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Thread: You’re Better Off in a State With a Higher Income Tax

  1. #11
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    Quote Originally Posted by Rasselas View Post
    When Reagan came into office, the highest marginal tax rate was 70%. When he left it was half that. And it's stayed roughly in the same place (in comparison with earlier eras) since then. We've never seriously considered returning to the 70% or 90% rates that were common through the middle of the 20th century.
    I think my question still stands. A mere three years before Reagan slashed top CG taxes, Carter signed off on slashing them by roughly as many percentage points. And five years after Reagan's cuts, he okayed hiking them back up. Then Clinton slashed them in the mid-1990s, helping to fuel a stock bubble. So my question about why you would single out Reagan for CG taxes stands.

    Reagan made a seemingly permanent change in our attitude about taxes on high earners.
    Relative to the 1950s and 1960s, a lot of things were permanently changing in this country, and across the world, in the mid 1970s and forward, and I really don't buy that it was just something about Ronald Reagan. Oil crisis, steel crisis, global economic slump, financial crises, high unemployment, currency speculation, newly industrialized countries bringing economic competition, and so forth. These were things largely outside of anyone's control, and they would have defined that period of time even if there had been no Reagan. Reagan and Thatcher swung into power with promises to fix the problems, and it's largely true that these things were too global to be simply fixed by conservatism. But partisan liberals don't just argue that Reagan and Thatcher types didn't deliver on promises, rather they tend to flip the whole situation on its head and claim Reaganism caused all of it. That's an insane argument. But partisan arguments often are.

    Even I'm not arguing for tax rates like we had before Reagan.
    Would you if you knew it would make our happiness and living standards blow past countries like Denmark and Norway? I would. I'd be the first to sign up for 70-90% top marginal income tax rates. But why do reasonable people often doubt that would be the case?
    Last edited by Neomalthusian; 28th October 2017 at 11:57 AM.

  2. #12
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    Quote Originally Posted by Neomalthusian View Post
    Quote Originally Posted by Rasselas View Post
    When Reagan came into office, the highest marginal tax rate was 70%. When he left it was half that. And it's stayed roughly in the same place (in comparison with earlier eras) since then. We've never seriously considered returning to the 70% or 90% rates that were common through the middle of the 20th century.
    Three years before Reagan slashed top CG taxes, Carter signed off on slashing them by roughly as many percentage points. And five years after Reagan's cuts, he okayed hiking them back up. Then Clinton slashed them in the mid-1990s, helping to fuel a stock bubble. So my question about why you would single out Reagan for CG taxes stands.
    Really? That's not what I see in this chart: Historical Highest Marginal Income Tax Rates | Tax Policy Center

    Relative to the 1950s and 1960s, a lot of things were permanently changing in this country, and across the world, in the mid 1970s and forward, and I really don't buy that it was just something about Ronald Reagan.
    Okay. Reagan isn't really important to my argument. But I think you're making a huge generalization here without even saying what you mean.
    Would you if you knew it would make our happiness and living standards blow past countries like Denmark and Norway? I would. I'd be the first to sign up for 70-90% top marginal income tax rates. But why do reasonable people often doubt that would be the case?
    Are our living standards so much higher than those in Denmark or Norway? So far as I can tell, we live in bigger houses. What else?

    Is the difference really about marginal tax rates? I doubt it.

  3. #13
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    Quote Originally Posted by Rasselas View Post
    Really? That's not what I see in this chart: Historical Highest Marginal Income Tax Rates | Tax Policy Center
    CG <> Income Tax rates. I was talking about the blue line in reference to the mid-1970s through mid-1990s:



    I think your original point might have validity, it just didn't make sense why you'd mention CG tax cuts while ignoring Carter and Clinton to single out Reagan.

    Okay. Reagan isn't really important to my argument. But I think you're making a huge generalization here without even saying what you mean.
    I went back and edited in attempt to say what I mean.

    Are our living standards so much higher than those in Denmark or Norway?
    No, my question was if you and I thought 90% top income tax rates would bring happiness and living standards that exceeded Norway and Denmark, wouldn't we both advocate 90% top tax rates? I would. But we apparently doubt those types of tax rates would achieve a desirable outcome. Why do we think that?

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    Quote Originally Posted by Rasselas View Post
    Is the difference really about marginal tax rates? I doubt it.
    I just wanted to point out that we're off on a tangent obviously (which is fine) because we were initially discussing different state taxes and of course how those different tax policies had different effects in different states.

    I would suggest that the difference is the aggregate tax rate. We obviously have here an instance where a couple of higher marginal rates existed, but, overall, the aggregate tax rate was much, much lower.

    Indeed a 1950s taxing and spending paradigm, I'll take it. I'll take that compromise ANY DAY, obviously because we will be taxing the population far less with substantially less government spending. Unfortunately, I'd have to concede a couple of marginal tax rates that, while I don't think they are a good idea, still reflects, overall, a better compromise than conservatives are ever going to achieve today.

    Quote Originally Posted by Rasselas View Post
    Are our living standards so much higher than those in Denmark or Norway? So far as I can tell, we live in bigger houses. What else?
    Norway has oil of course. Denmark is an EU outlier of course. But even so Denmark has a small population and there are enclaves in the US far better off than Denmark. Indeed, why not Switzerland (I'm a proponent of the Swiss model), figures the country wealthier than the US and the EU is a country that taxes less than the US. Overall, the proper comparison is the US and the EU, as a whole, or, to at least do the UK/France/Germany comparison, and bottom line the EU is mired in a permanent recession.
    Last edited by publius3; 28th October 2017 at 12:51 PM.

  5. #15
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    Quote Originally Posted by Neomalthusian View Post
    CG <> Income Tax rates. I was talking about the blue line in reference to the mid-1970s through mid-1990s:



    I think your original point might have validity, it just didn't make sense why you'd mention CG tax cuts while ignoring Carter and Clinton to single out Reagan.
    Okay, fair enough. My own position is that capital gains should be taxed like any other income. I see no reason that money you didn't work for should be taxed at a lower rate than your labor. Also, capital gains taxes are mostly paid by the very top-most earners, particularly now.
    I went back and edited in attempt to say what I mean.
    I'll take a look.

    EDIT: Okay, but I think you're imputing to me arguments I never made. I'm just saying that our top marginal rates are half what they were pre-Reagan, and that they've moved in a range entirely different from before Reagan. I'm not BLAMING Reagan for anything. I'm just saying that not only did he accomplish his taxation goals in the short term--he created a change in our politics such that previous policies aren't even seriously considered anymore.

    No, my question was if you and I thought 90% top income tax rates would bring happiness and living standards that exceeded Norway and Denmark, wouldn't we both advocate 90% top tax rates? I would. But we apparently doubt those types of tax rates would achieve a desirable outcome. Why do we think that?
    I certainly think aspects of their societies are better than ours, and they DO appear to be among the happiest people on earth. I think you're making two mistakes with this comparison: 1) You're equating happiness with material wealth, which is not supported by any sort of research--the opposite, actually, and 2) you're posing a false dichotomy. Something in between is certainly feasible, and that's what I'm suggesting.
    Last edited by Rasselas; 28th October 2017 at 12:57 PM.

  6. #16
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    Quote Originally Posted by Rasselas View Post
    Also, capital gains taxes are mostly paid by the very top-most earners, particularly now.
    Only because primary residences are exempted.

    (every two years, married couple can have a gain up to 500k on the sale of their primary residence)

  7. #17
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    Quote Originally Posted by publius3 View Post
    I just wanted to point out that we're off on a tangent obviously (which is fine) because we were initially discussing different state taxes and of course how those different tax policies had different effects in different states.

    I would suggest that the difference is the aggregate tax rate. We obviously have here an instance where a couple of higher marginal rates existed, but, overall, the aggregate tax rate was much, much lower.
    Okay, you lost me there.

    Indeed a 1950s taxing and spending paradigm, I'll take it. I'll take that compromise ANY DAY, obviously because we will be taxing the population far less with substantially less government spending. Unfortunately, I'd have to concede a couple of marginal tax rates that, while I don't think they are a good idea, still reflects, overall, a better compromise than conservatives are ever going to achieve today.
    The thing is, states spend most of their money on social welfare--schools, health care, support for the poor. I want to see more of that. The Federal government spends money on those things but also on the military. The Fed does SS and Medicare too, which is (or should be) a separate issue since it's taxed separately.

    If you're saying you'd rather see social spending by states than military spending by the Fed, I'm with you. But what we see is an effort to discourage states from taxing and spending (via suggested changes in the tax code). States that provide more and better services are accused of mismanagement, as if the fiscal choices of Alabama or Mississippi are the baseline and anything above that is just wasteful.

    Norway has oil of course.
    So does California. What's your point?
    Denmark is an EU outlier of course. But even so Denmark has a small population and there are enclaves in the US far better of than Denmark. Indeed, why not Switzerland (I'm a proponent of the Swiss model), figures the country wealthier than the US and the EU is a country that taxes less than the US. Overall, the proper comparison is the US and the EU, as a whole, or, to at least do the UK/France/Germany comparison, and bottom line the EU is mired in a permanent recession.
    And yet the Danish are the happiest people on earth. And while you can claim all you like about "enclaves," a nation that serves the intererests only the richest upper-portion of its population most by necessity be a tyranny. The claim "my rich people are richer than your rich people" sounds like Marie Antoinette.
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  8. #18
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    Quote Originally Posted by Babba View Post
    Well, well, well. Looky here. Proof once again that supply-side economics sucks.





    State Income Tax: The Higher the Better, Says 2017 Study
    Especially if you want to excel at signing people up for welfare. Aim high, California.
    http://www.sandiegouniontribune.com/...y.html#article

  9. #19
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    Quote Originally Posted by Rasselas View Post
    Okay, you lost me there.
    In the 1950s there were higher rates, but overall, society was taxed far less.

    Quote Originally Posted by Rasselas View Post
    The thing is, states spend most of their money on social welfare--schools, health care, support for the poor. I want to see more of that.
    But that's not what you want. You want a comprehensive cradle to grave welfare state. I don't object to welfare for poor people. Right now the US has a poverty rate of 15% +/-. If we had absolutely no income inequality in the US, 15% of the population would receive 15% of the income. So if you want 15% taxation for poverty mitigation, I'll give it to you.

    Quote Originally Posted by Rasselas View Post
    The Federal government spends money on those things but also on the military.
    You're obviously preaching to the choir with me on that one.


    Quote Originally Posted by Rasselas View Post
    The Fed does SS and Medicare too, which is (or should be) a separate issue since it's taxed separately.
    Still part of the totality of taxation though....

    Quote Originally Posted by Rasselas View Post
    If you're saying you'd rather see social spending by states than military spending by the Fed, I'm with you.
    With respect to the federalism issue, we'll get too far afield. Obviously I prefer things to be devolved to the states and that would include welfare. Obviously the military should be federal though obviously much smaller.



    Quote Originally Posted by Rasselas View Post
    But what we see is an effort to discourage states from taxing and spending (via suggested changes in the tax code).
    Well, conversely you could just as well say that the current tax code encourages states to tax and spend because if they do, their population has a tendency to shed some federal tax. Of course, apparently 30% of filers itemize, the 70% who don't will get a higher standard deduction and I have to wonder what percentage of that 30% currently itemizes an amount less than $24,000?

    Quote Originally Posted by Rasselas View Post
    States that provide more and better services are accused of mismanagement, as if the fiscal choices of Alabama or Mississippi are the baseline and anything above that is just wasteful.
    They're accused of mismanagement because they're mismanaging their finances that's an issue separate and distinct from the level of spending. You can mismanage a small budget or a large budget.


    Quote Originally Posted by Rasselas View Post
    So does California. What's your point? And yet the Danish are the happiest people on earth.
    Gross National Happiness, nice objective metric. How do we measure that again? You're going to tell me that the Danish people are more happy than people living in 72 and sunny every day? Really?

    As for the issue of oil, Norway simply has more oil per capita.

    Quote Originally Posted by Rasselas View Post
    And while you can claim all you like about "enclaves," a nation that serves the intererests only the richest upper-portion of its population most by necessity be a tyranny. The claim "my rich people are richer than your rich people" sounds like Marie Antoinette.
    To be fair you didn't bring up Denmark, Neo obviously did, but obviously Bernie Sanders loves to bring up Denmark, like he's going to somehow copy Denmark and bring Denmark here. My first point is that if the US is going to copy the social market economy political economy, it will look like the EU. You can't cherry pick and say, "If the US adopts the social market economy, it will look like Denmark."

    To wit, with respect to enclaves, as opposed to neighborhoods by the way, my point is that if we actually COULD emulate Denmark (and we cannot), you would prefer to emulate the wealthier enclaves HERE.
    Last edited by publius3; 28th October 2017 at 02:03 PM.

  10. #20
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    Quote Originally Posted by publius3 View Post
    In the 1950s there were higher rates, but overall, society was taxed far less.
    It would be interesting to see more about this.
    But that's not what you want. You want a comprehensive cradle to grave welfare state.
    PLEASE, don't tell me what I want. You'll probably get it wrong and just piss me off.
    I don't object to welfare for poor people. Right now the US has a poverty rate of 15% +/-. If we had absolutely no income inequality in the US, 15% of the population would receive 15% of the income. So if you want 15% taxation for poverty mitigation, I'll give it to you.
    Cool, but how about the fact that 20% of CHILDREN are in poverty? What about their opportunity?

    Still part of the totality of taxation though....
    But taxation doesn't hit us all equally, and those are particularly regressive taxes, so it matters.

    Well, conversely you could just as well say that the current tax code encourages states to tax and spend because if they do, their population has a tendency to shed some federal tax. Of course, apparently 30% of filers itemize, the 70% who don't will get a higher standard deduction and I have to wonder what percentage of that 30% currently itemizes an amount less than $24,000?
    This would be a more convincing argument if it weren't for the fact that these high tax states are also net contributors to the Federal budget. Moving to eliminate state tax/fee exclusions will exacerbate that inequality.
    They're accused of mismanagement because they're mismanaging their finances that's an issue separate and distinct from the level of spending. You can mismanage a small budget or a large budget.
    Yes, it is a separate issue, but Republicans in California--the 14 Republicans who just voted for the budget--are using supposed mismanagement as a reason to end the tax break for their own constituents. The real reason for higher spending is more and better services, particularly in California.
    Gross National Happiness, nice objective metric. How do we measure that again? You're going to tell me that the Danish people are more happy than people living in 72 and sunny every day? Really?
    There's actually lots of research on human happiness. Here are some examples of macro studies:

    https://www.livescience.com/54061-th...fographic.html
    Maps Show Happiest Countries in World: Costa Rica, Vietnam, Colombia | Time.com
    Mapped: The world&#39;s happiest (and least happy) countries

    Studies of happiness in the US suggest that weather has rather little to do with feelings of wellbeing, and that incomes more than 20% above the median don't contribute significantly to being happy. People perceive money in comparison to someone else, and the truly rich simply have a different class of friends with whom to compete.


    As for the issue of oil, Norway simply has more oil per capita.
    Which is nice but hardly dispositive (hope I'm using that word right).

    To be fair you didn't bring up Denmark, Neo obviously did, but obviously Bernie Sanders loves to bring up Denmark, like he's going to somehow copy Denmark and bring Denmark here. My first point is that if the US is going to copy the social market economy political economy, it will look like the EU. You can't cherry pick and say, "If the US adopts the social market economy, it will look like Denmark."
    Fair enough. Look at the maps and you'll see the EU is consistently happier than we are.

    To wit, with respect to enclaves, as opposed to neighborhoods by the way, my point is that if we actually COULD emulate Denmark (and we cannot), you would prefer to emulate the wealthier enclaves HERE.
    I wish we had fewer enclaves and that it were harder for the well-off to live apart from their "inferiors." I myself don't live in above-the-median housing.

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