This chart is the clearest portrait of the last 30 years extant. The Bush Taxcuts obviously caused the great acceleration in late 2001. I know what the liberals think about this situation. What about our libertarian contributors?
The Wall Street Journal reports this morning, that some traders are “front-running” the market at extraordinary volumes.
The firms gain that advantage by buying data from stock exchanges and feeding it into supercomputers that calculate stock prices a fraction of a second before most other investors see the numbers. That lets these traders shave pennies per share from trades, which when multiplied by thousands of trades can earn the firms big profits.
Critics call the practice the modern day equivalent of looking at share prices listed in tomorrow’s newspaper stock tables today.
John Maynard Keynes once wrote, “Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation.” We have clearly crossed over Keynes’ line as the Journal reports that “High-speed trading,(is) now estimated to account for about two-thirds of U.S. stock market volume.”
What is needed is a global financial transaction tax such as H.R. 4191 that would impose a 0.25% tax on the value of a stock trade. This would bring the nonsense of these firms trading in and out of a stock hundreds of times a day to an immediate halt. The fact that this high-speed trading is even legal is amazing to me, but it serves no societal purpose. If global financial regulators are capable of setting International Capital standards then they certainly ought to be able to establish an International Financial transaction tax.
The 19th Century French philosopher August Comte said, “demography is destiny”. By which he meant that the social, cultural and economic fabric of a nation derives in large part from its population dynamics. Over the weekend we have been talking about the rabid Anti-immigrant law passed last week by the state of Arizona. The fact that someone like John McCain would endorse such a bill after having been an enlightened leader of immigration reform, shows just how scared McCain is about the Tea Party movement. For a man who wrote a book called Why Courage Matters
Every where you look cities and states are radically cutting services. Classroom sizes are growing and some schools and even municipal services are talking about adopting a four day week. Because so much of our tax system in America is based on the income tax, collections can have wild swings from year to year. In most of the rest of the developed world the Value Added Tax is the main source of government income and it’s much more even as production and consumption spending tend not to have such wide swings.
Columbia tax law specialist Michael Graetz has proposed a radically different way for America to levy taxes and perhaps get its fiscal house in order.
Last year, Graetz published a book on this notion, 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the United States; With a New Introduction
. In an interview last week, he said he had tweaked his proposals to adjust for the worsening deficit realities and some new data.
A look at the options in fiscal year 2015 is instructive. Using reasonable economic assumptions, to reach Obama’s target of a deficit that is 3 percent of gross domestic product by that year would require about $400 billion in spending cuts or tax increases (That assumes terminating the Bush tax cuts for the wealthy, which most Republicans resist).
Graetz would impose a 14 percent value-added tax on goods and services; it would be collected piecemeal at each stage of production. Small businesses, those with gross receipts of less than $500,000, would be exempt. Continue reading ‘Rethinking Taxes’
Since last week’s cartoon was so popular, I thought I’d post my favorite each week.
Cartoonist-Rex Babin
In 1985, Grover Norquist formed a group called Americans for Tax Reform. His goal was simple: “”I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” So the fear of new taxes has prevented us as a country of doing anything about our health care system, for instance. The conservative assumption is that if you don’t do anything, things will stay the same, but as the chart and accompanying article prove, that’s not true–they get worse.
How did we get to this bizarre place? As Frank Rich points out this morning, when Andrew Stack committed his crazed act of murder suicide by flying his plane into the Austin Texas IRS headquarters, some Republican congressmen were supportive.
Representative Steve King, Republican of Iowa, even rationalized Stack’s crime. “It’s sad the incident in Texas happened,” he said, “but by the same token, it’s an agency that is unnecessary. And when the day comes when that is over and we abolish the I.R.S., it’s going to be a happy day for America.” No one in King’s caucus condemned these remarks. Continue reading ‘America’s Anti-Tax Obsession’
There has been so much misinformation about climate science dumped into the blogosphere in the last three weeks (what perfect timing for the climate change deniers), that a little perspective is in order. As Jared Diamond wrote yesterday, there really isn’t much dispute in the science community, and so the efforts to use the emails from some snarky English scientists reminds me of the creationists trying to deny evolution because one frog has an unexplained anomaly.
NOT surprisingly, the problem of climate change has attracted its own particular crop of objections.
• Even experts disagree about the reality of climate change. That was true 30 years ago, and some experts still disagreed a decade ago. Today, virtually every climatologist agrees that average global temperatures, warming rates and atmospheric carbon dioxide levels are higher than at any time in the earth’s recent past, and that the main cause is greenhouse gas emissions by humans. Instead, the questions still being debated concern whether average global temperatures will increase by 13 degrees or “only” by 4 degrees Fahrenheit by 2050, and whether humans account for 90 percent or “only” 85 percent of the global warming trend.
• The magnitude and cause of global climate change are uncertain. We shouldn’t adopt expensive countermeasures until we have certainty. In other spheres of life — picking a spouse, educating our children, buying life insurance and stocks, avoiding cancer and so on — we admit that certainty is unattainable, and that we must decide as best we can on the basis of available evidence. Why should the impossible quest for certainty paralyze us solely about acting on climate change? As Mr. Holdren, the White House adviser, expressed it, not acting on climate change would be like being “in a car with bad brakes driving toward a cliff in the fog.” Continue reading ‘Copenhagen Musings’
Last week I related a fable about War, Taxes and the City State of Florence, the point of which is that when you start taxing the rich for the wars, the wars happen less often. Carl Levin gets behind the idea today.
Carl Levin, chairman of the Senate Armed Services Committee, said higher-income Americans should be taxed to pay for additional troops sent to Afghanistan and that NATO should provide half of the new soldiers.
I can’t wait for Rush Limbaugh and Glenn Beck to start a 9/12 Protest about the War Tax on their multi-million dollar paychecks.
The more I look into the details of the new Obama Budget proposal for the next ten years, the more I am struck by the stark break with the economic policy of the last 30 years it represents. As the chart above shows, the U.S. has diverged from the rest of the developed world in lowering taxes on the top 5% of earners and thus increasing income inequality. Peter Orzag made clear that things are going to change.
“Over the past two or three decades, the top 1 percent of Americans have experienced a dramatic increase from 10 percent to more than 20 percent in the share of national income that’s accruing to them,” Mr. Obama’s director of the Office of Management and Budget, Peter R. Orszag, said in a briefing for reporters. “So we are asking them to pitch in a bit more.”
But what’s more important is where the new revenue will be directed. The budget “would overhaul health care, begin to arrest global warming, expand the federal role in education.” As I mentioned yesterday, the cuts in corporate welfare subsidies to Agribusiness, the Military Industrial complex, health insurance companies and student loan providers will provoke a fierce lobbying effort. But the budget process plays out over many months and my hope is that Al Franken will be seated by the time the votes are cast. That would mean the President would need only one Republican senator to block the filibuster. The Republicans will declare that raising taxes on the top 5% is class warfare, some how ignoring the fact that a majority of people making over $200,000 voted for Obama, fully aware that he had pledged to raise their taxes.
I see folk with long cars and fine clothes
That’s why they’re called the smarter set
Because they manage to get
When only them that’s got supposed to get
And I ain’t got nothin yet–Ray Charles
There is a populist anger that is swelling in the land. George Bush and Dick Cheney slunk out of town, but their friends are mighty grateful for the last 8 years.
The income of the 400 wealthiest Americans swelled in 2006, soaring nearly 23 percent from the previous year, to an average of $263 million, according to data released Thursday by the Internal Revenue Service. Since 1996, this group has nearly doubled its share of all income earned in the United States.
The top 400 paid just more than $18 billion in federal income taxes in 2006, or an average of $45 million, on a record $105 billion in total income — the lowest effective tax rate in the 15 years since the agency began releasing such data.“Until recently, we had a financial system that rewarded investors, and we have a tax system that does as well,” said Robert S. McIntyre, the director of Citizens for Tax Justice.
Now wealthy people, he said, pay income tax rates well below those of working-class citizens because of a myriad of tax breaks. A lower capital gains tax, now at 15 percent, down from 28 percent in 1997, benefits investors with big portfolios.
The average adjusted gross income in 2006 of more than $263 million for the top 400 taxpayers compared with an average of $214 million in 2005. It was three and a half times what they earned in 1996, which was $74 million.