The Wall Street Journal needs to have its statistics license taken away. Every editorial manages to commit some sort of statistical fallacy.
highest marginal tax rate is charted against total revenue as a percent of GDP. Absolutely worthless. Total revenue as a percent of GDP happens to be flat, so we can take any statistic we care to blather about, chart it against this line, and say: see? You can't get money from (fuel taxes | tariffs | mandatory minimum sentencing | software piracy).
The most heavily debated tax issue is the rate that the richest pay. Progressives argue that they should pay much higher percentages than they currently do. They fail to account for the added incentive to avoid such taxes and subsequent loophole creation and usage.
So the core issue of tax policy has been the marginal tax rates verses total revenue. It isn't the WSJ.
The argument is over what point we're at on the Laffer Curve, as well as the specific shape of the curve (i.e. is the right side so steep that we can tax at whatever rate we want up until revenues collapse entirely?), and about how tax enforcement policy can affect the shape of the curve.
"They," meaning progressives, don't fail to account for anything. They just disagree with your analysis.
Finally, the reason nobody knows or cares about this particular research is that most tax cuts were made with an eye toward maintaining revenue at a constant percentage of GDP. That is, the graph is a self-fulfilling prophecy. It doesn't predict what would happen with subsequent changes in the tax code.
Furthermore, this isn't even in any way connected to MTRs for the rich. All that this graph reflects is that as taxes were decreased for the upper %1 over the past half century, they were increased on everybody else. It doesn't illustrate increased collection rates, just increasingly regressive tax policy.
Brief mathematical analysis of what this article said:
TaxRateforRich x RichEarnings + TaxRateEveryoneElse x EveryoneElseEarnings = TotalRevenue
Then they told you that as TaxRateforRich dropped, total revenue remained constant, and thus concluded that the amount of earnings reported by rich people (RichEarnings) must have risen. What they ignored was a rise in TaxRateEveryoneElse.
"All that this graph reflects is that as taxes were decreased for the upper %1 over the past half century, they were increased on everybody else."
False.
We have a dynamic system where the incentives of the top 1% have a disproportional influence on GDP. Further, tax rates of the top 10% account for the majority of revenue. So I not only deny your claim but put forth that your rhetoric is emotionally manipulative - pitting the rich ("them") versus the rest ("us poor little everybody else").
The "rich", the top 1%, are the prime drivers of wealth creation. They are the reason GDP grows faster than population growth. The incentives on the top 1% heavily influence GDP growth.
Also, the percentiles used are very misleading. The top and bottom quintiles today are not the same people in the top and bottom quintiles 20 years ago. So most stats we track about poverty and wealth are fairly useless because they follow that faulty assumption.
Just in case anyone isn't clear on this: if you're a founder of a tech company, you're in the top 1% - perhaps not in income today, but in wealth generators and life-time taxes paid and to-be-paid.
""All that this graph reflects is that as taxes were decreased for the upper %1 over the past half century, they were increased on everybody else."
False."
I have to disagree. The Tax Reform Act of 1986 (as well as the cut of 64) disproportionately affected the lower income brackets. As a matter of record, tax rates are higher for the lower income brackets, and lower for higher income brackets than at any other point in US history.
"The top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15% - the only time in the history of the U.S. income tax (which dates back to the passage of the Revenue Act of 1862) that the top rate was reduced and the bottom rate increased concomitantly."
"The "rich", the top 1%, are the prime drivers of wealth creation. They are the reason GDP grows faster than population growth."
Anyone who has capital gains from the labor of others. It is misleading to say that they are responsible for this growth themselves. Their wealth is invested in those in other income brackets, and used to drive up GDP. There's nothing morally wrong with this system.
I agree that incentives for the upper %1 have a disproportionate effect on GDP. That said, from an economic perspective, I happen to believe that the Laffer curve has a very steep right side, and that we are to the left of the peak. This means that by raising rates, more revenue can be collected. For example, the 1981 tax cut did not improve revenue collection.
I believe that we should raise rates in order to pay for progressive social programs. The upper %1 have benefitted from not only their skill and ability to drive wealth creation, but also a good deal of luck.
Progressivism is a form of social insurance. It is an acknowledgment that perhaps, through no fault of my own, I might have been born poor, or with skills not suited to the modern economy. It is the understanding that in the richest nation on earth, no one should want for food, shelter, or healthcare, no matter what their ability to contribute.
This is not rhetoric. It is a judgement of values, and an assertion of a logical argument.
Think of it in terms of human capital. Those born into poverty today lack the access to crucial resources, such as education, to contribute to the economy to their full potential. It is a colossal waste of human resources to allow these conditions to continue. Imagine if Bill Gates had been born in Compton instead of Seattle.
The fundamental disagreement between libertarians and progressives is that libertarians do not find the values of a mob/majority justify violence upon a minority.
I used the word violence carefully: you don't pay your taxes, an armed man will come to put you in a pen for years.
The problem with asserting positive rights, versus freedom from oppression, is that they come at a cost to someone else. For example, asserting a right to health care is asserting the right to take from a health care provider.
"As a matter of record, tax rates are higher for the lower income brackets, and lower for higher income brackets than at any other point in US history."
Tax rates are still higher for higher income earners.
They make more, and a flat percentage would proportionally cover their wealth, but you insist on a _higher_ percentage. That is pretty hard to justify, especially considering the benefit of government is diminished proportional to increased income.
"The fundamental disagreement between libertarians and progressives is that libertarians do not find the values of a mob/majority justify violence upon a minority."
The power of the state rests upon the willful consent of the governed. The constitutional structure protects minorities from the tyranny of the majority, and as such, when it is in the good of society, that force can be used, including to collect taxes.
"The problem with asserting positive rights, versus freedom from oppression, is that they come at a cost to someone else. For example, asserting a right to health care is asserting the right to take from a health care provider."
Here's the fallacy. Its not a zero sum game, and the market isn't an omnipotent distributer of goods. For example, asserting a right to health care provides more output for the society, as it takes away from the costs of untreated illnesses. Some things are common to all, and ensuring that everyone has access enhances total welfare. Surely you must see that defense spending is justified?
"They make more, and a flat percentage would proportionally cover their wealth, but you insist on a _higher_ percentage."
This is a form of social insurance. Just as defense spending insures us against risk of attack, social programs insure us against the risk of bad luck. Imagine yourself behind the veil of ignorance, before you were born, before you knew that you would occupy that top %1. Now design a tax system.
You have to take into account the decreasing marginal utility of income. $100 additional dollars to a person making several million a year has far less utility to them than $100 additional dollars to a person making twenty thousand a year.
Not to mention the political folks tell me that inequality is the chief cause of revolution. If we look at this from a practical perspective, we see that times of extremely low taxation and large amounts of inequality caused a breakdown in the market system. Those who accumulate most of the wealth become a law unto themselves and ensure oligopolistic control over industry. Too much of this and in Russia the farmers get their pitchforks and the mob takes to the streets. Here you get the New Deal. Some socialism is necessary to stave off communism.
"The constitutional structure protects minorities from the tyranny of the majority, and as such, when it is in the good of society, that force can be used, including to collect taxes."
You just said: 'the minorities are protected, and that means force can be used on them.' It's a clear contradiction.
What kind of government program isn't justified by that reasoning? Why doesn't the government start controlling or "guaranteeing" super markets, car dealerships, or house construction?
You take an unprincipled approach that scales to tyranny.
"For example, asserting a right to health care provides more output for the society, as it takes away from the costs of untreated illnesses"
That is complete unvalidated. Where is the evidence? Keep in mind, the comparison is to health with government management and with individual decision making (and not government coverage vs. none). One huge fallacy specific to health care is that health does not equal medical treatment. So you can't equate a dollar paid for medical treatment and a dollar improved in value of health.
"Some socialism is necessary to stave off communism."
And some sex is necessary to keep your virginity. Corporations that accumulate government power usually do so because of unprincipled approaches to what the government should and shouldn't be doing. Look up the history of railroads in the US, and specifically the rise of the Interstate Commerce Commission. A government entity went out of it's bounds to "protect" the people, and the new power was taken over by the rail companies. It's exactly what I mentioned before: What kind of government program isn't justified by that reasoning? And then who do you think is going to control it? Our benevolent senators? Or the people with a $$$ interest?
For health coverage, lots of policy decisions make much more sense if you just consider the AMA the largest and most powerful union in the US. They act for the benefit of themselves, and not their patients, often doing so with government force. One example, two words: drug war.
"You just said: 'the minorities are protected, and that means force can be used on them.' It's a clear contradiction."
This is the basis of constitutional government. Just holding a minority opinion doesn't necessarily mean the majority can't constrain your behavior with force.
For example, if I hold the minority opinion that "killing people for no reason is fine," then it isn't a violation of my freedom for the non-homicidal majority to arrest me.
Constitutional government includes a series of guarantees about what can't be done to minorities, and also usually includes checks and balances on the majority's power to prevent rash action.
"What kind of government program isn't justified by that reasoning?"
The answer is that all governmental programs are justified as long as they improve the public welfare. Those you have listed would not.
The fundamental difference is that in the progressive model the market is not the be-all-end-all of politics, it is just a means used to accomplish an end. The economy exists to serve the people, not the other way around.
""Some socialism is necessary to stave off communism."
And some sex is necessary to keep your virginity."
Pretty much everyone on either side of the left-ride divide agrees about the need for the modern welfare state, even if they disagree about the extent. Communist orators used to draw crowds of tens of thousands before the New Deal.
"You take an unprincipled approach that scales to tyranny."
Your pure libertarianism scales to a far more direct form of tyranny, and doesn't come with the niceties of constitutional protections. What's the market rate on a police force? An army? A life?
"This is the basis of constitutional government. Just holding a minority opinion doesn't necessarily mean the majority can't constrain your behavior with force."
It's the exact opposite. A constitutional republic maintains that holding the majority opinion does not justify force.
If you don't understand this, you don't understand anything about the US.
Your examples are ridiculous. Stopping violence is not violence.
"Pretty much everyone on either side of the left-ride divide agrees about the need for the modern welfare state, even if they disagree about the extent"
You really don't know anything about this, do you? Who exactly do you think you're talking to if not someone who disagrees with that sentiment?
"Your examples are ridiculous. Stopping violence is not violence."
If you don't like the previous (perfectly valid) example, how about one that doesn't involve violence on the part of the perpetrator? Perhaps theft, or public nudity.
The point is that everything a state does is ultimately based on force. The whole point of preventing tyranny of the majority is to ensure that the only actions are taken are taken for the good of everyone, rather than a specific sect. It has nothing to do with denying the legitimacy of taxation.
It seems to me you don't understand the basic concept of a constitutional state. Reread On Liberty and Federalist #10.
"Who exactly do you think you're talking to if not someone who disagrees with that sentiment?"
I was pointing out exactly how far outside the terms of legitimate debate you actually are.
fuck man, you advocate violence, then tell the victims they consented and should thank the government for its constitutional protections that prevent anyone from being a victim.
First of all, force isn't violence. Nobody beats you for failing to pay your taxes.
Second of all, you do consent. You have freedom of speech to express your displeasure, and a vote to rid yourself of unjust leaders.
Taxes are the price we pay to live in a civilized society. They build our roads and pay our soldiers, and I'm sick and tired of some people acting like they're a form of theft.
> First of all, force isn't violence. Nobody beats you for failing to pay your taxes.
Oh really? We put people in jail for failing to pay taxes. People get killed in jail. They get beat and raped.
> Second of all, you do consent. You have freedom of speech to express your displeasure, and a vote to rid yourself of unjust leaders.
If five guys vote that a woman should put out, she consents because she's free to say no and can vote against their proposal.
> Taxes are the price we pay to live in a civilized society. They build our roads and pay our soldiers, and I'm sick and tired of some people acting like they're a form of theft.
Note that they also pay for a lot of other things; things that simply don't work.
SDurkin suggests a social contract. In every other contract, you can refuse the deal. You can also get out of the contract if the other side doesn't live up to its obligations. The "social contract" in reality is neither social nor a contract.
"Oh really? We put people in jail for failing to pay taxes. People get killed in jail. They get beat and raped."
Yes, really. Victimization in prison isn't part of the state's intent or action. Its an unfortunate consequence of a poorly managed correctional system. One that would see far fewer prisoners if there were more poverty assistance programs.
"If five guys vote that a woman should put out, she consents because she's free to say no and can vote against their proposal."
See above for a full explanation of how constitutional democracies prevent tyranny of the majority.
"Note that they also pay for a lot of other things; things that simply don't work."
This is a problem with certain specific programs, not with taxes in general.
"SDurkin suggests a social contract."
Yes, I do suggest a social contract, because social contract theory is part of the foundation of our and every other modern democracy. Sure, it isn't perfect, but its certainly better than the alternatives.
> Victimization in prison isn't part of the state's intent or action.
Let's assume for the moment that this statement is true.
That does not in any way absolve the state from moral accountability when it sends people there. Since prisons, in reality, are set up in such a way that brutal violence is a given, it is neither here nor there what they wish it were like. You sentence people to the prisons you have, not the ones you wish you had.
Imagine you have a time-out room for misbehaving children, which has been infested with human-eating alligators. "It's an unfortunate consequence of your running in the halls that you will be devoured by alligators, but it's not my intent or action. I just mean for you to have a 15-minute time out, and it's not my responsibility if my putting you there -- by force, into what I intend to be a nice quiet room -- is actually a death sentence."
Do you not understand that dragging a person to jail, when he wishes to stay in his home, is violent? That physical force exerted on his body, against his will, is violent? Do you not understand that it hurts people? Do you not understand that demands, backed by guns, are violent?
Never mind whether it's for the best in the grand scheme of things, or whether a superior alternative is known. Even if this is best it is still violent.
There's also the rise in Social Security taxes under Reagan, which was done to give the Social Security system a surplus to handle the baby boomers' retirement. Since only wages up to a certain level are subject to Social Security tax, the tax affects the middle and lower classes more than it affects the rich.
The odd part about SS spending is it's vary low friction Income redistribution so it has little impact on the economy where Defense spending has a such a huge negative impact. However, such a large portion is put into the general fund the SS savings is basically just income tax.
"Progressivism is a form of social insurance. It is an acknowledgment that perhaps, through no fault of my own, I might have been born poor, or with skills not suited to the modern economy. It is the understanding that in the richest nation on earth, no one should want for food, shelter, or healthcare, no matter what their ability to contribute."
No, progressivism is nothing more than epicureanism, transported into the present. You propose building a world where everyone is free from pain and struggle, without realizing that this builds a society of child-men, unable and unwilling to do the hard work necessary to advance civilization, each clamoring for more and more handouts from the ever-bountiful teat of Government.
I wonder if there's some sort of fundamental relationship between the powerful elites in every given society and the rest reflected in the graph? Is there some sort of relationship like Boyle's Law for gases?
A classic case of "lets find a graph to bolster our opinion". They may indeed be right. Raising taxes may produce a disincentive for capital to work and reduce GDP, actually reducing tax revenues. That fits in one sentence... what shall we fill the article with?
Comparing this wacky correlation with Boyle's law is just shameful. There are examples in the former eastern-blok countries where low flat taxes actually cut corruption and raised revenues. They would have done better just presenting these anecdotes than this!
Why is it shameful? It's not a "wacky correlation" - it's arguing that there is causation. It's basically saying "we have data proving the Laffer curve exists." That's not wacky. That's giving credence to a theory.
Low, flat-taxes are helpful but not politically tenable in the United States.
Um...The article was pointing out that those two curves are independent. Isn't that what you're saying too? That even large fluctuations in the highest tax bracket have no material effect on the bottom line.
However I agree with you that journalists should provide actual statistical analysis alongside charts, instead of adding sensational writing and letting the masses draw their own conclusions visually.
I would like to see a chart that plots (/ tax-revenue GDP) to the early 1900's.
We can't conclude from this chart that the two curves are independent - only that they have been independent historically. One explanation that leaps to mind is that the total tax level will remain constant because the government will always tax sufficiently to fund its programs, and those have stayed roughly constant as a proportion of GDP. This leads to a seeming noncorrelation between any segment of the tax code and total tax revenue.
Even if the above explanation is far off-base, I hope it shows how a historical noncorrelation doesn't necessarily mean a lack of causal connection.
The author (David Ranson, not the WSJ board itself) is addressing the idea, implicit in Dem presidential proposals, that you can raise a meaningful amount of tax revenue with higher tax rates on high incomes.
The chart is directly relevant to that question: no matter what you do to high-earners, tax revenues don't budge.
US GDP growth hasn't changed, even as this highest marginal tax rate moved by a factor of 3. It was actually highest in the 60s and 70s, when the top rate was still in the 70% range.
GDP and total revenues are just too big to be affected by the tax rate of a single group, even, the most wealthy.
What this budget shows us is that total gov’t spending must never be over 19.5% of GDP. That’s the only solution. Then, we can start lowering taxes and see if revenues stay up.
We probably couldn't lower taxes for a while after spending less than 19.5% of GDP so we could actually pay down the national debt, but I like your plan.
Actually, they were claiming that raising the top rates hurt revenue because it tanked the GDP (while it left revenue as a percentage of GDP intact). However, they did not present evidence of that claim.
You have missed the point of the article. It doesn't matter if a tax is "income tax" or "lolcats tax", economists agree that any tax creates a disincentive for productive work.
The question is, how much do tax rates impact productivity. This article points to some data that suggest that as rates increase, productivity decreases or evasion increases.
I don't think it's implying causation where there's only correlation. It seems to be implying non-causation due to non-correlation.
I'd say the bigger flaw is that it only looks at the very top tax rate without looking at the point at which the top bracket cut in. In the 1950s the top tax rate was enormous but it only affected a tiny number of people. Now it's a lot lower but affects a larger slice of the population.
It's incredible to see your post get so much karma given that your argument is so wrong.
You really should learn some statistics yourself - total revenue for the government happens to be a function of tax rates. Using examples such as "software piracy" just destroys your credibility.
Journalists in general are terrible with statistics as is the general public because the concepts of statistical significance and correlation versus causation are lost upon them.
In this case however, the article isn't making a statistical fallacy. Given the tremendous portion of government revenues collected from those in the Top 1% of income, it makes sense to analyze whether there is any sensitivity between the highest marginal rate and total revenue.
Furthermore, it makes sense to ask whether things like marginal tax rates and capital gains tax rates have an impact on GDP growth which in turn effects revenue growth for the government.
The fact remains that the Wall Street Journal's editorial board has an obvious agenda and few scruples about pushing it with bad statistics.
Other arguments I've seen on that page: America is a classless society (evidence: if you look at people who are poor when they're 20, they're often much richer when they're 40). The poor are "lucky duckies" for having such low tax rates (evidence: tax share statistics which take account only of the income tax, ignoring the state, local, and payroll taxes which make up the majority of the burden for the poor). I'm sure there have been others. I don't know if these have been mainly by the editorial board themselves, or op-eds.
I have nothing particularly against market liberalists - I respect the Economist, and Reason Magazine. The WSJ just doesn't seem honest.
I am 27 and making 70k. SS takes 14% of my income and will start paying me back at 67. Ignoring may past "donations" we are taking about 40 years worth taxes and 40 years worth of lost investments. Granted there is some give and take about such things but 6% over inflation is little on the low side but not unreasonably so.
So the basic numbers are 70 * .14 * 1.06^40 = 56k / year in retirement but SS cap's at 1/2 that so at least 1/2 of SS is pure income redistribution for a young person making 70k.
Granted if bad things happen SS will help me or my family out, but that's the definition of welfare. And if I die before 67 I am left with nothing.
PS: SS is not just about retirement, but life and disability insurance is cheep and I still pay for it have and I have been paying for over 5 years at this point and 6% over inflation is a vary low number for 40 years.
1. To suggest taxing the rich at a higher rate is the sole reason for a drop in GDP is simply ludicrous. Being that government spending is a part of the GDP equation, it's much too complex to attribute to a single cause. For example, given that the public's appetite for taxing the rich would increase in hard times, it would also stand to reason that governments are reducing spending concurrently, and that is the reason for the stagnation.
2. The implicit suggestion that GDP increases are inherently good and GDP decreases are inherently bad is outdated. You could get a GDP increase by dropping a nuke on LA. The US doesn't even use GDP to measure economic health anymore, but rather GNP.
3. I would love to see a graph that uses the total net revenue as an adjusted dollar amount, and leaves the GDP equation out of it. I'm pretty sure the results would be rather different.
"Raising taxes encourages taxpayers to shift, hide and underreport income"
Uh, let's not forget about finding legal tax shelters and using wealth to influence lawmakers to define what actually is a legal tax shelter.
It's a pity that the article never explores the difference between income and wealth. Does anyone honestly believe that wealthy individuals haven't long ago figured out how to avoid paying the top rate?
By my read, this means that we should raise the top marginal tax rate to 90%. Why? If it doesn't matter, then you might as well make the unwashed masses (like me!) happy that the rich are "doing their fair share".
Hauser fails to see that savvy political policy does not flow from "rational" economic policy.
Except it didn't. GDP grew faster in the fifties, with a 90% "millionaire's tax", than it did in the eighties, as top marginal rates were being cut to their lowest levels.
The real problem with this scenario is that those people who are being taxed 90% might feel less of an obligation to contribute back through charity (even if they are paying far less than 90%).
The article doesn't even seem to acknowledge the existence of economies other than US. If you are trying to propose an economic 'law' then you really need to look at more than one country. In fact there are many other succesful economies that have a higher percentage Tax/GDP ratio than 19.5%
And perhaps your strawman argument veils an inability to debate the topic at hand. I never said anything about doing away with public education. Small government != the doing away of all social programs.
"yeah, we'd be much better off if all these programmers we hire from state schools weren't able to afford an education."
Your comment superficially sets up an argument I never made, which is the definition of a strawman.
Anyways...
I'm all for government sponsored programs that work along side the private industry (and force competition) in order to contribute to the general welfare, which is what the constitution states. For example: defense, infrastructure and education among others.
However, I'd love to rid our government of all the pet projects, pork, worthless organizations (and employees) and general waste that rape our income.
It's near impossible to fire a government worker, which is a crime in and of itself. Our government is so inefficient that consulting firms are rolling out in mass "staff augmentation" programs that take over the responsibilities of a given agency/department.
Think about that...you hire government workers to do job X. They are so incompetent at job X you hire high priced consultants to complete job X while not firing any of the workers. The end result? Job X is completed at two - three times the original cost. Ridiculous. If you ever want a first hand look at how inefficient the government is, live in DC for a few years.
Except that the constitution doesn't state anything about education, and defense accounts for nearly 50% of the federal budget. Cutting all the fat and inefficiency does not address the root problem, health care costs and defense spending. If you don't want huge taxes you can't have a military this size, and I haven't a clue on how to fix health care.
I agree, but want to underline that the military is pretty efficient. You CAN get fired from the military if you screw up, and compared to the armed forces of other empires, the US armed forces do a pretty good job of kicking ass when there's ass to be kicked, and doing pretty good research (ARPANET, jet travel, Manhattan project).
um, have you ever been in the military? I was in the army for 4 years, you can't really get fired. You have to do somethign way over the line to get kicked out. Out of many hundreds of people I knew only a handful got kicked out. The vast majority of those failed drug tests, usually twice. One guy got kicked out for sexually abusing a few women (sneaking into their rooms at night while they were sleeping and ...). And I think I knew one that got kicked out for being too fat (but I knew a lot of people that were too fat and never got kicked out.
Now let's address this efficiency claim. Do you want to know what we did most of the time? Absolutely nothing. We hung out, did some cleaning, hung out some more, played some play station, hung out some more, took a nap. Yeah, that was my usual day.
We can also attack this efficiency claim from another angle. The U.S. spends almost as much as every other nation combined for military purposes. No company that did such a thing would be considered efficient.
Right, which is where it's certainly open to debate. I interpret general welfare to include things like education and infrastructure since virtually everyone benefits from them in some form or another.
As for defense...if we focused on "defense" instead of "offense" that 50% could be sliced in half if not quarters. Think of how much money not invading Iraq would have saved us. There's no reason our defense budget needs to larger than the next 25 countries combined.
As for healthcare...I'm with you man - not a clue.
"Your comment superficially sets up an argument I never made, which is the definition of a strawman."
No, because you made no specific argument. If you make a statement that is so short that it can be interpreted to be anything anyone wants then it isn't a strawman if I fail to read your mind!
We all know that government is inefficient, but I think the blame is misplaced. I don't believe it's inefficient because it's a government, but because it's a giant institution. I've worked for the government, for large corporations, and for start ups. Large corporations are equally as inefficient as the government most of the time.
Less affordable for who? I graduated with a CS degree after going to community college then a state school. I graduated with no loans or debt of any kind. I payed $11/unit at CC and about $800 a quarter at state school.
You can't seriously claim that this would have been cheaper for me if only the government had gotten out of education.
Maybe I should have said "It hides the costs really well." Some people benefit from transfer payments, but much less than they think, and on balance nearly everyone loses. To paraphrase David Friedman, suppose the government takes a penny from each of 100 people, and dumps 50 cents on one lucky winner (that's you)---and then repeats the process 100 times. Everyone feels like they're getting a good deal, but you're still 50 cents poorer.
Sum up the total cost of increased prices due to taxation and your personal lifetime tax burden and it's not nearly as clear-cut that you come out ahead with public schools. Add to that the distorting effect of school monopolies on incentives and quality (virtually all public school teachers are in the bottom half academically, etc.) and you've got a shaky argument for government education, even for your case. I'd bet that even you would have been better off if schools were provided on the market.
your paraphrasing fails to deal with the reality of the situation. By "dumping" tuition assistance on me you didn't merely transfer money is a zero sum game. I am now a competitive worker in the global economy, which I wouldn't have been, and I make a far larger salary than I would have. Now I"m paying far more money into the government than I would have in order to enable another person a similar opportunity.
This makes us all richer in the long run, and is not the zero sum game you claim it to be.
Your argument assumes that the same or superior goods couldn't be supplied more efficiently on the market. After all, the same argument applies to having the government buy people cars (now they can drive to work), hard-hats (now they can work in construction), or food (who can work if they're hungry?).
When the government is the monopoly supplier of a good, it's difficult to visualize the world being any other way. But there are instructive test cases: just look at how much more vibrant religious life is in the absence of a state religion. (I'm a Pastafarian, BTW. ;-) Or look at how much scarcer and less varied food is in command economies.
Education is tremendously valuable, and there are powerful incentives to unlock that value. I think you'd be surprised at the institutions that would arise to help you become a competitive worker in the absence of a government monopoly on education.
Maybe if Patri's Seasteading Institute (http://seasteading.org/) takes off, we'll get to find out. :-)
That is a ridiculously stupid argument. Cars & hard hats you buy when you are 17-18+, i.e an adult. Education starts when you are 3. Are you going to penalize every kid whose parents decided buying a new car was more important than getting the better school? Sure some parents will make rational choices and send them off to great schools, but many will take the cheap route. At least right now the default, free, school is the one that MOST people go to. It is the exception to be paying to go elsewhere. If you find the fastest way to separate the classes in America, this is it. Next thing you will say is "but there will be vouchers it will be all equal", sure except that the bar before was $0 for public education out of my pocket vs 20,000 a year for private. Few would make that leap, except those with piles of money. So now everyone is making the leap, and you know what will be the differentiation? Not money, but skill. It will be competitive. Who will get into the best elementary schools? The kids whose parents push them, because who at that age makes decisions out side of their parents will. And then they will get further ahead than the school with the lower achieving kids, and so it begins. By high school you totally separate curriculum, one that is significantly more advanced than the other, and the kids have totally different chances of getting into college. Decisions at age 10 by their parents suddenly have impacted their life, sounds like a great improvement to me! If you don't think it happens, compare Wilmington Charter to the rest of Delaware, their acceptance rates to colleges, the racial makeup of the school, it is atrocious.
Yes there are. Look at all the countries at the top of the list on education. They all have strong federal education. No country with a purely private education system is even on the list!
No country with a purely private education system is even on the list!
That's because no such country exists. But no country had freedom of religion (in the modern sense) until 1787, the year the U.S. Constitution was ratified. That doesn't mean it was a bad idea.
"But no country had freedom of religion (in the modern sense) until 1787"
So there was no country in the world prior to 1787 that ever allowed it's citizens to practice the religion of their choice? Are you sure about that?
edit: you do realize that the US primarily had private schools in the early days. The idea that no one ever tried private education is simply false. So is the idea that America is the first country that ever allowed it's citizens to practice the religion of their choice.
The government doesn't have a monopoly on education, especially not higher education.
Transfer payments aren't the same thing as a centrally directed allocation of goods. You can still choose where to spend them. Even targeted assistance for education still lets you choose what institution to attend.
The transfer payments in the current system pay huge dividends over market allocation of educational goods, because the market tends to give these goods only to the children of those who are already well-off.
However, the primary and secondary public school system is radically broken, mostly through the fault of the government. It needs not only more competition, but also the elimination of local funding through property taxes.
Psychohistory can work in a society very different from ours (and certainly not the one Azimov described). In our society randomness plays too big of a role. Some of the current sources of uncertainty (like technological progress, or the personal freedom we have) may disappear in 1000 years, but this is purely a speculation.
I think this is statistically relevant, as rich Americans pay a big part of taxes:
During Fiscal Year (FY) 2006, the IRS collected more than $2.2 trillion in tax net of refunds, about 44 percent of which was attributable to the individual income tax. This is partially due to the nature of the individual income tax category; containing taxes collected from working class, small business, self employed, and capital gains. Of the Individual Income Tax, the top 5% of income earners pay 60% of this amount. [8] [9]
The top 5% pays 26.4% of tax receipts, and changes in the marginal tax rate for the top bracket usually affect tax rates of lower brackets. I'd say this news is pretty relevant.
"What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser's Law says it will also lower tax revenue. That's a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice."
And the Nordic countries, with a highly redistributive state, and some of the highest GDP per capita rates in the world?
Under the "who should pay for govt?" question is another question - is it good for a large fraction of the population to have essentially no role in paying for govt?
Suppose that we could get all of the tax revenue from 1000 people, should we? How about 1%?
people who don't pay taxes shouldn't vote. this would actually be an interesting opt out clause to experiment with. you can forgo taxes if you give up suffrage.
it would be self balancing in a supply demand curve too. the more people that opted out the more power the remaining votes would have until equilibrium was reached between money and votes.
Even if the article were true, I still believe in 'bubble up' rather than 'trickle down'.
If you transfer money to the poor, then tend to be happier and thus cause less social problems (e.g. less crime, fewer beggars, etc.). The rich can afford it. Soak 'em :-)
what is this garbage? the poor tend to be happy when you give them money? you have zero basis for this. people tend to be happy when they earn success. people who are given money tend to be unsatisfied and lazy.
I said 'happier'. Besides what you do is not give (so much) money to the poor and middle class, but rather tax them less and tax the rich much more. The poor and middle will be happier as they keep more of their earnings and the rich, well, they will be alright.
well of course the bottom 5th income wise shouldn't pay tax as they contribute less than 1% of tax revenue and receive on average much more in government aid than they pay in taxes. seems like a silly little loop for the money to go in when you could just not tax them. warren buffet has advocated this program.
Yes, but it didn't kick in until your income got up over $1 million or so. This was actually common around the globe before the Reagan/Thatcher revolution. Remember the Beatles song "Taxman"?
"I'll tell you how it will be/ that's one for you nineteen for me/ 'cause I'm the Taxmaaaan!"
The Beatles were actually paying 19 out of every 20 cents to Her Majesty's government, for a top rate of 95%.
I wasn't even going that far. I can see how people consider it hyperbole to call taxes "slavery" when someone is taking 40% of your earnings from you. You still have more than half of what you earned to do with as you will. But 95%? You're basically working solely for the good of whoever is stealing from you. It's true that they're not forcing you to work, but you either give over almost all your earnings or go without any benefit from your labor at all.
I'm not the first to make the comparison, you know. I believe Frederick Douglas compared income taxes to slavery in his autobiography. Unfortunately, I listened to it on CD so I can't pull up the exact passage at the moment.
1. They are doing it with logic.
2. Do you consider the New York Times, or Washington Post, or any other major daily to be the newspaper of the poor? Give me a break.
And there's hostility towards tax havens? They get cut off from wires, and you have to smuggle in cash / diamonds in suitcases, and it's a total pain in the ass and you become a social pariah?
Not saying that should happen, but it could happen.
highest marginal tax rate is charted against total revenue as a percent of GDP. Absolutely worthless. Total revenue as a percent of GDP happens to be flat, so we can take any statistic we care to blather about, chart it against this line, and say: see? You can't get money from (fuel taxes | tariffs | mandatory minimum sentencing | software piracy).