introducing this tax change will create prosperity.
posted by mary8nne at 10:00 AM on March 12, 2012


Keep things as they are and bank offshore

watched the Cain film: why is it that candidates think that if they ran a business they can run a country? Does a pimp suggest that he can do great work turning tricks?
posted by Postroad at 10:01 AM on March 12, 2012 [2 favorites]


three blind mice: “What have progressive taxes produced in America but huge disparities in wealth and an eye-watering national debt? The rich don't pay their ‘fair share’, ‘carried interest’ gets special tax treatment instead of being treated as all other income, the poor don't pay anything, and the middle class gets squeezed.”

The United States today has a flatter tax than at any other time in its history; where the top tax bracket once ranged from around 70%, it's now rather close to the bottom tax bracket, and can be brought even lower by use of loopholes.

If the correlation between tax structure and economy implies causation, it would appear that flatter taxes have all but destroyed the economy, created ballooning international debt, squeezed the middle class, given special treatment to those who have lots of money, and basically done everything bad you ascribe to "progressive" taxes.

If you want to examine the relative benefits of flat vs progressive taxes, find a nation that has consistently followed a policy of progressive taxation. The United States, a nation where nearly every politician since the dawn of time has promised to cut taxes and where implicit promises to sabotage progressive taxation are the only way to get elected, is not that nation.
posted by koeselitz at 10:04 AM on March 12, 2012 [18 favorites]


But honestly, how can 99% of US women use birth control on a regular basis, yet Santorum gains any traction whatsoever?

False premise, false conclusion.
posted by Jahaza at 10:05 AM on March 12, 2012


every "flat tax" plan I've heard of (with non-psycho supporters) has included a minimal wage level, and therefore fit your definition of "progressive tax".

I am comfortable with a definition of "progressive tax" that implies that many politicians are incorrect / possibly being disingenuous when talking about taxation.

Like I said a minute ago upthread, a "progressive tax" and a two-tier "flat tax" are different in degree, not in kind. If you think we should have a two-tier tax system and I think the tax system should have, say, one tier more than your system does, we're really just disagreeing about implementation.
posted by gauche at 10:06 AM on March 12, 2012 [1 favorite]


Our current tax code is essentially bell shaped. Those at the bottom pay little or no taxes. One current GOP talking point is how terrible it is that something like half of us pay no taxes. They cite this to illustrate how progressive the current system is but forget that the reason that percentage got so high is the current downturn in the economy. Anyway, I digress. The upper middle tier bears the highest rates, both the rates are high and deductions get phased out. The 1% on the other hand, as Warren Buffet likes to point out, pays low taxes. The effects of the deduction phase out diminish with greater income, more of that income is capital gains and dividends which bear a 15% rate and with enough income there are still tax shelters to shield much of your income from any tax. This system is clearly broken. Herman's plan is not really a plan, but a flat tax done well would be better than this. Better yet would be to go back to something like the Tax Reform Act of 1986 with a few tiers of tax rates and a general cutting back of preference items.
posted by caddis at 10:33 AM on March 12, 2012


False premise, false conclusion.

Well I guess we can pedantic it out:

- Virtually all women (more than 99%) aged 15–44 who have ever had sexual intercourse have used at least one contraceptive method.

-...only 7% of women aged 15–44 are at risk for unintended pregnancy but are not using contraceptives

- Among the 43 million fertile, sexually active women who do not want to become pregnant, 89% are practicing contraception



So I guess you are arguing against the "on a regular basis" part of the comment? That is technically what is known as a nit.

Overall I think darkstar's comment stands as reasonable approximation.
posted by edgeways at 10:35 AM on March 12, 2012 [1 favorite]


straight: " 2. I deny that anyone has ever decided to forgo an opportunity to make more money solely because they'd also have to pay more taxes."

Don't be so sure. I once had a boss who advised me (totally seriously,) that if he gave me a raise, I might wind up with less take-home money in my paychecks. Which is, of course, wrong. Last year, USA Today said the same thing, until they corrected the article.

But it does make one wonder if such scare tactics ever work with an employee who is living paycheck to paycheck.
posted by zarq at 10:39 AM on March 12, 2012 [3 favorites]


this way there'd be no built-in disincentive to keep making money past a certain point

This already doesn't exist in the current tax plan.
posted by DU at 10:42 AM on March 12, 2012 [6 favorites]


watched the Cain film: why is it that candidates think that if they ran a business they can run a country? Does a pimp suggest that he can do great work turning tricks?

Either way, the common man is getting fucked.
posted by FatherDagon at 10:45 AM on March 12, 2012 [2 favorites]


You guys are looking at this all wrong. Herman Cain is right, eliminate the capital gains tax and impose a 9% sales tax.

On everything.

Buy a car? 9% tax. Buy a soda? 9% tax. Buy a store? 9% tax. Buy stocks? 9% tax? Buy CDOs? 9% tax? Buy a company? 9% tax. Buy and sell stocks 10 times in a day? Pay 9% tax on each purchase.

Under this plan, if AT&T had bought TMobile, AT&T would have owed an extra $3.5 Billion to the government.

This would, of course, crash Wall Street.

But a man can dream.

I honestly do not understand why we treat the purchase of securities of any form as different than the purchase of physical goods. It's too late now, but I think the destinction was a mistake.
posted by Hactar at 10:49 AM on March 12, 2012 [6 favorites]


- Among the 43 million fertile, sexually active women who do not want to become pregnant, 89% are practicing contraception

So I guess you are arguing against the "on a regular basis" part of the comment? That is technically what is known as a nit.


When it drops the number from 150 million to 38 million, it's not a nit.
posted by Etrigan at 10:52 AM on March 12, 2012


When it drops the number from 150 million to 38 million, it's not a nit.

If your 150 million is based on "half the population of the US is women, therefore..." then that figure is somewhat flawed, since the population figure will include post-menopausal women and girls that have not yet reached puberty, not to mention women who are infertile, either naturally, have had tubal ligation or that have had hysterectomies or whatever. Sure, 43 million is a bit of a reduction from from the total women of childbearing age, but not a 70% reduction.
posted by LionIndex at 11:03 AM on March 12, 2012


running philip-random's "25% on everything over $15k" plan through a quick check - it comes out as somewhat progressive.

First number is income, second is tax, third is percentage of income paid in taxes. (I put the formula in as (X-15000)*0.15).

15,000 0 0
20,000 750 3.75
25,000 1500 6
30,000 2250 7.5
40,000 3750 9.375
50,000 5250 10.5
75,000 9000 12
100,000 12750 12.75
200,000 27750 13.875

Actual rate for people making 200,000: 14%. I don't know how this compares to current actual rates (I know that marginal rates in Canada max out at 29% for federal taxes, but I don't know the actual rates).
posted by jb at 11:04 AM on March 12, 2012


But not very progressive.
posted by jb at 11:04 AM on March 12, 2012


Overall I think darkstar's comment stands as reasonable approximation.

We can all appreciate its truthiness.
posted by Jahaza at 11:05 AM on March 12, 2012


this way there'd be no built-in disincentive to keep making money past a certain point

This already doesn't exist in the current tax plan.


I'd also like to note that it is an assumption that "incentives to make a literally unbounded amount of money" is a good thing.
posted by DU at 11:08 AM on March 12, 2012 [2 favorites]


Hey jb, you just did "15% of everything above 15k", not "25%..."
posted by notsnot at 11:08 AM on March 12, 2012


There is no evidence, NO EVIDENCE, that anyone in history has EVER opted not to earn another million dollars a year just because the additional money would be taxed at a slightly higher rate than their first million.

Lots of such assertions in this thread. IANALaborEconomist, but there's a huge literature on the elasticity of wage income as well as taxable income generally, often using tax changes or bracket creep as exogenous variation. I'm not going to claim that it's definitive, but NO EVIDENCE is a bit strong. If the next million in my pocket requires twice as much input as the first and means less to me, then I might not work as much, take as many risks, or sacrifice by eg moving for it.
posted by a robot made out of meat at 11:09 AM on March 12, 2012


The problem is, he was a presidential candidate, and a fair amount of the GOP voter based liked his ideas.

Yeah ... but he directly quoted Pokemon in his farewell speech. That has to count for something.
posted by krinklyfig at 11:13 AM on March 12, 2012 [3 favorites]


If the next million in my pocket requires twice as much input as the first and means less to me, then I might not work as much, take as many risks, or sacrifice by eg moving for it.

Isn't the second million usually understood to be much easier, due to economies of scale, ability to invest in riskier propositions, hiring of accountants, etc? And again, if it "means less" then that makes risks easier to take.

But all of that is beside the basic point: Progressive taxation will never leave a person who just got a raise poorer than before they got the raise. That is a lie propagated by tax-evaders (i.e. rich conservatives and the poor people they've confused or brainwashed).
posted by DU at 11:15 AM on March 12, 2012 [1 favorite]


Lots of such assertions in this thread. IANALaborEconomist, but there's a huge literature on the elasticity of wage income as well as taxable income generally, often using tax changes or bracket creep as exogenous variation. I'm not going to claim that it's definitive, but NO EVIDENCE is a bit strong. If the next million in my pocket requires twice as much input as the first and means less to me, then I might not work as much, take as many risks, or sacrifice by eg moving for it.

All these guys are labor and tax economists and this paper says that:

The tax rate t maximizing revenue is: t=1/(1+a*e) where a is the Pareto parameter of the income distribution (= 1.5 in the U.S. and easy to measure), and e the elasticity of reported income with respect to 1-t which captures supply side effects. The most reasonable estimates for e vary from 0.12 to 0.40 (see conclusion page 47) so e=.25 seems like a reasonable estimate. Then t=1/(1+1.5*0.25)=73% which means a top federal income tax rate of 69% (when taking into account the extra tax rates created by Medicare payroll taxes, state income tax rates, and sales taxes) much higher than the current 35% or 39.6% currently discussed."

Tl;dr: taxes are pretty damn low already. It could be far higher before anyone decided to quit earning money. Like up to a top marginal rate around 70%.
posted by T.D. Strange at 11:21 AM on March 12, 2012 [3 favorites]


Simple tax plan:
-Personal deduction=1.6 ("phi") times the poverty ratefor your tax-reporting unit (single, married, x kids, whatever). This is adjusted yearly, none of this "nothing above 106k goes into SS, for the next 20 years regardless of inflation.

-First "step": base rate* amount above deduction.
-Second "step": (base rate +1)*amount above first step. Etc.
-Each step is phi times the last step. It all works out like A3 and A4 paper.
-Base rate is determined on a yearly basis. Perhaps base rate should be times a multiiplier, or an upper bound function with the upper bound something like 75% on the next ten milllion.
-Since each step is a geometric multiplier above the last, the billionaires can feel the same way about the hundred millionaires as the millionaires feel about the 100 killionaires.

No mortgage deduction; it just favors those who can afford mortgages, and puts unnatural pressure on home ownership.
no charity deduction. It just creates OCD weirdos out of everyone, writing down how many pairs of holey underpants they gave to Goodwill.
posted by notsnot at 11:21 AM on March 12, 2012


Point taken, jehaza. I do like to be accurate.

Thus, I'll amend my comment to say "when the vast majority of adult US women, and virtually all of them that have been or are sexually active, have used or are using birth control of some form..."

Admittedly, it takes some of the contrast out of the comment, but I think the point still has merit.
posted by darkstar at 11:23 AM on March 12, 2012


If the next million in my pocket requires twice as much input as the first and means less to me, then I might not work as much, take as many risks, or sacrifice by eg moving for it.

I'm not an economist, but this seems like a basic error of economics to me. As I understand it, in a functioning market, if there is a million dollars to be made, someone will find a way to make it. In our example, it might not be you if for whatever reason you decide that the risks are not worth it at your particular rate of return, but that doesn't mean that money gets left on the table. Somebody's going to take it, because there's always going to be somebody for whom it's the first million (or, say, ten people for whom it's the first hundred-thousand).

Can somebody with an economics background correct me on this?
posted by gauche at 11:23 AM on March 12, 2012 [2 favorites]


gauche, I suppose the million might not be there for some folks, because it might only be realizable gains for someone who has already invested sunk costs into an infrastructure and opportunity to be able to gain it.

That is to say, the money might be on the table in a leveraged buyout for Mitt Romney because he can fire a few hundred more people from the company, use the "savings" in salaries to leverage the company further into debt and then and pocket the loan premium as kickbacks to Bain, but no one else would be able to realize that money as gain because no one else is in position to take advantage of it.
posted by darkstar at 11:28 AM on March 12, 2012 [2 favorites]




The flatter and simpler the tax code the better. The accountant's idea of a 25% tax on every dollar about $15k - or whatever mix of those two numbers produce a reasonable balance of revenue and equity - is fine.

Getting it done politically is much harder. Republicans bloviate about taxes constantly, but in practice have consistently moved us towards a tax system with relatively high rates but filled with loopholes for sectors of the economy and society that have the right political connections. And since most of those loopholes benefit the rich, it makes the system grows steadily less progressive and less efficient until we end up where we are today.

On the other hand, Democrats are terrified of any talk about the combination of flatter taxes and no deductions because they know that as soon as they open their mouth about taking away popular loopholes (like the mortgage interest deduction) they'll get the shit kicked out of them in the media for trying to raise taxes on the middle class.

This exact dynamic played out in the debate over the 1986 Tax Reforms, which was largely driven by Democrats - Bill Bradley in the Senate and Dick Gephardt in the House - and only later adopted by Reagan and the Republicans. (Though plenty of Dems opposed it as well.) ("More than anyone else, Bill Bradley initiated tax reform, steadily prodded his colleagues, and lobbied House members.")

Showdown at Gucci Gulch is the book to read for a good telling of what it took to face down the lobbyists. And that was in a much less polarized and vicious environment.

I should do a post on this sometime.
posted by RandlePatrickMcMurphy at 11:29 AM on March 12, 2012 [1 favorite]


To worry about whether people will work or do something else if the marginal tax rates are changed is to think that social engineering is something the tax code itself should accomplish. If you really think that, fine, but please recognize that this is what is happening.

Fairness seems much more important to me. And as verb says, that means we need to have an agreed account of fairness. Personally, I'm with jedicus in thinking that a tax is fair just in case every taxpayer experiences the same pain upon paying his or her taxes.

The way to get evenly distributed tax pain is to tax real utility, not raw dollars, and offer no deductions except for number of dependents. We don't need tiers, either. A single equation will give a smooth curve increasing the tax slightly for each additional dollar earned. Using Bernoulli's account of utility, I propose the following:

TAX_OWED = DOLLARS_EARNED - DOLLARS_EARNED^(1 - RATE)

Where the RATE is the percentage of utility you want to collect in tax. Three percent would be plenty. If you think this is not progressive enough, pick a floor value -- a poverty threshold -- and subtract it from DOLLARS_EARNED to give a new variable TAXABLE_DOLLARS_EARNED. Then compute the same function replacing DOLLARS_EARNED with TAXABLE_DOLLARS_EARNED.
posted by Jonathan Livengood at 11:30 AM on March 12, 2012 [3 favorites]


The flatter and simpler the tax code the better.

False. "Flat" taxes are inherently unfair, because, as pointed out above, money is nonlinear.
posted by DU at 11:39 AM on March 12, 2012


[hpyothetical example involving rich man in unique position to make a particular profit on a company]... but no one else would be able to realize that money as gain because no one else is in position to take advantage of it.

I don't actually see how this makes a difference.

Let's say there's a company which, as in your example, is really over-valued and ripe to be raided in that manner that you describe. Let's also say that, even though I just used the term "raided", we agree that this sort of activity is economically beneficial or at least neutral because it trims the economic fat and so on. Let's further say that the tax system is such that someone like Mitt won't take this beneficial, profitable action because he won't make as much on it after taxes as he would like. It's not worth it to him.

All that means is that the asset is not worth as much to him as it would be worth to some other person or group of persons who are not in as high a tax bracket and could turn the theoretical profit. The economically efficient thing for him to do is to sell the company to this person or group of people who can then take the benefit of the raid as profit on the purchase price. What am I missing?
posted by gauche at 11:39 AM on March 12, 2012 [1 favorite]


Oh jeepers, and mortgage interest deductions are not "loopholes". They are deliberately there to encourage home ownership.
posted by DU at 11:39 AM on March 12, 2012


DU, that may be true, but you can justify any tax loophole by saying it's a deduction to encourage activity X.
posted by Aizkolari at 11:43 AM on March 12, 2012




False. "Flat" taxes are inherently unfair, because, as pointed out above, money is nonlinear.

At least simpler would be preferable to the current system. In any other area of law, having a system so complex that the average person cannot understand it is undesirable, so why is tax law allowed to be so obfuscated? The tax code especially should be simple because it contains the covenant between the state and the citizen in the form of financial subsidization. I think libertarians are nuts, but one good driving force of the small government movement is the impulse toward simpler laws with fewer "gotcha" provisions.
posted by deathpanels at 11:46 AM on March 12, 2012


I guess what I'm trying to say is this: if you are in a position where could be making that second million, but decide not to because the tax code isn't worth it, you can hire me to make that million for you. I'll keep $900,000.00 and you can have $100,000.00 for yourself for doing nothing.
posted by gauche at 11:47 AM on March 12, 2012 [2 favorites]


All these guys are labor and tax economists and this paper says that:

Sure, but so are these guys and got nearly a flat tax + deduction. My understanding is that the answer you get for optimal is pretty unstable to the assumptions. I'm responding to the specific idea that the response of wage income to tax rates is zero.

Isn't the second million usually understood to be much easier, due to economies of scale, ability to invest in riskier propositions, hiring of accountants, etc? And again, if it "means less" then that makes risks easier to take.

It's an empirical question; I'm not too interested in story-timing it. What matters is the actual marginal return versus the cost I have to spend; presumably it isn't a negative / zero amount of cost or incomes would diverge instead of being continuous.

But all of that is beside the basic point: Progressive taxation will never leave a person who just got a raise poorer than before they got the raise. That is a lie propagated by tax-evaders (i.e. rich conservatives and the poor people they've confused or brainwashed).

Good thing nobody in the thread has argued that. I responded to a specific claim that higher marginal taxes don't cause the affected people to work less.
posted by a robot made out of meat at 11:49 AM on March 12, 2012


DU, that may be true, but you can justify any tax loophole by saying it's a deduction to encourage activity X.

Only if there is evidence that it was specifically put there for that reason after reasoned debate. "Loophole" usually means a gap inadvertently left (or planted secretly by some subset) and then exploited later.
posted by DU at 11:50 AM on March 12, 2012


I responded to a specific claim that higher marginal taxes don't cause the affected people to work less.

All kinds of things cause people to work less. I think the "nobody has ever stopped working because of taxes" argument is silly, although I've definitely made it myself.

I submit that the relevant questions are these: does a progressive tax code so disincentivize work that it becomes economically inefficient? If so, at what point? And -- to address the proposal that formed the original post -- how close is the deeply, deeply regressive U.S. tax code to the point at which the economy suffers because people are not working because of the tax incentives?
posted by gauche at 11:55 AM on March 12, 2012


notsnot: Simple tax plan...

You may think that's simple, but any tax equation that requires Greek letters is going to fly with the American taxpayer like a lead balloon.
posted by double block and bleed at 11:59 AM on March 12, 2012


I always thought that taxes should be based on a logarithmic function...
posted by Stu-Pendous at 12:00 PM on March 12, 2012


What I really don't understand is how any sane rich person dumps money into a campaign like Herman Cain's. I get why Cain does it; I can even understand how a certain wealth-worshipping Republican becomes a supporter. But why would you waste millions of hard-earned dollars on this guy? Why not just go buy yourself an actual circus sideshow? It'd probably be cheaper.
Perhaps it has something to do with the marginal utility of money.
posted by billjings at 12:04 PM on March 12, 2012 [3 favorites]


In any other area of law, having a system so complex that the average person cannot understand it is undesirable, so why is tax law allowed to be so obfuscated?

I don't know why you think the tax code is a special case, here. The number of people with a grasp of the civil and criminal codes of their jurisdiction (not to mention federal statutes) has got to be vanishingly small.
posted by adamdschneider at 12:04 PM on March 12, 2012 [1 favorite]


What kind of entitled coddled lazy-ass millionaire decides he's not going to work harder because the next million he makes, he keeps a little less of it in his pocket than the previous million?

I thought we were supposed to be tough on the people who were too lazy to work hard?

Obviously the mistake here was not taxing that previous million more.
posted by fleacircus at 12:08 PM on March 12, 2012 [6 favorites]


this way there'd be no built-in disincentive to keep making money past a certain point

This already doesn't exist in the current tax plan.


But what does exist is a strong incentive to give to registered charities to drop yourself down a bracket, come to think of it. I wonder how charitable giving would be impacted if there was no bracket incentive?
posted by Shepherd at 12:15 PM on March 12, 2012


That millionaire isn't earning 2 million dollars in wages. Most of it will be in the form of capital gains, which is taxed at a lower rate than wages under the current system and would not be taxed at all under Cain's plan.

There's a reason the tax brackets don't go past $388,000.
posted by deathpanels at 12:16 PM on March 12, 2012 [2 favorites]


I wonder how charitable giving would be impacted if there was no bracket incentive?

If there were no tax code, the rich would fund hospitals out of the kindness of their hearts, so that nobody would ever die or go bankrupt because of a preventable illness or a random accident. This is how the world was before Karl Marx and FDR, who turned the American utopia into a socialist wasteland for no reason other than sour grapes. GOOGLE RON PAUL.
posted by gauche at 12:19 PM on March 12, 2012 [8 favorites]


deathpanels: “At least simpler would be preferable to the current system. In any other area of law, having a system so complex that the average person cannot understand it is undesirable, so why is tax law allowed to be so obfuscated? The tax code especially should be simple because it contains the covenant between the state and the citizen in the form of financial subsidization. I think libertarians are nuts, but one good driving force of the small government movement is the impulse toward simpler laws with fewer ‘gotcha’ provisions.”

This is a common refrain among those of us who want tax reform, but sometimes I wonder how true it is. Really, how much simpler could taxes be? You fill out a very simple one-page form and mail it to the IRS. They've even set it up so taxes are automatically withdrawn from your paycheck, so effectively you're getting paid to fill out a simple one-page form.
posted by koeselitz at 12:19 PM on March 12, 2012


2. tax EVERY dollar past that at 25 percent (this way there'd be no built-in disincentive to keep making money past a certain point

It always cracks me up how flat taxers push this point about the tax system disincentivizing earning more money: Yeah, right, that's why we don't all earn that extra million or two in higher salaries. We choose not to because the tax system makes it so not worth it.

Given that most of us don't have the luxury of any actual choice over how much we earn from our work, how is a tax system that encourages the vanishingly small number of those of us who do have that luxury supposed to provide economic benefits for the rest of us? Trickle down?
posted by saulgoodman at 12:40 PM on March 12, 2012 [1 favorite]


This is a common refrain among those of us who want tax reform, but sometimes I wonder how true it is. Really, how much simpler could taxes be? You fill out a very simple one-page form and mail it to the IRS. They've even set it up so taxes are automatically withdrawn from your paycheck, so effectively you're getting paid to fill out a simple one-page form.

The hard part of taxes is what counts as (different kinds of) income and the innumerable exceptions and nuances to the rules. For most people they don't matter, but accountants and tax lawyers aren't just making it all up.

What kind of entitled coddled lazy-ass millionaire decides he's not going to work harder because the next million he makes, he keeps a little less of it in his pocket than the previous million?

I could work more hours, and choose not to because the time with my family is worth more to me. However, there is a price for which I would work an extra hour; I would take $1M for a day :-). As the marginal tax rate goes up, so does that price since I only care about the money I actually see. Working less produces less real wealth unless you think we are in a weird situation like an AD shortfall (but in that case, nobody would be willing to pay me the $1M). Exactly what these numbers are and how much a difference it makes is a matter of debate, but it definitely exists.
posted by a robot made out of meat at 12:41 PM on March 12, 2012


to give to registered charities to drop yourself down a bracket,

You don't drop yourself down a bracket. The income that's in one bracket will be there no matter what you do. It's the income at a certain level that's in a different bracket, not the taxpayer.
posted by saulgoodman at 12:42 PM on March 12, 2012 [1 favorite]


a robot made out of meat: If you're making millions, you don't get paid by the hour, nor is your wage in any other respect tied directly to hours worked.
posted by saulgoodman at 12:44 PM on March 12, 2012 [2 favorites]


saulgoodman:
Take some categories of people making millions for work who get paid on an intensive margin:
1) Entertainers really do get paid per unit produced.
2) Executives, given fixed ability, could take an easier job at a company with less of a need for high pay and keep their free time.
3) Very high end professionals often do still bill by the hour.
4) Capital managers spend time to look for profit opportunity; more hours means more money.

For all of them there's a kind-of-extensive-margin about moving from high to very high income versions of the same job. Eg you don't get paid by the hour as an upper manager, but your likelihood of moving from upper management to officer is really a function of hours worked.

If you progressively tax consumption or investment income, there's also a true extensive margin; diminishing returns to work make it sensible to retire earlier.
posted by a robot made out of meat at 1:11 PM on March 12, 2012


" The number of people with a grasp of the civil and criminal codes of their jurisdiction (not to mention federal statutes) has got to be vanishingly small."

But I'm willing to bet that these laws change with less regularity than the tax codes and that the average citizen does not infringe civil criminal laws often enough to need an intimate understanding of them. And it isn't so much that the brackets or the forms are incomprehensible, more that there are too many exceptions and deductions to consider, to the point that we literally pay somebody else to keep track of all those exceptions for us.
posted by deathpanels at 1:17 PM on March 12, 2012


a robot made out of meat: “For all of them there's a kind-of-extensive-margin about moving from high to very high income versions of the same job. Eg you don't get paid by the hour as an upper manager, but your likelihood of moving from upper management to officer is really a function of hours worked. If you progressively tax consumption or investment income, there's also a true extensive margin; diminishing returns to work make it sensible to retire earlier.”

I guess there is some real-world evidence for that. As progressive taxes have been all but eliminated for the very rich, they have increasingly widened the income gap. But that's a bad thing. It seems as though progressive taxation could put a stop to the broadening divide between the poor and the rich.
posted by koeselitz at 1:19 PM on March 12, 2012


1) Entertainers really do get paid per unit produced.
--Wait? What? By the hour? Then how is it the dollar amounts of the contracts are always announced before shooting even starts for most big Hollywood projects?

2) Executives, given fixed ability, could take an easier job at a company with less of a need for high pay and keep their free time.
--Again, this is only applicable to people in the highest income brackets.

3) Very high end professionals often do still bill by the hour.
--Sure. People at my level, who take home in the 50--100,000 range. But you were talking about people who take home millions.

4) Capital managers spend time to look for profit opportunity; more hours means more money.
--Most of those earnings are taxed at the lower Capital Gains rate anyway (see "carried interest" here), so this is also not a very persuasive argument.
posted by saulgoodman at 1:26 PM on March 12, 2012


Really, how much simpler could taxes be? You fill out a very simple one-page form and mail it to the IRS.

For me VERY much simpler. I filled out a one page form for years and it was a thing of beauty, but this year I had about 45 pages of schedules to do and we don't even itemize (which is why the money my tax guy gets is both well earned and happily paid by me).

They've even set it up so taxes are automatically withdrawn from your paycheck

This is only true for some types of income. We have three income sources that were not taxed automatically and we have to either send in estimated taxes ourselves and/or take a hit at the end of the year (with penalties if we underestimate too much). I do have some taxes automatically taken out, but that's from a more traditional source of income.

I know my situation is not the norm, but I also think it's not too crazy. We don't make a ton of money, don't itemize, have only two income earners, don't use any of the special cases that would require even more forms, etc. We just do a few different things in the same two professions that make things very complicated very fast. It doesn't have to be this complicated though I'm not necessarily saying a flat tax is an answer.
posted by Clinging to the Wreckage at 1:28 PM on March 12, 2012


I'll amend my comment to say "when the vast majority of adult US women, and virtually all of them that have been or are sexually active, have used or are using birth control of some form..."

What you don't understand, darkstar, is that those women who support Ick Rick and that ilk are using birth control responsibly and aren't sluts. Totally different. Makes all the sense in the world that they agree BC is wrong for those filthy, awful, barely human women who use it in a nasty way.

They're not having CD about BC, it's entirely about class.
posted by Lesser Shrew at 1:41 PM on March 12, 2012


--Wait? What? By the hour? Then how is it the dollar amounts of the contracts are always announced before shooting even starts for most big Hollywood projects?

Larger number of movies / concerts / albums = more hours. Longer expected shoots = demand more money.

--Again, this is only applicable to people in the highest income brackets.

I thought that's who we were talking about.

--Sure. People at my level, who take home in the 50--100,000 range. But you were talking about people who take home millions.

Yes, top end lawyers can make $1M / year and get paid per client.

--Most of those earnings are taxed at the lower Capital Gains rate anyway (see "carried interest" here), so this is also not a very persuasive argument.

Argument for what? That they have a loophole now doesn't change that they get paid on an intensive margin, which is what you said doesn't happen.
posted by a robot made out of meat at 1:51 PM on March 12, 2012


Hey jb, you just did "15% of everything above 15k", not "25%..."
posted by notsnot at 2:08 PM on March 12 [+] [!]


*oh, I'm so embarrassed* - years of doing Ontario sales tax and/or tip (15% hereabouts) just has 0.15 hardwired into my brain. here is 25% on everything about $15,000.

again - income, tax at 25%, tax/income*100

15,000 0 0
20,000 1250 6.25
30,000 3750 12.5
40,000 6250 15.625
50,000 8750 17.5
75,000 15000 20
100,000 21250 21.25
200,000 46250 23.125
posted by jb at 2:07 PM on March 12, 2012 [1 favorite]


If the next million in my pocket requires twice as much input as the first and means less to me, then I might not work as much, take as many risks, or sacrifice by eg moving for it.
posted by a robot made out of meat at 2:09 PM on March 12 [+] [!]


You might not if you already had a million dollars - but peasants all over the world and throughout time do put in a lot of extra labour for a very small amount of return, because that's what they need to survive or better themselves.

Which suggests that how hard people work is more about what they need (or think that they need) than just what they earn.
posted by jb at 2:10 PM on March 12, 2012 [3 favorites]


that thing about peasants working harder is a well-known thing in peasant studies - and for these purposes, "peasant" can be loosely defined as a small agriculturalist who farm land that they own or rent, rather than agricultural wage-labourers - though low-paid wage labourers might make similar economic choices.
posted by jb at 2:11 PM on March 12, 2012


It would put a shit ton of other people out of work too.

Then the IRS could not be used as a tool to punish others. Its a good thing that no longer happens after the Church commission reforms, right?
posted by rough ashlar at 3:18 PM on March 12, 2012 [1 favorite]


I decided, after hearing about Romney's financials, that we should invert the tax code. Wage income should be taxed at a flat 15%, with our current system of deductions and exemptions. Capital gains, on the other hand, should be taxed progressively, at the marginal rates of, oh, say 1970 -- with the bracket cutoffs adjusted for inflation, obviously. That would mean that any investment income over $1.1 million dollars would be taxed at 70%.
posted by KathrynT at 3:36 PM on March 12, 2012 [2 favorites]


three blind mice: Herman Cain is more of a socialist than most people on this board.

You generally have reasonable things to say but this is just totally crazy. Herman Cain is socialist except for the fact that he proposes tax rates one third what you do. And also those taxes completely exclude capital gains and dividends which are 95 to 100% of all income for many millionaires. This would end up collecting just a fraction of the taxes even currently collected, which will require gutting social security and medicare. Millionaires would end up paying essentially zero taxes. So I can see why you might think Cain might be socialist!

And your statement that taxes shouldn't be redistributive. What you fail to realize is that this is exactly what makes Sweden's relatively flat tax rate progressive. Sweden collects taxes at about twice the rate of the U.S. and then massively redistributes it so that everyone lives at non-poverty levels -- free pre-natal to grave medical care, paid maternity leave, subsidized childcare, good schools for everyone, subsidized college education, strong labor unions, very generous unemployment insurance plus child allowances, generous retirement pensions. None of this stuff is available to Americans.

Sweden collects about half of the GDP as taxes and redistributes it to the citizens as a wide array of social benefits, ensuring that everyone is taken care of and there is no poverty. In the U.S, only about 25% of GDP is collected as taxes, less than half of Sweden, and Cain wants to cut that by about half again. That is what makes Sweden's tax system progressive -- it is relatively flat on on taxation but highly progressive in distribution. This is very different from the U.S., that also has a relatively flat tax system (despite its progressive name), and very stingy redistribution.

So no, Herman Cain is not a socialist. Just the opposite in that the rich would pay little or no taxes under his system and the poor would be no better off. And second, despite the flat tax rate, Sweden has a highly progressive redistribution system, which is why there is little poverty. This sort of redistribution is exactly what Cain wants to eliminate -- all social welfare programs.
posted by JackFlash at 3:58 PM on March 12, 2012 [6 favorites]


Herman Cain is also, importantly, not a socialist because he does not believe in state owned enterprise and property. Quite the opposite, just like every other mainstream American politician since the 1930s, come to think of it. Can we please stop throwing around "socialist" as a synonym for "social democrat"?
posted by deathpanels at 6:40 PM on March 12, 2012 [5 favorites]


Argument for what? That they have a loophole now doesn't change that they get paid on an intensive margin, which is what you said doesn't happen.

Well, the current system already doesn't tax capital managers progressively. So I guess what I meant was, there goes your argument against the current system as far as capital managers go; it's clearly not progressive enough where they're concerned, to discourage going the extra mile for that extra million, since that's essentially what caused our recent financial collapse. (But I've also got newborn daddy brain, so my reasoning may be a bit less sturdy than usual at the moment.)

I thought that's who we were talking about.

Well, no. It's everyone's tax code. It's more important it provide the right economic incentives to the many than to the few. The few are motivated enough already, obviously, to keep themselves busy cooking up new schemes to part us from our hard-earned wages, and due to the decreasing marginal utility of the dollar, they don't benefit as much from the tax code being less progressive than the rest of us benefit from it being more progressive.

The tax code should provide the most benefit to the most people, right? Encouraging the top earners to squeeze six extra hours into one day a year to take home that extra million (as if in any remotely rational economic universe any person could be personally productive enough to be worth nearly 200,000 an hour!) doesn't benefit the economy as much as giving a few thousand extra to lots of people on the lower end of the scale.

(The only reason it even seems to make economic sense for some to earn such grossly irrational sums is because there are so few of us demanding these sums. No healthy economy could support the rest of us being paid for our labor on a scale that's even remotely rational compared to the uber-achievers--and likely, the higher-level wages can only continue to grow so disproportionately as long as everyone else's earning growth continues to be artificially suppressed.)
posted by saulgoodman at 7:28 PM on March 12, 2012 [1 favorite]


But what does exist is a strong incentive to give to registered charities to drop yourself down a bracket, come to think of it.

An essential step in advocating for more progressive taxation is to educate people about how tax brackets actually work. And we've got a long way to go.

It's the income at a certain level that's in a different bracket, not the taxpayer.

That's a good start a pithy summary of how it works, but it still seems a little abstract.

Maybe a pie-chart type graphic that says: This is a salary. Anyone who makes at least this much pays 0% taxes on that chunk. Anyone who makes this much more pays 15% tax on that chunk. Anyone who makes this much more pays 20% on that chunk. Etc.

I don't know. That still sounds confusing.
posted by straight at 10:27 PM on March 12, 2012 [1 favorite]


So I guess what I meant was, there goes your argument against the current system as far as capital managers go;
Well, no. It's everyone's tax code. It's more important it provide the right economic incentives to the many than to the few

You seem to be imputing an argument that someone else was making onto me. I just wanted to correct a factual inaccuracy (that labor supply isn't elastic at the top end). You replied to that stating that high-end labor doesn't get paid marginally, and I came up with examples to show that it does, which you seem to be conceding. I agree that getting to an optimal tax policy requires taking lots of other things into account, including what you're buying with those taxes. The efficiency loss associated with progressive taxes on high incomes may be the best option, but we shouldn't pretend that it's zero.
posted by a robot made out of meat at 5:09 AM on March 13, 2012


You seem to be imputing an argument that someone else was making onto me.

That's very likely. To the extent I unintentionally did so, I apologize.

The efficiency loss associated with progressive taxes on high incomes may be the best option, but we shouldn't pretend that it's zero.

That's debatable. Efficient market theory hasn't held up very well to scientific scrutiny in practice. So even the terms of the argument are debatable at this point. And if those exceedingly high incomes aren't really properly connected to hourly productivity--or more importantly, aren't rationally connected to the economic value of the activities--then that's not necessarily a true statement.

It might be that excessively high incomes are actually drains on the efficiency of the markets; these salaries may in effect be decreasing the practical crowd-size of the economy, magnifying the economic consequences of the mistakes of the few, and undermining the very basis for efficient market theory (which is ultimately the idea that markets benefit from the beneficial effects of crowd wisdom). For example, imagine if salaries eventually got so out of whack, one extremely "productive" person was earning 90% of the income generated in the US every year. Now imagine that this lucky, hardworking person is basically the only person making decisions about capital investment (because he's the only one with any surplus capital). Where's the efficiency of the markets then, in this scenario? It's all down to one person and his/her choices, good or bad, to determine the long-term health of the rest of the economy. The more income inequality increases irrationally, the less efficient the markets are. Irrational income inequality is bad for markets.
posted by saulgoodman at 9:15 AM on March 13, 2012 [4 favorites]


Maybe a pie-chart type graphic that says: This is a salary. Anyone who makes at least this much pays 0% taxes on that chunk. Anyone who makes this much more pays 15% tax on that chunk. Anyone who makes this much more pays 20% on that chunk. Etc.

I don't know. That still sounds confusing.


Animation might be effective. The key is to imagine income as a stream that gets split up into certain buckets as it flows -- net post-tax income, income tax revenues, and payroll tax revenues. As the total amount of money that's being "poured" passes certain marks, the split-up changes, shifting a higher percentage to the 'income tax' bucket, or closing off the 'payroll tax' bucket, etc. But once the money's been split up into the buckets, it's there -- at no point does getting more money result in someone digging into your 'post-tax revenue' bucket and dumping it into the 'taxes' bucket. It can only change the ratios used to split up addition money that comes through.

Now I want to make an infographic or something.
posted by verb at 3:41 PM on March 13, 2012 [1 favorite]


straight writes "I deny that anyone has ever decided to forgo an opportunity to make more money solely because they'd also have to pay more taxes."
...
darkstar writes "If there's any evidence that this kind of thing (i.e., discouragement from working harder, more, whatever) due to marginal tax rates, I'd love to see it."

I don't have any kind of proof but from experience I can tell you that the belief that working over time at time and a half will net you less money is rampant among blue collar workers. Or that getting a raise will push you into a higher tax bracket and you'll have less money. It's looney, makes about as much sense as fan death, but people believe it. And like religion you can't reason people out of the belief; I don't even try anymore.

darkstar writes "But honestly, how can 99% of US women use birth control on a regular basis, yet Santorum gains any traction whatsoever?"

Because a) Most people aren't single issue voters, b) of those that are single issue voters most aren't single issue on birth control and c) lots of people believe that they'll be able to special case their way out of restrictions they want for other people.


adamdschneider writes "The number of people with a grasp of the civil and criminal codes of their jurisdiction (not to mention federal statutes) has got to be vanishingly small."

Most people don't even know the motor vehicle code in their jurisdiction.
posted by Mitheral at 7:04 PM on March 13, 2012


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