Just a quick post on something I've been mulling around in my head.
Enacting an income tax seems to be a useful tool for plutocrats. Most poorer people depend mainly on labor income for their livelihoods. By taxing income directly instead of consumption, investment, etc., accumulation of financial capital can be hindered at its source. This is important for currently wealthy people who would prefer to prevent or reduce competing choices than continue to innovate.
Thoughts?
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It sounds right.
But to discourage people from saving, inflation does the job well enough.
Sure, but income taxes prevent people from saving the money that's taxed. Discouragement is one thing; prevention is another.
Of course, inflation has also been used to preserve/enhance the positions of the currently wealthy. That's beside the point.
That's exactly how the middle class is being squeezed by the unholy alliance between who you call "plutocrats" and lower classes. While the lower classes are obviously hurt themselves by income taxation, the sense of schadenfreude from seeing people earning more than they do squeezed harder makes it all worthwhile. And sure, "plutocrats" end up in the highest tax brackets but they have the means to defend themselves. They can set up foundations, offshore accounts and afford to hire the best lawyers and accountants to come up with 100% legal schemes to pay less than their "due". They can resort to lobbying. In the end they can even afford paying more taxes without flinching. And even the State says they are getting richer, dropping all pretenses of being the only source of "social justice".
While I agree with you completely about income taxation being a hindrance to the process of financial tax accumulation, I don't believe it's done consciously. The middle class (we) simply lacks the firepower of the lower and higher classes: the former have the votes, the latter the lobbying and economical power. The system needs both votes (consent) and money to stay afloat but cannot afford to squeeze "plutocrats" too hard. So the weakest class gets the worst of it. Not only it's slowly bled into extinction, but it also gets lectured about how earning "too much money" is bad and the State should step in to level the playing field, often by people who earn insane amounts of money like that Bono fellow.
There's a catch though. Once the middle class will become incable of bearing the burden of buying the consent of the masses (through taxation, inflation and many other means) what will happen? A return to the Dark Ages? A new October Revolution? The parasites should always be wary that killing the host invariably result in their deaths.
Agreed, and a couple other tools of the wealthy/powerful to remain as such are poor education systems and minimum wage laws. This ensures the masses remain poor and uneducated securing their positions for generations.
ANY specific tax is distorting and harmful to the economy.
Accepting arguendo that we're trying to raise tax revenue in the first place, the only really economically healthy tax, other than a poll tax that would never be accepted, is a tax on ALL transactions...sales of goods, sales of labor, sales of services, et cetera.
The idea that we should go from punishing labor to punishing consumption or added value is just insane. It's like advocating that we go from stabbing ourselves in the hand to stabbing ourselves in the foot.
That includes the "fair" tax.
Kakugo:That's exactly how the middle class is being squeezed by the unholy alliance between who you call "plutocrats" and lower classes. While the lower classes are obviously hurt themselves by income taxation, the sense of schadenfreude from seeing people earning more than they do squeezed harder makes it all worthwhile. And sure, "plutocrats" end up in the highest tax brackets but they have the means to defend themselves. They can set up foundations, offshore accounts and afford to hire the best lawyers and accountants to come up with 100% legal schemes to pay less than their "due". They can resort to lobbying. In the end they can even afford paying more taxes without flinching. And even the State says they are getting richer, dropping all pretenses of being the only source of "social justice".
In my OP, I was actually arguing in terms of the currently wealthy vs. everyone else. Most people in the US, today and historically, self-identify as being "middle-class". (Other parts of the world may be different in this regard.) However, I there's a de facto lower income-tax burden on the poor because, if they couldn't earn enough money to "get by", they'd be more likely to foment revolts. Schadenfreude doesn't factor much into it, as far as I can tell.
Kakugo:While I agree with you completely about income taxation being a hindrance to the process of financial tax accumulation, I don't believe it's done consciously. The middle class (we) simply lacks the firepower of the lower and higher classes: the former have the votes, the latter the lobbying and economical power. The system needs both votes (consent) and money to stay afloat but cannot afford to squeeze "plutocrats" too hard. So the weakest class gets the worst of it. Not only it's slowly bled into extinction, but it also gets lectured about how earning "too much money" is bad and the State should step in to level the playing field, often by people who earn insane amounts of money like that Bono fellow.
Well, a question to ask is why a national income tax was instituted in the US instead of something else like a national sales tax. I suspect many of the currently wealthy who support income taxes do so out of a desire to keep others from becoming threats to their existing wealth, much/most of which is in the form of asset values.
Kakugo:There's a catch though. Once the middle class will become incable of bearing the burden of buying the consent of the masses (through taxation, inflation and many other means) what will happen? A return to the Dark Ages? A new October Revolution? The parasites should always be wary that killing the host invariably result in their deaths.
Sure, but this is beside the point.
freeradicals:Agreed, and a couple other tools of the wealthy/powerful to remain as such are poor education systems and minimum wage laws. This ensures the masses remain poor and uneducated securing their positions for generations.
If it's intentional at all, that would indeed seem to be the idea.
Kaz:ANY specific tax is distorting and harmful to the economy. Accepting arguendo that we're trying to raise tax revenue in the first place, the only really economically healthy tax, other than a poll tax that would never be accepted, is a tax on ALL transactions...sales of goods, sales of labor, sales of services, et cetera. The idea that we should go from punishing labor to punishing consumption or added value is just insane. It's like advocating that we go from stabbing ourselves in the hand to stabbing ourselves in the foot. That includes the "fair" tax. I hope you don't think I was trying to argue otherwise in the OP. I didn't mean to implicitly advocate other kinds of taxes over the income tax -- I merely wanted to point out what I see as an interesting consequence of the income tax vis-a-vis other taxes. The keyboard is mightier than the gun. Non parit potestas ipsius auctoritatem. Voluntaryism Forum | Post Points: 5
I hope you don't think I was trying to argue otherwise in the OP. I didn't mean to implicitly advocate other kinds of taxes over the income tax -- I merely wanted to point out what I see as an interesting consequence of the income tax vis-a-vis other taxes.
Just a quick post on something I've been mulling around in my head. Enacting an income tax seems to be a useful tool for plutocrats. Most poorer people depend mainly on labor income for their livelihoods. By taxing income directly instead of consumption, investment, etc., accumulation of financial capital can be hindered at its source. This is important for currently wealthy people who would prefer to prevent or reduce competing choices than continue to innovate. Thoughts?
EmperorNero:Yes, by taxing income you punish production, and thereby protect the currently wealthy from competition. Essentially it means keeping the lid on capital accumulation so that the current owners of capital stay on top relatively. Income taxation is probably one of the most conservative (as in: preserving the status quo) state measures in existence. The rich actually love high income taxation, because it's really taxes on the upper middle class. It suppresses upwards mobility in the group that is most likely to compete with them. And then pretty much everything the government does with that money is a subsidy of the super wealthy. If the government builds a road their land value goes up, if it maintains order through a police force they don't have to hire security for their mansions.
Thanks for writing this -- you put it better than I did. :)
The rich actually love high income taxation, because it's really taxes on the upper middle class. It suppresses upwards mobility in the group that is most likely to compete with them.
This is such a good point, summarizing arguments I've made in a much more tedious way, that I'm gonig to steal it for an article.
We should say this every time some socialist like Buffet brags about wanting taxes higher.
I recently wrote an article saying that Buffet's "600 Billion dollar challenge" is harmful, that the wealthy giving to "charity" is not altruism or philanthropy, but actually bad for the economy, especially the poor:
http://pithypontifications.wordpress.com/2010/12/31/billionaires-shouldnt-give-their-wealth-to-charity/
Between your point and that one, I think the lie is put to Buffet's entire outlook