I wonder if those who are touting a 70% marginal personal income tax rate for the highest earners realize that such a thing would cement the very inequality and influence of the wealthy they claim to oppose? As was the case 60 years ago, very few would pay it. They would lobby to get exemptions and get them. Pay to play, baby.
Every socialist understands the wealthy evade taxes. We can therefore:
A) Tax them anyway.
B) Keep doing nothing.
C) Take away their control of the social surplus, eliminating the need to tax.
Keep in mind that relatively few Democrats (and even fewer Republicans) are socialists and if that doesn’t already extend to those styling themselves as “democratic socialists” it soon will. What they are is dedicated to using the levers of government to make themselves rich and powerful.
It always amuses me when Republicans and libertarians complain about the “leftists”. They’re all about equally left. Even Republicans and most libertarians recognize that you can’t maintain a modern state on the basis of a head tax.
I assumed you were referring to AOC, who started the 70% tax discussion and identifies as a socialist.
Bernie Sanders “identifies” as a democratic socialist but he’s not above using the levers of government to enrich himself. Rep. Ocasio-Cortez will be no different. It may take a cycle or so.
As Lincoln said, no matter what you call it, a tail is not a leg.
Socialists also understand how to use socialism to acquire and maintain wealth and power.
My point is that isn’t socialism. It’s people “identifying” as socialists without actually being socialists.
I was responding to Ben with that comment, but I’d say there are very few real socialists.
So you are saying that our wealthy are now so rich that they can pretty much do whatever they want? Probably true.
Steve
Not exactly. I’m saying that the tax system is not an effective way of increasing income/wealth equality.
Sure, but it is because the wealthy will just pay off people to make sure that they dont have to pay more.
Steve
That is a problem with any political system. It is not unique to ours.
There are other ways than the tax system. For example, we could stop subsidizing the well-to-do. We could allow wages to rise by enabling a tighter job market. We could put an end to omnibus spending bills which are excellent for hiding bogus appropriations in. We could adopt “plain language” rules in our legislation. We could adopt “single matter” rules in how legislation is drafted. The list is practically endless.
Update
One of these days I should do an analysis of the effects of immigration of unskilled workers on income inequality. The data are probably going to be between hard and impossible to get. In my opinion it is obvious that immigration is a major cause of income inequality. The challenge is in quantifying the effect.
Taxes, properly implemented, might address some of the effects of income and wealth inequality, they can’t do anything about the causes.
Social engineering through taxation is stupid and wasteful. It assumes the tax collectors are smarter and more knowledgeable than those they are collecting the tax from and thus will spend it more wisely. The Gini coefficient and wealth inequality are simply tools and words used to justify taking ever increasing proportions of the people’s wealth in the name of ‘fairness’ and societal justice. Corrado Gini pretty much said that in his paper.
I hate to be ‘the turd in the punchbowl’, but even if you could have an effective tax rate of 70%, you would slow the growth of income inequality.
With a credit-backed monetary system, the only way to address income inequality is by changing the credit creation process. The 70% taken from the wealthy will quickly be used by the recipients to create debt – personal, private, or public, and the people who are able to create the credit needed for the debt will, again, reacquire the 70%.
The wealthy do not need to do anything or influence anybody. It is automatic, and there is no way to stop the process.
TastyBits:
Do you mean “would not slow the growth”? I agree.
But my point remains. The objective is neither to slow the growth of income inequality nor to obtain the money to tackle the projects the proponents want to address but to control the distribution. I don’t think that can be done effectively via the tax system at all.
I’m back, beating my dead horse, but if you don’t have it, don’t spend it. If society is set up to underpay 90% of citizens, consumer demand should be at rock bottom. But no, the banks encourage and enable massive debt, and people, thinking short term, embrace it. Then complain when they are even poorer.
The rich get richer, and the poor get poorer, until death makes them equal. Nothing will change that.
@Dave Schuler
I mean that the rate of the growth (acceleration) of the income equality would decrease, but neither the growth nor the rate of growth would be stopped.
I was on my soapbox, but many (most) people believe that George Soros or Warren Buffett have a lot of dollars stored in a bank vault or on a bank ledger. They think it is just a matter of taking or transferring those dollars, and all will be right with the world.