The original income tax was also promised to be only a tax on the rich. These things have a way of finding the non-rich eventually.
Also, remember in 1970, the bank secrecy act put in place a $10,000 threshold for deposits or withdrawals, that were not reported on a "suspicious activities" list. This is also where we got the $10,000 travel disclosure rule. You will note that in 50 years, that threshold has not budged, putting non-wealthy people and transactions under the microscope. These laws are not adjusted for inflation, and we all expect there to continue to be inflation at the current or even an accelerated rate.
"Ultra-Rich" and "Could" are going to have to be refined as ideas; bearing in mind that a) the proportion of GDP which goes to taxes has not changed in any great measure for a very long time, including since the top marginal tax rates were already that high (though the bracket was... pretty high, and other factors reduced its purpose), and b) the U.S. already has the most progressive income taxes in the developed world as far as I can tell.
I know it's fashionable these days to play on people's resentment for "the rich" (however that is conveniently defined at the time), but this is budgetary advice from somebody who didn't think far enough ahead to budget her first month of rent in DC (or find a roommate), and who once said that the reason unemployment is low is that "everyone is working two jobs".
If you want a progressive policy, this person is not likely to be able to hold that policy's basic premise in her head, let alone any important details. I'm not a progressive, but surely it's easy to see how a Tulsi Gabbard, for example, is actually likely to produce some form of meaningful policy on at least some issues, whereas AOC mostly relies on desperately clawing to relevance through cheap popularity stunts and gaffes.
Hmm. When you put it that way, I seem to recall a certain President Clinton doing something similar, and he was a pretty shrewd politician. Even if you don't scare the top earners into going along, you at least challenge the default of leaving things as they are, and you challenge it in the direction you (the politician) want to go.
Agree or disagree, there's a few things this article left unclear.
First, the US has a progressive tax code. So, you wouldn't be taxed 70% on your entire income, only the money over a certain amount. Plus, due to deductions and other loopholes, nobody will actually pay this full amount.
Secondly, this rate isn't a new idea. It was 94% under FDR (democrat) and 91% during the Eisenhower (republican) administration, and both resulted in times of prosperity. And it was 70% as recently as the 80s.
It does include the quote "That doesn’t mean all $10 million are taxed at an extremely high rate", however it wasn't explained for anyone who's unfamiliar with our system.
Both occurred during (some) times of prosperity. That's an entirely different premise than giving the tax rate credit for the prosperity. FDR never once saw sustained economic prosperity during his tenure in office. That isn't a statement on his policies, rather, his time in office coincided with the great depression and WW2. He died before the post war boom took hold.
Did prosperity occur specifically because of the tax rates, or because of unprecedented before scale and use of fossil fuels per capita before the crisis of 1973?
To put this in context, a 70% rate on the top marginal income tax bracket is not unprecedented, or even high by historical standards [1]:
> Sanders said income tax rates under Eisenhower were as high as 90 percent.
> A look through the records shows that top earners in the eight years of Eisenhower’s presidency paid a top income tax rate of 91 percent. It was even a bit higher before he took office.
Sure, but they are not imminent (what is the pearl harbor of climate change?). Further, climate change is highly politicized whereas WWII mobilized the entire country in purpose.
Disclaimer: I'm apolitical because right/left is divide-and-conquer, divided-we-fall noise.
Climate change shouldn't be political or some far-off hypothetical.. no propaganda, rationalization or BS can deny the mountain of evidence that it's an immediate, existential threat that demands immediate, decisive action on the decatrillion-dollar moonshot scale (roughly the total, multi-decade cost of Iraq & Afghanistan).
Technically correct, although dividends were excluded from the high income rate, so most ultra-wealthy just took much of their income in dividends instead. (Or pursued other means of tax avoidance[0], or tax evasion[1].)
Diminishing returns sounds like a good idea on paper, because then the richer you get, the more you contribute. But remember that the people who are experiencing the diminishing returns aren't going to like it (besides Warren Buffett) and will probably fight against it.
It's a bit of a conundrum. The richer you get, the more power you have (via money). We want to tap into that wealth/power for the greater good. Those affected might disagree and can wield said power to prevent you from doing so. You might be able to legally force them to using the power of democracy, but this could cause all sorts of other problems (the rich fleeing to other countries, etc.)
Because if I'm able to make myself sufficiently wealthy, I should be trusted to handle my money myself, not have it redistributed by some third party that doesn't always operate very efficiently.
This isn't about trust, no one cares whether a rich person can handle their money. That's not why they pay taxes or that those who aren't super rich pay taxes because they can't be trusted. It's about funding the society that helped enable you to become wealthy. That instead of relying on the christian idea of charity that we instead fund a society that can create a more stable environment.
And what's so wrong from wanting to support charities that pay for the things you want and care about vs. more money to the militarization of police, or the military industrial complex in general?
Charities are only needed because the government doesn’t provide the necessary services in those areas. The unfortunate thing with charities is that it’s a whim of the donors what gets covered (1 dollar = 1 vote) and sometimes they are religious (not all inclusive)
I'm not a socialist and am in favor of maximizing personal liberty. Likewise I'm against corporate protectionisms and in favor of reigning in IP law. I don't want more government as a general rule.
I trust you to handle your money to benefit yourself. I don't trust you to handle your money to the appropriate benefit of society and (by extension) your descendants.
Especially if you manage to do enough damage to society through your greed that it necessitates a class war. We can either redistribute peacefully in an attempt to solve problems that largely affect the poor, or we can push them off until the poor get desperate.
I openly admit I am a republican but I have never understood why there are not more tax brackets. A person making 100k per year is not even close to the same as a person making 100m per year but are taxed at the same rate.
I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income?
Because income tax in the first place is a compromise with people who don't want that system at all. So you get a solution that isn't what anyone wants.
What we have now is effectively "a function to calculate your taxes based off your total income" - it's just that the function treats different portions of income differently.
> I've never really understood why there are brackets in the first place, can't we just write a function to calculate your taxes based off your total income?
You could use a function with a smooth derivative, and since a table is used in application it would have no effect on practical complexity of tax prep, though it would make intuitive grasp even harder (and it's already bad.)
Hmm. Maybe use a log scale? Every factor of 10 in income, the incremental tax rate goes up a percent or three. If 35% is the top now, and starts at $100K (numbers made up because I refuse to grovel through the IRS code in order to make an HN post), and if the delta is 3% per factor of 10, then we get 38% at $1M, 41% at $10M, 44% at $100M, 47% at $1B (income, per year). I'll stop there, because I'm not sure anyone has ever reported $10B income in one year ever in history.
If you made the delta 9%, that would get you 44% at $1M, 53% at 10M, 62% at $100M, and 71% at $1B. This gets you in the neighborhood of Ocasio-Cortez's idea, but without one big step to get you there. (I suspect that it would also raise considerably less money than her plan...)
The problem is that enough types of activity are excluded from taxation. It would be better to have a 0.25% margin tax on all financial transactions or currency transfers. Nobody could avoid it, and some of the micro-trades wouldn't happen as much.
Yes, then you still have the cash loophole, but most people aren't using cash.
I applaud ambitious efforts and I'm open to raising taxes for the very rich (albeit easy for me to say down here in the middle class), but AOC doesn't strike be as competent in the slightest (although as her supporters are so fond of rationalizing, she's not the least competent public official). She has charisma, which is an important leadership quality, but not much else as far as I can tell. Certainly not the person I want leading the charge on climate change.
I agree with raising taxes, maybe not through income tax as it’s shown it often can decreases revenue and capital flight etc. and I support high brackets in the $10M range and up. Many people think 100k is rich and 400k is extremely rich but taxing that further I’m sure will decrease revenue.
I support things like a tax on digital advertising. This is a tax that wouldn’t slow growth or harm the econo,y really and impacts mostly those with extremely high capital investments. Facebook, Google help our economy a lot but they don’t have that many jobs in relation to profits. A 10% tax on digital advertising would eat marginally into their profits but their profits rise 25% a year so not too bad. That would raise around $15-$20B a year by 2020. Imagine how doubling the subsidies for solar and EVs would do for renewables and EVs.
How relevant is this actually? Legislators make the law but it's the bureaucrats, who are the real specialists in crafting the details of legislation that are actually relevant.
Competent politicians aren't competent because they're knowledgeable in every possible topic, but because they surround themselves with subject matter experts.
She's been in Congress for a whole 4 days. I'm sure by the time any legislation was starting to be written there will be subject matter experts in the room.
I have zero doubt that legislation for this session is pretty much already complete. Sure, there'll be things that come up during the session, but legislators already have their priorities set going in, and it'd be silly not to have the work already done and have the bills ready to go.
> It's the bureaucrats, who are the real specialists in crafting the details of legislation that are actually relevant.
In my experience, it's often just "interested parties". I'm thinking of multiple cases where political advocacy groups I've worked with have drafted a bill proposal and taken it directly to state-level legislators seeking to have them sponsor it. In every case, they either refused or submitted the bill as-is without modification.
In one case, that means that an Arkansas law was actually drafted by a 16-year-old (me). That one was relatively minor in the grand scheme of things, but still :)
Why do you believe she's not competent? She seems to be competent.
Secondly, isn't empathy, vision, ambition and an ability to rally people incredibly important for a politician? Politicians aren't supposed to know everything, but rather work with appropriate experts and aides.
She really isn’t competent. Watch any interview she gives or her discussing anything really. But that doesn’t matter. We don’t need everyone to be competent, if she can get a message out to young people and her following she can raise awareness and tilt voters to policies further to what she wants. She is extremely charismatic and that’s an important skill in itself. It’s like playing with fire because she would make a terrible lead lawmaker on everything, but she absolutely is doing a fantastic job raising awareness
> She really isn’t competent. Watch any interview she gives or her discussing anything really.
Not seeing it. I've spent some time working in a (state, not federal) legislative office and have a political science degree (specialized in pragmatics of US politics.) I've seen some of her interviews. I don't see anything that indicates that she would be incompetent as a legislator. Could you explain the basis for your assessment?
Well, a number of her interviews seem to show her not having a very good grasp on basic facts. The branches of the US government. How much the military spends. Fairly basic stuff.
Now, this could be that she's not good at interviews, and feels the need to keep talking to appear competent. She could know far more, and just be unable (yet) to bring it out in front of the cameras. But to me, she comes off as talking without knowing. That scares me in someone who can write legislation.
The reason I like her is that she is passionate for a lot of the values I am pasaionate for. It's like with an engineer, you get the right person then you can always train them on the job if they need to learn things. I was very naive when I started as an engineer and everything turned out okay, it's not like she is the president or even a senator.
I'm not... I've seen enough government operations that you cannot convince me that additional taxation is necessary vs. reducing excess spending and bureaucracy.
Haha. You will never be convinced the. There’s been ample examples of austerity and cutbacks and government audits at all levels of government in all countries. This libertarian ideal of wasteful spending and government mismanagement is kind of a dumb one. Things are actually pretty well done unless the politicians are corrupt. But if corrupt politicians are the problem then the solution is to fix the corrupt politicians.
Every large organization (public or private) has waste the same way every large computer system has waste. Management is complex and there’s simply no way to optimize all resources in real-time. In software we may lament some of the bloat but we generally accept it as a necessary evil. In places where performance is extra valuable we profile and optimize the path. Well the same thing happens in government and corporations. Government of Ontario spends a good chunk of money on grants to health care system researchers to incrementally make things better and the system is doing really well considering how underfunded parts of it are.
I've seen $80k phone systems denied, while $180k systems get approved... I've seen fixed telecom rates nearly 5x what private businesses pay. I've seen contracts burn through cash only to cancel projects after billions have been spent. I've seen $100 office chairs denied, and $580 chairs ordered instead... because of anything from approved vendor lists, to just plain shifts in corruption. In the end, it all sucks a lot.
These are just off the top of my head. I'm not saying there aren't things that do run relatively effectively... I will also say there is gross overspending at all levels.
For the most part, the military could be cut to a fraction of the current size without much lost. A lot of the rest could be made up by shifting IP registration costs, and reducing protectionism. There's plenty of fat to trim...
> Income tax hikes are dead on arrival while Republicans control the Senate and White House. Such a steep increase also isn’t likely to find much support among many congressional Democrats.
And rightfully so. When pretty much everyone benefited from lax climate controls and externalities that are not directly included in the price of a product or service, why should only on special group pay for it? If there were a global move towards pricing in climate change into the end price, however that may work, I would strongly suggest that everyone has to pay their share. Or am I missing something here?
> When pretty much everyone benefited from lax climate controls and externalities that are not directly included in the price of a product or service
I think the argument would be that the ultra-wealthy benefited more from a carbon-based economy than the average worker, in the form of their accumulated fortune.
I think that argument is not valid. The "ultra rich" would benefit from any kind of capitalistic economy, they are "ultra rich" because they have more capital than 99.9% ( or whatever) of the population. And most of this fortune stems from having shares in businesses.
However, IF we would have taxed the greenhouse gas emissions into every product, maybe not even the middle class would have been able to afford it. But since gas was cheap, a lot of people were able to afford having a car, building houses, getting to their jobs without moving their homes and were able to improve their lives.
I do see the point in your argument, I just think it would be a fairer solution to tax everyone for the climate change linear to their consumption.
Consumption is one way to see it. But if, as you were saying, society benefited a lot from greenhouse gases then perhaps tax those that benefited most from our society :)
She cites Lincoln and FDR as evidence that radical ideas can be good ones. But "there have been radical ideas that have been good" does not imply "this radical idea is a good one".
Her idea may in fact be good, but on this point, her logic does not work.
As for the idea itself: IIRC, there seem to be significant second-order effects that keep the federal government's income at 18-22% of GDP, no matter what the tax rates are. So raising the rates like this may provide significantly less new income than she expects.
What's more, if you have a pot of new money, there will be competing ideas for how to spend it. This green initiative may be a good idea. Somebody else may have a good idea - say, Medicare for all. And a different somebody may have another good idea - say, guaranteed basic income. The problem is, even if raising the taxes provides the expected money, the money is only enough for one of these ideas. You can only spend that pot once. But Congress being Congress, they're going to want to spend it three times. (Note well: This specific paragraph is not a criticism of Ocasio-Cortez's idea; it's a criticism of Congress in general.)
> She cites Lincoln and FDR as evidence that radical ideas can be good ones. But "there have been radical ideas that have been good" does not imply "this radical idea is a good one".
But it does rebut the common line of argument that it is preemptively deployed against, which is “Radical ideas should be rejected as bad merely because they are radical.”
> As for the idea itself: IIRC, there seem to be significant second-order effects that keep the federal government's income at 18-22% of GDP, no matter what the tax rates are. So raising the rates like this may provide significantly less new income than she expects.
To the extent that revenue seems relatively stable with apparently large changes in rates, I don't think those are “second order effects”, I think that they are coordinated changes to tax policy other than rates. The US doesn't have some kind fof special sui generis immunity to policy changing effective rate of total taxation.
Also, US federal tax revenues were 27.1% of GDP in 2017 [0], so the 18-22% range is not only not immutable, but also not what is recently observed.
Your first part is fair, and your second part has actual data. I'm not sure why you're being downvoted.
There might be some kind of gaussian distribution on good ideas, though. The more radical an idea, the lower probability that it's correct. It's still not zero, and the idea should be judged on the merits. But the further out the idea is, the more radical it is, it seems reasonable to say that the level of skepticism should go up.
-- Government-led investment in energy and resource efficiency, as well as reusable energies and microgeneration;
--Low-carbon infrastructure redevelopment in order to create jobs;
--A directed tax on the profits of oil and gas companies with proceeds being invested in renewable energy and energy efficiency;
--Financial incentives for green investment and reduced energy usage, including low interest rates for green investment;
--Re-regulation of international finance, including capital controls, and increased scrutiny of financial derivatives - likely along the lines of Basel II;
--Curbing corporate tax evasion through compulsory financial reporting and by clamping down on tax havens;
In federal accounting how does one allocate tax revenue to a project? Is it not just a big fungible resource that then gets allocated? To me the funding doesnt seem to be the problem in so much as making tackling climate change and allocating actual dollars.
Congress at least nominally operates under pay-as-you-go rules. If you're going to propose a new program, you have to propose where the money's going to come from.
(I say "at least nominally" because I'm not sure that this actually works as advertised. If it did, the deficit shouldn't increase from one year to another, except perhaps in an economic downturn.)
Not a word about the logistics of making such a huge change in such a short amount of time? Surely AOC realizes that money isn't the only obstacle, but also replacing an enormous amount of infrastructure. When you think about how ubiquitous our usage of gasoline, home heating oil, CNG for heating and cooking, and on and on, it quickly becomes clear that while finances would be very difficult, that's dwarfed by the amount of physical change that would be required.
Start looking at how all the replacement transportation can be put in place 11 years - either getting all cars off the road, and manufacturing new electric ones; or building other mass transit that can serve everyone (and how long does it take to get a train line built these days?). How are we going to find enough building contractors to install electric heat or heat pumps into every house that uses oil or gas, and to build and install electric stoves?
And of course there's the upheaval of jobs for all the people in the current industries, and trying to find a place for them in the new industries.
Money's not the bottleneck here, we're more constrained by logistics.
I'll leave the tax plan aside to respond to this. As slow and creaky as the world is, when a government as powerful as the United States aggressively puts forth a vision for the world the systems of the world bend to make it work.
Remember also that the vast majority of logistical challenges with climate change aren't developing new products, but handling coordination problems around deploying existing ones.
Things that might happen if America decided to commit seriously to a Green New Deal:
- automotive roadmap overhaul to 80% electric drivetrain for all deliveries in the United States by 2030
- tectonic shift in land use around the country to higher density zoning, mass transit, HSR
- hundreds of billions of dollars of research to public and private institutions to map all the carbon in our system and the most effective ways to remove it
But these are all giant changes. Here are simple ones that are straight up applications of government power:
- switch all major urban areas to Tokyo style zoning with property taxes tied to mass transit investment
- steep cliff on ICE vehicles delivered in the United States hitting some x00% in 2030
- end all fossil fuel subsidies
- move all energy supply to a Texas style market
Emergent properties of human behavior responding to incentives would take care of the rest.
Remember also that the vast majority of logistical challenges with climate change aren't developing new products, but handling coordination problems around deploying existing ones.
Yes, that was exactly my point. There simply aren't enough people making electric cars, heat pumps, and all those other new products, to eliminate fossil fuel dependence by 2030, which was what AOC was advocating. Diverting enough resources would be disastrous to other industries, and then once we've made the huge investment to build all that, we suddenly don't need the capacity once we hit the goal. It's economic suicide.
Emergent properties of human behavior responding to incentives would take care of the rest.
You're outlining programs that would push us in the right direction, which is good. These are not things which will eliminate fossil fuel dependence by 2030, which is what AOC was shooting for, and which I'm criticizing.
That doesn't even account for locations where most electricity comes from coal, or fossil generation. I think nuclear gets a bad rep for the most part, and don't mind it... that said some hate it.
Beyond this, is expanding the power needs for areas that may not have capacity meaning more infrastructure. Replacing main breakers and panels...
> During World War I, the top rate rose to 77% and the income threshold to be in this top bracket increased to $1,000,000 (equivalent to $19.6 million[68] in 2018 dollars).
> During 1944 and 1945, the top rate was its all-time high at 94% applied to income above $200,000 (equivalent to $2.85 million[68] in 2018 dollars).
The US has previously had top marginal income tax rates even higher than 70%. As far as I can tell, currently the highest tax bracket is 37% at income over $600,000. Why not add more brackets with progressively higher rates? The largest barrier is that usually to get elected to to the federal positions that are required to pass this policy you need the support of the donor class, exactly the constituency that would be opposed to the policy.
So even confiscating all the wealth of the top couple thousand richest people in the world (not just US) would only fund the US government for 2-3 years. And that would be a one-time event.
Basically, the amount of money spent by the US government is already so massive that I don't see how giving it more can possibly help with anything. It would be much more realistic to attempt making the government slightly more efficient and then reallocating the money saved.
And that ignores that barely anyone will end up paying these 90% taxes, just like almost no revenue was collected from the 90% bracket in the 1950s since various accounting methods/etc were be used to avoid it.
The US GDP was $17.5 trillion last year. I don't think you're looking at the right numbers. This isn't about seizing wealth, it's just an increase in the top bracket of income taxes.
Anyway the climate plan is more about moving money around than just taking it and throwing it in a hole. Ideally, more wealth would be generated from people actually spending the money for useful things than would be made from the passive investments favored by the ultra-rich.
You didn't mention tax revenue in your comment either. My point was you need to look at capital gains and business taxes to get an idea of how much money there is available. Wealth is not relevant and personal income is not the whole picture.
>"You didn't mention tax revenue in your comment either."
Yea, I guess you are correct. I just consider adding to the national debt another form of tax (via inflation).
>"My point was you need to look at capital gains and business taxes to get an idea of how much money there is available."
Still not following. I am concerned with the government spending a very large amount per year. Spending these resources more efficiently seems like low hanging fruit vs just raising taxes on whatever. The idea of confiscating the wealth of the ultra rich is just to demonstrate that they really aren't that rich compared to what the US government is spending.
So if the actual desired outcome was to get, eg this climate project done, then I would expect people to be exploring that option. Plus increased efficiency should be better for the climate...
Taxing the rich isn't about generating revenue to make something. It's a reallocation mechanism for dollars that already exist in the economy to things that we want as a body of people.
If this seems radical, notice that this is already part of the American social contract. We already tax people to provide services and invest in long term projects. All this does is change the rates and the allocation direction.
>"Taxing the rich isn't about generating revenue to make something. It's a reallocation mechanism for dollars that already exist in the economy to things that we want as a body of people."
Ok, well here is a department of the government I am familiar with admitting they waste $25-30 billion every year (imo that is an underestimate, but they definitely waste over 50% of their funding on worthless stuff):
https://nihrecord.nih.gov/newsletters/2016/07_01_2016/story3...
So why not reallocate that to whatever this climate project is? And I'm sure there is similar massive waste in other departments too. If 87.5% is representative that is $3.5 trillion per year to be used.
I mean no one actually wants to waste ~$30 billion a year on worthless medical research, right?
I can't tell if you're being sarcastic. The problem with saying "Half of this research is worthless" is that it's impossible to know which of the research will be worthless before you do the research. As long as the research that was useful produced enough value to justify the system (which, in the case of the NIH I'd venture it does), it's worth doing overall.
This reminds me of the Wanamaker quote: “Half the money I spend on advertising is wasted; the trouble is I don't know which half”.
>"The problem with saying "Half of this research is worthless" is that it's impossible to know which of the research will be worthless before you do the research."
Once you know the common problems, it is actually quite easy to spot design flaws or a history of hiding unwanted results. When you know what to look for you can filter out crappy research in a few seconds. It could probably be automated to a large extent.
For example, a common thing in biomed is to have a "headline claim" that x protein/drug/etc influences y behavior/health outcome/etc. But then there is never a scatterplot of x vs y.
Another is lack of "blinding" (hiding the experimental conditions from the researcher/subjects). There are more, but you get the picture. The presence of these baffling practices quickly demonstrates they don't know what they are doing, and the research should not be funded.
> Taxing the rich isn't about generating revenue to make something. It's a reallocation mechanism for dollars that already exist in the economy to things that we want as a body of people.
That simplistic logic fails to account for the fact that pursuing income is an incentive to allocate resources to productive investments that are self-sufficient and pay off tons of taxes directly and indirextly, such as by paying salaries and generating demand.
Once you start to impose communist "reallocation mechanisms", not only are you eliminating incentives for productive investments as they effectively cease to be productive due to state intervention and actually create incentives to move production and industrial capabilities out of the country.
In short, you're advocating that the goose that lays golden eggs should be slautered to get to someone else's eggs.
> Once you start to impose communist "reallocation mechanisms"
You mean, like a heirarchy of preferential tax rates for different income sources where capital income is favored over general income which in turn is favored over labor income?
Robbing someone of 70% of their income is way more aggravating and profoundly totalitarian than a simple progressive tax. It's one thing to grant a small share of your income to the state in order to keep social institutions running, but it's an entirely different thing if the state robs you off the majority of your total income for no reason at all.
In a free and democratic society, a citizen has the right to the fruit of his labour, not just to a small fraction of what he worked for.
You seem to be responding to something other than the post yours is attached to, but:
> Robbing someone of 70% of their income is way more aggravating and profoundly totalitarian than a simple progressive tax.
A 70% top marginal rate isn't taxing (much less “robbing”) 70% of your income, unless your income is literally infinite.
Also, the top marginal rate was at or above 70% for every year from 1936 through 1980, yet for some reason those 44 years aren't usually considered a “profoundly totalitarian” period in US history.
> So even confiscating all the wealth of the top couple thousand richest people in the world (not just US) would only fund the US government for 2-3 years. And that would be a one-time event.
Why? What do you think happens to money after the government spends it? It vanishes?
See my other posts in this thread. I'd guess the money is largely wasted on stuff like incorrect medical "discoveries" that slow down progress. Ie, the money is being used to create problems that require more future money to fix.
Although Ocasio-Cortez minored in economics, she doesn't seem to understand simple concepts such as unemployment rates. In a recent interview[1], in response to a question about how low unemployment rates undermine her message of the working class falling behind, she said the following:
> I think the numbers you just talked about is part of the problem. Because we look at these figures and say, "Unemployment is low. Everything is fine." Well unemployment is low because everyone has two jobs. Unemployment is low because people are working 60, 70, 80 hours a week and can barely feed their kids.
This was so incorrect that Politifact rated it "pants on fire".[2]
AOC also doesn't seem to have an understanding of basic historical facts. Immediately after she put her foot in her mouth on labor stats, she said:
> Right now we have this no-holds-barred wild west hypercapitalism. What that means is profit at any cost. Capitalism has not always existed in the world and it will not always exist in the world. When this country started, we were not capitalist. We did not operate on a capitalist economy.
That is not the sort of mind that I want tinkering with the economy I am part of.
What if we were to have an amendment to the Constitution such that income taxes for each income group would have to be approved by a plebiscite of those actually IN that income group? I wouldn't feel nearly so uneasy about taxing the ultra-rich at 70% if the majority of them were in favor of it.
As much as I dislike the supermajority tax rule in CA, it actually hasn't been that much of a practical problem (the supermajority budget rule was, but that was dumped.)
Of course, it's not an actual block on tax increases, and there's a straight-to-the-ballot bypass available.
> What if we were to have an amendment to the Constitution such that income taxes for each income group would have to be approved by a plebiscite of those actually IN that income group?
Similarly, we should also require that regulations on industry be approved by the regulated industry, and that criminal punishments be ratified by those who are guilty of the specific crime.
Well, I think if we can impose 70% taxes on the ultra-rich, perhaps we should pass a law that Asians have to pay 50% more than other groups; I believe we still can outvote them.
I know you're probably trolling/joking, but I've thought that we should have something like this for non-citizen workers combined with more open borders for migrant workers and H1B floors for pay.
Well, I would say it is neither trolling nor joking, but rather a kind of thought experiment. Isn't soaking the rich (if I'm not rich) very similar to placing exorbitant taxes on the Asians (if I'm not Asian)? It's really just a matter of how far you think we can take the notion of the tyranny of the majority until it becomes morally repugnant.
I, honestly think that taxes are all around too high, and spending more so. I'm in favor of flat taxes. I would suggest that higher non-citizen taxes as well as a pay floor (must be at least X) for h1b visa workers. Those would be mainly to offset immigration. I'm not against immigration, however drawing too many people will create resource constraints on one side, and depression of income and lifestyle on the other.
In the sense that, given the power to define how the law treats them in each of their relevant contexts (taxation and legal punishment), they would both have extremely strong motivations to favor their own wellbeing to the exclusion of society as a whole. But isn't that obviously the analogy being drawn? Your phrasing makes it sound like the parent comment was saying rich people should generally be treated like criminals, which just sounds like a purposeful misinterpretation (no offense if you were genuinely unsure what the parent comment was saying).
Here's what I don't understand - the US emits in the range of 15-20% of the world's total carbon emissions. If we were to reduce that by 20% (which would be a huge undertaking), we're talking about a 4% worldwide decrease at most. In order for any drastic change to happen, the US cannot do it alone.
Therefore, domestic policy is not the place where a real impact can be made. It's a foreign policy matter, and something that can really only be accomplished through treaties and the like.
China's contribution to carbon emissions is approximately twice the US's. Trump wants to threaten to harm China's economy through tariffs. Why not combine those two goals and craft legislation so that tariffs are set on a sliding scale based on the origin nation's total carbon emissions?
The vast majority of wealth is stored in abstract things like stocks and bonds, not possessions stored in a bunker somewhere.
To pay high taxes, that means liquidating those stocks and bonds (or in the case of income taxes, never buying them in the first place). That limits the financing that corporations can get, preventing expansion or causing them to downsize.
In other words, taxing the rich actually takes from corporations. Maybe that's the goal, but it has consequences, like job losses, greater dependence on foreign investment and imports, etc.
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[ 3.0 ms ] story [ 164 ms ] threadAlso, remember in 1970, the bank secrecy act put in place a $10,000 threshold for deposits or withdrawals, that were not reported on a "suspicious activities" list. This is also where we got the $10,000 travel disclosure rule. You will note that in 50 years, that threshold has not budged, putting non-wealthy people and transactions under the microscope. These laws are not adjusted for inflation, and we all expect there to continue to be inflation at the current or even an accelerated rate.
I know it's fashionable these days to play on people's resentment for "the rich" (however that is conveniently defined at the time), but this is budgetary advice from somebody who didn't think far enough ahead to budget her first month of rent in DC (or find a roommate), and who once said that the reason unemployment is low is that "everyone is working two jobs".
If you want a progressive policy, this person is not likely to be able to hold that policy's basic premise in her head, let alone any important details. I'm not a progressive, but surely it's easy to see how a Tulsi Gabbard, for example, is actually likely to produce some form of meaningful policy on at least some issues, whereas AOC mostly relies on desperately clawing to relevance through cheap popularity stunts and gaffes.
They said she was an outsider but she sure is learning fast.
First, the US has a progressive tax code. So, you wouldn't be taxed 70% on your entire income, only the money over a certain amount. Plus, due to deductions and other loopholes, nobody will actually pay this full amount.
Secondly, this rate isn't a new idea. It was 94% under FDR (democrat) and 91% during the Eisenhower (republican) administration, and both resulted in times of prosperity. And it was 70% as recently as the 80s.
Both occurred during (some) times of prosperity. That's an entirely different premise than giving the tax rate credit for the prosperity. FDR never once saw sustained economic prosperity during his tenure in office. That isn't a statement on his policies, rather, his time in office coincided with the great depression and WW2. He died before the post war boom took hold.
> Sanders said income tax rates under Eisenhower were as high as 90 percent.
> A look through the records shows that top earners in the eight years of Eisenhower’s presidency paid a top income tax rate of 91 percent. It was even a bit higher before he took office.
> We rate Sanders’ statement True.
[1] https://www.politifact.com/truth-o-meter/statements/2015/nov...
Climate change is not WWII.
I'd say Katrina, Sandy, Irene, Maria, Camp, Woolsey, and Mendocino, but if you're not convinced already you'll never be.
Climate change shouldn't be political or some far-off hypothetical.. no propaganda, rationalization or BS can deny the mountain of evidence that it's an immediate, existential threat that demands immediate, decisive action on the decatrillion-dollar moonshot scale (roughly the total, multi-decade cost of Iraq & Afghanistan).
The CO2 warming we are seeing today come from CO2 that entered the atmosphere 10 years ago. So, the damage is happening RIGHT NOW.
The sentence you highlighted has nothing to do with WWII.
Eisenhower was president from 1953 to 1961.
[0]: i.e., legal
[1]: i.e., illegal
https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...
Note I just grabbed the first google result, may be inaccurate / biased
It's a bit of a conundrum. The richer you get, the more power you have (via money). We want to tap into that wealth/power for the greater good. Those affected might disagree and can wield said power to prevent you from doing so. You might be able to legally force them to using the power of democracy, but this could cause all sorts of other problems (the rich fleeing to other countries, etc.)
Especially if you manage to do enough damage to society through your greed that it necessitates a class war. We can either redistribute peacefully in an attempt to solve problems that largely affect the poor, or we can push them off until the poor get desperate.
Warren Buffett doesn't actually like it, otherwise he'd be writing checks to the treasury.
You could use a function with a smooth derivative, and since a table is used in application it would have no effect on practical complexity of tax prep, though it would make intuitive grasp even harder (and it's already bad.)
If you made the delta 9%, that would get you 44% at $1M, 53% at 10M, 62% at $100M, and 71% at $1B. This gets you in the neighborhood of Ocasio-Cortez's idea, but without one big step to get you there. (I suspect that it would also raise considerably less money than her plan...)
Yes, then you still have the cash loophole, but most people aren't using cash.
I support things like a tax on digital advertising. This is a tax that wouldn’t slow growth or harm the econo,y really and impacts mostly those with extremely high capital investments. Facebook, Google help our economy a lot but they don’t have that many jobs in relation to profits. A 10% tax on digital advertising would eat marginally into their profits but their profits rise 25% a year so not too bad. That would raise around $15-$20B a year by 2020. Imagine how doubling the subsidies for solar and EVs would do for renewables and EVs.
Competent politicians aren't competent because they're knowledgeable in every possible topic, but because they surround themselves with subject matter experts.
¿Por qué no los dos? Is Ocasio-Cortez surrounding herself with subject-matter experts?
In my experience, it's often just "interested parties". I'm thinking of multiple cases where political advocacy groups I've worked with have drafted a bill proposal and taken it directly to state-level legislators seeking to have them sponsor it. In every case, they either refused or submitted the bill as-is without modification.
In one case, that means that an Arkansas law was actually drafted by a 16-year-old (me). That one was relatively minor in the grand scheme of things, but still :)
Secondly, isn't empathy, vision, ambition and an ability to rally people incredibly important for a politician? Politicians aren't supposed to know everything, but rather work with appropriate experts and aides.
Not seeing it. I've spent some time working in a (state, not federal) legislative office and have a political science degree (specialized in pragmatics of US politics.) I've seen some of her interviews. I don't see anything that indicates that she would be incompetent as a legislator. Could you explain the basis for your assessment?
Now, this could be that she's not good at interviews, and feels the need to keep talking to appear competent. She could know far more, and just be unable (yet) to bring it out in front of the cameras. But to me, she comes off as talking without knowing. That scares me in someone who can write legislation.
https://www.pbs.org/video/alexandria-ocasio-cortez-barhhq/
Every large organization (public or private) has waste the same way every large computer system has waste. Management is complex and there’s simply no way to optimize all resources in real-time. In software we may lament some of the bloat but we generally accept it as a necessary evil. In places where performance is extra valuable we profile and optimize the path. Well the same thing happens in government and corporations. Government of Ontario spends a good chunk of money on grants to health care system researchers to incrementally make things better and the system is doing really well considering how underfunded parts of it are.
These are just off the top of my head. I'm not saying there aren't things that do run relatively effectively... I will also say there is gross overspending at all levels.
For the most part, the military could be cut to a fraction of the current size without much lost. A lot of the rest could be made up by shifting IP registration costs, and reducing protectionism. There's plenty of fat to trim...
And rightfully so. When pretty much everyone benefited from lax climate controls and externalities that are not directly included in the price of a product or service, why should only on special group pay for it? If there were a global move towards pricing in climate change into the end price, however that may work, I would strongly suggest that everyone has to pay their share. Or am I missing something here?
I think the argument would be that the ultra-wealthy benefited more from a carbon-based economy than the average worker, in the form of their accumulated fortune.
However, IF we would have taxed the greenhouse gas emissions into every product, maybe not even the middle class would have been able to afford it. But since gas was cheap, a lot of people were able to afford having a car, building houses, getting to their jobs without moving their homes and were able to improve their lives.
I do see the point in your argument, I just think it would be a fairer solution to tax everyone for the climate change linear to their consumption.
Her idea may in fact be good, but on this point, her logic does not work.
As for the idea itself: IIRC, there seem to be significant second-order effects that keep the federal government's income at 18-22% of GDP, no matter what the tax rates are. So raising the rates like this may provide significantly less new income than she expects.
What's more, if you have a pot of new money, there will be competing ideas for how to spend it. This green initiative may be a good idea. Somebody else may have a good idea - say, Medicare for all. And a different somebody may have another good idea - say, guaranteed basic income. The problem is, even if raising the taxes provides the expected money, the money is only enough for one of these ideas. You can only spend that pot once. But Congress being Congress, they're going to want to spend it three times. (Note well: This specific paragraph is not a criticism of Ocasio-Cortez's idea; it's a criticism of Congress in general.)
But it does rebut the common line of argument that it is preemptively deployed against, which is “Radical ideas should be rejected as bad merely because they are radical.”
> As for the idea itself: IIRC, there seem to be significant second-order effects that keep the federal government's income at 18-22% of GDP, no matter what the tax rates are. So raising the rates like this may provide significantly less new income than she expects.
To the extent that revenue seems relatively stable with apparently large changes in rates, I don't think those are “second order effects”, I think that they are coordinated changes to tax policy other than rates. The US doesn't have some kind fof special sui generis immunity to policy changing effective rate of total taxation.
Also, US federal tax revenues were 27.1% of GDP in 2017 [0], so the 18-22% range is not only not immutable, but also not what is recently observed.
[0] https://www.oecd.org/tax/revenue-statistics-united-states.pd...
There might be some kind of gaussian distribution on good ideas, though. The more radical an idea, the lower probability that it's correct. It's still not zero, and the idea should be judged on the merits. But the further out the idea is, the more radical it is, it seems reasonable to say that the level of skepticism should go up.
-- Government-led investment in energy and resource efficiency, as well as reusable energies and microgeneration;
--Low-carbon infrastructure redevelopment in order to create jobs;
--A directed tax on the profits of oil and gas companies with proceeds being invested in renewable energy and energy efficiency;
--Financial incentives for green investment and reduced energy usage, including low interest rates for green investment;
--Re-regulation of international finance, including capital controls, and increased scrutiny of financial derivatives - likely along the lines of Basel II;
--Curbing corporate tax evasion through compulsory financial reporting and by clamping down on tax havens;
(I say "at least nominally" because I'm not sure that this actually works as advertised. If it did, the deficit shouldn't increase from one year to another, except perhaps in an economic downturn.)
Start looking at how all the replacement transportation can be put in place 11 years - either getting all cars off the road, and manufacturing new electric ones; or building other mass transit that can serve everyone (and how long does it take to get a train line built these days?). How are we going to find enough building contractors to install electric heat or heat pumps into every house that uses oil or gas, and to build and install electric stoves?
And of course there's the upheaval of jobs for all the people in the current industries, and trying to find a place for them in the new industries.
Money's not the bottleneck here, we're more constrained by logistics.
Remember also that the vast majority of logistical challenges with climate change aren't developing new products, but handling coordination problems around deploying existing ones.
Things that might happen if America decided to commit seriously to a Green New Deal: - automotive roadmap overhaul to 80% electric drivetrain for all deliveries in the United States by 2030 - tectonic shift in land use around the country to higher density zoning, mass transit, HSR - hundreds of billions of dollars of research to public and private institutions to map all the carbon in our system and the most effective ways to remove it
But these are all giant changes. Here are simple ones that are straight up applications of government power: - switch all major urban areas to Tokyo style zoning with property taxes tied to mass transit investment - steep cliff on ICE vehicles delivered in the United States hitting some x00% in 2030 - end all fossil fuel subsidies - move all energy supply to a Texas style market
Emergent properties of human behavior responding to incentives would take care of the rest.
Yes, that was exactly my point. There simply aren't enough people making electric cars, heat pumps, and all those other new products, to eliminate fossil fuel dependence by 2030, which was what AOC was advocating. Diverting enough resources would be disastrous to other industries, and then once we've made the huge investment to build all that, we suddenly don't need the capacity once we hit the goal. It's economic suicide.
Emergent properties of human behavior responding to incentives would take care of the rest.
You're outlining programs that would push us in the right direction, which is good. These are not things which will eliminate fossil fuel dependence by 2030, which is what AOC was shooting for, and which I'm criticizing.
Beyond this, is expanding the power needs for areas that may not have capacity meaning more infrastructure. Replacing main breakers and panels...
> During World War I, the top rate rose to 77% and the income threshold to be in this top bracket increased to $1,000,000 (equivalent to $19.6 million[68] in 2018 dollars).
> During 1944 and 1945, the top rate was its all-time high at 94% applied to income above $200,000 (equivalent to $2.85 million[68] in 2018 dollars).
Nominal Tax Rates and Brackets, 1913-2013: https://files.taxfoundation.org/legacy/docs/fed_individual_r...
Inflation-adjusted Tax Rates and Brackets, 1913-2013 (in 2012 Dollars): https://files.taxfoundation.org/legacy/docs/fed_individual_r...
>"Added together, the total net worth for 2018's billionaires was US$9.1 trillion" https://en.wikipedia.org/wiki/The_World%27s_Billionaires
Meanwhile, the US federal government spends ~$4 trillion per year: https://en.wikipedia.org/wiki/United_States_federal_budget#/...
So even confiscating all the wealth of the top couple thousand richest people in the world (not just US) would only fund the US government for 2-3 years. And that would be a one-time event.
Basically, the amount of money spent by the US government is already so massive that I don't see how giving it more can possibly help with anything. It would be much more realistic to attempt making the government slightly more efficient and then reallocating the money saved.
And that ignores that barely anyone will end up paying these 90% taxes, just like almost no revenue was collected from the 90% bracket in the 1950s since various accounting methods/etc were be used to avoid it.
Anyway the climate plan is more about moving money around than just taking it and throwing it in a hole. Ideally, more wealth would be generated from people actually spending the money for useful things than would be made from the passive investments favored by the ultra-rich.
I don't follow. Why do you think GDP is the "right number" instead of tax revenue?
Yea, I guess you are correct. I just consider adding to the national debt another form of tax (via inflation).
>"My point was you need to look at capital gains and business taxes to get an idea of how much money there is available."
Still not following. I am concerned with the government spending a very large amount per year. Spending these resources more efficiently seems like low hanging fruit vs just raising taxes on whatever. The idea of confiscating the wealth of the ultra rich is just to demonstrate that they really aren't that rich compared to what the US government is spending.
So if the actual desired outcome was to get, eg this climate project done, then I would expect people to be exploring that option. Plus increased efficiency should be better for the climate...
If this seems radical, notice that this is already part of the American social contract. We already tax people to provide services and invest in long term projects. All this does is change the rates and the allocation direction.
Ok, well here is a department of the government I am familiar with admitting they waste $25-30 billion every year (imo that is an underestimate, but they definitely waste over 50% of their funding on worthless stuff): https://nihrecord.nih.gov/newsletters/2016/07_01_2016/story3...
So why not reallocate that to whatever this climate project is? And I'm sure there is similar massive waste in other departments too. If 87.5% is representative that is $3.5 trillion per year to be used.
I mean no one actually wants to waste ~$30 billion a year on worthless medical research, right?
This reminds me of the Wanamaker quote: “Half the money I spend on advertising is wasted; the trouble is I don't know which half”.
Once you know the common problems, it is actually quite easy to spot design flaws or a history of hiding unwanted results. When you know what to look for you can filter out crappy research in a few seconds. It could probably be automated to a large extent.
For example, a common thing in biomed is to have a "headline claim" that x protein/drug/etc influences y behavior/health outcome/etc. But then there is never a scatterplot of x vs y.
Another is lack of "blinding" (hiding the experimental conditions from the researcher/subjects). There are more, but you get the picture. The presence of these baffling practices quickly demonstrates they don't know what they are doing, and the research should not be funded.
That simplistic logic fails to account for the fact that pursuing income is an incentive to allocate resources to productive investments that are self-sufficient and pay off tons of taxes directly and indirextly, such as by paying salaries and generating demand.
Once you start to impose communist "reallocation mechanisms", not only are you eliminating incentives for productive investments as they effectively cease to be productive due to state intervention and actually create incentives to move production and industrial capabilities out of the country.
In short, you're advocating that the goose that lays golden eggs should be slautered to get to someone else's eggs.
You mean, like a heirarchy of preferential tax rates for different income sources where capital income is favored over general income which in turn is favored over labor income?
In a free and democratic society, a citizen has the right to the fruit of his labour, not just to a small fraction of what he worked for.
> Robbing someone of 70% of their income is way more aggravating and profoundly totalitarian than a simple progressive tax.
A 70% top marginal rate isn't taxing (much less “robbing”) 70% of your income, unless your income is literally infinite.
Also, the top marginal rate was at or above 70% for every year from 1936 through 1980, yet for some reason those 44 years aren't usually considered a “profoundly totalitarian” period in US history.
Why? What do you think happens to money after the government spends it? It vanishes?
> I think the numbers you just talked about is part of the problem. Because we look at these figures and say, "Unemployment is low. Everything is fine." Well unemployment is low because everyone has two jobs. Unemployment is low because people are working 60, 70, 80 hours a week and can barely feed their kids.
This was so incorrect that Politifact rated it "pants on fire".[2]
AOC also doesn't seem to have an understanding of basic historical facts. Immediately after she put her foot in her mouth on labor stats, she said:
> Right now we have this no-holds-barred wild west hypercapitalism. What that means is profit at any cost. Capitalism has not always existed in the world and it will not always exist in the world. When this country started, we were not capitalist. We did not operate on a capitalist economy.
That is not the sort of mind that I want tinkering with the economy I am part of.
1. Starting around 5:45 in this video: https://www.pbs.org/video/alexandria-ocasio-cortez-barhhq/
2. https://www.politifact.com/truth-o-meter/statements/2018/jul...
Of course, it's not an actual block on tax increases, and there's a straight-to-the-ballot bypass available.
Similarly, we should also require that regulations on industry be approved by the regulated industry, and that criminal punishments be ratified by those who are guilty of the specific crime.
Therefore, domestic policy is not the place where a real impact can be made. It's a foreign policy matter, and something that can really only be accomplished through treaties and the like.
China's contribution to carbon emissions is approximately twice the US's. Trump wants to threaten to harm China's economy through tariffs. Why not combine those two goals and craft legislation so that tariffs are set on a sliding scale based on the origin nation's total carbon emissions?
To pay high taxes, that means liquidating those stocks and bonds (or in the case of income taxes, never buying them in the first place). That limits the financing that corporations can get, preventing expansion or causing them to downsize.
In other words, taxing the rich actually takes from corporations. Maybe that's the goal, but it has consequences, like job losses, greater dependence on foreign investment and imports, etc.