The new committee to re-elect Donald Trump

It has some surprising members:

Rep. Alexandria Ocasio-Cortez has been promoting the idea of a 70 percent top marginal tax rate, and Paul Krugman has been defending it. Matthew Yglesias of Vox has written that 70 percent might be too low.

Here is my full Bloomberg column on the topic.  You will note by the way that if you only apply the tax on say $10 million and up, it will all be converted into capital income and the tax will distort without raising much revenue.  And here is a sentence toward the end of the piece, part of my advice for Democrats:

Recognize that you’ll never be that popular on the tax issue.

I see this as a kind of catnip issue, one where the Democratic Left is so, so tempted to make redistribution the central idea of the party, a disastrous urge in my view.

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I'm going long on popcorn stocks.

"I see this as a kind of catnip issue, one where the Democratic Left is so, so tempted to make redistribution the central idea of the party, a disastrous urge in my view."

"I'm going long on popcorn stocks."

Me too. Tyler is absolutely right that this is disastrous. All people hate taxes. They hate them especially when they feel they're levied unfairly. Incidentally, those that feel this most are middle-class and wealthy tax payers. Poor people hate them too even though they pay surprisingly little, taxes for them just happen to be a dog-whistle for hatred of the rich. This is not to say middle-class people don't hate the rich it's just that they're hatred is in the form of what they perceive to be unfairness, which upon closer examination is not a whole explanation of the case.

TL:DR all people hate taxes. The Dems appear they want to go all in on being the party of taxation, and that nothing exists outside the state. I say unto them...do it.

You talk about the middle class as if it exists. Do mean the upper 20% minus the upper 1% that fancies themselves middle class to duck the charge of "hoarding opportunity" (Richard Reeves)? That middle class.

Phook them.

Yes, let's hope the dumb Dems do it.

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All people hate taxes.

I don’t hate taxes. I’m happy to pay them.

John has volunteered to pay the taxes everyone. Party at John's house.

Says the moron who has never heard of a collective action problem. You can do better little man.

Replace federal, state and local income taxes with a sales/VAT tax with no exceptions (i.e. on food and medicine and no group or person is exempt). Then everyone has skin in the game and it is a visible tax. Once it is in place allow voters to vote to increase or decrease that tax in every national election, Force the federal state and local government to budget/govern on what is collected and no more.

Ann Coulter says we need a wealth tax. She is right.

U need to check ur white privilege.

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concur 100% anon....one day we'll get there...doubt i will live long enough to see it

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Wait, I want in!

Together we will pay all your taxes. You give all your income to us, we will split all your income, and we will then pay much higher tax rates than all of you, and than we currently pay, because all your income added to ours will put us into higher brackets.

You get the benefit of not paying taxes, which according to free lunch economics puts money in your pockets. And as per free lunch economics, the cost to you is ignored: you have zero income.

And according to your free lunch economics, the much higher cost of taxes means we will be much worse offf, because in free lunch economics, the benefits, all the extra money we have from taking all your income off your hands to pay your taxes, and more taxes to boot, does not count.

Free lunch economics says its not zero sum. You pay no taxes by having no income, which means you are better off because costs, taxes are lower. But we assume the benefits, after tax income, are constant. Why should the benefit of paying no taxes come with a cost?

And by you not costing anyone anything, ie, paying youu for working, society is better off, because cost cutting is always better. And you will keep spending on consumption, or actually increase your spending, because cutting the costs of paying you will increase consumer spending thanks to the wealth effect of me and John being richer. Free lunch economics Is great!

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An interesting thing to me about taxes is that the top 20% make so much more than the bottom 20% you'd think that 10% of the to 20%'s income would easily pay to move the bottom up and then another 15% for defense and police, the roads funded by the gas tax and SS through the FICA.
But the taxes are higher than that and the poor are not doing well.
I guess it's Medical spending Medicare and Medicaid. Forget taxing more than think about medical care.
https://meaningness.com/metablog/post-apocalyptic-health-care

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My kind of taxpayer.

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Beer and pretzels for everybody!

There are Federal income taxes and then there are (at least a megagajillion) other taxes: federal, state county, municipal; income, progressive, regressive, etc.

Evidently, AOC has no (She hasn't missed anything!) experience with paying taxes; and so thinks they are "sweet" (see Aquinas' "Dulce Bellum Inexpertis" quote). It's not her fault. She's an econ major.

Plus, an added benefit! The occult Trump reelection committee could be listed as a violation of Campaign Financing law, and the high crime and misdemeanor for Trump's impeachment. Brilliant!

In conclusion, we have only this one USA. Make the Country a better place repeal the Nineteenth Amendment.

She lives in New York so she pays more in taxes than most peoplle in US doing similar work. Ie, she will pay more in taxes than her peers representing Kansas, and as a waittress she paid more in taxes than the waitress in Kansas.

What I find ironic is she chose to pay higher taxes to be without health insurance like the waitress in Kansas is forced to be without health insurance. At least based on her statement she has had no health insurance, which would be free Medicaid if she were really earning next to nothing in New York terms, or highly subsidized private insurance premiums bought on the New York health care market.

But, my guess is she has listened to conservatives and believes no young person should every pay medical bbills for old people, because turning old, say age 30, is a choice. Free lunch conservatives never explain the second amendment method of young people never paying old people medical bills: bullet to the brain at on your 30th birthday. Getting old and costly is a choice!

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"Dulce bellum inexpertis" is a quote from Pindar (Γλυκὺς ἀπείρῳ πόλεμος, Fragments 110) you philistine.

I like how you worked three Mediterranean civilizations into one short comment. Bravo!

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Also part of "The new committee to re-elect Donald Trump"

DeBlasio and Newsom after their announcements today. DeBlasio for making his "free" plan $100 million (I burst out laughing when I read this) and Newsom for saying his "free" plan will cover illegals under 26 years old.

This is basically just vote buying now. Unvarnished. NY and CA need to become their own countries. If one federal tax dollar goes to either of these "free" programs we should declare war.

We got a proud keyboard warrior here ready to fire hot pixels at the demon libs. Be afraid, leftist devils!

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If New York and California became their own countries, how would all the red state welfare queens survive?

What, you thought Kentucky and Montana were net contributors to the federal treasury?

I'm imaging some kind of Federally enforced CA and NY taxpayer "redistribution" program. Probably enforced at gun point considering our side owns most of the guns.

Sounds like sauce for the goose to me...since we're all masturbating on the risibility of the situation.

I feel like you and I have massively asymetrical information regarding tax dollars going out and into CA and NY....you sure they are takers...care to place a wager?

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The military bases are one of the few things people agree that taxes should pay for but yes, there will be some belt-tightening. Probably a second Great Migration as well.

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I suspect a significant cause here is that CA and NY as well as MT and KY have equal representation in the Senate.

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"This is basically just vote buying now. Unvarnished. NY and CA need to become their own countries. If one federal tax dollar goes to either of these "free" programs we should declare war."

Its only thanks to GOP majority States refusing "free" money from Obamacare that California and New York get as much Federal money as they paing in Federal taxes, ending the huge transfers of liberal's "wealth" to Red States.

Its ironic that Kentucky got a big boost from the Democratic government expanding Medicaid, which the GOP libertarian governor can't figure out how to end, as he promised, without killing tens of thousands of jobs, paid for by Federal money.

Texas, on the other hand, refused billions of dollars to pay workers in Texas to keep California and New York "wealth" flowing by way of Federal taxes into Texas. But Sen Cruz has worked hard to restrore wealth redistribution from New York and California by cutting out the Federal money Texas has refused, but also by hiking taxes paid by those in New York and California. Texas has increased its share of military spending while its been slashed in California and New York.

Of course, Sen Cruz forced cuts to Federal money to Texas for military because he wanted tax cuts, but not bigger deficits.

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I'm enjoying all the heads exploding with these new congresspeople. It's like the 2016 election all over again! Our "professional expert" class need more pain medication. I Love IT!

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"it will all be converted into capital income "

Could always tax that as ordinary income. Get rid of 401ks and have everyone use Standard IRAs, but with a much larger cap on yearly contributions. Say, in the $50k range for an individual, or maybe even up to $100k. Gains in that account aren't taxed. Gains outside that account are. If necessary, exempt the first $N of gains and tax at a lower capital gains rate.

Lower the cutoffs for the top few brackets to account for the fact that many people in at those income levels will be contributing the (now larger) max to their IRA.

This was addressed in the linked article.

Good call. I'm actually not a fan of a 70% top rate. I would, however, not mind lowering the cutoffs on the existing brackets, increasing the size of the standard deduction, eliminating the mortgage interest deduction, and allowing charitable donations to be deductible even by those who don't itemize. Possibly also tax health insurance premiums as income. Set cap gains rate wherever it needs to be to avoid capital flight. Set estate tax back to 50% and use a lower exemption amount; maybe somewhere in the $2M per individual range (so $4M for couple).

I like the idea of a VAT, but hard to fix regressivity. One potential way: tie VAT revenue directly to some universal program (health care? old age pension?)

I would like a health-care system funded by VAT, with a QALY determined by revenue. Want more things covered? Then vote to pay more at the store.

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Progressive consumption tax

I hate when people throw this out there. Now you want to track my spending, because you don't already have enough information about me?

You don't need to track more than is tracked now.

One way to achieve a progressive consumption tax would be to allow a person to put as much money as they want, pre-tax, into an IRA. Then allow people to take as much as they want out of their IRA at any time but pay taxes on all of the withdrawals.

You would tax income not put in an IRA plus any withdrawals from the IRA at a progressive rate. You could also allow people to buy cars and homes in their IRA and rent them at market rates. The result would be a progressive consumption tax.

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VAT with a universal citizens dividend is about as progressive as it needs to be.

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You could always tax non-profits, including universities, that fail to spend at least 80% of their income and earnings on their stated purpose and 20% or less on operating costs. Also, tax any non-profit that pays any one board member, officer or employee more than, say $150,000 in total compensation

I would love to see this come up during a debate...since talking about taxes is on the agenda anyway.

I would love to watch the look on their faces while they try to defend AGAINST taxing institutions like Harvard with an endowment of $37 billion and receiving federal money to the tune of almost $1 billion. I would love watching them go through contortions trying to talk about public good, public benefit and public welfare while they defend these factories for 1%'ers (quite literally based on enrollment...1%'ers). I would love to see AOC defend this and advocate for taxing an SME multi-millionaire CEO with a workforce of 500 employees or less at the same time.

This is my fetish.

A pervert like you need a better fetish.

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I thank President Captain Bolsonaro for having ordered restrictions on immigration.

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Nice job on the headline. Accurate and funny :-)

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I enjoy the fact that everyone in the media discusses these Dem ideas as as if they have even the slightest change of happening.

Apparently due to the Dems' ironclad grip on.... one-third of the lawmaking power they need.

Like Mexico paying for the wall? Or an amazing healthcare plan to cover everyone much better at much lower cost?

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so tempted to make redistribution the central idea of the party, a disastrous urge in my view.

Looks to me like Republicans have already made redistribution the central idea of their party.

I guess you aren't paying attention, or maybe your information processing power is attenuated.

The winners of the POTUS election voted to restrict illegal immigration, to build a wall, and to preserve what remains of social capital, such as it is.

It will be a battle to the death, maybe figuratively speaking, and will not be won by impeaching the President. That will be the first shot, but not the last.

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Exactly.

Harsh government regulation of who employers can hire in order to redistribute income from capital to labor. In addition, massive taxes (aka tariffs) on imported goods to eliminate the profits from offshores manufacturing in another attempt to redistribute income from capital to labor.

We’re all statists now!

You should have let us nominate Ron Paul. We wanted a night watchman state--a government so small it doesn't really matter who's in charge of it. We were told that was unrealistic, just Tea Party crackpots, and frankly, racist.

Plan B: we elect a strongman who despises our enemies.

Let me know when this Plan B is actually put into action, would you?

Trump, the racist fascist.

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Who stopped you from nominating Ron Paul? Oh that's right, everyone voting for other people.

Elect Ron Paul, no Trump. Don't elect Ron Paul, Trump.

Any principled person should support Trump, because he's the last best shot at American civic nationalism. After Trump, it will be all identity politics all the time.

Your reply is beyond my wildest troll dreams. Please continue.

How many white males are even left in the Democratic Party besides Bill DeBlasio and Gavin Newsome? When the Bernie Bros finally leave they can just call it the Single Women And Their Brown, Gay, and Brown Gay Friends Party.

Enough to win 235 House seats?

Is Beto white?

Beto is Irish. So, not white.

Well so is Gavin Newsom, so jeez you're right!

I'm trying to track this down, but I think only 1 in 4 or 1 in 5 Hillary voters was a white male. I might be remembering that wrong. I'm open to correction.

We really don't vote any more; we just take a census.

Most of what you've stated in this thread is pretty controversial and unpopular. It's a shame because it is going to make people disregard a very good statement you just made:

"We really don't vote any more; we just take a census."

This. This. Biggest threat to our democracy. Biggest problem in our society. There is no debate in us vs them. There are only good guys and bad guys.

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This is a solved problem from an economic perspective. Tax land and other monopolies, not income or investment.

Do you think they'd ever give up the gravy train?

"Not until 1917 did the income tax yield as much money to the federal government as customs duties did. But by 1920 it was contributing ten times as much money as the customs; and that was only the beginning of the rise of the graduated income tax to a predominant place in the financing of a hugely expanded government, and to an important place among the instruments for the redistribution of wealth in America. "

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I don't think Trump's base feels badly about taxing billionaires and millionaires at 70%. Quite the opposite.

True. We don't give a sh*t about billionaires or lefty, high-tech stock millionaires. But we do enjoy watching the left commit suicide while drilling holes in the bottom of the Democrat Dory.

Otoh, we do envy the walls left wing elites build around their communities. Can't we please have one also? Just one big long one ...
-

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Less so than you'd guess I think.

Half because their image probably reflects x-aires as more likely to be unsophisticated, driven entrepreneurs. Rather than, 5th Gen country club who earns profit every time a seal is clubbed.

Half because they know that liberal professionals tend to resent "People who make more money, but aren't better educated, so clearly don't deserve to and have come by their money by dubious means" and then it's "The enemy of my enemy".

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Trump supporters support individual liberties. After the freedom of thought, the liberty to generate and to retain personal earnings over that required for subsistence and use this savings, or capital, to create wealth for their own self through voluntary participation in markets and enterprises is very important. Even if it is the individual liberty that must not be spoken of plainly.

"Trump supporters support individual liberties."

Lulz! When did the big spending p-grabbing New York nationalist-protectionist become a libertarian?

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I bet you also thought that immigrant labor was cheap, that diversity was a strength, that changing the people would not change the place, and other fairy tales.

You mean those things aren't true?

The Single Mom, College Student, Ethnic Minority, Homosexual, and Ethnic Minority Homosexual Party. Tyler ain't seen nothing yet.

Must be a lot more of those people than I figured, with how many House seats they won.

What are the odds that AG has a Grindr profile?

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Demography is democracy.

You should probably leave the country if these things greatly hurt your butt. Otherwise buy ass cream.

Not an argument.

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Psssst! Do it! Do it! You know it's going to feel oh soooooo good! Uni 😈

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Is there anyone in the room who doesn't believe Krugman has fallen off the left edge of the Earth?

Capitalism is off the left of the earth?

"it will all be converted into capital income and the tax will distort without raising much revenue"

What Tyler is fearing is the building of too much capital!

The rich using the tax dodge of paying workers to build new factories that produce returns from producing more goods!

The rich using the tax dodge of building fiber optic neetwork to every address by paying workers to generate income from universal high speed internet afforded by even minimum wage worker families!

The tax dodge of paying workers to build solar, wind, battery farms to sell non-fossil fuel electric power to everyone!

This is the situtation in the 60s that prompted Milton Friedman to oppose building capital. He opposed the tax dodges that drove drill baby drill which kept US oil production increasing every year until he won the argument and sold politicians on job killing tax cuts and eliminating tax dodges for capitalism, eg drill baby drill.

He argued for less production by less capitalism, and more oil imports from Saudi Arabia swhere less cappital needed to be built to enable burning capital assets in Saudi Arabia. Capital assets, eg, oil, in abunndance is bad because the price, and profit,, end up being too low.

Capital needs to be scarce to have high rents, high profits.

Policies that drive free market building of capital eliminates capital scarcity, driving prices, and profits lower.

Abundant capital as Keynes advocated is clearly leftist because profits end up being zero, rent seeking is eliminated.

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AOC and the Democrats generally want to grow the government but they think they need revenue to do it. (The current Supreme Court is likely to restrict the growth of the regulatory state.) When they say they want higher taxes, they are really saying that they want to punish some and reward others. They want to punish high earners and redistribute to groups that they view as needier.

Cowen is correct that the groups most hurt by the higher marginal tax increase are professionals in urban areas. The wine and cheese liberals who support the Democrats. Two high-income earners. Given how much they complained about losing the tax deductibility of local taxes, how will they react to higher taxes from the Dems?

punish some and reward others

Exactly what the tariffs are for.

The last time we debated tariffs amidst this degree of economic and political imbalance, things didn't go so well.

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The Yglesias piece in the link is classic Vox: “Rest assured that somewhere there is research that confirms your policy biases. Here are links to papers you won’t be able to understand, let alone analyze. That’s fine. Science is on your side anyway!”

Scott Alexander has called this "Voxsplaining".

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This is another area where I must be really, really ignorant. Hasn't redistribution been a central tenet of the Democratic party for 60 years?

The big difference is now the Republican Party is the party of using taxes (tariffs) and regulation (immigration enforcement) to do the redistributing.

You can’t let employers or consumers decide what to hire and buy - you need big government to make the decisions for them.

The founders of the US could have come up with any number of ways to fund the federal government--they chose tariffs because they're flat, simple, and demand-side. As for immigration, they restricted citizenship to free whites and allowed States to enforce the public charge doctrine, and whatever other criteria they wanted. This is an inapt criticism.

Just as long as we all agree that people can’t be allowed to make their own decisions as to who to hire or what to buy. It’s not the proper place for tbe government needs to make those decisions for them.

I just want to be sure the marriage of convenience between libertarianism and conservatism is well and truely shattered.

Yes. Gary Johnson and Naked Man are on their own.

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You can hire anyone you want as long as they are in the U.S. legally. Even a night watchman state is responsible for controlling the borders. Borders are a public good, not owned by any one person.

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Yep. Resentment, jealousy, and outward-projected feelings of inadequacy are a potent political force.

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It's funny how these higher marginal tax rates always seem to give politicians leeway to raise rates on everybody else after it becomes clear that revenue increases don't materialize. "Yes, we're now raising your rate to 50%, but look...we're taxing all the rich people at 70%."

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More crocodile tears from Tyler. Another ho-hum clickbait article with zero substance. Maybe next week?

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This will never happen. Obama couldn’t even get the 529 college savings tax break or backdoor Roth IRA repealed. There is no significant constituency for raising taxes, even in the Democratic Party.

That is why it is being presented as policy. With Trump and a Republican Senate it won't pass, but they get to pontificate with no consequence.

So just like Obamacare repeal? Those many moons ago..

Yes, like the Obamacare repeal. Directly responsible for the Republicans losing the house.

Nothing to do with the president, surely

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Steve Reeves loves to tell the 529 tax break story.

The Democrats love to steal from everyone and give to themselves.

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The 70 percent tax rate is akin to Trump's border wall: it's not its actual effectiveness so much as the message it would be intended to deliver.

Walls are very effective at stopping illegal immigration

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A pity, perhaps possibly maybe, that New Yorkers cannot restrict municipal grievances and disgruntlements to the five boroughs proper.

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From Tyler's column:

" ... say you had a 70 percent rate at $500,000 and above. The biggest losers would be high-earning professionals in major cities and suburbs. Think doctors, lawyers, business consultants and the like, mostly on the coasts. A lot of those people live in blue states and are highly educated. More and more of them are educated women. All of these groups tend to be strongly anti-Trump, often passionately so.

And they are not just voters, they are donors, fundraisers, organizers and prominent voices in their communities. Some of them are even columnists for newspapers and web sites, or TV pundits. In essence, the Democrats would be giving some of their most influential supporters a huge pay cut. The party also would be telling them they can’t ever hope to build up much of a financial cushion for the future."

Thanks for pointing out the fact the Democrats are now the party of the wealthy, coastal elite. Don't forget all the media pundits and talking heads (outside Fox News), entertainers, rich professional athletes (that denigrate our flag and national anthem), all government employees including the CIS and the FBI - scary when you consider the power of technology and the ubiquitous surveillance state - and the Hollywood machine pumping out endless social capital destroying politically correct soma.

The Democrat party is no longer the party of the working class - the bulk of the US population, though it has tricked many people into supporting it via divisive distractions like postmodernist drivel.

I do hope the Democrats can turn themselves around, but that soma is powerful stuff.

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When talking about extra 12% for California Income Tax, Why would Tyler leave out the 3% for Medicare tax. Wouldn't that apply to everyone also.. there is no phase out.. right?
85% definitely sounds worse that 82%

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"But say you had a 70 percent rate at $500,000 and above."

In other words, Tyler couldn't argue against what the Democrats are actually suggesting (70% marginal at $10 *million*) so he made up a completely strawman.

Actually no, that is even more idiotic.

Ted Olson, one of the highest paid lawyers ever, charged around $1,800 an hour. Even at an insane hourly rate like that, you would need to work ~107 hours per week, every week, to churn $10 million.

The people who get paid $10 million per annum are not being paid through payroll at some hourly rate. They are being paid in lump sums, or through capital gains. In that environment, it is trivial to restructure your payments: make them capital gains, move them offshore, make them in kind payments that dodge tax authorities (housing, schooling, company jet, etc.).

I mean seriously, say you make $20 million a year. If the government is going to take $7 million of it, you can afford to burn 50 cents on the dollar to dodge the taxes. Apple avoided at least $13 billion in taxes by hiring multiple law firms to find tax havens, should we really expect their individual officers and stockholders to do any less?

There is simply not that much income that is easily taxable these days. This isn't a world anymore where there are only dozen or so truly stable countries with good laws that welcome global capital. The USSR is dead, the number of coups is dramatically down, and even the communists in China are playing nice with foreign assets.

The actual talking point is pure theater that would raise minimal revenue and may well cost more in lost economic activity than it generates.

I think you're wrong, but at least you're addressing the actual policy suggested by AOC, and not some invented boogeyman.

70% on $10M doesn't need to be addressed because it's a joke. It would raise no revenue and probably lose revenue.

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+1 to Sure.

Hypermobility of capital was one of Tyler's candidates for the Great Stagnation...ignore it at one's peril.

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Great headline. Why not implement a progressive consumption tax instead? Wouldn't the politics of it be better? It's the obnoxious consumption of the ultra rich which upsets people, I don't see taxing that to be as bad politically.

Too wonkish. Intelligence is despised these days by all parties

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Obnoxious consumption doesn't respect borders though. The rich can easily buy their planes, designer clothes, cars, etc. overseas, you can try to catch all that at customs ... but tariffs are not exactly easy to enforce. Worse one man's obnoxious consumption is another man's "business expense". After all, for some companies a private jet likely does save money by making it easier to coordinate the C-suite at meetings and minimize wasted time. For other businesses it just is a way to let the top guys enjoy the flights.

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I don't see how this could help Trump.
Soak-the-rich rhetoric DOES win votes.
The newly elected governor of Illinois campaigned heavily on that theme, proudly stating he would be one of the soakees. He won handily. The rabble currently running for mayor of Chicago are also singing that tune.

It's like we need some sort of skin-in-the-game criteria for voting so we don't end up a mobocracy voting itself benefits.

But Pritzker spent $170 million of his very own family's fortune to buy the governor's mansion. The corpulent toad has more skin in the game than anyone.

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Trump invented the "soak the rich" idea, he had skin in the game at the time as today.

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So soak-the-rich rhetoric wins votes in Illinois and Chicago. How about less Blue states?

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Ocasio-Cortez's attitude comes across as imperious. She doesn't seem to care whether it would be effective in raising substantial revenue, or whether it might have some of those unforeseen consequences, her message is: "Don't bother me with reasons why this won't work, just do it already!"

The message really needs a better messenger than a freshman Congresswoman who seems to think things happen just because you stomp your feet and demand that it be so.

So, perhaps that's what Krugman's for: to lend the prestige of his Nobel to the foot-stomping.

She has looks and charisma. End of debate.

Hmmmmm...

Must be that 'eye of the beholder' thing. Personally, I don't go for that bug-eyed buck-toothy look.

She looks wild-eyed crazy to me.

Go figure.

She's hotter and more fun to be around than Donald Trump. You have to give her at least that.

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There are estimates that 70% marginal tax on incomes above 10 million/year would get an extra $70 Billion/year in tax revenue. If we actually wanted to cover the budget deficit of $1T/year, the 70% marginal rate would have to travel down to much lower incomes, perhaps the below the $200K household income common for the cheese and red wine urban liberals.

She’s repeatedly said there’s no need to pay for any programs. Throw it on the credit card.

Sounds almost like Dick Cheney.... maybe she’s a secret Republican after all.

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"...so tempted to make redistribution the central idea of the party, a disastrous urge in my view."

I wouldn't go above 50%, even though I'm for a Progressive Income Tax, but, please, enough about "redistribution." Redistribution occurs everyday in all kinds of laws. That's what government does. It allocates resources which ends up redistributing them.

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I have become convinced, over the last year or so, that Trump will win a second term.

In an ideal world the democrats would prioritize beating him. This means pursuing a moderate platform that maintains their base but maybe making a few concessions for the Republicans who feel disenfranchised by their party and its apparent new leader. This could be John Kerry's time to shine!

But instead they seem to be moving from one whacko (Elizabeth Warren) to another (Ocasio Cortez). It's almost as though they saw Republicans nominate Trump and thought "Oh yeah? Hold my beer."

+1

I remember last election night, because it shocked me how (left-leaning) media professionals were visibly shaken on live television. Stephen Colbert , whom I absolutely admire, was speechless and close to tears when he had to announce that Trump won. It was that moment I realized how strongly the left is disconnected from reality.

In those few days after the elections some left-leaning/pro-democratic bloggers analyzed correctly why the dems lost, what they should do now and warned, the worst thing to do is to go all-in on hysteria and double down on identity politics. It didn't last until inauguration day when they were back in their wacko-mode to do exactly this. Tuning into Colbert in the last 2 years has been basically "Tomorrow, Trump is going to be arrested" on every day.

So I absolutely agree, unless Trump *is* going to be arrested he will win the next election.

The DNC from the upper ranks to the base seems to be incapable to understand or even engage with reality, which is proved by their proposals, their "whackos" they tolerate and nominate as well as their question-worthy media stunts (e.g. during the midterms, placing anti-semites in sure shot democratic districts so they can commemorate themselves for the first muslim congresswomen "fighting" their way into the house).

After 2 years Dems already control the House. With a growing economy, no foreign policy crisis, rising wages, and low inflation.

What happens when there’s a mini recession?

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Trump can't win a second term when he's in prison.

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If Trump is impeached or arrested elections will be the least of the Democrats problems.

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The reason running on marginal tax rates doesn't work well is because most voters don't understand how they work. The average dumb voter making 50K a year thinks an 80% top marginal tax rate means he'll be paying 40K a year in taxes, and opponents of higher taxes cultivate this misunderstanding among voters.

Democrats or anyone who really wants to win need to run on a real tax on the rich - a tax on wealth, not income, which is a change in wealth and not wealth itself. Run on a platform to eliminate all income, payroll, sales, etc. all taxes on economic activity and replace them with a single tax on wealth i.e. net assets as a use fee for property rights.

I think wealth taxes are hard to enforce/collect. Income for the receiver is an expense for the payer, e.g., the employer or customer, who then has an incentive to report the income/expense as a deduction against his own income. Wealth taxes require identifying a person's art, gold bars, and whatever other assets he hoards in his underground bunker. Even equity in privately-held firms is not so easy to track (or value).

Yep, and it disincentivises saving. I suppose you could get around that with special untaxed retirement accounts.

No it doesn't. It stops the unfair subsidy of property rights protection of wealth holdings.

How does it not?

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The same can be said of any kind of property tax or, indeed, when you go buy property insurance. Moreover, the precise wording of the tax base would be: “in-place liquidation value”. Banks do this kind of evaluation for collateral all the time. But you bring up an important detail which is how do you get a reasonable assessment? Certainly not the way the French assess their net asset tax: Government lawyers “negotiate” with high price lawyers hired by wealthy taxpayers to value their assets!

No, you simply let people place bids for the property in escrow with the government, which pays interest at the treasury rate which is also the net asset tax rate. This is virtually the definition of “liquidation value” since someone is willing to set aside that amount of cash for the instantaneous purchase of the property. The maximum bid in escrow becomes the assessment for the property. The government can make its own bids, which, if maximal, become the assessment basis. An owner thinks he’s being over-taxed? He can force the sale of his asset for the assessment at any time.

Clever, but still the problem of large amounts of assets being held out of sight from the IRS.

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If a wealth tax was implemented I would move to another country, so this country would lose a substantial amount of tax revenue. I didn't save and invest my whole life to give that money away to incentivize eating garbage and going to useless college.

So you're a parasite who doesn't want to pay the cost of property rights protection. You want other people taxed via economic activity to subsidize that cost. Removing parasites from the economy by getting them to move out would be good for the economy.

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Yes, plus the really wealthy will find a way around most of the impact. The guy with 3 Burger King franchises will get hit hard, the Soros and Bloomberg guys will not.

I’d like to see them start with eliminating the deductibility of interest on 2nd homes. If you can’t manage that ...

Didn't that just happen?

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Seems like you're arguing pretty hard against a version of the policy that was not actually proposed, which is to say a threshold 5% of the original threshold.

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Most of the income of America’s super-wealthy comes not from labor but from capital. It can be earned through capital gains, exercising stock options, and from corporations with possible foreign domiciles. Raising the marginal income tax rate to 70 percent will not, for better or worse, squeeze them very much.

Who then is most likely to pay more? Well, it depends on exactly which income level the higher rate would set in. But say you had a 70 percent rate at $500,000 and above. The biggest losers would be high-earning professionals in major cities and suburbs. Think doctors, lawyers, business consultants and the like, mostly on the coasts. A lot of those people live in blue states and are highly educated. More and more of them are educated women. All of these groups tend to be strongly anti-Trump, often passionately so.

This is why you need to run on a wealth tax and lowering or eliminating altogether income and other taxes on economic activity.

A wealth tax is the quintessential tax on economic activity. A progressive consumption tax would be far superior because it would tax lavish consumption of real resources and not investment in productive economic activity, which benefits us all.

Stock vs flow. Economic activities are flows. Wealth is a stock.

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Could it be, that these kind of policy proposals emerge with a broad backing within the party upper ranks, because beating Trump in the next presidential election seems to be an easily achievable goal for the democrats (virtually impossible to lose)?

Meaning that in turn of the next election being a safe bet these proposals are either…

…that because of the felt security they can strip off their masks and show their true leanings OR

… that this "free for all" gives enough space to those that are usually kept quite within the party?

The latter maybe more true, if the "learnings" from the last election are "the louder you are, the better".

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Having read the thing, now, after reading what commentators have written (obviously more important ;)!), doesn't seem too bad, in its basic message (these %s will hit the Brahmin Left more than "the rich", and so are dubious for the Dems even on self interested grounds, let alone wider concerns).

Though:

If you wish to defeat President Trump, talk about health care, wages, good jobs and the economy. As a secondary issue, get some generals to repeat endlessly on TV that U.S. foreign policy could be far more reliable and stable.

That would require them having a more credible set of proposals on this, and that's hard: Obama did nothing for the shrinking middle on wages or good jobs, anyone who knows Random Critical Analysis doubts that much can be done on healthcare, foreign policy is hard for the left to coordinate on (the urge to support the enemy, so long as its not too explicitly right wing, is always too strong), and their only economic plan seems to be to stimulate the way Trump is doing but on programs that everyone's more dubious on (more welfare state-y, less tax break-y and military).

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I think that Tyler does not think his audience is smart, or the electorate. Consider these two paragraphs:

"The responsible fiscal view is this: Right now the U.S. has a large and growing fiscal gap. And no one knows just how strong an appetite the rest of the world will have for U.S. Treasury securities as the federal government’s debts and deficits grow. Eventually, the solution to this problem will require adjustments of unknown size on a number of magnitudes, including both spending trajectories and taxes. It is very likely that the solution will involve some higher tax rates on higher earners.

I know that doesn’t sound as progressive or as dramatic as a 70 percent marginal tax rate right now. But it is closer to what a consensus of economists might agree with."

Get that? We need to tax the wealthy at a higher marginal rate to be fiscally responsible .. but nobody say 70!

A marginal rate on $10 million is essentially meaningless. The number of workers who earn $10 million in wage income is close to zero.

The number of people who earn $10 million in passive income is much much higher.

More importantly there are people every year who “cash out” of a business or exercise stock options that have accrued, or land a major business deal that occurs once every 3-10 years.

That’s who the target is, and as soon as Yglesias et al can whisper Into her ear, it transforms into a 70% capital gains tax.

Honestly I’m all for taxing wage income at 70%. Make the threshold $50,000 for a family of four. Everyone should pay their fair share, and the proceeds should pay for mosquito nets, HIV meds, and food assistance for poor countries.

But make the capital gains zero.

"Using the $10-million income as a cut-off, Mazur said that taxing the $244 billion in income above the threshold at her 70 percent rate would bring in an added $72 billion a year, or $720 billion over 10 years."

To me $720 billion is not nothing, but of course in a serious conversation we could plug in other numbers and tiers.

Won't happen. I would estimate that tax revenues will drop with that kind of tax.

Tax revenues are at a record high right now, with a growing economy. Spending is the problem.

How convenient it is for you to estimate something like that!

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By the way, if I recall correctly you are Canadian, where taxes are collected at a rate of 31.7% of GDP.

Taxes in the US are currently at 26% of GDP.

Maybe you should do a paragraph on that. Describe both what a hellhole it is to live in your country, and why 26% is a hard limit for us?

Canada has a VAT. That's what you need to get the % up. Taxing millionaires won't bring in any revenue. You have to tax the middle class to get that (like Europe). The U.S. already has the most progressive federal income tax in the world.

Is this some kind of iron law? Non-VAT maxes at 26% of GDP and everyone knows that?

Is it on Wikipedia?

It's not an iron law, but VATs are an efficient way of raising taxes. More to the point, if you raise any particular tax too high, it becomes worth it to try and evade it.

Far better to have dozens of taxes, each nibbling away, but none worth taking extraordinary measures to escape.

I am not actually opposed to VATs, but I just push back when they are put forward as some reason marginal rates can never be higher.

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Seriously speaking - If I want to severely punish poor people - what should I do ? What could be done at the policy level or institutional level in order to punish the poor people severely ?

( please do not ask - why I want to do that ? Just tell me what can be done)

America puts more people in prison than Red China. They are mostly poor. We already do a good job punishing the poor. Its time to punish the rich. #maga #wealthtax #anncoulterisright

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In the short term anyway, get rid of all the welfare programs. That would take the % in poverty from around 5% to something like 20%.

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Carbon taxes on transportation fuels, electricity, and heating oil. Toll roads. Tax food. Increase rooftop sloar subsidies and increase electricity rates to fund the subsidies. VAT. Open the borders. Get rid of the minimum wage (after opening borders). Get rid of section 8. End SNAP. Raise social security taxes on everyone but have a cutoff just beyond poverty level wages.

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I would've expected a more nuanced take from you Tyler. Maybe the opinion business doesn't suit you.. it's too reactionary.

You deliberately restated the policy and used a straw-man of a 70% income on $500,000 instead of the proposed $10,000,000. You made your entire argument moot and in the meantime just displayed your biases instead of actually assessing the issue like Krugman did. The US has had a higher top-level income bracket before and it'd be nice to see a healthy debate assing the pros and cons on both sides of the spectrum instead of all this pearl clutching regarding AOC and Democrats.

"70% income on $500,000 instead of the proposed $10,000,000'

Seriously? I didn't even have patience to pick that out. That's bad. And Tyler reeeaaaly disrespects his readers.

I don't feel disrespected, and if you think that half the Democrats in Congress wouldn't go for a 70% tax on incomes above $500,000 you're living in cloud-cuckoo land. They start the discussion at $10 million because nobody will feel threatened by it, but they know there's no money in that proposal so the threshold will creep down until it does raise revenue, and $500,000-$1 million is the "right" range if you're trying to soak the rich and cut off most off the incentive for enterprise.

I am just so tired of this strategy. You refuse to discuss a concrete proposal, and just substitute something else, and then say you were scared of a thing you substituted.

How can you have self-respect with that?

It is a basic dishonest you that get you out of any proposal. Just substitute one you don't like!

Speach to text glitch.

"It is a basic dishonesty that gets you out of any proposal. Just substitute one you don't like!"

He's addressing the general call for much higher marginal rates, not some random proposal by some random person that's not even put forward as a bill

Nope.

AOC proposed 70% starting at $10M. Anyone who references AOC and 70% and then a *different* level is messing with you.

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Setting the threshold at $10 million, where no one will pay it, is much more misleading than setting it at $500,000, where people will pay it and not like it.

In what sense is it "realistic?"

Is it Tyler Cowens realistic policy?

Because it sure is not AOC's proposal.

Is it just a straw man to scare the Democrats? Or as we see on this page is it to motivate Republicans!

How is "realistic" in quote marks there? Who are you quoting?

A $10 million threshold is misleading, because it would affect almost nobody. People would take their income in a different way, enter it on a different line in their return, and avoid the tax.

The lie is that you can raise big money by taxing almost nobody. Even Cowen's modification only affects the top 1%.

If a policy that affects the 0.1% of filers becomes a bad policy when extended to 1% of filers, it was a bad policy to start with.

$10 million is the proposal, and it is misleading to pretend otherwise.

And that is the basic dishonesty on this page. Many of you recognize fiscal problem, and the need for higher revenues, but for some reason you want to blame that discomfort on someone else.

Is it AOC's fault that the last tax bill left this hole, really?

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But say you had a 70 percent rate at $500,000 and above.

Nevermind that the quoted proposal was a 70 percent rate at $10 million and above.

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(Just imagine if the 12 percent were added to an 80 percent marginal income tax rate.)

You mean like if someone eliminated the SALT deduction to own the libs?

Well... it's also good tax policy and efficient. Every economist recognizes that.

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A libertarian doesn't like taxes. News at 11.

An anti-libertarian likes taxes on other people's money. Dog bites man.

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Still wondering in 1959 what percent of the total tax revenues came from the top 1%?
And in 2017?
etc. Is it really worse?

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Could we ask Stephanie Kelton or Bill Mitchell their thoughts?

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The partisan vampire that is Matt Yglesias still has a platform while James Damore still can't find a job. Everyone meditate on that for a moment.

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My prediction for Democratic tax reform will be - Add 3 or 4 more brackets with the top rate being 70%. Re-create SALT. Increase the amount of the mortgage deduction covers. Increase the amount of money you can shove into 401K's and 529's.

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The misconception that plagues most people about income taxes is that people look at their money in percentage terms instead of absolutely. They think that if you root under my couch cushions and find $1.50 then if you do the same for Bill Gates' you'd find $15,000.00. You wouldn't. Just because you've got a billion dollars it doesn't mean that you won't find a 10 million dollar tax bill eye watering. Add on to that the fact that if that's you're bill it means that you can spend at least a couple of million on accounts and lawyers to do something about it and still come out ahead.

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This is some cracker jack economic analysis! The model you present showing this is an inefficient way of raising revenue is excellent. Wait, you did not prepare a model? Well, you cite voluminous studies showing that this is not an efficient or necessary way to pay for the spending that Congress has approved and re-approved for decades, right? I'm sorry, your column does not cite a single study on those topics? Oh, so if you didn't prepare or cite any economic models, what does your analysis consist of then? Your intuition about capital formation and some arm chair political analysis (I did not realize that you were a political scientist or had invested significant time in reviewing the literature, but good for you for developing such a secondary specialty! Can you point us to the bases for your political science claims? We would all benefit from seeing them!).
It is also impressive that you feel comfortable rejecting a policy proposal by criticizing a completely different policy! Who knew that it is logically consistent to say that a 70% marginal tax on income over $10M is a bad idea because the politics of a 70% marginal tax on income over $500K would be, in your expert political science opinion, bad for Democrats! That is some cool argumentative jujitsu. It's downright Brooksian!

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A progressive consumption tax (no estate or corporate income tax) would solve the "conversion" problem. And, it is a good idea on ots own merits.

Are you talking progressive-by-proxy, with targeted exemptions and surtaxes matching spending patterns at the low and high income ranges, or a literal progressive tax on spending (compete with the implied privacy nightmare, outlawing cash transactions and barter, etc.)

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When poll and asked it the rich should pay more taxes the majority answer, Yes!

When poll and asked what the top marginal tax rate should be the average answer is 30%.

People don't know what top marginal tax rate means but if you get up to $10million your average tax rate is over 30% already!

I told a working class friend who was pretty much for higher taxes before knowing the rate, that New York a Yankees player (I do not remember who) would pay about half his income in tax and he thought that was way too much.

Tongue in cheek>Political reality dictates, we raise the top marginal tax rate to 80%,to keep elite Democrats happy,and chock the tax code full of exemptions and loopholes so no one pays anything close to that,to keep GOPers happy and keep progress chugging along.

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Wouldn't a high tax rate (assuming no behavior change or tax avoidance) just be insanely inflationary?

I remember reading a good article a while ago that you can't tax a rich man who doesn't spend. Simplified due to the fact his resources end up in assets (financial) instead of consumption. He ends up bidding up the price of things like bonds causing lower rates for borrowers.

If you hiked his taxes his income would be transformed to people with a higher propensity to spend. This should be inflationary. Which would cause the FED to hike rates more. Which would then cause many people to have higher mortgage rates. And thus rob consumption from borrowers (largely middle class) and give it most likely to poorer Americans thru transfers who would spend.

The issue with the Lefts arguments on this issue is its incredibly difficult to figure out all the linkages and who would end up benefiting.

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Something needs to be done about capital flight, and sure, the Democrats can't press the professional class too hard, since they are an important voter and donor bloc that could easily switch to the Republicans. Yet, it may be good political messaging to say "the super-rich are spending too much of their income on luxuries, or are hoarding their fortunes, and we need tax policy to be able to compel more humanitarian spending and investment into national improvements." There are many groups in the Democratic coalition that see the super-rich as having unfairly gained their positions in the economy, having taken advantage of a corrupt oligopoly, and would consider the taxation a form of restorative justice, in addition they would be animated by the prospects for greater funding for their desired policies. This is true for environmentalists, social democrats, progressive reformists, black liberals, and the working poor. While it may invigorate their base, and increase turnout, the Democrats are taking the risk that this message does not have an equal or greater effect on Republican voters.

If you could make philanthropic spending and/or sustainable business investment tax-deductible, then taxing the rest of income over $10 million at a high rate may be an excellent idea. Or you could capture only the most frivolous spending and saving by the super-rich with taxes on luxury goods and direct progressive taxation of wealth. In any case, you could create a tax policy that highly encourages expenditures to increase social well-being one way or another. If this was clear in the platform and messaging, I predict the Democrats could alleviate many of the fears of their most wealthy supporters.

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