Unalloyed Arrogance

Can I get an amen?

Does it get any better than that?

Hey Don/Russ,

I've had a question that's been on my mind for a few days, and wanted to get your take on it.

Regarding the 1.5 multiplier. Logically, it's ridiculous: there has to be a dead-weight loss whenever you move from the most efficient point.

My question is, assuming that this 1.5 multiplier exists, couldn't we use the same method to demonstrate that the "multiplier" in the private sector is higher, and that money is being misinvested for that reason.

I recognize that it opens up the argument for gov't takeover of businesses that are producing under the gov't multiplier, but for the sake of theory?

Thank you, Don. That part of his speech irked me to no end.

hopefully you will address this bit from Obama's 4pm speech yestrday: "...If we once again guide the market's invisible hand with a higher principle, our markets will recover...." in your usual elegant way. Unfortunately, your time is limited and the garbage spewing from Washington is limitless.

Each of us earns income by working, saving, and taking risks - efforts that we exert to improve our standard of living as each of us judges best.

But many of us also "earn" income from countless rents, including but certainly not limited to state employment and pensions, myriad welfare programs and bailouts. This income certainly is not insignificant, and its significance grows daily.

Few people earn income intending for a third party to confiscate large chunks of it.

Actually, many people are only too happy to see large chunks of their income populated, because they understand very well the source of their income in the first instance.

Does a banking executive receiving a handsome bonus this year, after his bank received a handsome check from the TARP, resent paying income taxes? I doubt it, because he gains more from the rent seeking than he loses.

Does some handsomely paid executive at Lockheed-Martin resent his taxes? How about some proprietor of a highway construction firm? Will IRS employees soon join the income tax revolt?

Martin, please correct me if I've misunderstood you, but your post seems to assume that the only form of effective taxation is the income tax. It's an awfully big assumption.

"income earners" that was the best laugh of the week so far. How about income receivers? Many rich people don't have to lift a finger to collect their loot other than to sign checks. They even give the check writing power to another so their golf game at the country club won't be interrupted so rudely. The true printing presses that churn out the dough do not reside at the U.S. Mint, they reside with the owners of capital. Where is savior Marx when we need him? He'd make a mockery of all this Keynesian stimulus nonsense. He'd demand that we seize the true printing presses in this country, and stop kiting checks. So what if he wore a beard and looked grubby. He probably didn't bathe all that much, but how should I know? I'm really tired of all the bullshit suit and tie corporate theft. Whoever invented the tie should really have been strung up by it. On the other hand, the inventor of deodorant deserved a 24-carat gold medal.

Martin,

If I understand you correctly, you bring up a good point. Let's say I'm an entrepreneur running a partnership (a disregarded entity for tax purposes) and it is worth it for me to run my business only if the business produces X amount of after tax income annually for me annually. A tax increase reduces my annual income to below X, providing incentive to close up shop. To provide incentives for me to continue to run my business, the government offers me rents which it extracts from my customers to bring my income back above X. I don't care how much I pay in taxes as long as my after tax income remains above X. In some form, that example can be extended to all the scenarios you mention. IRS employees don't earn enough to be a target for income tax hikes :)

In this game, only the rich and powerful win because they can buy politicians. The average Joe is left holding the bag (paying the more for a good or service and likely higher taxes too - eventually).

i too am thankful for deodorant to cover your repugnant stench

If you think about it, taxes are a way to force all Americans to spend a certain proportion of their wealth. The government doesn't just take the money, it turns around and spends it all over the place in reckless and unpopular ways that individual taxpayers would NEVER spend it.

Heavens, TrUmPit or however you did it, to listen to you you'd think you could replace a draft horse with a poodle to pull the Budweiser wagon. "Many rich people don't have to lift a finger to collect their loot other than to sign checks" - are you saying those particular people who got rich did it by means of exactly the kind and amount of luck that goes into buying a winning lottery ticket? Or do they maybe have that little something-something that makes them able to generate great wealth and you and me much less able to do so? I'm not saying there's no luck or connections involved, just that there are those who - often in addition to great talent and drive - take advantage of the luck and connections that come their way, and those who squander them.

"Savior Marx"... I have to assume you're parodizing.

It doesn't matter how much you tax the rich, the burden will always be borne by those who labor to create value.

TrUmPiT,

You're correct. We shouldn't allow the rich to loan money to poorer people. That's wrong. But without that, we wouldn't get loans. So, i think we should take the money.

Lemme know when my share is in... I'm goin' to have a nap.

Martin, please correct me if I've misunderstood you, but your post seems to assume that the only form of effective taxation is the income tax. It's an awfully big assumption.

I didn't intend to say anything about the income tax except that opposition to it is less pronounced than Don suggests. In reality, many people "earn" their income from the income tax as well as many other taxes and rents. These people don't oppose the tax, even if they pay it themselves, because they both pay and receive it, and they receive more than they pay.

I favor a progressive consumption tax that essentially is a reform of the income tax, but it would not tax all income alike and would not tax investment at all. I don't favor other formulations of a consumption tax, like ad valorem taxes or retail sales taxes (the Fair Tax for example) for reasons we could discuss.

The model I favor is an individual income tax with progressive marginal rates plus tax deferred, individual investment accounts (like IRAs and 401ks) with unlimited contributions. So if your annual income is a billion dollars and you accountably reinvest all but $50,000 of the income, you pay the same tax that anyone else earning and consuming $50,000 pays; otherwise, you pay progressively higher rates on the income you choose to consume.

This model of a progressive consumption tax is not about raising state revenue at all, quite the opposite. It's about entitling private property holders to withhold revenue from the state in order to perform the sort of "stimulus" function that statesmen now claim they're performing.