That's a terrible, terrible, highly-biased article.
It combines actual falsehoods, with: an obvious confusion between, on the one hand, how we might choose to structure society (with various pros and cons), and on the other hand, what are the objective macroeconomic consequences of various policies.
Maybe society ought to tax the rich more or less. That's a legitimate topic that one can discuss.
But this article is not a discussion or analysis. It's propaganda.
Just a handful of problems: he's correct about the producer vs. parasite narrative. Although he rejects that narrative, later on he says that "a democracy is supposed" (really? why?) to have people taxed according to their means. But "everyone has a right" to use the public resources (roads, etc.) of society.
So in fact, although he won't admit it, he actually agrees (in theory) that there are citizens who are net contributors to society, and other citizens who are net drains.
Other just flat out errors: "Taxes make absolutely no difference in the hiring equation." He's confusing his personal experience in corporate America, with any knowledge of macroeconomics. Do taxes have an impact on corporate hiring? Or not? I challenge you to find me a single respected academic economist who would agree that they make "absolutely no difference".
He's either exaggerating for effect (propaganda), or else ignorant about economics.
At best, he's making a (weak!) argument that a democracy ought to have progressive taxes. But of course the US already does. (And in fact, the US incredibly leads industrial nations with just how progressive its taxes are!) The real question is: what ramping of progressive taxation is the "right" one? Is the current US above, or below, the optimal point? How would you decide?
Really, the article is an amateur partisan hack piece.
> But this article is not a discussion or analysis. It's propaganda.
There's a fine line between strongly worded opinion and propaganda.
> he actually agrees (in theory) that there are citizens who are net contributors to society, and other citizens who are net drains.
Of course. But the point is that, at least at the extremes, there is not necessarily any correlation between being a contributor or parasite and being rich or poor. Many poor people are contributors, and many rich people are parasites. So we should not avoid taxing rich people on the grounds that they are presumptively contributors.
> Other just flat out errors: "Taxes make absolutely no difference in the hiring equation."
He's being sloppy, but not incorrect. *Personal* income taxes (which in the broad context of today's political debate is the topic under discussion) does -- or at least should -- not have any impact on hiring.
Don, what is fundamentally wrong with sharing the load? Why do we accept 50/50% split during divorce even if one spouse isn't working (i.e. not contributing financially at all) and yet we dismiss redistribution of income on a state level? It just makes sense to invest in underperforming parts of the society to achieve better growth overall. This way you achieve a much better standard of living, with more healthier and educated people in your workforce, less crime. If anything, less polarisation in the society is a very beneficial thing. And in the Greg Makniw's article you referred to you've missed the conclusion: "So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively."
Ron said: "there is not necessarily any correlation between being a contributor or parasite and being rich or poor."
Sure, the correlation isn't necessary. And there's a question of exactly how the rich person became rich. Nonetheless, in general, a rich person can pay for their own private consumption. Whereas, some poor people subsist on the handouts of society.
"Personal income taxes"
That's a much better topic, and perhaps we might still disagree, but let me only note that this article you approved of so much is the one that made the mistake, not me. The first paragraph talks about "taxing the rich", but the analysis is all about corporate taxes and profits and hiring.
Alex said: "what is fundamentally wrong with sharing the load?"
Why, nothing at all. In fact, in my original comment, I wrote: "Maybe society ought to tax the rich more or less. That's a legitimate topic that one can discuss."
"yet we dismiss redistribution of income on a state level?"
Who has done so? Not me.
The question is: what is the right level of redistribution? Is our current level too high, or too low? And what criteria would you use to make the judgment? (In particular: are you arguing from a sense of justice, or from a question of maximum utility or growth to society?)
"It just makes sense to invest in underperforming parts of the society to achieve better growth overall."
That's possibly true, but not argued at all in the article Ron linked to.
The question of what policy leads to better overall growth, is close to an objective question in macroeconomics. It doesn't need to be controversial. Presumably, there is some actual answer.
The problem is, that not everyone will agree that overall growth is what policy ought to be optimizing for.
"If anything, less polarisation in the society is a very beneficial thing."
Also possibly true. But, you may not realize, this goal is likely to be in direct conflict with a goal of better overall economic growth.
How do you choose, when you have a policy conflict between income inequality, vs. total economic growth?
"...Mankiw..."
Yes, I got the conclusion. You may have missed that both Ron and the article he linked to, were arguing in favor of "more taxes on the rich". The very conclusion you quoted says that the progressivity of the US tax system is not the important issue. (I.e., the rich are already being taxed just fine.) The two issues are: (1) the overall level of taxation, and (2) distribution of that tax revenue to the lower economic strata.
Those two points were not being addressed by either Ron, or the linked article.
He said: "They repeat the slogan, "Taxes are theft," and take the "money we earned" by "force" (i.e. government.)", but makes no argument why taxes aren't theft. He just calls it a slogan. If I tried to tax You it would be called theft or a racket, but when government does it it's ok. Still there isn't any difference morally and he doesn't make any arguments to dispute that.
He also claims "paying taxes means you are already making money, which means you have already hired the right number of people. Taxes are based on subtracting your costs from your revenue, and if you have profits after you cover your costs, then you might be taxed." This is only true on taxes on proffits not all taxes...
@Alex, "what is fundamentally wrong with sharing the load?" It's not sharing if You are forced to give.
"Why do we accept 50/50% split during divorce even if one spouse isn't working" Marridge is a voluntary relationship. Nobody forces you to get married...
"It just makes sense to invest in underperforming parts of the society to achieve better growth overall." This makes no sense economicaly. What You subsidise grows a. i. underperforming parts so you have to subsidise it even more, and what You tax decreases so productive parts dwindle. That's by the way the main reason for enormous national debits...
'And in the Greg Makniw's article you referred to you've missed the conclusion: "So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively."' They've been increasing taxing and spending for decades and look at the results. Poverty, unemployment and other things they subsidize are only increasing. Don't You think it's time to try something else.
That's a terrible, terrible, highly-biased article.
ReplyDeleteIt combines actual falsehoods, with: an obvious confusion between, on the one hand, how we might choose to structure society (with various pros and cons), and on the other hand, what are the objective macroeconomic consequences of various policies.
Maybe society ought to tax the rich more or less. That's a legitimate topic that one can discuss.
But this article is not a discussion or analysis. It's propaganda.
Just a handful of problems: he's correct about the producer vs. parasite narrative. Although he rejects that narrative, later on he says that "a democracy is supposed" (really? why?) to have people taxed according to their means. But "everyone has a right" to use the public resources (roads, etc.) of society.
So in fact, although he won't admit it, he actually agrees (in theory) that there are citizens who are net contributors to society, and other citizens who are net drains.
Other just flat out errors: "Taxes make absolutely no difference in the hiring equation." He's confusing his personal experience in corporate America, with any knowledge of macroeconomics. Do taxes have an impact on corporate hiring? Or not? I challenge you to find me a single respected academic economist who would agree that they make "absolutely no difference".
He's either exaggerating for effect (propaganda), or else ignorant about economics.
At best, he's making a (weak!) argument that a democracy ought to have progressive taxes. But of course the US already does. (And in fact, the US incredibly leads industrial nations with just how progressive its taxes are!) The real question is: what ramping of progressive taxation is the "right" one? Is the current US above, or below, the optimal point? How would you decide?
Really, the article is an amateur partisan hack piece.
I was going to offer free editing, but gave up after one paragraph: http://markup.io/v/2wz5wdkmdbnh
ReplyDelete> But this article is not a discussion or analysis. It's propaganda.
ReplyDeleteThere's a fine line between strongly worded opinion and propaganda.
> he actually agrees (in theory) that there are citizens who are net contributors to society, and other citizens who are net drains.
Of course. But the point is that, at least at the extremes, there is not necessarily any correlation between being a contributor or parasite and being rich or poor. Many poor people are contributors, and many rich people are parasites. So we should not avoid taxing rich people on the grounds that they are presumptively contributors.
> Other just flat out errors: "Taxes make absolutely no difference in the hiring equation."
He's being sloppy, but not incorrect. *Personal* income taxes (which in the broad context of today's political debate is the topic under discussion) does -- or at least should -- not have any impact on hiring.
Don,
ReplyDeletewhat is fundamentally wrong with sharing the load?
Why do we accept 50/50% split during divorce even if one spouse isn't working (i.e. not contributing financially at all) and yet we dismiss redistribution of income on a state level?
It just makes sense to invest in underperforming parts of the society to achieve better growth overall. This way you achieve a much better standard of living, with more healthier and educated people in your workforce, less crime. If anything, less polarisation in the society is a very beneficial thing.
And in the Greg Makniw's article you referred to you've missed the conclusion:
"So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively."
Ron said: "there is not necessarily any correlation between being a contributor or parasite and being rich or poor."
ReplyDeleteSure, the correlation isn't necessary. And there's a question of exactly how the rich person became rich. Nonetheless, in general, a rich person can pay for their own private consumption. Whereas, some poor people subsist on the handouts of society.
"Personal income taxes"
That's a much better topic, and perhaps we might still disagree, but let me only note that this article you approved of so much is the one that made the mistake, not me. The first paragraph talks about "taxing the rich", but the analysis is all about corporate taxes and profits and hiring.
Alex said: "what is fundamentally wrong with sharing the load?"
ReplyDeleteWhy, nothing at all. In fact, in my original comment, I wrote: "Maybe society ought to tax the rich more or less. That's a legitimate topic that one can discuss."
"yet we dismiss redistribution of income on a state level?"
Who has done so? Not me.
The question is: what is the right level of redistribution? Is our current level too high, or too low? And what criteria would you use to make the judgment? (In particular: are you arguing from a sense of justice, or from a question of maximum utility or growth to society?)
"It just makes sense to invest in underperforming parts of the society to achieve better growth overall."
That's possibly true, but not argued at all in the article Ron linked to.
The question of what policy leads to better overall growth, is close to an objective question in macroeconomics. It doesn't need to be controversial. Presumably, there is some actual answer.
The problem is, that not everyone will agree that overall growth is what policy ought to be optimizing for.
"If anything, less polarisation in the society is a very beneficial thing."
Also possibly true. But, you may not realize, this goal is likely to be in direct conflict with a goal of better overall economic growth.
How do you choose, when you have a policy conflict between income inequality, vs. total economic growth?
"...Mankiw..."
Yes, I got the conclusion. You may have missed that both Ron and the article he linked to, were arguing in favor of "more taxes on the rich". The very conclusion you quoted says that the progressivity of the US tax system is not the important issue. (I.e., the rich are already being taxed just fine.) The two issues are: (1) the overall level of taxation, and (2) distribution of that tax revenue to the lower economic strata.
Those two points were not being addressed by either Ron, or the linked article.
He said: "They repeat the slogan, "Taxes are theft," and take the "money we earned" by "force" (i.e. government.)", but makes no argument why taxes aren't theft. He just calls it a slogan. If I tried to tax You it would be called theft or a racket, but when government does it it's ok. Still there isn't any difference morally and he doesn't make any arguments to dispute that.
ReplyDeleteHe also claims "paying taxes means you are already making money, which means you have already hired the right number of people. Taxes are based on subtracting your costs from your revenue, and if you have profits after you cover your costs, then you might be taxed." This is only true on taxes on proffits not all taxes...
@Alex,
ReplyDelete"what is fundamentally wrong with sharing the load?"
It's not sharing if You are forced to give.
"Why do we accept 50/50% split during divorce even if one spouse isn't working"
Marridge is a voluntary relationship. Nobody forces you to get married...
"It just makes sense to invest in underperforming parts of the society to achieve better growth overall."
This makes no sense economicaly. What You subsidise grows a. i. underperforming parts so you have to subsidise it even more, and what You tax decreases so productive parts dwindle. That's by the way the main reason for enormous national debits...
'And in the Greg Makniw's article you referred to you've missed the conclusion:
"So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively."'
They've been increasing taxing and spending for decades and look at the results. Poverty, unemployment and other things they subsidize are only increasing. Don't You think it's time to try something else.
Aleksandar