Chris Christie Vows to Bankrupt NJ

"And what makes you think high earners are productive?

This is a tautology."

Wow, it just gets dumber and dumber. You really don't think there's a difference between income and productivity? Even in a perfectly efficient market that's not the case.

> 2) There's ample evidence about what cutting tax rates for rich people does--they save most of it.

This is the false liberal propaganda of the century and ignores secondary effects on incentives and recycling capital in the private market rather than inside government, effects which trump the savings rate.

"This is the false liberal propaganda of the century and ignores secondary effects on incentives and recycling capital in the private market rather than inside government, effects which trump the savings rate."

Been watching Fox News a lot lately, huh?

Here's some data (from that bastion of liberal demagoguery Moody's Analytics): "http://www.bloomberg.com/news/2010-09-13/rich-americans-save-money-from-tax-cuts-instead-of-spending-moody-s-says.html

Where's yours?

(By the way, the second half of your response, is a complete non-sequiter. If the question is whether the poor spend more of their money from reduced taxes than the rich, whether the government is efficient at spending the money is completely irrelevant. Nice attempt to change the subject, though.)

> If the question is whether the poor spend more of their money from reduced taxes than the rich, whether the government is efficient at spending the money is completely irrelevant.

Wrong, the question is whether there is net economic benefit from reducing taxes on the rich. You've decided to considering only an unsophisticated direct savings effect, which would make you fail any economics class.

"Wrong, the question is whether there is net economic benefit from reducing taxes on the rich"

For those following along at home, here's the conversation so far:

crescent22: The government would make more money by making poor people pay $300 than by increasing the marginal rate on rich people to 90%.
jordyn: That's not true, a 1% increase on rich people will generate more money than your scheme
crescent22: ... ...
jordyn: *and* it's a really bad idea because you're getting rid of one of the most effective programs by which the government encourages poor people to work
crescent22: Well, but then cutting taxes for rich people must be even better!
jordyn: Actually poor people spend more of the money they get back in tax reduction than rich.
crescent22: That's propaganda.
jordyn: Here's evidence that says otherwise.
crescent22: But I think we should cut rich people's taxes!

I cannot change the fact that the conversation was on 80% taxes or 90% taxes or 94% taxes when I entered it. I'm happy to continue saying The government would make more money by making poor people pay $300 than by increasing the marginal rate on rich people to 90%.

It is nonsensical to get into a situation where the poor can only ever have their taxes cut, never raised. Then the creep comes and suddenly half of America does not pay income taxes anymore. Whether they pay FICA or Medicare isn't relevant - these are supposed to be lock-boxed and restricted-use revenues. You cannot have a situation where only half of the country funds non-discretionary spend.

crescent22: Your idea continues to fail the test of multiplication. Taxing everyone who didn't pay taxes last year will generate $15B in revenue. That's vastly less money than small changes to tax policy affecting people in upper income brackets will generate. It's orders of magnitude less than what a 90% marginal rate would do, even assuming that a lot of income would flee the country as a result. This is a question of math, not ideology.

As someone who pays relatively high marginal rates, I'm not at all opposed to the idea that we ought to be open to raising taxes across the board, but income is so concentrated in a small group that any proposal to generate reasonable amounts of revenue are going to require increasing taxes on rich people. In particular, trying to squeeze taxes out of folks earning the EITC is likely a bad idea for the economy and runs against the more market-based approached to reducing poverty that the country has been heading in for years.

> crescent22: Your idea continues to fail the test of multiplication
Not if the multiplier is negative.

> It's orders of magnitude less than what a 90% marginal rate would do, even assuming that a lot of income would flee the country as a result.

The income would not only flee the country; it would not even be produced if the capital stayed in the country.

> Taxing everyone who didn't pay taxes last year will generate $15B in revenue. That's vastly less money than small changes to tax policy affecting people in upper income brackets will generate.

I don't have a problem doing both. I believe every income-earner should pay income taxes. Everyone (who earned income) got a tax cut in 2001 and 2003. Everyone should have their taxes raised in 2013. A culture of dependency and ingratefulness is very dangerous when it comes to financing the government.

"The income would not only flee the country; it would not even be produced if the capital stayed in the country."

History disputes this point, since in the past we had 90% marginal tax rates during a period of incredible sustained economic growth.

Making people who make less than $20k a year pay taxes will only put more people into poverty. INstead of making them pay taxes to generate a measley $15 billion, we could easily generate that money by:

1. Cutting defense spending
2. Eliminating agricultural subsidies
3. Increasing the estate tax

"The government would make more money by making poor people pay $300 than by increasing the marginal rate on rich people to 90%."

People who study taxes and economics for a living would disagree. Raising taxes on the rich will generatee approximately an extra $70 billion a year. Making poor people pay taxes will generate $15 billion.

> History disputes this point, since in the past we had 90% marginal tax rates during a period of incredible sustained economic growth.

Capital is far more mobile now. So is labor. Economic growth was then defined by a period of American hegemony over the Western world and females entering the work force.

> The government would make more money by making poor people pay $300 than by increasing the marginal rate on rich people to 90%.

> Raising taxes on the rich will generatee approximately an extra $70 billion a year. Making poor people pay taxes will generate $15 billion.

I don't believe your comment directly rebuts mine.

"Capital is far more mobile now. So is labor. Economic growth was then defined by a period of American hegemony over the Western world and females entering the work force."

Okay, so why didn't the Clinton tax increases cause your theoretical problems? You have various reasons why the vast amount of data on these topics might not apply, but there doesn't seem to be any actual data to support your position, so there's no good reason to take it particularly seriously.

why bother arguing with a soundbite delivery tool??

jordyn, you are making a lot of specious arguments. And it seems as if you don't understand economics.

crescent is right, this liberal talking point about spending vs. saving is just a misleading attempt to justify redistribution.

I posted elsewhere that as of the latest data, the 40th-60th percentile of taxpayers were around $40,000-$60,000 in annual income, and that the average of that group paid 3% in federal income taxes. 3%. The tax code already soaks the most productive in this country.

And your comparison to the 1950s is misguided. The world in ruin in the aftermath of World War II is not a good context for the relative economic productive capacity of the world today.

> Okay, so why didn't the Clinton tax increases cause your theoretical problems?

Internet boom. Productivity boom. American hegemony only improved in the 1990's. It's disappointing to have to mention this.

> there doesn't seem to be any actual data to support your position, so there's no good reason to take it particularly seriously.

There's a little continent across the pond. It's called Europe. 2% GDP growth constitutes good there. It's normal not to get a job until you're 35.

"It's normal not to get a job until you're 35."

Do you have a source for this? Last time I checked, Germany has a lower unemployment rate than the U.S.

I'd stop working in a second if the marginal rate went to 90%. I'd probably stop any higher than 60%. Maybe 55%.

Germany is 7.5% unemployment and England is 7.9%.

Interesting how socialist conveniently ignores Spain, Italy, Greece, Portugal . . .

Germany is only one part of Europe. Germany does not have a lower unemployment rate than many parts of the U.S.

LICComment: "jordyn, you are making a lot of specious arguments. And it seems as if you don't understand economics."

Yes, clearly the one person providing data in this argument is the one with the specious arguments that doesn't understand economics. I don't claim to be an expert on economics, but I'm pretty good at basic math, which seems to give me a real leg up on most of the debate so far.

"crescent is right, this liberal talking point about spending vs. saving is just a misleading attempt to justify redistribution."

Hey, either of you can show some data that disproves the point. Just calling it a liberal talking point doesn't make it not so.

"I posted elsewhere that as of the latest data, the 40th-60th percentile of taxpayers were around $40,000-$60,000 in annual income, and that the average of that group paid 3% in federal income taxes. 3%. The tax code already soaks the most productive in this country."

As pointed out earlier, this creates a false correlation between productivity and income.

Moreover, your 3% number is not that interesting. 3% as compared to what? The 14% that the top quintile pay? Boo hoo. Even the top 1% only have a 23% effective tax rate, so it's not like the burden is so outrageous today.

This discussion is really, silly, though: income is so concentrated at the top that it doesn't matter what you do with the lower brackets. I agree they should share in some of whatever tax increases are to come, but the idea of trying to tax everyone just for the sake of it may have some political/personal appeal, but it's horrible public policy with hardly any benefit.

Italy is 7.8$

Italy is 7.8%.

"Germany does not have a lower unemployment rate than many parts of the U.S."

It sure does when you look at Nevada and Michigan.

I'm still waiting for the link abotu Europeans not finding jobs until they are 35. I'm not letting that oen go until I see evidence.

"There's a little continent across the pond. It's called Europe. 2% GDP growth constitutes good there. It's normal not to get a job until you're 35."

Ah, so your theory is that Europe is more like the United States than the United States of recent history is like the United States? Good one!

Moreover, that's data, that's an assertion not backed by facts. Here's some data, let's look at GDP growth in Denmark (the country with the highest taxes in the world) versus the US:

http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_kd_zg&idim=country:DNK&dl=en&hl=en&q=denmark+gdp+growth#met=ny_gdp_mktp_kd_zg&idim=country:DNK:USA

The US seems to do somewhat, but not outrageously, better. It certainly doesn't seem to be the cases that the range of values is astoundingly better in the US.

...and unemployment is currently 7.8% and was as low as 3.1% a few years back; both of those figures are substantially better than the equivalents in the US.

The Dutch, UK, German, and Austria, Sweden, Finland, Canadian higher tax and more socialist economies are doing better....not only now, but did so during the Bush years. 27 out of 30. The entire decade. The US was pretty poor versus most of the OECD from 2001-2008 or even 2003-2008.

It was at least high-middle of the pack in terms of growth in the Reagan and Clinton years. Overall from 1980-2005 the US was #10 out fo 30 in terms of GDP growth in the OECD. But again, #27 during the Bush years.

And the two lower tax places in the OECD were...Ireland and Iceland. So the lowest tax places pretty much did the worst. Over the last decade

Now correlation does not equal causation, but the simple fact that the US did better in the 8 years with higher taxes than it did under Bush, or that countires with higher tax did and are doing better than us from 2001-now is pretty much not an argument for lowering taxes.

By the way, that sentence above is supposed to read: "Moreover, that's not data, that's an assertion not backed by facts".

I forgot to point out one more little gem as well, which is this response to why the Clinton tax increases didn't hurt the economy:

"Internet boom. Productivity boom. American hegemony only improved in the 1990's. It's disappointing to have to mention this."

But this is my whole point. These are all symptoms of an effective economy inhabited by productive people. The fact that it occurred in the face of tax increases strongly disproves the notion that increases in tax rates will make all of the productive, income earning people leave the country. In fact, they stayed and generated a huge economic boom. I won't go so far as to say that the Clinton tax increases caused the prosperity of the nineties, but it's certainly clear that they didn't do anything to dampen it. Your supposed rebuttal just makes my point for me.

Oh yeah, and those "high tax" states? Not so high if you include ALL state and local TAXES, not just income taxes.

http://www.statemaster.com/graph/eco_tol_tax_bur_pergdp-total-tax-burden-per-gdp

Suddenly, a lot of red states are high tax if you count all taxes collected. Mississippi is #5 and Kentucky #10, while NY and NJ are #31 & 33. In terms of % of state GDP.

But its easier to focus on...rather... CHERRY pick the stats that suit you.

But yes by any measuer, Texas is dead last.

Canadian unemployment rate is 7.6%

Netherlands unemployment rate 4.7%

Austrian unemployment rate 8.2%

Sweeden unemployment rate 8.1%

Finland unemployment rate 7.9%

Now crescent will tell us that we an only compare the unemployment rate in Europe to "certain areas" in the U.S.

Low tax Ireland is at 14.1% unemployment

and if we look outside of Europe, high tax Socialist/ Marxist Brazil is at 5.7% unemployment.

And communist China is at 4.2% unemployment.

Last I heard, independent sources put real overall US unemployment at 22% or so. Spain, Greece, Ireland, etc.?

at least states with low taxes all have surpluses. Look at Texas, they have no unions, low taxes and their surplus is.... oh wait, never mind.

By the way, the unemployment rate in free-market Liberia is 85%. Or at least it was in 2003; maybe they've eliminated employment altogether by now.

Somalia is the most free market country in the world. The govt. literally only controls 3 blocks of the capital. What's unemployment there? 99%. Is it any wonder pirating is the only industry?

Is it any suprise that low tax states and countries that Conservatves love to use as models keep collapsing?

By the way, the unemployment rate in free-market Liberia is 85%

ah another of your real estate conversations....

How about we compare all of Europe against all of the U.S., Mr. Socialist?

> Eurozone unemployment stuck at record levels
> By Stanley Pignal in Brussels
> Published: January 7 2011 12:16 | Last updated: January 7 2011 18:01
> Eurozone unemployment remained at record levels in November, dashing hopes that Europe’s nascent economic recovery would filter down quickly to its labour market.
> The jobless rate in the 16 countries then using the euro was stable at 10.1 per cent,

> The US seems to do somewhat, but not outrageously, better. It certainly doesn't seem to be the cases that the range of values is astoundingly better in the US.

29 out of 37 years by my ballpark US growth is above that of Denmark.

> ...and unemployment is currently 7.8% and was as low as 3.1% a few years back; both of those figures are substantially better than the equivalents in the US.

I would be willing to bet 80-90% of the years of the last 30 US unemployment was below that of Denmark's.

> And communist China is at 4.2% unemployment.

So those 200 million subsistence farmers are employed?

> As pointed out earlier, this creates a false correlation between productivity and income.

The correlation is not false. It's real, and it's positive. The only argument is how close to 100% it is.

Prove it.

Sorry, too busy being productive.

jordyn, other than government workers, you believe that people who produce less valuable goods and services have higher incomes than those who produce more valuable goods and services? And you base this crazy logic on what exactly?

It is frustrating trying to debate with the illogical and the factually challenged.

"How about we compare all of Europe against all of the U.S., Mr. Socialist?"

Because that's dumb. Countries in Europe have wildly different tax policies (to say nothing of other economic conditions). You're trying to make the argument that they're representative of some sort of bad policy. Comparing to a whole continent is just incoherent.

"The correlation is not false. It's real, and it's positive. The only argument is how close to 100% it is."

Actually, as I pointed out earlier, if we're looking at productivity *gains* in recent years (which is probably what we want to encourage), the correlation is probably negative, at least if you compare top earners to the rest of the economy.

"I would be willing to bet 80-90% of the years of the last 30 US unemployment was below that of Denmark's."

How much will you bet? It's been true precisely 0 times in the past 10 years, as far as I can tell. In 2000 and before, it does appear that the Danish unemployment rate was generally higher, but often very close to the US unemployment level.

And this is the country with the highest taxes in the world, keep in mind. It's economy may slightly underperform the US, but it's hardly a disaster.

http://www.shadowstats.com/alternate_data/unemployment-charts

This entire discussion presupposes falsely that an appropriate measurement of a country's success is the unemployment rate. Denmark's rate are suppressed by the world's most expensive labor market policy.

The country spends 5% of GDP on labor market policies (unemployment, training, subsidies to employers, and related administration), which is preposterous and renders any comparison laughably invalid, and fully explains why you chose to compare a lovely but meaningless country of 5.5m to the United States.

"jordyn, other than government workers, you believe that people who produce less valuable goods and services have higher incomes than those who produce more valuable goods and services?"

I believe three things:

1) On average, you are probably correct that higher earners tend to produce more than low earners, but the correlation is far from direct.

2) There are many people with extremely high incomes who produce little or no value in the process. For example, some analyses of "financial innovation" have shown an overall negative effect on the economy, but it generates huge amounts of income despite this fact. Similarly, people passively providing large amounts of capital and realizing large incomes as a result of these investments don't add to the economy in a way that would be any more usefully provided than if that same capital were invested by a bunch of smaller, less wealthy folks.

3) As I pointed out earlier, the "non-rich" are becoming more productive at a faster rate than the rich, but not earning more as a result. That's pretty broken, and makes me profoundly skeptical of claims that we should defend rich people because of how productive they are.

"It is frustrating trying to debate with the illogical and the factually challenged."

I agree. I'm still waiting for you to present *any* facts to substantiate your position.

"This entire discussion presupposes falsely that an appropriate measurement of a country's success is the unemployment rate. Denmark's rate are suppressed by the world's most expensive labor market policy."

You were the one who said that whether people could get a job or not was a sign of how Europe is broken.

You end up arguing with yourself a lot. I guess that happens when you make silly assertions and then have to backtrack when the actual data appears.

What % of GDP does the US spend on labor market policies (military personnel, defense-contracting, subsidies to corporations, allowance for unproductive financial services products that provide no actual capital for actual manufacturing or other processes)?

> You were the one who said that whether people could get a job or not was a sign of how Europe is broken.

I stand by that. When you want to talk about Europe, where the unemployment is still higher than the U.S. despite a deep recession in the U.S., instead of a cherry-picked part of Europe that is 1.5% of Europe's population, let me know.

If I wanted to do something similar, I could say North Dakota is doing great, but would it speak for the U.S.?

> allowance for unproductive financial services products that provide no actual capital for actual manufacturing or other processes)?

This is where you are wrong. America's deep and liquid capital markets have for generations been a major competitive advantage.

The generations that preceded 1980, yes.

jordyn, you are not providing any facts or reasoning to support your conclusory statements. You only give anecdotal hypotheticals, and poor ones at that. You can point out unsubstantiated conclusions all you want, it doesn't make your argument.

People don't make high incomes from possessing capital. They need to put that capital to use (I guess what you called "providing" it) in a productive way. Your number 2 point is unsound.

crescent22: "I stand by that. When you want to talk about Europe, where the unemployment is still higher than the U.S. despite a deep recession in the U.S., instead of a cherry-picked part of Europe that is 1.5% of Europe's population, let me know."

I cherry-picked the country with the highest taxes. That should help prove your point if it's valid, no?

But you really don't seem to understand that Europe is not a country, despite having roughly the same population as the US. The entities that are useful for the comparison of tax policies are countries, since that's where tax policy is set. If you want to compare, e.g., privacy policies between the EU and the US you may be onto something since there's a lot of Europe-wide privacy policies, but while Denmark and Ireland are both in Europe their tax policies have basically nothing in common, whereas all of the US has identical tax policies.

LICC: "jordyn, you are not providing any facts or reasoning to support your conclusory statements. You only give anecdotal hypotheticals, and poor ones at that. You can point out unsubstantiated conclusions all you want, it doesn't make your argument."

I don't think you understand what "hypothetical" means. That's something that might happen. What I'm providing is data about things that already did happen.

On the other hand, it's possible some of them are anecdotal. But some data is still better than no data. When you provide some data that's better than mine, I'll do more than a cursory Google search to substantiate my positions, but frankly that's all that it takes in most of these cases because these points are well trodden with the vast preponderance of evidence on their side.

"People don't make high incomes from possessing capital. They need to put that capital to use (I guess what you called "providing" it) in a productive way. Your number 2 point is unsound."

But unless they're fairly active investors (e.g., Warren Buffet) they're not providing any value that a less concentrated form of wealth wouldn't do just as well. Someone with $1 million dollars in each of 50 different Fortune 500 stocks isn't doing anything for the economy that 5000 people with $10K investments in the same basket of stocks wouldn't accomplish as well. So conflating these people's incomes with their productivity is misleading--they're wealthy, not productive.

> while Denmark and Ireland are both in Europe their tax policies have basically nothing in common, whereas all of the US has identical tax policies.

Really? I'm looking at a 12.62% marginal tax rate here in New York and wondering how good life would be in Washington state and Florida.

Enjoy being encrusted in mold, but having a few more pennies. Buh-bye.

"Really? I'm looking at a 12.62% marginal tax rate here in New York and wondering how good life would be in Washington state and Florida."

There are no pan-European income taxes, dummy.

so he takes a small country with the single largest labor subsidization policy and goes through the trouble of comparing its unemployment with the U.S., a country with 6000% more people.

"Really? I'm looking at a 12.62% marginal tax rate here in New York and wondering how good life would be in Washington state and Florida."

Congratulations. You've found the biggest discrepancy in the United States, so a top combined income tax rate of 35% vs. 47%. What's the biggest gap in Europe? Looks like in parts of Switzerland the top tax rate is 22% versus ~60% in Denmark. So a 34% difference in rates versus a ~300% difference in rates.

Are you really trying to argue that tax policy differences between countries in Europe are comparable to tax policy differences between states in the US? Really?

No, my original assertion was that tax policies and labor policies in Europe lead to structurally higher unemployment. I'd be happy to use an average or median tax rate for both Western Europe and the U.S. to keep you from cherry-picking.

"so he takes a small country with the single largest labor subsidization policy and goes through the trouble of comparing its unemployment with the U.S., a country with 6000% more people."

Comparing with Europe was your idea. I was perfectly happy comparing to the US of the 90s. That's a much more controlled analysis in any case.

In any case, other people have already pointed out that Germany has lower unemployment than the US. That's the biggest country in Europe. Germany has pretty high taxes, too: the top federal marginal rate looks to be ~50.5%. How can they do this if taxes cause all the smart people to leave?

Even looking at Europe as a whole, with a bunch of admittedly dysfunctional economies (many of which have relatively lower tax burdens), the overall unemployment rate currently looks to be basically identical to the US. So even accepting your silly premise, there doesn't seem to be much to your argument.

Why don't we compare "North America" to "Europe" instead? I'm sure lumping Mexico and the Carribean into the analysis will really help make the analysis more meaningful.

> Even looking at Europe as a whole, with a bunch of admittedly dysfunctional economies (many of which have relatively lower tax burdens), the overall unemployment rate currently looks to be basically identical to the US

Oh really? After the largest recession in 75 years affected the U.S. orders of magnitude more than Europe?

Why don't you run over to your trusty dusty Google Public Data and see what it looked like over the last economic cycle - maybe 8.5% in the euro zone and i'd say about 5.75% in the U.S.- merely a 50% difference.

Like I said before, if you want to lump all of Europe together you should lump all of North America together.

Or you should compare countries.

Or you should just look at the rich set of data available from historical changes within the US.

But since none of these methods proves your point, you insist on comparing one country to a bunch of countries and act like it means something.

P.S. If you think that the recession hit the U.S. "orders of magnitude" more than Europe, you don't understand what an order of magnitude is.

jordyn, you clearly have a lack of knowledge of capital markets and capital investment. A person that holds blue chip stocks, unless they are very successful active traders, are not generating high levels of income. But a person who invests invests directly in a business is adding value by putting capital to use to generate economic activity.

You seem to think that people with high incomes don't deserve it and are just fortunate. That view has led to some poor results when used as a basis for governing and economic policy.

jordyn is trying to defend cherry-picking small population countries to compare to the entire U.S. This is an example of another bad argument. You should at least be able to compare the countries that use the Euro, especially since they are all supposed to operate under the same fiscal guidelines, and Germany has to bail out Greece and others.

COnsidering that this has become an argument on taxes and spending, the fact the Europe or the EU or the Eurozone DO NOT HAVE Federal Taxing or spending its silly for YOU to try to make it thus, LICC.

The fact that you are trying to argue that NJ should do what this or that state does elsewhere in the US makes your attempt to lump Europe together entirely disingenuous.

LICComment: If you have $1 billion and get a 1% return, that's still $10 million. That's a lot of income independent of how crappy the return is. Moreover, if you just invest in an index fund, you'll get market returns without expending any effort whatsoever.

FWIW, there's a lot of people with high incomes who are absolutely deserving of it. There's some people who have high incomes who have a detrimental effect on the overall economy. There's more of the former than the latter (see my original point #1), but as income inequality increases it becomes less and plausible that the rich "deserve" all of their money, especially as income and wealth become intensely concentrated in a small group of people.

As for whether I'm cherry picking small countries, I'm having a hard time figuring out how the biggest country in Europe is a small country. And, as I've said several times, the entire exercise of comparing Europe to the US is stupid; but if you're going to do it, comparing the effects of tax policies on any scale other than the national scale is ridiculous. Feel free to choose a representative country, but trying to make sense of "Europe's tax policy" is incoherent regardless of whether or not they share a common currency. This would be like lumping El Salvador or Panama together with the US when discussing our tax policy because they use the US dollars as currency.

How many people in the U.S. do you think have $1 billion in investments?? A couple hundred?
Now you are making straw man arguments.

How many people in the US do you think have $10M incomes? The argument scales fine as you lower the numbers. You only need a few hundred thousand to be in the top 1% of earners.

I think you're missing the point of the argument, in any case.

Your argument is equality of outcome as opposed to equality of opportunity.

Huh? What argument are you talking about? You seem to be trying to insert some tired political debate into this discussion and then arguing against it.

ok, enough with all the arguing. I want proof that Europeans can't find jobs until they are 35. Don't make outrageous claims without any evidence.

Socialist, jordyn, please stand by. crescent22 is trying to find the right GOP bumper sticker to copy into a reply.

>Making people who make less than $20k a year pay taxes will only put more people into poverty. INstead of making them pay taxes to generate a measley $15 billion, we could easily generate that money by:

Agree

>1. Cutting defense spending
Agree though I'm interested in details

>2. Eliminating agricultural subsidies
Agree completely

>3. Increasing the estate tax
Increase the rate, but not the minimum estate threshold

>LICComment: If you have $1 billion and get a 1% return, that's still $10 million. That's a lot of income independent of how crappy the return is. Moreover, if you just invest in an index fund, you'll get market returns without expending any effort whatsoever.

Market returns include risk. Has nothing to do with effort of the capital provider.

"Market returns include risk. Has nothing to do with effort of the capital provider."

You miss the point of the argument. $1 billion concentrated in the hands of a single passive investor doesn't provide any more benefit than the same $1 billion passively invested by 10,000 investors. The billionaire isn't more productive than the small investors; he's just wealthier.

Ok what is the point of the argument?

Read the last sentence?

But I'll summarize again: just because your income is high doesn't mean you're particularly productive.

huntersburg, jordyn is making another inane argument. She first tried to argue that lower income people are more productive than higher income people, which makes no sense. She then backed off a little, but is still trying to make the point through a hypothetical anecdotal example. Her premises fail.

Actually, there's been two assertions:

1) Income and productivity aren't necessarily correlated. Specifically, I wrote: "You really don't think there's a difference between income and productivity? Even in a perfectly efficient market that's not the case."

and, I think the other argument you're alluding to:

2) Productivity for non-rich people has been increasing faster than productivity for rich people. As far as I know, no one has even attempted to argue this point; I didn't "back off a little", I just assumed since the point was uncontested that there was nothing less to discuss on this angle.

It's good to see that you completely miss the point of the argument in any case. It doesn't matter how much money is involved in the example--the point is that the income purely scales with the amount of money invested and has nothing to do with how "productive" the investor is.

jordyn, you have a typical misguided liberal view. We are not talking about "rich" people. We are talking about high income people. There is a very significant difference. Sometimes the two overlap, sometimes they don't. But your straw man arguments are not effective.

Oh, are we back to arguing that people in the top 1% of all income earners are not rich? That's always a good one.

The whole point of the argument is that people with a lot of wealth can be people with a lot of income without doing anything particularly interesting or productive to do so. In fact, someone with a lot of money can generate a lot of income while being considerably less productive with their capital than others would have been.

Anyone with a large investment portfolio that earns crappy returns can be both high income and unproductive at the same time.

I have a feeling we're about to get a lesson in the transitive property of productivity, which is when we find out that Georgina Bloomberg really really is a truly productive person because once earned, money carries over for ceaseless generations without being taxable ... becomes somebody (else) worked really hard for it.

You are basing your conclusions on such a miniscule portion of the population to distort the argument. For the most part, people earn income based on their production of goods and services. The more productive people are, the more income they earn. There are some who receive income through inheritance or investments, and among that group a small number may have very high incomes from it, but you are basing general conclusions on very small exceptions.

You should fact check before you decide to base your argument on something that is relatively straightforward to verify.

For those earning over $1M a year, 31.4% of all income is capital gains and dividends, and 92% of households get some of their income through these channels (versus 1.4% of all income amortized over 21% of households with incomes less than $100K). So investment income accounts for a huge portion of the "productivity" that you assume must automatically attach to people at the upper end of the income scale.

You can take a look at the data yourself at: http://www.taxpolicycenter.org/taxtopics/Guide_to_TPC_Tables.cfm

Your own analysis defeats your argument. Allocation of capital is a productive activity. Even so, by your account most income for those earning $1M a year (and I'm not sure of the relevance of the $1M number) is not from capital gains and dividends.

Thanks for proving my point.

Since I'm repeating myself, I'll make this point one last time and then only bother responding if there's something substantive and new to respond to:

- Unless done in interesting ways, allocation of capital is not particularly more efficient/productive when done in large chunks than in small chunks that are aggregated by, e.g., banks or the stock market. So someone with a lot of money isn't using it any more productively by investing it in the same way as a bunch of people with smaller amounts each that end up putting the same amount of money in equivalent places. Remember the context of the original argument, which was that we don't want to disrupt these super-productive people by raising their taxes in favor of poorer people; if the capital can be put to use just as effectively regardless of who has the money, the argument against higher taxes for rich people fails.

- You argument before was that my analysis applied to a "miniscule" number of people. Now that it turns out that it applies to about a third of the income we're talking about here, you've decided that since it's "less than half" . But assuming any reasonable distribution of non-investment to investment income, you'd expect at least 10% of the $1M+ earners to earn the majority of their money through investments. So we've gone from "strawman" to tens of thousands of people somehow.

Your first point- this argument MAY be relevant if you were talking about increases to the capital gains tax. But we were discussion income taxes. Regardless, a bunch of people with small amounts will not invest in the same way as someone with huge amounts of investable capital.

Your second point is irrelevant.

So now all you have to do is somehow prove that the people with huge amounts of investable capital will invest their capital in more productive ways than people with smaller chunks and you've got yourself an argument.

Now that you seem to have conceded that the initial argument was not a strawman, I agree that it's not very interesting to belabor the second point.

"a bunch of people with small amounts will not invest in the same way as someone with huge amounts of investable capital." ... true: smaller investors have a much harder time sending capital out of the country to emerging markets; they tend to invest it locally/nationally instead.

It's a bit more nuanced than that alanhart, and smaller investors have many investment choices abroad through mutual funds and ETFs. But if you were correct, that could mean that smaller investors are more responsible for creating bubbles and excessive valuations at home.

Productivity of capital though seems to be a different question than taxing employment. If we overtax capital, we'll have more of the outflows of capital from the U.S. that alanhart is concerned about.