Monday, April 06, 2009
Depending on the rich
Clive Crook of the Financial Times deconstructs the United States budget mess in a column you should not read if you already have trouble sleeping at night. Toward the end there is this interesting bit, which perhaps explains the intense emotions around the president's proposed tax increases for the "rich":
Mr Obama intends to squeeze the rich, but the scope for this may be more limited than US liberals would wish. Few Americans seem aware that the US income tax code, as a recent Organisation for Economic Co-operation and Development study showed, is already one of the most progressive. Even before the rise in top marginal rates promised by Mr Obama, the US income tax collects 45 per cent of its revenues from the highest-income decile. Compare that with Britain at 39 per cent, Canada at 36 per cent, France at 28 per cent, Sweden at 27 per cent and an OECD average of 32 per cent.This difference is only partly explained by the less-equal US income distribution. The fact that the US has no broadly based national sales tax – value added taxes make Europe’s overall tax codes less progressive still – only underlines the point. The US tax system raises comparatively little revenue; what little it raises already comes disproportionately, by international standards, from the rich.
Of course, this also means that the fiscal condition of the United States, such as it is, depends more on the rich continuing to earn large amounts of money than other countries do. By virtue of its tax policy, our government both bashes the rich and needs them to keep working hard to a much greater degree than the rest of the OECD. The question is whether the rich will respond in the way our politicians hope they will, by producing still more.
Perhaps the rich (and those ambitious to be rich) now understand that the whole thing depends on them working harder for less after tax income, which would in turn explain the crazy popularity of a 50 year-old novel about business.
CWCID: Paul Kedrosky.
6 Comments:
By 
, at
Mon Apr 06, 02:38:00 PM:
The politicians are not worried about how dependent the national tax revenues are upon the high income earners. When the high incomes are taxed into oblivion, the tax laws will simply adjust by Congressional vote to shift the burden onto the rest. We need to vote in new politicians.
By , at
Mon Apr 06, 02:54:00 PM:
Bottom line: Obama & Co. have the next four years to impose a national sales tax -- among much else, of course. The "new era of responsibility" marches onward.
By , at
Mon Apr 06, 03:28:00 PM:
TH,
I'm curious -
I can discern a few things from being a longtime reader of your blog:
1) You are a member of the much-derided "rich"
2) You live well below your means
3) You work rather long hours
In light of these things, have you given any strong consideration to acting in the ways recommended by that "50 year-old novel about business?" What keeps you in your current position, rather than choosing to consume far more leisure?
By , at
Mon Apr 06, 04:41:00 PM:
By virtue of its tax policy, our government both bashes the rich and needs them to keep working hard to a much greater degree than the rest of the OECD.
Well, what do you expect from a government that treats smokers as social lepers, but is, at the same time, so addicted to tobacco tax revenue that it must ensure lots of people keep smoking.
"Intelligence," "logic," and "politician" are not mutually inclusive terms, are they?
By , at
Mon Apr 06, 05:30:00 PM:
From Link:
Obama's stimulus and budget will break the bank. They'll result in huge permanent structural deficits, even assuming growth rates we probably won't reach. You can't tax the rich enough to close the gap.
So Congress is voting for a certain train wreck ... more accurately the Democrats are. We've gone insane.
Too many voters take for granted how much depends on our how having a reasonably healthy economy with a modest rate of growth. We've enjoyed it for 20 - 30 years and so forget.
As I've ranted enough here, Obama is doing this by design. Alinksy hated the US middle class as the ultimate bourgeoisie ... Obama does too. How long until the typical American figures this out?
What the Financial Times just wrote isn't news to me ... it is noteworthy that hardly any MSM source in the US is reporting on what's so obvious.
As to a national sales tax ... I think writers from abroad miss how we in the US get taxed a lot on the state and local level. We also have payroll taxes ... which are supposed to be earmarked and capped, but won't be for long.
By 
JPMcT, at
Tue Apr 07, 09:11:00 PM:
Time to insert the mandatory quote from Alvin Lee: Tax the Rich;Feed the poor;Till there are no rich no more.
Oh, while I have you...anybody know whyone can't get a copy of Michael Radford's production of 1984? Still no DVD release. I've never seen a more graphic condemnation of the end-game of the American Progressive movement.
