Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
A conversation
Published on February 21, 2007 By Draginol In Politics
This past week I had a very interesting debate with JoeUser's resident socialist, Col Gene. He is always trying to find new and creative ways to advocate higher taxes on anyone who makes more money than he does. His argument always boils down to the deficit and that rich people can afford it.  The former argument is nonsensical because politicans will simply spend all they get and more. The latter is a classic socialist argument.  Below is some of the conversation.

Socialist claim: What I have said is that the distribution of wealth is skewed too fare toward one side.

Wealth isn't distributed. In a capitalistic society, wealth is earned. Person A provides Person B with a product or service in exchange for money.

Socialist claim: very wealthy for example pays far smaller % of their income to Social Security taxes then the low and middle income workers

Of course. That's because social security is CAPPED. There's only so much you pay in and that's how much gets paid back. 

Socialist claim: If your annual income is 1 Million dollars you are paying about.6% of your income in Social Security Taxes where a person making $25,000 is paying 6.2%. How is that fair?

What does fairness have to do with it. If I make $1 million and put $60k into a bank aboutn I am putting in .6%. On the other hand, if I make $20k and put in $1000 into the bank then I am putting in 5%.  So what is your point?

Social Security is, in theory, supposed to be a retirement plan by the government.  If I were emperor, I would do away with it entirely and then no one would have to put anything into it.

Socialist claim: The wealthy can pay slightly higher income taxes (like those in effect in the 1990's) with NO adverse impact on their life style. If we have a slight shift in the wealth to the middle and low income working families it would not only help many meet their most basic needs but they would spend almost 100% of that income that was shifted and help the economy.

There are so many things wrong with this statement I'm not sure where to begin.

First, what we pay in has nothing to do with whether we can afford it or not. The government, like the electric company, exists to provide its individual citizens with a service.  Stealing one man's earned income to give to another is wrong.

Secondly, you clearly have no idea of what the "rich" do with money. You are correct in that their lifestyles wouldn't change if you taxed them more. That isn't the point. The people with the highest incomes INVEST their money. That's HOW you get rich in the first place. You keep investing your money to make more money.  That investment is what creates jobs, opportunity, and new goodies for us to use. 

Taxing the rich more won't hurt the rich personally, but it will, in the long-run, hurt everyone else through fewer jobs, a slower increasing in standard of living.

Moreover, the # of Americans who don't have access to "basic needs" is trivial. I've mentioned this before but the poorest 25% of Americans live pretty well on average. Most have DVD players, TVs, Internet access, cars, and a slight majority of them even own their own home. They even get free medical care via Medicaid.  But even that's irrelevant. It is not the responsibility of the government to give away other people's earned money to other people.

You basically see the government as something that RULES us. This is completely contrary to what the founding fathers intended.  They saw the government as a glorified neighborhood association. For the first hundred years or so, the govenrment only taxed for services rendered.
 

Socialist claim: If you have a seven figure annual income (that would place you in the top 1%) then you paying another 5% in federal Income taxes would not impact you life style. What will impact all of us is the fact we are operating this government at a substantial deficit and have piled up a National Debt of almost $9 Trillion dollars which we must pay interest on EVERY Year. We will be paying $500 Billion PER YEAR in interest. That interest comes from the taxes you and I pay and is money that is not available for other obligations like Social Security and Medicare benefits.

You are correct, it wouldn't affect my lifestyle. I'd just have to lay off a worker or two because that's where my excess income goes to -- investing in my business.

I have also pointed out, repeatedly, that it is well known that the budget would be easily balanced if we simply FROZE spending increases for a couple years. No cuts needed. Just quit increasing spending until the tax receipts catch up.  The tax recepts of the federal government have nearly doubled since Bush came in. Imagine the surplus we would have if they hadn't increased spending at an even faster rate.

Socialist claim: I worked about 40 Years and paid my taxes so my parents and grandparents could receive their Social Security and Medicare.

So you admit social security is a pyramid scheme. 

I also work but see it as a moral obligation to help my family myself and not rely on the government.  Free citizens do not need the government to do the right thing. They do the right thing because they are free people.  I'm sorry you need the government to intercede for to take care of your parents and grandparents.

The issue that socialists have is that they want the government to take over the economy.  For the past 60 years, the normal level of government intrusion in the economy has been around 18%. By 1998, the government had managed to get to over 21% of the economy. Something needed to be done -- tax cuts. 

Take a look at this graph from the CBO:

Graph

Historically, the federal government was only confiscating around 18% of the generated wealth of the country. Bush helped get it back to something approaching normal. As you can see, however, social security is slowly going to intrude more and more as you get out into the future. Socialists think that's a good thing. They prefer the government rule us.

The basic problem with most socialists is that they have no understanding of economics. They  think if we just raise taxes everything will be fine. But that's not how it works. If you raise taxes, you are simply shifting wealth from the private sector into the public sector.  And who has a better track record of producing wealth? People like me or some clueless politician in Washington? 

Moreover, even if you raised taxes the 40% needed on the wealth to balance the budget next year, it would only be a temporary solution. In other countries, the government represents up to 30% of the GDP and guess what? They have debts too. Governments will always spend what they get because they have an incentive to do so. 

That is why the tax recepts and spending receipts aren't a good measure of what our tax rate should be.  The real question is, what % of our economy do we want the government confiscating.  Once you make that decision, then it's just a matter of the government living within its needs and making sure enough taxes are being collected to meet that number.

Look closely at this graph.  The government's tax income today is the same as it was when Bush came in.  Yet we have these scary deficits you mention.   So what is the cause then? Spending. We increased spending across the board:

You see the problem? Since Bush came in, spending just went berserk. And it's not because of the Iraq war alone. The government went on a spending spree.

So to sum up:

  1. Rich people are rich because they invest their money.
  2. If you tax the rich more, it won't affect their lifestyle but it will mean they have less to invest (look at how quickly the economy jumped back largely thanks to the tax cuts).
  3. If the rich invest less, people lose jobs.
  4. It is immoral IMO to advocate that the government should confiscate money from one person to hand to another who provided no service to the original person.
  5. Tax rates and spending levels are the wrong metric. It's what % of the economy you want the government to be involved in.
  6. We have a deficit today because we increased spending.
  7. Tax cuts are why the economy grew so fast after the recession.

The reason why the United States has been at the forefront of economic progress is because we have laws that encourage people to work very hard.  The moment you start penalizing people from working hard, the worse off all of us are.  I work on average 55 to 70 hours per week depending on how busy I am.  I do that all year round. I take maybe 2 weeks off per year (which is really just making up all the weekends I work).  As it stands today,  I am working about 20 to 30 hours per week for the government. That is, I'm working what amounts to nearly a second full-time job just to pay for the government.

And I support paying taxes because my country does so mcuh for me.  What I don't support is the government confiscating my income to give to others who hasn't earned it.  I think it's a toxic, evil thing for a government to do. It robs the earner of freedom and it saps the will out of the receiver. It's certainly not compassionate.

Free men and women control their own destiny. When we give power to the men with guns, we cease being free.

 


Comments (Page 2)
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on Feb 23, 2007
"Dan Greene: That first chart is tracking the percent of GDP the federal government took in in taxes. If you just plotted taxes versus GDP growth it would be harder to read because both numbers are moving up all the time.

Even though total federal revenues stay the same, you can see they're getting it from different sources than they used to on this chart. More social security, less corporate income tax. (just ignore the top shaded region, that's state and local taxes. Those have grown more than anything.)"

Thanks. Lack of labeling the data made it confusing. I read and then re-read the paragraph but it looked to be talking as much about the first graph as the second.

"GT is now a visitor. Not a good idea to spam the owner's blog."

Way to go Draggy!

"Wealth isn't distributed. In a capitalistic society, wealth is earned. Person A provides Person B with a product or service in exchange for money."

I only have a small issue to take with that, in a purely capitalistic society wealth is earned. However our society is hardly purely capitalistic as demonstrated by the article. Making the government more socialist would however, make the government more and more in charge of wealth distribution and less and less in creating conditions for wealth to be earned through investment.

"Now for the shocker: The Business Week piece cites a new survey of today's adult men, which finds that this number has dropped to only 10 percent. That is, over the past generation upward mobility has fallen drastically."

Here's another shocker for ya, the amount of work a person has to do in order to achieve a standard of living comparable to minimum necessary, to what his old man achieved on either the mid or low end is much easier to attain then it was ten, twenty, or thirty years ago.

If you want to move up, you have to work harder, make more sacrifices, then just time, also money, and/or work for yourself rather then a corporation.

"...who has a better track record of producing wealth? People like me or some clueless politician in Washington?"

Excellent point. One that any socialist should be able to agree on regardless of his desire to have the government tax more, spend more, and provide more services and provide those services above the cost obtainable to society by the private sector.

"You see the problem? Since Bush came in, spending just went berserk. And it's not because of the Iraq war alone. The government went on a spending spree."

Your graph shows a spending rate that is perfectly linear between 2001-2003, during this time, you have an economy on the mend, and you are paying for additional military and security operations. I would assume. Again I'm being one of those guys right here right now adding an opinion with no actual receipts or facts. But that's logical to conclude. Also, you had the build up for the Iraq war, assumed to be a 6-18 month operation, well we know different now don't we, a major hurricane season which not only caused billions of dollars of damage in Louisiana, but Mississippi, Texas, Florida, along with as you say Republicans spending money like crazy mofo's.

The was spending is justifiable, as is hurricane relief, although the hurricane relief is lame, its part of the governments job to assist states and communities damaged with recovery from natural disasters. It's in the interest of the national economy to do that. As for the war, it's in the nations interest to win the wars we start, and achieve the goals of those operations, strategically, security wise and just good policy to be victorious in war. Call it economic morale if you want. So it's good for the government to spend money.

Now as for whats called pork barreled spending. All this extra crap that gets tacked onto these spending plans for nationally legitimate spending items, that stuff is good, because it is good for the economy to have that capital dumped into the market. But it is bad because as you say, who makes money more efficiently, obviously the government makes money, but not with the same efficiency as the small business owner.

The problem for purely capitalist societies or ones that are more capitalistic then our own, is that the boom and bust cycles are more pronounced. If shit happens and the economy begins to slow, eventually grinding to a much lower level then it was the year before, business gets cold feet, this is what happens.

A. They stop making plans to hire people
B. Then they tell others they are making plans to stop hiring people
C. Then they actually stop hiring people
D. Then other companies stop hiring people because those initial people, who weren't hired can't spend money to buy the products that they are selling.
E. Eventually the actual unemployment rate begins to climb, and the economy is officially slowing down, largely because of the psychological.

In a purely capitalistic society, the government is oblivious to anything economic, But in our society which is not purely capitalistic when this begins to happen, the federal bank lowers interest rate, to encourage people and businesses to trade in some cash for capital. Or loan out money for less interest. The congress also starts talking tax cuts. Which again increase the money supply because people have more money in their pockets to spend on goods. Offsetting the number of people who have lost their jobs.

The biggest effect, is that the government keeps spending money, in order to keep the economy growing, regardless of what the private sector is doing, because the government is the biggest potential customer and biggest potential producer. They can keep the economy spinning regardless of slowdowns, and when the economy gets too hot, they can increase taxes, and either spend that money or pay off deficits from times when in order to keep the economy running smooth, the government had to spend more then was readily available.

The advanced understanding of how economy works, combined with different schools of economic thought along with innovation and strategic use of competitive advantage have made the United States a leader in economic development. However that may not be a status that we can hold onto forever.
on Feb 25, 2007
And I support paying taxes because my country does so mcuh for me. What I don't support is the government confiscating my income to give to others who hasn't earned it. Draginol

I think most people agree with these two points. What is missing from the article and the comments so far is the real problem that most rich nations and the USA in particular face: What do we do about the fact that there are so many citizens who cant afford basic life necesssities. They may be a small percetage of the population in some areas but not-so-small in other areas: these are reasonable housing costs, health insurence, decent retirement income for working people, support for the disabled and of course affordable good education to maintain and expand our technological power?.

If we say the government has no role to play in achieving that and let them help themselves as Draginol seems to be saying, then we run the risk of missing that goal. It is the responsiblity of the government to set general policies that make achieving that goal more certain. if the government ignores that, achieving that goal becomes uncertain and in the hands of individuals who may or may not see it as part of their own interest. not onlyt that, but individuals see the goal differently since each sees it from their own point of interest and they dont see the full picture. The government does (ot it should)

these are the main reason for governments in general.

We must also remember that eliminating issues that negatively affect our society's character, like homelessness, uneducated population, unhealthy citizens, ...etc is part of the government's responsiblities.


taking care of these issues is not a socialist issue at all. In fact i think it is a sign of capitalism. who is the sane capitalist who wants a homeless sleeping on the corner of his/her mansion (or nice apartment building)? or would Draginol be happy to have a pool of well-educated pool of prospective employees or not-so well educated one? the socialists, usually dont really care about that. they hire all anyway for producing nothing. Capitalists, smart ones, know that these issues affect them negatively if they linger unsolved.

Taxes and who must pay and to what limit comes in as an answer to "how can the government pay for the solutions to these issues". the question becomes who pays the government and how much and in what % of each individual/corporate income/profit? who can afford to pay more percentage? that is really the issue not to distribute wealth to people who hvn't earned it. no one is for that.
on Feb 25, 2007

I think most people agree with these two points. What is missing from the article and the comments so far is the real problem that most rich nations and the USA in particular face: What do we do about the fact that there are so many citizens who cant afford basic life necesssities. They may be a small percetage of the population in some areas but not-so-small in other areas: these are reasonable housing costs, health insurence, decent retirement income for working people, support for the disabled and of course affordable good education to maintain and expand our technological power?.

What percentage of the US population do you think actually can't afford food, clothing, and shelter?

The problem is that what we consider "life's necesities" gets bigger and bigger each year. Obesity is a major problem with "the poor" these days.

Probably my single biggest pet peeve is "Medicaid" which is free health care for "the poor".  When I was a kid, we didn't have health insurance.  The government paying for doctors and medicine for the citizenry is totally out of line.  They aren't "necessities".

The government has no interest in helping people help themselves. The politicians who promote laws that hand things over to others are looking to create a dependent class who will be inclined to vote for them.

The federal government doesn't need to be involved in schools. That's the problem, most people think the federal government does all these things it really has little to do with or if it does, it really just meddling.  Roads, schools, public safety, these are handled by the state.

My tax dollars overwhelmingly go to things that go directly to other individuals.  For example, medicare is a total racket.  There's no cap on it so I end up sending tens of thousands of dollars to Washington each year that then go to some other individual. Medicare does nothing for me or my family but I have to pay into it.  Medicaid literally does nothing for me.  These aren't things that help "society", these are things that take from the productive class and largely go to the unproductive class which does not help society.

on Feb 26, 2007
"You see the problem? Since Bush came in, spending just went berserk. And it's not because of the Iraq war alone. The government went on a spending spree."


You're correct on this. Bush is "part" of the problem. The other part of the problem is congress!
on Feb 26, 2007

Bush and the Republican congress absolutely blew it.

Look at the Repubilcan congress spending at the end.  Deplorable.  They deserved to get kicked out.

on Feb 27, 2007
Look at the Repubilcan congress spending at the end. Deplorable. They deserved to get kicked out.


Libertarian Congressman Ron Paul (R-Tx) has suggested that the goverment no longer allow employers to withhold taxes. instead, taxpayers would actually be forced to write out a check to actually "pay" their taxes. the reasoning being that people would feel much differently if they actually had to pay taxes rather than the painless "slow bleed" method we use.

any thoughts on that idea? i recently reported on his new hampshire trip last weekend....WWW Link
on Feb 28, 2007
Great post...another great article was written by 19th century Fredric Bastiat entitled "The Law". Just Google Bastiat and you will find plenty of websites that have "The Law" published online for reading. Not a long read, but a great one.

I think you would like it.
on Feb 28, 2007
Libertarian Congressman Ron Paul (R-Tx) has suggested that the goverment no longer allow employers to withhold taxes. instead, taxpayers would actually be forced to write out a check to actually "pay" their taxes.


Rush Limbaugh proposed this about 15 years ago and brings it up about two or three times a year. So libertarians and conservatives agree on at least one thing. I wonder how many more?
on Feb 28, 2007
Rush Limbaugh proposed this about 15 years ago and brings it up about two or three times a year. So libertarians and conservatives agree on at least one thing. I wonder how many more?


actually, Paul has touted this idea since his 1988 run at least. and the idea probably goes back to since the US government began to have employers withhold taxes. but finding common ground is nice, yes.

conservatives find much in common with libertarians, as do liberals. libertarian philosophy is neither conservative nor liberal however.

as it says on their page...

"Libertarians are neither conservative nor liberal. Libertarians believe in liberty on all the issues. They believe in personal freedoms/civil liberties and economic freedoms, whereas the Republicans want to control many social freedoms, and Democrats want to control many economic freedoms."
- Corey Stern, The Minnesota Daily, March 16, 2006

and like in any party, not everyone is in 100% lock-step agreement on every party stance. just like in every party, there is plenty of dissent and debate. as it says on their website...

Libertarians are practical; we know we can't make the world perfect. But, it can be better. Libertarians will keep working to create a better, freer society for everyone. As William Allen White said: "Liberty is the only thing you cannot have unless you are willing to give it to others."


on Feb 28, 2007
Rush Limbaugh proposed this about 15 years ago and brings it up about two or three times a year. So libertarians and conservatives agree on at least one thing. I wonder how many more?


actually, Paul has touted this idea since his 1988 run at least. and the idea probably goes back to since the US government began to have employers withhold taxes. but finding common ground is nice, yes.

conservatives find much in common with libertarians, as do liberals. libertarian philosophy is neither conservative nor liberal however.

as it says on their page...

"Libertarians are neither conservative nor liberal. Libertarians believe in liberty on all the issues. They believe in personal freedoms/civil liberties and economic freedoms, whereas the Republicans want to control many social freedoms, and Democrats want to control many economic freedoms."
- Corey Stern, The Minnesota Daily, March 16, 2006

and like in any party, not everyone is in 100% lock-step agreement on every party stance. just like in every party, there is plenty of dissent and debate. as it says on their website...

Libertarians are practical; we know we can't make the world perfect. But, it can be better. Libertarians will keep working to create a better, freer society for everyone. As William Allen White said: "Liberty is the only thing you cannot have unless you are willing to give it to others."


See the problem most people have is that they equate libertarians with "liberals" and don't realize that there "is" a distinct difference.
on Feb 28, 2007
Yes, libertarians that have gone insane are called liberals.
on Feb 28, 2007
Glad Doc Bumped this one or I would have missed it. Excellenat rebuttal Brad. All points are right on and accurate, and those stating they are just dirty pool have no argument. Anyone quoting Krugman as an authority of Economics should have invested in Enron.
on Feb 28, 2007
See the problem most people have is that they equate libertarians with "liberals" and don't realize that there "is" a distinct difference.


perhaps. i think the major 2 parties have both done good marketing where it comes to painting all 3rd parties as radical fringe groups or communists.

but i hear people referring more and more to libertariansism, either the party or the various political stances or philosophical views more often.
on Mar 01, 2007
perhaps. i think the major 2 parties have both done good marketing where it comes to painting all 3rd parties as radical fringe groups or communists.


Only out of national survival do they trash third parties. Look at other countries that have more than two choices. Italy has not had a stable government since they lost Mussolini. Coalition governments don’t last long and can easily be toppled by outsiders wanting to change the direction and leadership of the country. Whatever strengths a third party might add to a nation they are outweighed by the faults and weaknesses inherent with multiple parties.
This is why we don’t have a liberal party or a conservative party. We have a Democrat party and a Republican party, within those parties you have factions like liberals and conservatives. There are liberal democrats as well as liberal republicans. You have stupid people that want to kill the nation to save the planet. Sorry there is no group that wants to kill the planet to save the nation. My point is that in consolidating the different factions into two groups it makes the nation stronger. There are democrat libertarians as well as republican libertarians. Each side is supposed to attack the same problem in a different way. Well it used to be that way and that is how it was designed. But now only one side wants to fix the problem while the other side wants to obstruct but not solve anything.
on Mar 03, 2007
"i think the major 2 parties have both done good marketing where it comes to painting all 3rd parties as radical fringe groups or communists."

"Whatever strengths a third party might add to a nation they are outweighed by the faults and weaknesses inherent with multiple parties."

LOL. So how about if we just have a one party system. Oh shit we do. It's the party of I wanna stay in power forever and I'll say whatever is necessary to do that.

Heaven forbid we have a little revolution in this country.

Something else I notice about the graph, spending has never actually decreased during a Republican controlled congress.
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