Krugman on taxes

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Kriegsspiel
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Krugman on taxes

Post by Kriegsspiel » Mon Jan 07, 2019 6:56 pm

tax policy toward the rich should have nothing to do with the interests of the rich, per se, but should only be concerned with how incentive effects change the behavior of the rich, and how this affects the rest of the population.
. . .
Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.
https://www.nytimes.com/2019/01/05/opin ... dance.html
Pretty much what the founders intended.
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Re: Krugman on taxes

Post by pugchief » Mon Jan 07, 2019 7:51 pm

It's mind boggling that Krugman is so highly regarded.
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Re: Krugman on taxes

Post by technovelist » Mon Jan 07, 2019 8:32 pm

If Krugman is ever right about anything, it will be the first time.
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Re: Krugman on taxes

Post by boglerdude » Mon Jan 07, 2019 11:56 pm

Freeway congestion pricing (bidding for spaces) would be a win-win tax on the rich. But it "looks unfair"

And the rich are taxed by paying more for health ins and tuition
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Re: Krugman on taxes

Post by sophie » Tue Jan 08, 2019 6:36 am

Wow, this guy really hates "the rich". I wonder how he defines that group? I expect he is very likely to be among them. So many people have nodded in agreement with such statements, until they realize that the term applies to them even though they don't own a yacht or a Bentley, and still feel like they're struggling to make ends meet.

The sad truth is that there really is no longer a middle class. You're either in the Medicaid/poverty class, or you're "rich" by someone's definition.
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Re: Krugman on taxes

Post by moda0306 » Tue Jan 08, 2019 9:01 am

sophie wrote:
Tue Jan 08, 2019 6:36 am
Wow, this guy really hates "the rich". I wonder how he defines that group? I expect he is very likely to be among them. So many people have nodded in agreement with such statements, until they realize that the term applies to them even though they don't own a yacht or a Bentley, and still feel like they're struggling to make ends meet.

The sad truth is that there really is no longer a middle class. You're either in the Medicaid/poverty class, or you're "rich" by someone's definition.
Is "rich" a lifestyle or a net worth? I lean towards the latter, because a "rich" lifestyle built on labor with inadequate stored wealth is fleeting. Anybody can generate a fleeting "rich" lifestyle if they're willing to go into debt or only engage in it temporarily.

If net worth describes "richness," then there are indeed many, many people that are not in the Medicaid/poverty class that are also not "rich."

To Krugman's comments, if he's right that (for example) perhaps a 70% tax rate will maximize revenue, this is a very different question than the morality of said tax. In-fact, if it's true, it would get us past all this Laffer-curve bullsh!t where conservatives pretend to care about our fiscal position by cutting taxes on high-income folks to supposedly "raise revenue."

But wealthy people have it fine. Even if we ignore all the planning one can do around retirement accounts and life insurance, or rental properties, and just assume a 100% taxable passive portfolio, a $5 Million Net Worth generating a 3% "taxable income load" will probably generate $150k of income and about a $25k annual federal income tax (probably less), and no FICA/Medicare tax.

I'm not going to lose sleep over that. Some shlub making $90k in wages probably pays that much in Fed & Payroll taxes.
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Re: Krugman on taxes

Post by pugchief » Tue Jan 08, 2019 11:20 am

What Krugman (among other leftisits) still doesn't get is that confiscatory tax rates have the same effect as communism, well, because it basically is communism. If I know that for every dollar above some threshold results in those dollars being taxed at 85% (federal + state + unlimited medicare + 3.8% Obamacare tax + who knows what else), what incentive do I have to be productive to that level? I will try to work the least to make the most, as will virtually everyone else. Except, of course, the true leftists who will work the least to get the most free shit.

If you don't believe me, go ask anyone who grew up in the former Eastern Bloc before the Iron Curtain fell, and then emigrated to the US. Even their college aged kids don't buy into that philosophy.
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Re: Krugman on taxes

Post by moda0306 » Tue Jan 08, 2019 12:28 pm

pugchief wrote:
Tue Jan 08, 2019 11:20 am
What Krugman (among other leftisits) still doesn't get is that confiscatory tax rates have the same effect as communism, well, because it basically is communism.
Ummm... no. They're nothing alike. I would much, much rather be an American in 1955 with the crazy tax brackets back then than a Russian citizen back then.


If I know that for every dollar above some threshold results in those dollars being taxed at 85% (federal + state + unlimited medicare + 3.8% Obamacare tax + who knows what else), what incentive do I have to be productive to that level?
I don't know... maybe the 15% of profits is worth the extra work. Maybe you have an expensive lifestyle you have to afford. Maybe you just decide not to work at that level. What matters to the analysis isn't what YOU would do, but what earners at that level as a group would do.

Based on my experience with tax and even high-income clients, usually folks don't really know what their marginal tax rate is (no matter how much I try to drill that in).
I will try to work the least to make the most, as will virtually everyone else.
That sort of describes (understandably) pretty much how everyone behaves. Or try to behave. This isn't exactly something it takes taxes to generate. People try to earn the most amount out of the least amount of work. Duh.
Except, of course, the true leftists who will work the least to get the most free shit.
"True leftists" huh?

https://en.wikipedia.org/wiki/List_of_U ... per_capita
https://en.wikipedia.org/wiki/Federal_t ... g_by_state
https://www.brookings.edu/blog/the-aven ... t-america/

I see little evidence that "leftists" are the biggest takers. I'd say that low-income conservatives probably help even out the game a bit... or maybe there are just politically agnostic "takers" in red states and counties?
If you don't believe me, go ask anyone who grew up in the former Eastern Bloc before the Iron Curtain fell, and then emigrated to the US. Even their college aged kids don't buy into that philosophy.
Well I've already said I don't consider "high taxes = communism" to be anywhere near a reasonable statement, but let's analyze how much Polish folks hate what you consider "basically communism."

https://tradingeconomics.com/poland/gov ... ing-to-gdp

41% of Poland's GDP is government spending.

https://tradingeconomics.com/poland/per ... e-tax-rate

If you add Poland's income tax to their Social Security tax, it comes to almost 70%. That doesn't even factor in their 24% sales tax rate, which is a tax paid IRRESPECTIVE of income, as it's levied on gross receipts, not net income.

They don't seem to hate "basically communism" nearly as much as one would think considering the totalitarian commie boot on their neck for decades.

Lastly, to your point about Polish emigrants to the U.S., here's how they've voted...

https://en.wikipedia.org/wiki/Polish-Am ... y_politics

While they're not bleeding-heart commies, they seemed to tilt left.

So your entire narrative seems pretty empty.
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Re: Krugman on taxes

Post by pugchief » Tue Jan 08, 2019 2:58 pm

Moda,
Thanks for the skooling. You, of course, missed my point. Maybe super high tax rates aren't technically communism (perhaps socialism would have been a better choice of words), I was drawing an analogy that the effect was the same, i.e., redistribution of capital with the disincentivization of production. Pretty sure the 'group' would do the same as I.

I'm not sure why you zeroed in on Poland, but even the link you provided says their income tax rate is 32%, so I'm not sure what your point is. But I had a college kid who is the child of pre-Iron Curtain Russian immigrants shadowing me yesterday, as he wants to go to dental school, and he told me first hand that his community does not believe in socialism.

Why don't you provide an example of a modern country where income tax rates are 70% or higher and how much the citizens love it. Perhaps Venezuela?

Sorry I'm not Kshartle.
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Re: Krugman on taxes

Post by moda0306 » Tue Jan 08, 2019 3:31 pm

pugchief wrote:
Tue Jan 08, 2019 2:58 pm
Moda,
Thanks for the skooling. You, of course, missed my point. Maybe super high tax rates aren't technically communism (perhaps socialism would have been a better choice of words), I was drawing an analogy that the effect was the same, i.e., redistribution of capital with the disincentivization of production. Pretty sure the 'group' would do the same as I.
Well we're talking about pretty different extremes here. I mean I guess this is getting into semantics, but it seemed like you were saying they were very, very similar. I don't find them similar at all, though you do raise a point that it could disincentive production.

Oddly though, it was Stalin's attempts to incentivize production (at the point of a gun) that are among the Soviet Unions greatest atrocities. Millions died due to his attempts to industrialize the economy and meet production quotas/timelines.

I actually sort of doubt their economy would have modernized that fast had the White Russians won. But I could be wrong. And to be clear I don't find that to be a "good thing" considering the number of lives it was achieved on the back of.
I'm not sure why you zeroed in on Poland, but even the link you provided says their income tax rate is 32%, so I'm not sure what your point is. But I had a college kid who is the child of pre-Iron Curtain Russian immigrants shadowing me yesterday, as he wants to go to dental school, and he told me first hand that his community does not believe in socialism.
Poland struck me as the quintessential example of an eastern-block country. I just picked it and got a little bored with finding sources. :)

And the "income tax" rate is 32%, but as you did, making sure that all taxes on income are applied is important, as what you walk away with is what drives incentives (or so we're told, right?). And that does get close to 70% when you take all the Social Security. Further, a 24% sales tax is obscenely high, and that's on top of all the other taxes. If they don't like socialism, and high taxes is "basically" socialism, then we have quite the mystery here...
Why don't you provide an example of a modern country where income tax rates are 70% or higher and how much the citizens love it. Perhaps Venezuela?
Interestingly, Venezuala's taxes don't appear to be that high, and their government spending isn't that high of a portion of GDP. Yes, they owned some industries (mostly around natural resources), but Venezuela doesn't appear to be that "socialist" considering the measures you're talking about... and it's certainly not in the more hippie version of socialism where "the workers own the means of production." But no state socialist models really seem to work like that.

https://en.wikipedia.org/wiki/Economy_of_Venezuela

Finland's on the other hand appear to be around 51% NOT including Social Security, but closer to 80% if you include the SS tax total. Similarly to Poland, they also have a very, very high sales tax. Oddly, you'd want to re-figure the denominator for employer-paid Social Security taxes. So $80/120 = about 67%. Not quite 70%, but I we're sort of arguing peanuts at this point right?

https://tradingeconomics.com/finland/pe ... e-tax-rate

These are what we would consider obscenely high tax rates in countries that seem to be doing ok.
Sorry I'm not Kshartle.
Let's all be glad you're not. :)



So maybe Krugman and other lefties HAVE thought of the disincentive-to-produce argument and simply come to conclusions that this is why the "optimum rate" for tax-revenue is 70% instead of 75%, 80%, etc.

Once again, I'm not advocating for 70% tax rates necessarily, or even that it's the clear optimal rate for tax-revenue... just that we probably can rid ourselves of the "we can't raise taxes any more without reducing revenue" argument, because they're often made with weak evidence.
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Re: Krugman on taxes

Post by pugchief » Tue Jan 08, 2019 5:02 pm

When you add in sales tax (over 10% where I live), property tax (highest in the nation IL/NJ) which is paid even if you rent, payroll taxes, business taxes and fees, gasoline taxes, etc ad nauseum, it's a wonder even at current income tax rates that any of us have a dollar for a cup of coffee. I can't imagine making it worse. But people will listen to Krugman before they listen to me.
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Re: Krugman on taxes

Post by Xan » Tue Jan 08, 2019 9:24 pm

Kriegsspiel wrote:
Mon Jan 07, 2019 6:56 pm
tax policy toward the rich should have nothing to do with the interests of the rich, per se, but should only be concerned with how incentive effects change the behavior of the rich, and how this affects the rest of the population.
. . .
Or to put it a bit more succinctly, when taxing the rich, all we should care about is how much revenue we raise. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue.
https://www.nytimes.com/2019/01/05/opin ... dance.html
Pretty much what the founders intended.
I think the bigger issue than quibbling about specific tax rates rates is the philosophy that people's incomes are just there for government to help themselves to the "optimal" amount. "All we should care about is how much revenue we raise." hmm.
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