Bernie Sanders and Elizabeth Warren both discussed the idea of a wealth tax during the primary campaign. However, that's not what Joe Biden is proposing. Biden's proposal would:
- Increase the corporate tax rate from 21% to 28%
- Eliminate the cap on income subject to the Social Security payroll tax
- Tax capital gains as ordinary income for people earning more than $1 million a year
- Raise the marginal rate on people making more than $400,000 a year from 37% to 36.9%
- Close some inheritance tax loopholes
Notice what this would not do. It would not raise the taxes of anybody earning less than $400,000 a year by one penny. There is a lot of misinformation about this out there, and I'm sure people who read the New York Post or the Wall Street Journal will make comments based on the propaganda they encounter there.
While this is not a wealth tax (with the minor exception of increasing some estate tax revenues, which taxes the wealth of dead people), it is very closely targeted at the top 1% of income getters. (Notice I don't say earners, because this income is precisely unearned.) It would raise about 3.7 trillion over 10 years, which is enough to pay for free public college, universal child care, and more, while putting Social Security on a sounder financial footing. Taxing the income of the obscenely wealthy reduces their wealth, in the long run, so to that extent it works like a wealth tax. They'll still get richer, just a bit more slowly.
I have explained many times why raising corporate taxes, marginal rates for high incomes, and taxes on capital gains does not harm economic growth, so please don't make me do it again. If you make more than $1 million a year, you might not like this. Otherwise, you should like it a lot.
9 comments:
It's OK to tax corporations, but just know that they don't actually pay the tax. Corporations pass it along to the end consumer. It's just another expense to them. Corporate taxation is a way of hiding the tax in the price of the product or service just as VAT taxes do.
And please don't quote Robert Reich. I've made a boatload of money just blindly doing the opposite of whatever he says to do.
That is incorrect. I have explained before why you are wrong, and I said I didn't want to have to do it again, but apparently you have a very short memory.
Corporate taxes are assessed on profits -- the money that is left over after expenses are subtracted from revenues. Prices are set by the market. They are a function of supply and demand. If corporations could charge more for their goods and services, they would do so regardless of the taxes they had to pay on their profits. This is very basic economics, you would learn it in the first week of the first semester. They will try to maximize their profits by setting the price at the point that brings in the maximum revenue over expenses, no matter what the tax rate. The taxes come after. The only people who pay them are shareholders, and most of them are wealthy.
Since you obviously know absolutely nothing about economics, please do not comment on the subject. A VAT is a sales tax, which is indeed paid in part by consumers, but also in part by suppliers. That's a more complicated issue.
I am not worried at all about Biden losing the election; I think the ratio of sane voters to batshit-crazy voters is probably about 55% to 45%. But I do worry about the machines that count the votes--infiltration through hacking--and I worry about right-wing goon squads posted to intimidate voters.
The Republican party ain't no party; it's a desiccated, viral cult. It must be eradicated at its roots.
P's comments tend to elicit the same reactions in me to anything I see, hear, or read on the part of the "right," which is always not right ... not right in the head, not present in the heart, not infused with intelligence or humor, not rational, not based in reality or empathy. It is a cult of death, of greed, of mocking, of insecurity, of denial ... in short, of Thanatos.
You seem to be really good at what you do, but you don't understand this at all.
It doesn't matter to the investors (sharholders, owners, etc.) whether this tax expense comes above the line or below the line. Investors require a certain rate of return of capital IN THEIR POCKETS after all is said and done. So, the market prices accordingly.
TANSTAAFL (Yeah, I know where it came from but it's still true)
And yes, I have had LOTS of eco. It was my first love. That and history pretty much explain everything. It's just hard to make a living at it in the real world and I'd shoot myself if I had to teach. And I'm a CPA that specializes in taxation both US and international.
I like reading about stuff you know something about, but I'm not interested in schooling you on theories of taxation.
You are utterly, irredeemably, wrong and you don't have a clue what you are talking about. I have a doctorate in social policy which required me to pass qualifying exams in economics. Corporations, in order to maximize their return on investment, price their goods so as to sell them at the number and the price that maximizes their profit. That is to say, if they raise the price so that fewer people will buy them, they will hit a point where there return on investment is less. They typically have to compete with other producers who are trying to produce as cheaply as possible so they can get a price advantage. The market price does not go up when investors have part of their return taxed away. Taxation of profits and market prices of goods and services are completely unconnected.
I will no longer publish such ignorant comments, it isn't worth my time and effort to respond to them. Being a CPA that specializes in taxation gives you no relevant expertise at all. Yeah, they want to get their taxes as low as possible but not by reducing their profit, which is what you want them to do.
Here is a primer in basic microeconomics. I'll give you the money quotes.
"Since a perfectly competitive firm must accept the price for its output as determined by the product’s market demand and supply, it cannot choose the price it charges. In other words, the price is already determined in the profit equation, so the perfectly competitive firm can sell any number of units at exactly the same price."
Doesn't make any difference what their tax rate is, they will charge the same price because they have to. What if a firm has market power? Well in any case "A rational, profit-maximizing firm will choose to produce the quantity where marginal cost is equal to marginal revenue, or where the MC and MR curves intersect. This is true for both competitive firms and monopolies, although the implications are different."
Note that the taxation of profit is unrelated to marginal costs. The tax on profits comes after the cost of production. Again, you learn this in the first two weeks of Econ 101. It is not subject to debate.
It sounds like the kind of classic capitalistic economics y'all are discussing assumes many producers making a commodity product for many consumers. I think that assumption is rarely true.
Farmers out here in the plains are well aware of this problem. Field crops like wheat, corn, and soybeans are commodities (Any unit of a specific grade is effectively indistinguishable from any other unit of the same grade) which are marketed by a huge number of farmers. This satisfies the first two conditions. But, there are only a few buyers, and tending fewer. It isn't too difficult for them to arrange matters so that they all offer almost the same price for a commodity. They just need to pay enough, I.E. Marginal Cost, so that the farmers don't go out of business and kill their golden goose. Farmers say they're the only business that buys retail and sells wholesale.
I'm sure you've also noticed that gas prices rise and fall practically identically regardless of the conditions among the individual producers. When the price of crude oil goes down gas prices drop only after the older, more expensive oil has passed through the refiners' systems and into your gas tank; when crude goes up, pump prices almost immediately follow. Not too surprising since a handful of producers now have names like ExxonMobil, ConocoPhillips, and BP (which has ingested ARCO, Amoco & Standard Oil of Ohio to name a few).
Because the actual system no longer looks much like the Goldilocks Wealth of Nations version(tl;dr), Woody may indeed be partially correct. But then a tax on profits actually becomes a form of sales tax, and isn't that dogmatically better than a tax on being successful?
That actually raises another point which has always confused me. When Conservatives tout the virtues of a universal sales tax why don't they include a tax on the sales of securities? Not only would it raise a lot of revenue from entities that can obviously afford it, but it would also eliminate the kind of speculation that hinges on miniscule individual gains made from a massive number of transactions.
I apologize for getting off topic, but that's due to the condition I have.
"That actually raises another point which has always confused me. When Conservatives tout the virtues of a universal sales tax why don't they include a tax on the sales of securities? Not only would it raise a lot of revenue from entities that can obviously afford it, but it would also eliminate the kind of speculation that hinges on miniscule individual gains made from a massive number of transactions.
That's a pretty easy one to answer.
A sales tax is a consumption tax. Stocks are not consumed so it's really not appropriate. There has been some talk about taxing transactions, but it would not be a sales tax.
Also, speculators provide liquidity. And BTW, most of those speculators lose money.
All Chucky hears form the press are those undeserving winners, but not about the losers. There is no guarantee you won't lose your ass.
It's a risky business.
Well, whatever you want to call it is a side issue. It used to be that you had to pay a substantial commission to trade securities, so the transaction tax would only take us a little bit of the way back to how things used to be. I think the proposals are not really about raising revenue, they're about discouraging arbitrage and computer trading, and even discouraging speculation a little bit. Right now there is a lot of ultrafast computer trading going on which is done only to take advantage of tiny arbitrage opportunities, and doesn't actually add liquidity or do anything else useful as far as people can tell. But whether a transaction tax is the best answer to that is not really my field.
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