Sunday, September 24, 2017

It *IS* Fair to Tax the Rich More


First of all, is "fair" exactly the right lens to look through when discussing broad political policies?  It seems the right measure would be "what does the most good while doing the least harm for most people?"

Overall, the best coupling of economic-political systems seems to be democracy and capitalism with appropriate "safety valves" in place.

The "fairness" question has a lot to do with "safety valves" among other things.  Without some checks on rampant greed, government officials can just be "bought out", and you end up with an oligarchy,  rule by the wealthy, over time.

Another safety valve involves the stock market.  As I've said elsewhere in this blog, too low of taxes on the rich leaves too much money for stock market speculation at the top. The market crashes, and we ALL end up saddled with the increases to national debt that come with this.  This debt saddles our descendents, too.  Debt pay-off is a far higher percentage of middle class resources than upper class resources. 

After the first shock waves of the 2008 crash passed, the wealthy regained their wealth quickly. The middle class, which had already been struggling to maintain its place, keeps falling further behind. We really did bail out the rich more than the poor did.

Returning to the national debt:  if we don't pay it down, our country's ability to borrow money will be impacted negatively.  We will have to pay more interest to borrow money.  One prong in paying down the national debt involves raising taxes on the wealthy.  We could someday leave our children or grandchildren with the harsh austerity measures of Greece.  This would hit the middle harder than the wealthy at first, of course.  Over time, though, as the middle was squeezed more and could not be extended personal credit in the way it has been, they will not be able to support the wealthy through buying from the companies and corporations of the wealthy as much.  (I have also made this point elsewhere.)

The wealthy either outright own or own more stock in corporations that damage or negatively affect the environment.  Frequently, these companies/corporations would rather pay fines than fix the problems that hurt the environment or workers.  So we all get saddled with the eventual costs of clean-up or medical bills.  (The corporation may pay some costs in lost productivity.) While corporations pay part of the clean-up costs, we need an active Environmental Protection Agency (EPA) to make this happen. This costs money.  As the wealthy are profiting more from corporations, it seems "fair" to make them pay a larger share in ensuring the negative impact is limited or addressed.

When poorer people don't have insurance, they use emergency rooms later into their illnesses.  Emergency rooms cannot turn people away.  The hospitals recoup their costs via charging everyone more.  That drives everyone's health insurance up more.  The costs for insurance are a far lower percentage of the wealthy's compensation packages than it is for the middle class.  (The poor figure in differently, due to subsidies.)

There are other ways that the health industry benefits the wealthy out of all of this.  Hospitals keep being allowed to merge, although it is not necessarily good for the public.  Hospitals frequently operate, technically, by non-profit rules that benefit their ability to rake in the money.  But being non-profits doesn't stop them from paying their boards and their managing staff (roughly the equivalents of "CEOs") enormous salaries.  Additionally, health insurance companies and their CEOs, which are for profit, rake in big $$$.

(As an aside, the German system does not allow insurance companies to make a profit from basic policies.  The companies make their profits from the high-end "designer" policies.  Maybe a thought for here?)

The argument comes up that the wealthy are "job creators."  Not so fast. When greed became fashionable in the 80s (a fashion that has not died), a lot of corporate muckety-mucks accelerated the pace of moving jobs overseas to cheaper labor.  There is nothing written into current federal tax-lowering schemes that makes the wealthy produce more high-paying jobs in exchange for lowered taxes.  Besides which, some of the wealthy inherited their wealth.  Others are CEOs, who managed to get themselves into a "sweet deal." And they don't always lead their companies to better earnings. Even when they don't, they get obnoxiously high salaries, or at least the "golden parachute" to just leave and let another CEO give it a try.  And they have no obligation to create more high-paying jobs here. Their only obligations are to helping the shareholders get higher returns on their stocks.

There are those entrepreneurs who have created companies and wealth in their own generation. But, generally, they relied on strength, talents and resources of others. And a lot of the people in this category are very generous and give away a lot of their earnings.

Another reason raising federal taxes on the wealthy is fairer than you think is that state and local taxes tend to even out the percentages everyone pays in taxes.  State taxes are less graduated (everyone pays "closer" to the same percentage) and sales taxes take a far higher percentage of your money, the less you earn (or take home in disability or retirement pay).

Wars and the costs of caring for Veterans are another reason to tax the rich more. We're given all sorts of "noble reasons" why we've gone to war. And sometimes those noble reasons are true, though sometimes there are reasons to be skeptical.  Either way, the wealthy benefit off of wars. They disproportionately own stocks in companies that make military supplies and equipment.  VP Cheney's Halliburton connections appear to have benefitted from the Iraq war. Yet, servicemembers come disproportionately out of lower classes.  And we all have to pay the high financial and social costs of injured Veterans.

Some states have tried ridiculous tax-lowering, as I've also mentioned elsewhere.  There have been some states that kept cutting to the point of ridiculous.  Kansans went out to warn other states trying these policies that Kansas has tried that the policies didn't work.  Some of these states did couple corporate tax cuts with the requirement to provide jobs with certain salary levels.  Others did not. Still, Kansas and Louisiana, as mentioned elsewhere, ran into serious problems.  It looks like Wisconsin is going that way; the programs are beginning to be very unpopular there.  It seems only a matter of time until Arizona learns the hard way. 

Another reason I don't like this is how much this line of thinking is bought out directly by the Koch Brothers.  When you trace all the ways they funnel money to candidates to promote this, it's scary.  I won't list them all here right  now.  But there are a couple points worth making.

As an aside, I will mention a couple of the glaring improprieties of how the Kochs are setting too much of the national agenda.  First of all, their constant interference makes democracy a farce.  Secondly, the Kochs aren't terribly honest.  They're very willing to "use" conservatives who are pro-life, while the Kochs are decidedly pro-choice.  At some point, when they've gotten their way on economic matters, will they buy out the public thinking on abortion?  (There are other social conservative preferences that are the opposite of what the Kochs want.  I will not discuss all that here.  Suffice it to say, it looks like they're using people.)

As mentioned in my post on libertarianism, the Kochs literally want -0- taxes. That's not realistic at all in a modern society.  (see that post for more details) 

The Kochs bring out a great deal of cynicism in me.  There are so many things deserving another post at another time on the Kochs' operations.  But that's not the main point of this post.  The reason they came up in this post is their constant pushing of the opposite of what would be helpful for the U.S. to move forward. And I wanted to point out that they buy politicians' intentions.  

I agree that there's a point at which taxes are too high on the wealthy.  I'm no "Bernie, Jr.", either.  (I think his use of "socialism" was misapplied.  And it risks letting people like me get labelled as "socialist", which I'm not.  The correct definition of socialism is, according to Merriam-Webster: "1) any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods. 2) a system of society or group living in which there is no private property."  Even Bernie doesn't believe this.)  The "sweet spot" seems to be setting federal taxes on the wealthy somewhere between 40 to 45% and more fully graduating state taxes, to have more brackets.  (I realize I mentioned how having them less graduated equalizes things more, but they would still not likely end up fully graduated in most states.)

Think for yourself.  Don't follow straight ideologies.


Tuesday, September 19, 2017