No representation without taxation
The earned-income tax credit is designed to give a break to low-income workers. But commentator Amity Shlaes says these days the poor may be paying too few taxes and the rich may have too big of a burden, which is not helping economic recovery.
Amity Shlaes (Amity Shlaes)
More on Taxes, Commentaries
TEXT OF COMMENTARY
Kai Ryssdal: Those famed secret Swiss bank accounts are going to be getting a little less secret. The Swiss finance minister said today he's going to loosen up secrecy laws to keep Switzerland off a European black list of tax havens.
Back here at home it's not tax havens so much that politicians are worried about, it's tax increases. President Obama's going to have to deal with criticism from both sides of the aisle in Congress as he works out his budget plan for next year. Commentator Amity Shlaes says the discussion can't forget the lower ends of the tax charts.
Amity Shlaes: Taxation without representation. That's what our nation's founders rebelled against. Subjects in the colonies were sending money home to the crown without getting say in their own government. The course of U.S. history can be seen as progress by those who are taxed to get representation. Think of women with the 19th Amendment.
Along the way we began to pay out money to groups that paid no income tax at all. There's Medicare, of course, for senior citizens, even if they never worked; welfare for the poor and struggling, at least through the 90s. And, more recently, there's the earned income tax credit, a break for low income workers. The credit was designed to make people want to work and to offset their heavy pension payments for Social Security. The result of expanding it, however, is that many people who work don't pay income tax. Instead, they get money back.
Do we want to help weaker citizens, especially in downturns? Totally. In fact, both parties have plans that relieve yet more taxpayers of their burden. Republicans like payroll tax holidays. And the Obama administration is zeroing out the income tax obligations of yet more citizens.
But a tipping point does come when too many are paying out and too few are paying in. Maybe that tipping point is now. Today, households in the bottom half of earners pay only 4 percent of the income taxes. One tiny group, the top 1 percent, pays close to 40 percent.
This can slow the economic recovery we're waiting for. Top earners won't want to keep producing if their burden gets much heavier. But the more important problem is a problem of civics. All presidents talk about the need for community. We strengthen that sense of community when everyone has to pay some taxes. Like jury duty, paying taxes reminds you that you are part of something; it reminds you of what you owe, not just what's owed to you.
The mood of the skeptics today is just the reverse of the mood at the Boston Tea Party. Then, we said no taxation without representation. Today, try flipping that line: No representation without taxation.
Kai Ryssdal: Amity Shlaes is a senior fellow at the Council on Foreign Relations.
Comments
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From Gastonia, NC, 07/22/2009
People who pay no net tax on their income should not be allowed to vote in federal elections.
I used to work as a general service tech at Goodyear. A guy I worked with used to "quit" every year around the first of November because - get this - "If I continue working, I will make too much to be eligible for the earned income tax credit, and I will make about the same amount at the end of the year either way."
I joined the military for four years, got my education payed for and now make a good salary with a stable job. Donnie still has the same job and is still on welfare - and probably still quits every year.
Why should he have the ability to vote himself part of my earnings?
From Lynnwood, WA, 04/23/2009
A Robin Hood economic model of take from the rich and give to the poor is very seductive if you are on the receiving end of that equation. Real life is more complex than that.
I've never been employed by a poor person. And I don't have enough money to employ a poor person. What's hard to understand if you are always faced with too much month left at the end of the money (like me) is that rich people have to decide what to do with their "extra" money. The unintended consequense of 1% paying 40% is not that the rich will take their money to a beach somewhere, sit on their asses and watch the world go by. What happens is that instead of taking that pile of cash and creating a business that employs poor people and get rewarded for their effort with higher taxes, they'll do something less risky and less beneficial to society. What we need to encourage in our tax system is investments that employ people.
My ideal personal tax system is a flat rate above a threshold = a year at minimum wage. NO DEDUCTIONS. My ideal business tax system is a flat rate above a threshold computed from all employees salaries. Again NO DEDUCTIONS.
Deductions are just a way for Congress to hide the fact that they are coercing us to do something we wouldn't otherwise do. If Congress wants to encourage certain investments and activities, matching funds would be a better and more transparent way of doing it.
From Takoma Park, MD, 03/17/2009
How 20th century: "Top earners won't want to keep producing if their burden gets much heavier. But the more important problem is a problem of civics.". In the 21st century we wonder why AIG employees should keep producing, and we wonder about the civics of those in AIG who are offered and accept bonuses in the millions of dollars.
From HI, 03/16/2009
You gals/guys are talking some big numbers. Does anyone of you bloggers truly believe that we are now into a deep dust-bowl depression when incomes in this country of opulent affluence are so much higher than typical country today. People from the 30's would think you are nuts. I thought Hanky & Bernanke were nuts when they started the trickle-down panic and billionaire-bailout. What foreigners think about us? They must think we are some kind of sickoes.
This reminds me of Nixon. He didn't know how to enjoy what he had. All he knew was to grab more. Then grabbing got him thrown out.
You are my people. Slow down. Slow down people. Be happy.
Ciao,
A
From San Diego, CA, 03/16/2009
What is the percentage of greencard holders - permanent residents- in the U.S. who pay taxes and have no representation? Such people have to be residents for 5 years before having the choice to become citizens, but in those 5 years they pay all the taxes without representation. Is it possible that these taxes offset the amounts paid to those who never contribute?
From NJ, 03/16/2009
As far as the "top 1%" go, here are the facts:
"The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns." So much for the left's 'fair share' argument.
As for "What is the percentage of wealth that top 1% have?" We have an *income* tax, not a wealth tax. Oh, wait, yes we do: the death tax!
From NJ, 03/16/2009
As far as the "top 1%" go, here are the facts:
"The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns." So much for the left's 'fair share' argument.
As for "What is the percentage of wealth that top 1% have?" We have an *income* tax, not a wealth tax. Oh, wait, yes we do: the death tax!
From NJ, 03/16/2009
Several commenters blast Shlaes for neglecting to include "taxes on food, gasoline, telephone, etc. etc." But that argument is disingenuous. Those taxes are regressive, not progressive. The tax *rate* on food doesn't increase when you buy more, whereas the income tax *rate* punishes you more progressively for being more productive.
There's a difference!
From NJ, 03/16/2009
Several commenters blast Shlaes for neglecting to include "taxes on food, gasoline, telephone, etc. etc." But that argument is disingenuous. Those taxes are regressive, not progressive. The tax *rate* on food doesn't increase when you buy more, whereas the income tax *rate* punishes you more progressively for being more productive.
There's a difference!
From South Royalton, VT, 03/16/2009
Great plan! I'm confident workers everywhere are turning down promotions and raises so they can cash in once a year on the EIC. I'm surprised CEOs aren't requesting to be paid minimum wage so they can get in on the scam. I know I'm going to!
From Pittsburgh, PA, 03/16/2009
Concerning the taxation without representation comment.... Most of us are paying our taxes, I won't argue about whether too much or too little, but we are contributing a significant amount. So, are the average wage earners really getting their money's worth of representation? Just from the stories on I hear on Marketplace, one has to have serious doubts. Maybe it's time for a new "Tea Party"?
From Lake Forest, CA, 03/16/2009
Somehow, CEO's in the 70's and 80's managed to create wealth for their companies and the country while only earning 30x - 100x the average worker vs today where they earn 300x - 500x the average worker.
If the top 1% is upset about paying nearly 40% of the income taxes and feel it's unfair, perhaps they should reduce how much they make and raise the pay of those under them. It's a win win because then they will pay less taxes and those below will pay more taxes thus creating a more "fair" system.
03/15/2009
Ms. Shlaes,
You piece is clever but misleading.
Next time, please include all of the other taxes that the middle and low wage earners must pay like taxes on food, gasoline, telephone, etc. etc.
These taxes take a much bigger bite out of their incomes than the high end earners.
They also rarely benefit from a very low taxes on capital gains.
You mention FICA, but then don't include it when talking about taxes paid by different income groups.
Also, you mention "One tiny group, the top 1 percent, pays close to 40 percent." Could you please tell us next time what amount of income these people are making? How does that compare to 20 or 50 years ago?
From Tehachapi, CA, 03/15/2009
Today's Earned Income Credit is a diluted version of negative income tax, some forms of which were proposed by no lesser conservative icons than Milton Friedman and Richard Nixon as alternatives to welfare. About 15% of taxpayers are claiming it.
In response to Brian W, I want to point out that the top 20% of households receive about 50% of all income. They should be paying at lease 75% of the taxes.
03/15/2009
This "commentary" is further proof that conservatism is simply a rationale for greed. It has taken 30 years for many of the working class to realize that the ideas of the Republicans and right wingers like Shlaes have resulted in an actual decline in their real income, and finally now, a terrible crisis threatening even the marginal two-earner income that most families require now. NPR and marketplace should be ashamed of adding the the list of irresponsible media outlets that give her noxious views prominence.
From IL, 03/15/2009
NotA RandianCultist
Your comments are interesting, but very limited. In a closed economic system, you would be correct that changes in the tax rate would not have much impact on high-income individuals (other than to look for better ways to shelter the income). However, we don't have a closed system, and those with high incomes have the greatest ability to adjust to changes in the tax system. (You may be too young to remember, but one example was the Swede Bjorn Borg, a tennis star of the 70's and 80's who moved to Monaco to avoid 90% tax rates in Sweden).
This occurs even more with corporations. Have you noticed that most new technology companies are moving away from California to states with more favorable tax climates (Colorado and North Carolina, to name a few). The US has one of the highest corporate tax rates in the world; do you really think that if we increase corporate or personal taxes further, this will not impact corporate and personal behavior?
From VA, 03/15/2009
The comments by Parrish S. Knight From Silver Spring, MD, 03/14/2009 and Lawrence Tagrin From MD, 03/13/2009 Share two points of view with us that are unintelligent. Parrish has never heard of the law of diminishing returns--and that at some point you stop trying for the returns because they aren't worth it. This means less is produced, and every one is less wealthy. Unless government intervenes by awarding wealth to rent seekers, wealth goes to those best able to create it, these are the people who should have it. Tagrin imagines that because some taxes are regressive, our tax system is not ridiculously progressive in net. He should recall that payroll taxes are cut off at high income levels but so are payments. If he thinks people with low incomes should get more out of social security than they pay in, he just honestly say he thinks it should be a wealth redistribution system, welfare. To avoid purely circular--and since they go through government, necessarily inefficient--flows of money, all taxes should be on income, nothing on property or spending--and after a large per payer/dependent deduction, paid at a flat rate, a single bracket. This neither discourages or encourages specific varieties of economic activity, and provides no particular disincentives for high earners. Additionally, all welfare bells should have to pass a third house of the Congress whose members only net taxpayers can elect.
From Windermere, FL, 03/15/2009
With nonsense like this on Marketplace of late, I can't even listen to it anymore. It's one right wing hack after another.
From Windermere, FL, 03/15/2009
With nonsense like this on Marketplace of late, I can't even listen to it anymore. It's one right wing hack after another.
03/15/2009
It's distressing for me to hear this on Marketplace. Please bring honest arguments to the table. As dailykos says:
"If you provide a space for commentary on the holocaust, and your main speaker is Bishop Richard Williamson, you know what you're going to get. Likewise, if you have a national show on the economy, and you ask Amity Shlaes to present the commentary, you know what she will deliver: morally prurient lies designed to mislead the public on the best solutions to our economic problems. For Shlaes to keep telling her lies is pitiful. For national media to keep providing her an unchecked platform shows that the media would still rather believe in right wing unicorns than face reality."
I once contacted Amity for an interview, and she declared that she'd only accept if she had final say over which quotes we used. Seriously??
From WA, 03/15/2009
Interesting Commentaries. I see a constellation of problems in US. The systems are increasingly rewarding bad behaviors, punishing decent real hard working people. Please let me explain. Sure, I'll agree to pay even 50% Tax if I made Trillions/year like Bernie Madoff or other wallstreet CEOs. What would I care if I enjoy 30-40 years of luxury & jailed for 10-15 year & died? No one lives forever!! It is not their money to begin with anyway!! On the other hand, I will be excited to get $100 more per month on unemployment & collecting welfare, the less tax the better. Again, its not my money to begin with, anyway!
The other day, I thought that I was seen by a doctor...and it turns out that he is only some sort of assistant(with only 1-2 year of associate degree). I was lucky, someone told me that I wasn't seen by Kramer-type dermatologist (like in a Seinfeld episode)!! But I still get charge for whopping 80 bucks for basically a few bandages!! Once my superior told me to stop working overtime because other co-worker are "concern" that I am too hard-working. He told me that I am a hard worker, but I need to mix-in (during work, if others slack off, smoke a joint, can't figure out 1+1=?, drunk, etc., I should too! Dont' stand out, don't work too hard, especially, don't make more than they do)!! Now, I am seriously considering a career as a "professional crook" like Madoff, or some HedgeFund manager, or some big cheese insurance CEO (where the whole scheme is to insure risks, but will raise premium, refused sick patients,that deem to be high risks), or other quick-rich schemes like generating & selling those bad-asset mortgages to Taxpayers. Maybe! I will adopt 20 kids and collect more welfare!! Better yet, let partition to get "Octomom" (in CA) to run for next president!! Bye! Bye ! are the days of decent earnings from hard working!! Also, in the name of democracy, we should have one and only one voice!!
Well, you see, these problems had been brewing for quite sometimes; they were exemplified during this crisis, yet most Americans still refuse to recognize these problems. Lots of local governments are laying off people or getting pay-cut. Would congress or those in Washington agree to have a pay-cut(they had unanimously passed wage increases several years back). Again, it was not their money to begin with!!
From Lexington, 03/15/2009
Wow who is the idiot that invites this pseudo bullshitter to become a commentary on this show? Does anyone over there do any vetting? Her argument is all bullshit lie and she know its and she has been show to be lying by none other than Paul Krugman.
03/15/2009
W hartsell: Put down the pop psych degree, right now. The Laffer curve (which is what you're referring to when referencing an increase in tax revenue when taxes drop) has NOTHING to do with motivation or psychology. It has to do with the short term burst to employment and spending that supply-side economics generates. The problem with the Laffer curve argument is that it has a flip side... drop the rate of taxation too low and the economy BOTTOMS OUT... which is what we're seeing here. Conservatives conveniently forget that aspect to it. Your simple-high-school level behaviorism argument was LONG ago disproven by REAL psychologists. The truth is that motivation comes from many different places. No matter how well the upper class is taxed, they're still going to be making more money than other people. The idea that the rich will take their ball and go home is simply not in keeping with reality. Has it ever actually happened? No... even when taxation was higher. In fact, historically, tax revenues have been highest when the wealthy are paying the greatest amount -- Clinton, etc... there's also correlation with the Dow and standard of living measures. I could go on... but the simple fact is that anyone arguing for supply side right now is an intellectual midget and needs to not be given a stage from which to spew their misunderstanding of reality.
From IL, 03/14/2009
Wow. There seems to be a lot of jealousy and envy in most of these remarks. Those rich people just aren't paying their fair share!
Here is some basic human psychology: when you reward a behavior, you get more of it. When you add disincentives, you get less. On multiple occasions when the top tax rates have been cut (Coolidge and Chase in the 1920s, Kennedy(!) in the 1960s, Reagan in the 1980s, and Bush in the past 8 years), the tax REVENUES have increased in subsequent years, because there was an incentive to be more productive. And remember - these are taxes on income, not wealth. When you raise the income tax rates, you are taxing productivity - so you get less productivity.
Now imagine that the NBA used the progressive foul rates for games. A player who averages 20 points per game would get to shoot one free throw if he is fouled, but a benchwarmer averaging only 1 point per game would get to shoot 10 free throws - after all, that is only fair! The top scorers would be penalized; my guess is that they would not have the same incentive to practice hard or work on their 3-point shooting.
Your feelings about fairness don't change economics, and certainly won't have much of an impact on others people's behaviors. But those disincentives you place in their paths certainly will impact their behavior!
From Bethel, CT, 03/14/2009
We might all pause a moment to reflect that there are many non-monetary ways of fulfilling civic obligations. Ms Shlaes herself mentions jury duty. First Lady Michelle Obama today draws our attention again to military families. It is a fact that the poor and the working class are overrepresented in the armed forces, and therefore in casualty lists as well. If the only sacrifice you and I are making is to pay taxes, we should count ourselves fortunate.
From MN, 03/14/2009
Ironically, those with no money now... the poor and middle class have no representation, as the rich utilize lobbyist to gain representation though paying less taxes. So, really, lets have no representation without taxation, especially the rich!
03/14/2009
The poster who wrote "...while the average WAGE EARNER pays nearer 35%. Add to this that the 35% hit on someone making less than $50K a year..." is sadly misinformed.
In 2008, a couple, filing jointly, with no children and making $50K is paying federal income tax equal to 8.032% of the $50K wage, not 35%--quite a difference.
The math is $50K minus exemptions ($7K for a couple) then minus the standard deduction of $10.9K. That leaves a taxable income of $32,100. The 2008 Tax Table shows the income tax amount to be $4,016--8% of the $50K wage. It would be 6% if they had two children. $100K, 13%.
If anyone doubts the above, see http://www.irs.gov/pub/irs-pdf/i1040.pdf.
One can have any fairness opinion that he or she wishes, but it would be helpful to have the numbers on which you base your opinion be correct ones.
03/14/2009
.....and if we have a national health program like every other industrialized country in the world, I might have to sit in the same waiting room with poor people! I might choose to just die, which would really hurt the economy of myth making propaganda machines like CFR and their dissemination vehicles like the NYT and NPR.......
03/14/2009
This is not about a class wars. Take the median income per State and multiply by voting percentage (Obama vs. McCain) and you will find that the "leftists" are richer than the "rightists" by almost 20%!. Yes sir, the poorest ARE amongst the bulk of the republican vote. This means that the class war is bull; the democrats ARE on the average richer than the republicans. Higher taxes on the richer is an incentive to invest money before taxes (small businesses), and lower taxes in the lower income is money that will get spent in their local economies, because the poorer don't save as much (or just get in more debt) as the richer. Another fallacy is the thought that you would work less to fall into the 90K bracket instead of the 100K; what changes with progressive taxes is the SLOPE of the curve (for the average tax rate which is what counts), it is NOT a step change. Get it?
From Shrewsbury, MA, 03/14/2009
Unless one just wants to carp, a way to get the impact of Ms Shlaes talk would be to consider:
Suspending the withholding of taxation for all but those in the top 10% (or 20%) bracket progressively (first just 1 period out of 4; then 1 out of two; then totally); but require the taxpayer to make a cash payment (calculated and reported by the employer just as if it had been withheld)within X days after receipt. If not paid, the entire delinquecy would be taken from the next paycheck X+Y days after due.
Think of the impact on attitudes.
But, God Bless Chester Bowles, anyway.
Awareness of tax impact is what Ms. Shlaes is getting at.
From seattle, WA, 03/14/2009
a lot of the defense for Amity Shlaes comes from people who don't pick vegetables for a living. I challenge those anyone who says the poor don't pay enough taxes to pick lettuce for a day. Suddenly community health, public schools, food kitchens subsidized by taxing the rich don't seem so bad.
From Plano, TX, 03/14/2009
It seems to me that the US constitution and federalism allows a way out of the problem of representation without taxation. The solution is to greatly reduce the size and scope of the federal government and shrink the taxes required to support that reduced size. A smaller federal government could be supported with a fairly low flat tax on income. Disagree and want to buy more government? There is no reason that people in cities or states couldn't vote for more government and more taxes for their local area. Citizens shouldn't have to fight over one size fits all government when our federal system potentially allows variety.
From OH, 03/14/2009
I was staggered that Marketplace gave right-wing hack, Amity Shlaes airtime. If she's really worried about people not paying their taxes becoming somewhat detached from society, she should start with the fact that quite a few companies from the Fortune 500 pay no taxes..... the best way to get the great unwashed to start paying income taxes again would be to get the corporations that pay them to offer an actual income..... as for the poor not paying taxes...that's a fail...there's a tax on gas and utility bills, plus sales tax, property tax, local income tax...etc etc the earned income credit has been a major success...amity wouldn't want to touch that... before the crash, i read where 3 of of every 4 dollars in growth created during bush's "trickle down II" went to the top 1% of the population.... and the whole idea that tax rates effect behavior strike me as dubious...i didn't work harder when the rates at the bottom went from 15 to 10...i was already working hard...and i wouldn't quit working if my top marginal rates went up 3 points...i like working...
03/14/2009
>if you had a choice between making $100,000 a year and being in the 28% tax bracket, and making $25,000 a year and being in the 15% tax bracket, which would you choose?
That's not the problem, nor is the complete "going Galt" that some people sneer at.
I might find a way to earn just $90,000 and take the other 10% of my time as unpaid (and untaxable) leisure time. When the income tax base is skewed to depend heavily on the upper income earners, by how much do government revenues contract if more high income earners - particularly the >40hr/week folk - decide to live on less.
And do not assume those are jobs hours into which the "unemployed" can readily step. Most people who earn well stay employed.
That is the problem: a contraction in economic activity, not an outright abandonment.
From Phoenix, AZ, 03/14/2009
Wow! Where did this come from? Usually Marketplace is a left wing bastion. Representation without Taxation. That is awesome!!
From MA, 03/14/2009
This is like an urban legend or internet hoax that won't stop. The facts are true but incomplete. Yes, high income families pay the bulk of the income tax, but that is the wrong measure. Shlaes mentions payroll taxes, which are highly regressive, but somehow those don't count. Not mentioned at all are sales and property taxes, both also regressive. The percentage of income paid in taxes to all levels of government is amazingly flat across all earnings quintiles. But we never hear that -- Marketplace should report on that.
If Shlaes had noted that only the dead 'pay' estate taxes, so all you freeloaders who haven't died are getting a free ride, this argument based only on income taxes would be exposed for the nonsense it is.
From VA, 03/14/2009
I can't tell if the leftists posting here are dishonest or stupid - maybe it's both. All of this whining about "how much of the wealth does the top 1% have" is either a dodge or ignorance. We don't have a wealth tax in the US (at least not yet), we have an income tax. Got that? The top 1% of earners earn about 20% of total income and pay about 40% of income taxes. So yes, they pay far more than their "fair share."
03/14/2009
This thread presents a perfect illustration of the sheer hatred that spews from the Left. The commenters who stoop to name-calling and villification should really be ashamed. If you can't be civil, then be quiet. Let the people who want to talk about ideas and solutions do so in peace.
From nashville, TN, 03/14/2009
Sure, I'll be *happy* to pay $600/mo while my neighbor claims that she's self-employed (she's not) to get $4500 back in April. And she gets food stamps, which she sells a majority of for booze/cigarettes. And she has an apartment to stay in, with her bills paid, and free cell phone (!) to call up her numerous baby-daddies to come on over and enjoy tax-payer funded roof-over-head, booze, cigs, whatever else. She can afford that $99/week 60" plasma TV RENTAL. Her kids are her meal ticket, she's said so herself. She is capable of working but she chooses not to as we, the tax-payer, provide FOR her. I ask you, is this right? Is this just? And if you answer in the positive, why don't you fund more of this lifestyle so I can save more of my income?
From NY, 03/14/2009
Ronald Reagan had a great explanation for his theory of trickle down economics. As Lawrence points out, during the 50's, when Reagan was an actor, the top marginal rate was 91%. Reagan figured he could make 2 movies a year, working approximately 8 months, and take the rest of the year off to sit on the beach.
After all, why should he work those 4 months for only nine cents of every dollar earned?
But what he discovered is that while he could afford to lie on the beach or enjoy his ranch, the people also employed by the movie industry, the grips and set builders, etc. didn't have the luxury of a high income that allowed them to take those four months off as well. They had to find other work, lower paying to get by until the high earners got back to making movies.
It makes perfect sense to tax productive people who drive the economic engine at a lower rate to keep them motivated to keep working, therefore keeping all the other people dependent on them for their jobs working as well. This is why we've had decades of prosperity since Reagan's "war on the middle class."
It is hard work to own a business, with no small amount of risk. While you all are arguing over "fat cats" on Wall Street, you have to remember that truly rich people like Teresa Heinz Kerry only pays about 12% of her $5mil. annual salary, while people making between $250,000 and $500,000 (many small business owners) pay around 40%.
A flat tax would help with that disparity and would motivate risk takers (ie. business owners) to take greater risks which would help with employment numbers. But that will never happen because politicians don't want to give up the power that progressive taxation gives them and Democrats in politically powerful positions don't appear to pay their taxes anyway, so why do they care about tax rates?
From GA, 03/14/2009
We need to take all the 401k, Roth, IRA money the rich have because that is where the money is at. The poor are not poor because they did not care about education, because they did not plan for a future, because they were content to underachieve, because they rested on government hand-outs. they are poor because the government under Bush refused to take the money the rich had and give it to poor. It was so unfair. We should take all the money and businesses the rich have and give to the gov't to spend wisely. We should then take the ex-rich and send them overseas or have them work cleaning houses or cutting grass for the poor. See how they like it.
From Arlington, VA, 03/14/2009
I have surveyed the comments and am surprised that no one seemed to notice that this is not really an argument about tax equity but the beginning argument about the end of democracy. If the common worker were paid real wages that met his or her needs, they would gladly pay taxes. But too many workers have not been making it, working forty hour weeks and still not having the money to keep their families. Thus the tremendous run up in mortgage and consumer credit debt, which has for thirty years delayed the reckoning we are currently facing. Because Ms. Shlaes does not face the problem of stagnant wages, she does not see the re-imposition of the medieval nobles-oblige. When the peasants face a moneyed and landed aristocacy, where else can society turn for its common necessities?
From Boynton Beach, FL, 03/14/2009
I too am amazed at how completely off point many of the commenters are. When not indulging in the left favorite past time (throwing ad hominems at those with whom they disagree) they see no problem with a voting majority paying little or no taxes while the voting minority pays them all.
Here is an idea. How about we weight the votes by taxes paid. Then, those who pay 40% of the taxes will have 40% of the votes. That seems just as fair as the current system and we know the left is all about fairness.
Rick
From PA, 03/14/2009
How about taking a break from the class warfare rhetoric for a minute and ask ourselves whether the U.S. Constitution lays out a vision of a federal government so huge and all-consuming that it is necessarily empowered to confiscate 50, 60, 70, 80, or 90 percent of a person's income, regardless of what that income is.
Guess what, folks, the 800-lb gorilla in the room is not Wal-Mart but Washington.
Willie Sutton robbed banks because "that's there the money is." For the exact same reason, we find locust-hordes of lobbyists in Washington -- because that's where the money is. The trillions upon trillions in tax revenue flowing into D.C. is the source of the problem, because (1) it removes the locus of political responsiveness from city and regional levels, where average people have a chance of more access and proportionate influence, to Washington, where only the extremely well-funded and slickly organized can afford to set up shop and lobby for their agenda, (2) it enables corrupt practices like the earmarking- for-campaign-contributions quid pro quo that is the lifeblood of Congress' daily way of doing business, and (3) it grows the federal government to a size and power which the Constitution never intended, and in fact expressly comes out against (Ninth Amendment, anyone?).
I'm not here to defend the richest of the rich. Frankly they don't need my help. I argue the way I do not because I think that empowering the government to take from the rich hurts the rich, but because I think empowering the government to take from the rich gives government the power to take from EVERYONE. And that kind of society becomes a blatant spoils system. If you think the rich are going to be the ones to lose badly under those circumstances, you are a terrible fool.
From Washington, DC, 03/14/2009
Is it all the rage to talk about fiscal responsibility and not keep in mind the moral and ethical obligation a society has to low-income families. This story completely missed the fact the EITC lifts more children out of poverty than any other federal government program. This discussion should have commented on tax brackets and included an analysis of how low-income families might be better served if their income was taxed at a lower rate.
From austin, TX, 03/14/2009
$7.25 per hour effective July 24, 2009
03/14/2009
It's amazing to me how many of the comments here completely miss Ms. Shlaes' point. Well, no it doesn't really, given the forum. Anyway, points of social cohesion and economic recovery have nothing to do with being a "shill for the fatcats" or feeling sorry for the ultra-rich. It's a matter of equity BEFORE the law, and in the end, of practicality.
Mr. Parrish Knight addresses the actual topic at hand, but I believe that the 100K / 25K question ignores the reality of markets, because that isn't the choice. The real choice is that if you work very hard to earn 100K only to see an increasing amount disappear, you aren't going to switch to a 25K job... but you very well may work a lOT less, and earn 90K for your decreased effort. The loss in productivity is the marginal difference that can really harm an economy.
From Sicklerville, NJ, 03/14/2009
I understand that our type of government gives free speech to everyone, but please!!! How can you let this woman spout this drivel on your show. You know it's nothing but self serving BS.
From Chicago, IL, 03/14/2009
The problem with socialism is that you eventually run out of someone else's money.
I agree with Amity Shlaes totally. There's too many deadbeat ignoramouses running around looking for a handout. You wealth envy idiots are a pitiful bunch of losers. We need to repeal the Sixteenth Amendment to the United States Constitution & abolish income tax forever & replace it with the fair tax. Everyone including poor winy losers will have to pay their fair share.
From Silver Spring, MD, 03/14/2009
Whenever anyone attempts to make the same argument that Ms. Shales is making here, I always like to ask them a fun little question: if you had a choice between making $100,000 a year and being in the 28% tax bracket, and making $25,000 a year and being in the 15% tax bracket, which would you choose?
Right-wing economists often bemoan the fact that the wealthy pay a larger percentage of their income in taxes, but until I hear about a corporate CEO saying that he'd be better off as a Wal-Mart greeter, I won't be paying much attention to the whining.
From Annpolis, MD, 03/14/2009
Ah, Amity Shlaes. The tireless shill for the fat cats. Yes, the rich (including me in a relatively modest way) pay more taxes. That’s because our wealth is generated from the society and the infrastructure that taxes support. Our wealth is from civilization, and taxes provide the basis for that civilization. This argument should resonate with all but the insatiably greedy. And their pitchman Amity Shlaes.
From Sterling, VA, 03/14/2009
What is interesting is people ignoring the UCSD study on Polarized America and examining the top 1% trends as a percentage share of the economy. During the heart of the Great Depression polarization fell and was lagged by the income ratio. Indeed in the extended years of high unemployment from '38-'41 this trend continued. It was only in the mid-1960's that polarization increased while the income disparity was at its lowest point and that would actually lead income disparity. Even now that mid-1960's trend continues with far more political polarization, now than at any time since the 1920's. Political polarization would then fall even as the income disparity increased and then both put on a declining path by the Great Depression.
This does not support the thesis that greater income inequality promotes polarization: just the opposite has happened in the post-WWII era where a flat, static distribution of wealth had an increasing polarization effect.
This proves to be contrary to the argument that being too rich causes polarization and, indeed, when there is a static dispersal and low share of the top 1% does polarization increase, not remain flat. If the theory that more 'equitable' distribution of wealth causes harmony, then the Great Depression having that disparity lag polarization needs to be addressed, as does the post-WWII era of flat distribution percentages. Political polarization *leads* changes in wealth distribution when it is in a state of flux from either high to low or low to high. And 'fair' distribution means that polarization starts up to start changing the 'fair' system, as seen from WWII to the mid-1960's. And the wild swings in the polarization only happened *after* the progressive tax system was put in place and has caused deeper swings both up and down since then, which wasn't supposed to happen with progressive taxation systems.
03/14/2009
ON THE CONTRARY. Tax less the poor and you will see their money spent in the local economies. Tax more the top 5% and you will have an incentive to invest (not just save after-tax income) for them. It is a misconception that all rich are "conservative"; in fact the US States where "liberals" traditionally win politically ARE the rich states. So, in reality, the rich DO understand that there should be more taxes on that top 5%. "Conservative" doesn't mean rich, this lady should stop blabbering those BRAINLESS phrases that she splattered in this article.
From Tehachapi, CA, 03/14/2009
I turned on the radio. That voice...Those unbelievably stupid statements making my jaw drop and my eyes open wide with amazement and stupefaction. Yes! It has to be... Sarah Palin! ... Oh?... No? Amity Shlaes, a senior fellow at the Council on Foreign Relations, you say? So that's where Sarah might get a job after she finishes governing Alaska! (Remember, she has seen Russia from across the straits!)
Hey, here's another idea. Let's tax the squirrels. They may seem poor, but they should hand over a fair share of the acorns they hoard.
From Saint Louis, MO, 03/14/2009
The Amity Schlaes' commentary was more of the same. She has nothing new to offer to the discussion and what she continually puts forth, that the high end of the income distribution pays too much in (income) taxes and the low end of the distribution pays too little, is not supported by 80 years worth of the evidence. When the top marginal rates were high, income inequality was low, and growth was fairly consistent (relative to now). When top marginal rates were low in the 1920s and 1980s-2000s, income inequality was/is high and we know what the growth pattern has been - big bubbles followed by big crashes. In addition, recent research has indicated that the higher your income, the less you respond to tax incentives to be more productive - the crux of Schlaes' argument.
Progressivity in the taxation system makes sense - the more you make, the bigger your ability to pay, and to a certain extent the lower marginal utility you get for each additional dollar. Aside from that, income tax is not the only tax we pay and many of the other are flat or regressive, undoing much of the progressivity of the federal income tax. I am repeating well-known facts but places like Marketplace keep giving Schlaes et al. a venue for pushing this idea that not only do the rich pay too much in income taxes and the poor pay too little, but also that income tax is the only kind that counts (not payroll, sales, state income, property). There is a lot more buy-in to be achieved by giving people the opportunity to participate in the system, not just pay for it, not to mention jettisoning this attitude of "I got mine, it is up to you to get yours."
03/14/2009
-- Today, households in the bottom half of earners pay only 4 percent of the income taxes. One tiny group, the top 1 percent, pays close to 40 percent. --
What is the percentage of wealth that to 1% have?
From Atlanta, GA, 03/13/2009
I am very disappointed in Marketplace and its producers for giving a right-wing hack like Amity Shlaes airtime to peddle her intellectual dishonesty. Other posters here have already debunked her commentary of today far better than I could do, so I will only add that Shlaes is among the cadre of revisionist historians with books out trying to prove that Franklin Roosevelt's "New Deal" policies not only didn't help alleviate the Great Depression but actually prolonged it and/or made it worse. I can understand your wanting to be fair and providing a range of viewpoints, but if you must have a conservative on your air, you can do far better than a Republican Party/conservative movement sock-puppet like Amity Shlaes.
From Whittier, CA, 03/13/2009
If I remember my high school history, there was an earlier time when the poor didn't pay taxes. It was called something like "The Dark Ages", I think. I guess the only difference is that the poor nowadays are called freemen instead of serfs. Oh, and nowadays the rich make their wagers on Wall Street instead of in the parlor.
Thanks for putting it all in perspective, Amity! I wonder what tax bracket you fall in...?
From Bethel, CT, 03/13/2009
For the past three decades, income disparity has been increasing, see http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20080618/
The economic regime has not only given the rich the rewards of their labor, but also a good deal of the rewards of everyone else's labor. At the same time, the marginal rates in the upper brackets have been reduced, as well as the capital gains rates, which mostly benefits the higher-income strata. "Top earners" have seen their burdens become lighter, not heavier.
As far as the sense of entitlement, nobody can top those Wall Street and executive-row suits who have been defending their perks and staggering bonuses, despite having brought ruin on their firms.
Meanwhile, the rest of us did our civic duty and voted for change, in an election with the highest turnout in 40 years.
From DC, 03/13/2009
This woman has a beguiling voice and delivery, and a totally dishonest premise.
In the last ten years, that same 1% of the population that she bemoans may pay so much in income taxes -- and to which I presume she and her best buds belong -- has reaped virtually 100% of the increase in personal income in our entire economy.
When Ike was president, the president of Sears made, oh, 100 times what a salesman made. Today, the CEO of Walmart makes $1500 for each dollar made by one of his line employees. But that same line employee pays payroll taxes, sales taxes, real estate taxes, and personal property taxes. Gee, if that line employee paid income taxes even at the rate of the CEO, he might be able to contribute about $20 to the income of the US government.
Poor Ms. Schlaes, she might have to pay more taxes. All those geniunely poor folks she thinks are dispensable are still paying payroll taxes that are greater than any income tax they might be liable for.
My heart breaks for Ms. Schlaes' crocodile tears
03/13/2009
Amity Shlaes' publicist must have a direct line to half the producers in public radio--I can't swing a cat without hearing a segment of her Limbaugh-approved talking points. I'm happy to hear from serious opponents of the current administration's fiscal and monetary policies, but can we keep the Randians out of it?
From Dallas, TX, 03/13/2009
Amity Shlaes? Marketplace, where did you find this person? For my 2cents I'd like to point out the greater burden of state and local taxes paid by the other 99% of us thanks to fewer federal dollars being made available since the 80s due to the Reagan (should I say Gramm?) tax cuts. For all the wealth destruction the 1%'ers have visited on everyone in the last year they should be forced to pay everyone else a surtax. Let's leave the "fair and balanced" reporting to those corporate shills CNBC and FOX, OK?
From Indianapolis, IN, 03/13/2009
Amity Shlaes spoke about the upper 1% of earners paying the lion's share of taxes, glossing over the fact taht very 1% owns 90% of the wealth in America! Does it not stand to reason that those that have benefited most from the American Dream should be happy to put back into the system for the next dreamer? There is recent evidence that tax cuts do not stimulate the economy, yet that is has been the Republican platform for 30 years! It has been ineffective and harmful to the economy as a whole. Ms. Shlaes premise is intellectually dishonest, and does not account for the tax burdens placed on that 99% comprised of FICA and Social Security, They may receive refunds but their taxes are used.
From ME, 03/13/2009
I’ll just add that the folks on the lower end of the wage scale should not be punished for this sad economy. And weren’t our economic problems exacerbated by the fact that some individuals made millions while others only the Federal minimum wage of $5.85? What does that say about “we the people”?
From Minneapolis, MN, 03/13/2009
Of course, immigrants - both legal and otherwise - pay taxes without representation. Do you really want to go there?
From Schoolcraft, MI, 03/13/2009
It was hard to believe what I was hearing Amity saying.We're reaching a tipping point? I'd say we've toppled.The
time has come for the top 1% to stop evading their share of taxation & finally start paying their fair share,and to actually pay it!My husband &I have owned a small restaurant for 22 years,the amount of taxes we have & will pay have kept us from ever having the slighest savings & you won't hear us whining over spending to save those who are being left homeless & jobless! It seems figuring out that we're all in this mess together because of the top 1%
will continue to evade those greedy and
uncaring individuals such as Amity until
they are forced to be on the receiving end of the majority of Americans who have hearts and compassion!
From San Francisco, CA, 03/13/2009
It's a disappointing editorial choice to have placed this non-story on the site. What next? Guest Ann Coulter? Let's stick to hearing about real issues. Have some dignity.
From Winston-Salem, NC, 03/13/2009
It is very important to heed the ideas expressed here, whether or not the numbers are correct. When we continually increase the number of citizens who don't pay income taxes, the result is lower appreciation for the govt. spending and budgeting process. We need more people who have "skin in the game" (however small), not fewer.
From NC, 03/13/2009
Amity Shlaes? Puleeze! Trying to tie the conservatives love of tax cuts to “no taxation without representation” was disingenuous, to say the least. As for people who “pay no taxes”, vs the tiny 1% who “carry them” by paying 40% of the taxes, let’s be clear. Depending on which figures you read, the top 1% now controls between 40 and 60% of the wealth in this country. Heavy hitters pay all the tax? Well, let’s see. In our progressive tax system, they only pay Social Security tax on the first $100 or so thousand of income, and of their income, a large part of THAT is capital gains and dividends, taxed at the kingly rate of 15%, while the average WAGE EARNER pays nearer 35%. Add to this that the 35% hit on someone making less than $50K a year takes a much bigger REAL bite out of that person’s ability to survive, than the 15% paid by a gazillionaire (assuming he hasn’t stashed the bulk of his gains in Switzerland), takes out of HIS.
As Warren Buffet said, the conservatives ARE waging class warfare and they fired the first shot.
I am sick of this straw man being pumped up to show how “unfair” and “socialistic” the progressive tax code is. These are the same people who want to see a VAT or other consumption tax, knowing it will fall much more lightly on THEIR demographic. Let’s be clear – the ‘Greed is good” days are over. Ms. Schlaes needs to get a clue.
From MD, 03/13/2009
You may not have noticed that Amity Shlaes kept talking about the income tax and how "those people" who don't pay income tax get too much in benefits. This is a typical piece of intellectual dishonesty long practiced by libertarians and their corporate allies. A family of four whose wages total $25,000 may not pay any income tax, but if you add up their tax burden in terms of payroll taxes like FICA, medicare tax, etc... they probably pay a higher percentage of their income in taxes than a family who makes over $500,000. This is an example of framing which is typical of the breed.
What we need to do is roll back the Reagan tax cuts for the rich and bring our tax system back to one which supported the greatest expansion of both the nation's economey and middle class during the 1950's and 1960's, where the top marginal tax rate (the amount people pay on income OVER a specific amount) was between 91% (under Eisenhower) and 73% (until Reagan began his war on the middle class.
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