Conversation on Taxes

Full text of a conversation with some libertarians. Did I win? Did I score points? Or did I flatter them too much by using the term "pathological individualism"? You be the judge.
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Paul Nickels
This is class warfare, people! The rich are effing the poor at every turn. Money for tax breaks for the rich, no money for 99ers. Money for corporate bailouts, no money for the people. The poor pay taxes, the rich pay little or nothing. Is this the America our parents and grandparents fought for? Is this the America our founding fathers envisioned?

No. It is not.

Only Little People Pay Taxes | Mother Jones
http://motherjones.com/politics/2011/04/taxes-richest-americans-charts-graph
How a janitor ends up with a higher tax rate than a millionaire, and seven more charts that show how the richest Americans beat the IRS.

April 18 at 11:12pm • UnlikeLike • • Share

You, Deborah L Purdom and Jacquard Guenon like this.
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Denise Gerdes NO! This is not what it should be!
April 19 at 7:53am • LikeUnlike


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Bruce Olson it's not; that's a bit of a misrepresentation... those "in the Helmsley building" are not necessarily representative of "average". It also makes a lot of hidden assumptions about the sources of income for the wealthy person... if that income were mainly salary/bonus, his actual taxes would be MUCH higher; His net taxes in this case imply revenue from mainly off-shore or other tax exempt sources.
April 19 at 11:41am • LikeUnlike
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Sam Calvin ‎@Bruce I'm not seeing your point - the main thing here is that people who work for a living pay a high rate, while those lucky enough to live mostly off capital gains pay much less. The source of the wealth of all the truly wealthy is not work - that's why the tax rate falls as you get into the "upper stratosphere" of the top 1% despite a progressive income tax.
April 19 at 8:06pm • LikeUnlike • 1 personLoading...

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Dave Jilk Nevertheless, high income earners pay the vast majority of income tax. What really makes it non-progressive is the social security pyramid scheme.
April 19 at 10:01pm • LikeUnlike

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Sam Calvin ‎@Dave "Vast majority" is an overstatement. We do have a progressive tax system for income, but regular people pay plenty - and there are way more of us. And what do you mean by "pyramid scheme"? Social Security is a transfer system, so working age people *do* support a smaller number of retirees...but I don't understand where you're going with that idea.
April 20 at 12:18am • LikeUnlike
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Bruce Olson
Some figures published today in AJC (responding to the idiot Michelle Bachman) make the point that language counts here... Top 5% of earners pay 40% of Income Taxes but only 28% of All taxes. Regardless, I don't see the problem; these leve...ls have been in that range for a half-century and given that top 25% of incomes starts around $70K, and top 1% at $400K, this is just pointing out that higher incomes pay more taxes. Comparisons of total taxes paid are irrelevant... discussion has to focus on Marginal tax rates to be meaningful and useful.See More
April 20 at 9:46am • LikeUnlike
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Sam Calvin
‎@Bruce On the contrary, I find discussion of marginal rates confuses the subject. The slip from the oft-quoted Eisenhower marginal rate of 90% too often slips into the idea that high earners "pay 90% of income in taxes." The real clarifica...tion I want to see is the radical difference between income earned "by the sweat of the brow" - ie wages and salaries - and ownership income. These two things could not be more different, and are not taxed the same but both are lumped together in the category of "income." This leads to the justifiable criticism that many folks earning in the $200-$400k range in salaries are over-taxed, while the majority of income over $500k is ownership income - and therefore approaches the 15% tax rate.See More
April 20 at 10:44am • LikeUnlike
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Bruce Olson
Just because someone confuses it, doesn't make the focus wrong. To discuss the IMPACT of any tax policy change, the ONLY relevant issue is how it changes "in comparison to present rates" -->Sam Calvin ‎@Bruce I'm not sure I'm following you at all...are you talking about marginal tax rates - ie how much tax someone pays "on the last dollar earned" - or are you talking about changes in tax rates "at the margin" - ie 1% up or down on a particular type of income?
April 20 at 11:54am • LikeUnlike
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Sam Calvin ‎@Bruce As for my statements about clarifying how "income" is taxed, I think it needs to be made clear that not all income is earned by work, and that the system we have now (relatively) favors investment and punishes work.
April 20 at 11:56am • LikeUnlike
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Dave Jilk ‎@Sam: http://en.wikipedia.org/wiki/Social_Security_(United_States)#Claim_that_it_is_a_pyramid_or_Ponzi_scheme
April 20 at 12:11pm • LikeUnlike
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Dave Jilk It seems to me that marginal and total rates play different roles in the discussion. Marginal rates are about incentives and behavior; overall rates are about "fairness" (using the term loosely, since this is all about compulsion).
April 20 at 12:13pm • LikeUnlike
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Sam Calvin ‎@Dave Thanks for the link, but the comparison is patently ridiculous. A ponzi scheme is based on the notion that by paying in once you can become rich - which can only work for a small number who are in on the scheme early on. SS is based on the notion that working-age people (a large population) can support those who retire (a small population). To claim a similarity is just anti-social mud-slinging.
April 20 at 12:25pm • LikeUnlike
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Dave Jilk ‎@Sam, guess you're smarter than Paul Samuelson. Who was by the way a devoted Keynesian.
April 20 at 12:32pm • LikeUnlike

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Sam Calvin ‎@Dave Just because I can cite shortcomings in Newtonian physics doesn't make it a personal pissing match between me an the old man ;)
April 20 at 1:01pm • LikeUnlike

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Sam Calvin Seriously, though, Samuelson was a classic mid-century ideologue, and as such limeted by certain requisite myths - notably, the idea of the US as a classless society. In this respect, he differed sharply for Keynes, who believed in a ruling class which had to be enlightened to society-wide interests.
April 20 at 1:08pm • LikeUnlike
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Dave Jilk
‎@Sam, none of that affects whether SS is a pyramid scheme. Its continuation depends completely on being able to find more greater fools who will continue to pay, even as benefits get increased (when people live longer, benefits are increa...sing). That is a pyramid scheme - a "one time payment" may be a feature of a Ponzi-style pyramid, but that's only one type. On the bright side, soon enough people will realize that we have to open the borders to immigrants to keep our retirement checks coming.See More
April 20 at 1:18pm • LikeUnlike
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Sam Calvin ‎@Dave On the contrary, it's continuation requires that there be an insufficient number of fools who think it is a "scheme" that should be ended, instead of a needed form of social insurance!
April 20 at 1:24pm • LikeUnlike
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Dave Jilk ‎"Don't break the chain! Otherwise we will lose this crucial social insurance!"
April 20 at 2:04pm • LikeUnlike


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Sam Calvin Don't you believe that SS has kept people out of poverty? The usual "ponzi scheme" argument is that SS is unsustainable, not useless....
April 20 at 2:52pm • LikeUnlike

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Sam Calvin ‎@Dave It's sort of a pity you're so cynical, because I think there is a "scheme" aspect to SS, but the opposite of the one you suggest. Really, it's OVER-funded, and has loaned $2.5 trillion to the government, essentially allowing corporations not to pay taxes (see the MJ chart on payroll vs corporate tax)...
April 20 at 2:58pm • LikeUnlike
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Bruce Olson ‎@Sam, i don't think we're in disagreement so not worth going on about marginal rates... Dave stated it correctly, marginal rates are about incentives and incremental changes in what we are doing now; Total is about perceived fairness; i just like to be sure we keep complaints about tax rates and discussions of the two clearly separate.
April 20 at 3:22pm • LikeUnlike
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Bruce Olson
‎@Sam, re: SS... Dave's ref to Ponzi scheme is a weak analogy, but reasonable as he's mainly focused on two similarities: 1) that SS requires a continual influx of new people to remain financially viable and 2) That due to baby boomers, the... system isn't financially sustainable as benefits are currently defined. And, of course, David's annoyed because SS could certainly have been set up to be sustainable independent of future donors, but he's forgetting that at the time it was established, this country had a fear of "national banks" and "excessive consolidation of financial power" in banks; they explicitly chose to not make it a savings plan because they thought it would bring too much power to big banks and insurers; a fear which is not unsupportable and which generated regulations, e.g. prohibitting national banking, until as late as the mid-90s. I agree; I wish they hadn't been afraid; i wish it now was an independent savings plan rather than a debt owed out of the General Fund... but it's not a productive discussion; because the past can't be changed.See More
April 20 at 3:36pm • LikeUnlike
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Bruce Olson BTW, i don't think Dave's a cynic; I think he's an irrational, head-in-the-sand optimist. He truly believes in the transferrability of idealistic Libertarian ideas from the drawing board to the real world of an economy of this size. I think that takes huge faith! :-)
April 20 at 3:42pm • LikeUnlike
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Dave Jilk ‎@Bruce, I don't think it would work, but it would be right. @Sam, we are in agreement about that part of the scheme.... that fake "surplus" is what has allowed them to continue the scam! In any case, I don't just think SS is useless, I think it's counterproductive. It allows people to think that they don't have to plan for their future, and that's what is going to do us in.
April 20 at 3:58pm • LikeUnlike
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Sam Calvin ‎@Dave The surplus is real - but to return to the original point of the post - it's in the pockets of the corporate elite!
April 20 at 4:37pm • LikeUnlike

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Sam Calvin You're right about the absence of a plan - but I would argue that what is needed is an *industrial* plan. A plan to put Americans to work. If what you're saying about "not having a plan" relates to the probability that finance will raid the SS trust fund again - you're right - but all proposals for "economic realism" coming from Repubs are exactly a step in that process!
April 20 at 4:41pm • LikeUnlike
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Dave Jilk I'm talking about the idea that planning is the individual's responsibility, not that of the nanny state.
April 20 at 6:51pm • LikeUnlike

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Sam Calvin ‎@Dave Yeah right. ha ha. And it's the individual's responsibility to defend themselves against all robbers, be they crack addicts or multi-billion dollar corporations...
April 20 at 7:02pm • LikeUnlike
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Deborah L Purdom ‎@Dave. Yeah and those who did plan and had their own "retirement" accounts just lost most or all of them to the "private markets" gambling schemes.

@Sam, we might me better off if we DID protect ourselves from robbers... Just a thought.
April 21 at 12:13am • LikeUnlike
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Dave Jilk ‎@Deborah, keep up, the financial markets are entirely back to where they were before the crash.
April 21 at 9:26am • LikeUnlike

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Deborah L Purdom ‎@Dave. The financial markets, as far as hedge funds managers, CEOs, etc. are back to where they were, but people who lost all of their 401ks don't have them anymore - they're GONE, kapoot, just like mine, and those who lost a majority are still NOT up to where they were before and won't be for quite sometime, if ever.
April 21 at 11:43am • LikeUnlike
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Dave Jilk
‎@Deborah: really? What did you have it invested in? My IRA is well above where it was before the crash, my wife's 401(k) is completely recovered. I'm not even a particularly good investor, I just have a little diversity and index funds.... Perhaps you panicked and sold everything? Perhaps you were in particularly risky investments? Maybe you should take responsibility for those bad decisions.

That said, I see your profile picture says "End the Fed," with which I couldn't agree more, although probably for different reasons.See More
April 21 at 11:52am • LikeUnlike
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Sam Calvin ‎@Bruce Sorry didn't mean to ignore your comments - by "continual influx" do you mean that we'll continue to have a working-age population in the US? 'Cause that seems like a pretty reasonable condition of being able to support retirees!
April 21 at 12:22pm • LikeUnlike
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Sam Calvin ‎@Bruce Dave''s not an optimist, he's a survivalist. Because "saving" always relies on a collective agreement, it is always vulnerable to depredations. The only "responsible" move, in his world, is to have a sufficient stockpile of food, fuel, and water to see you through your own retirement. @Dave What say you? Am I right? Have a few MRE's stashed somewhere? Or are you just as irresponsible as Deborah?
April 21 at 12:25pm • LikeUnlike
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Dave Jilk
‎@Sam, we all have to make our choices. I can feel bad for Deborah (and I do) without wanting to, or worse yet being required to, take responsibility for her situation. I don't have any MREs stashed but I won't expect anyone to bail me out ...if it turns out that I should have.

Regarding "continual influx," the "pyramid scheme" results from the fact that the outbound benefits are increasing - both in terms of number of people with the baby boom but also because people are living longer; while the inbound payments are decreasing not only because the population is not growing very fast but also because it seems like (and I have no facts or data to back this up, only impressions) it's very common among recent college grads not to be too concerned about making money or even supporting themselves or being independent. This may or may not be a good life philosophy, but it does not bode well for the SS system.See More
April 21 at 3:20pm • LikeUnlike
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Sam Calvin ‎@Dave So it's those rotten kids? Ha ha.
April 21 at 3:25pm • LikeUnlike


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Dave Jilk ‎@Sam, nope, rotten parents
April 21 at 3:25pm • LikeUnlike


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Sam Calvin So help me understand what I can only regard as your "pathological individualism" (as I heard it recently called). Do you have the same hard-assed attitude with your family and friends? Or is it rooted in a distrust of the cultural mores of other backgrounds?
April 21 at 3:27pm • LikeUnlike
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Dave Jilk I like that term, "pathological individualism." I exchange value with friends and family, so depending on who they are and what our relationship has been, I might or might not want to help them in need. And vice-versa.
April 21 at 3:57pm • LikeUnlike
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Sam Calvin But doesn't that just translate into the right to be priggish and aloof? Although I don't think that any law could stop people from being that way, isn't someone who *exercises* that right the biggest fool of all?
April 21 at 4:39pm • LikeUnlike
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Deborah L Purdom
Dave, just think how much more you would have had in your IRA, if the crash had not happened.

What I don't understand is why, people like you, think it is perfectly okay that the "financial wizards" (who knew darn good and well that they w...ere taking HUGE risks with other people's money and it could come crashing down any minute) to "scream" for help from the government and actually get welfare (in the form of bailouts which are still going on today) in a very short amount of time.

But, the people that have lost their jobs, houses, savings and retirement accounts, because of the "financial wizards, and STILL can't find any type of job - those people whose wages were stagnant and were living paycheck to paycheck, for decades, are now called drug addicts and lazy bums just sucking from the government's teat's, and told they should have "planned better".

But the financial sector? Heck no, they don't have to plan for any crises and can suck, from the government's teat's, for as long as they want and get as much as they want and not even be held accountable for how and where they spent that bailout money from "we the people". In the meantime, they are continuing to do the exact same things they did that caused this "recession" which will cause even more problems in the near future. Dave, for your sake, sure hopes your planning works as well the second time around.See More
April 21 at 7:13pm • LikeUnlike
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Dave Jilk
‎@Deborah, I think it's important to remember that the crash was a reflection of a bubble, not an independent event. The market has never really had an opportunity to consolidate since the late 90s bubble - it's been propped up by various p...olicies driven by political pressure. So my IRA would not be worth more in any case. It probably should be worth less, in fact.

Don't assume that I condone what has happened with Wall Street welfare. I can't believe that the American people have tolerated it. But the real problem is not the folks on Wall Street, as piggish as they are. If the government did not offer these bailouts, did not give the impression that it's going to hold the economy together, did not create entities like Fannie Mae and Freddie Mac that stimulated creation of high-risk mortgages to achieve political goals (widespread homeownership), did not insure deposits and then fail to regulate behavior (even though we had the exact same moral hazard BEFORE with the S&L crisis in the late 80s) and then cry "too big to fail," then this stuff wouldn't have happened. The crooks in NY are only possible because of the crooks in DC. Oh, the economy has always had its ups and downs, even when there was less government intervention, but the crashes were not typically an existential threat like they are now.See More
April 21 at 8:39pm • LikeUnlike
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Dave Jilk ‎@Sam, I'm a pluralist, and I know some people are communitarians rather than individualists. I hope they're happy and wish them luck. Unfortunately, that's not enough for them, because they are not pluralists and they want me to conform, even if it needs to be at gunpoint.
April 21 at 8:48pm • LikeUnlike
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Sam Calvin ‎@Dave Ha ha we're all "pluralists" I'm just questioning the viability of individualism when you're sitting on a see-saw. The market requires an unprecedented amount of coordination between individuals and institutions, to deny this requires either exteme credulity, pathological blindness, or just plain cussed inability to give an inch to you brothers and sisters on this planet.
April 21 at 9:06pm • LikeUnlike
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Dave Jilk ‎@Paul Nickels, thanks for hosting our little debate.
April 22 at 7:55am • UnlikeLike • 1 personLoading...


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Denise Gerdes This is exactly what started this debate..... class warfare.... we need to work TOGETHER!
April 22 at 11:05am • LikeUnlike

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Dave Jilk ‎@Denise... but we don't agree... and I don't think this debate constitutes class warfare because unless I'm mistaken none of the participants is either "rich" or "poor."
April 22 at 11:14am • Like