walkitout (walkitout) wrote,

that villain, Robin Hood


Obama campaigned on things like, tax cuts for the middle class, tax increases for people whose yearly income exceeds $200K. Now we see that he's making an effort to make this happen.

Once upon a time, most people did not pay income tax; only those with the highest incomes paid income tax. The very highest tax brackets had what even I would regard as confiscatory marginal rates (something approaching 90%). The effect was expectable. First off, no one paid anyone income that triggered those top rates because after a certain point, giving your employee an additional dollar cost you ten. Second, people engaged in business (you know, that activity that supposedly generates jobs) made sure the money generated by the business went back into the business -- they didn't have a lot of income lying about that wasn't matched by costs. The effect, of course, was to eliminate that group of people who paid the most taxes, and ultimately more people had to pay taxes for the government to have anything to work with to do things like fight a wars, oops! police actions in the jungle. Er, never mind.

So here we see the big fears of the rich members of the right wing. First, redistribution will wipe them out of existence over time, especially if we reinstate a reasonable estate tax. People who come into this new system with a pile can manage the big pile so that it maintains itself without throwing off a lot of income -- this isn't a wealth tax. It's a slow process.

There are some people who don't have a big pile, but who have a non-replaceable skill that "earned" big compensation: think movie stars, top athletes, bestselling authors. There was never a great solution for how to evade the heavy taxes that came with that kind of newly-arrived-at-the-big-time thing, altho in some cases intangibles became a big part of compensation -- the star who gets total control of the picture, for example. Today, big name star television reporters make more than $200K (at least some of them). You can sort of see why these people are unhappy about the budget proposal.

Some of the right wing think tankers figure this won't work because the rich in recent history have been so good at dodging payment:

"partly because those being targeted will find ways to lower their tax bills."

Is this true? Maybe not. Recently, UBS and Switzerland were successfully pressured to disgorge information on a bunch of American tax cheats. Historically, it has been tough to effectively get the Swiss to cough up anything that wasn't drug-related money laundering. I wonder what stick they came up with. But if you can't truss your Swiss banker, you're stuck with outposts in the Caribbean. And we've seen lately how some of that has gone.

I don't have any problem living a nice, middle-class lifestyle. It's really all I ever aspired to. It'll be kinda fun watching the rest of Richistan learn to live within that framework as well.
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