Government Spending

Fareed Zakaria's Right to Pay Higher Taxes Stops at My Right Not To.

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I've long admired Fareed Zakaria's work, but what a piece of lazy slop his latest column is. He's in favor of letting all the Bush tax rates lapse, thereby granting us a shot at cutting "deficits by about a third—more than $300 billion!—permanently and relatively easily." You know the drill: Returning to Clinton-era tax rates would mean $3.9 trillion in more revenue over the next decade. Hitting up the top 2 percent or 3 percent alone would bring in about $700 billion over the next decade. Hitting just the lower 97 percent would bring in $3.2 trillion. Zakaria is jumping on the responsibility and fairness wagon, saying all should pay more.

Here you go::

Clinton raised taxes in 1992 and ushered in a period of extraordinarily robust growth. Bush cut taxes massively in 2001 and got meager growth in return….

I don't like our current tax system. It's unwieldy, taxes the wrong things (income instead of consumption), and is filled with loopholes that are legalized corruption. But we are not going to create the perfect tax code today. We have in front of us a simple, easy way to bring America's fiscal house in order, reduce our dependence on foreign borrowing, restore U.S. credibility and power, and give us a stable revenue base from which to make key investments for future growth. All we need is for Congress to do what it does so well—nothing.

Clinton, of course, didn't raise taxes in 1992 (he only took office in 1993). And when he did raise taxes, the economy was deep into recovery and, more importantly, Bill the Pander Bear was actually cutting discretionary spending in real terms by what would amount to 8 percent in his first term. That's a very different scenario than what we've got now. Shitty growth and projected increases forever in federal spending.

More important, Zakaria claims that the "Bush tax cuts remain the single largest cause of America's structural deficit" and that "federal taxes as a percentage of the economy are at their lowest level since the presidency of Harry Truman."

Let's assume that's all true (it's late, I've got a dinner to get to, and I don't have time to check). The problem with deficits is not one of revenue but one of spending. Forget about the dip in government revenue due to the recession.

It's a simple, plain, and nearly universally unacknowledged fact that the feds haven't been able to raise revenue much past the 19 percent of GDP bar for any period of time since World War II. Doesn't matter the the top marginal rate is, or the bottom, or nothing. The government is going to pull in just under 19 percent maximum. Some years it might be a bit higher and some a bit lower, but it ain't budging over the long haul (defined as the last 60 or so years). That is the limit of what we can spend if we want to have a balanced budget. Obama's own budget projections have the feds spending more than 22 percent of GDP each year over the next decade. You do the math.

What the government can do is change how much goddamn money it shells out. As noted above, over the course of Clinton's first term, for instance, real discretionary spending actually went down (we used to call it the peace dividend). But since Bill Clinton left office, total federal outlays have increased 60 percent in constant 2010 dollars. And there's your problem, Fareed. Stupid programs like the Medicare Part D, the prescription drug program that paid off seniors who were spending, on average, under 4 percent of their total income on prescription drugs. Two long and increasingly unpopular wars. No Child Left Behind, a federalization of education policy that costs hundreds of billions of dollars over time without any chance of helping poor kids escape crap schools. All the other parts of Medicare that are set to explode.

We are in debt because we spend too much, not because we make too little as a country. Let's say it again, this time in bold: We are in debt because we spend too much, not because we make too little as a country.

Fareed Zakaria, who surely makes well north of $250,000 a year, is welcome to give all his income to a government that has only managed a nominally balanced budget a handful of times since we beat the Axis powers.

But can he have the generosity not to include the rest of us who make far south of a quarter-mil a year in his delusion that higher taxes will mean smaller deficits?

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178 responses to “Fareed Zakaria's Right to Pay Higher Taxes Stops at My Right Not To.

  1. I’ve long admired Fareed Zakaria’s work…

    Ya lost me right there

    1. That’s because you’re even stupider that Gillespie.

      1. *golf clap*

  2. the rest of us who make far south of a quarter-mil a year

    You should appeal to the Kotchtopus for a raise. And I am not sure i believe you, according to all the other “news” outlets you folks at Reason are pulling all the world’s strings so you MUST be rollin in it.

    Do you expect me to talk?
    No Mr. Fareed, expect you to die. MUAHAHAHAHAH!

    *not a real threat. NO sheeps were f’ed in this posting*

    1. What is the Jacket bringing down? Perhaps Nick, you could ask the Jacket to increase you allowance.

      1. I think Nick is a battered spouse.

  3. Clinton raised taxes in 1992 and ushered in a period of extraordinarily robust growth.

    What is the economic theory behind such a move? How does taking dollars out of an economy improve it?

    1. Correlation = Causation damnitt!

    2. Wtf does that have to do with fairness? Or social justice?

      Or Patriotism?!

    3. Never mind the tech…..bubble.

  4. The Bush tax cuts are the “single largest cause of America’s structural deficit” only if you choose not to categorize everything else as “spending.” And yes, federal revenue as a percentage of GDP is the lowest it’s been since the 1950s, but just prior to the recession, it was humming along right around 19% as you’d expect.

    What conclusion can we draw from this?

    While I’m usually a low-tax kind of guy I think I could support a proposal which would increase taxes on Fareed Zakaria.

  5. “Fareed Zakaria, who surely makes well north of $250,000 a year, is welcome to give all his income to a government that has only managed a nominally balanced budget a handful of times since we beat the Axis powers.”

    What the point of giving to charity if you can’t force everyone else to do likewise?

  6. The nice thing about paying protection money to the mob is that they actually refrain from screwing with you so long as you pay.

    1. In your case, they’d probably wack you anyway, just to shut you up.

      1. Nah, the mob likes cash flow and avoids trying to wreck its productive, if terrorized, “clients.”

        1. Trust me, you would spout some libertoid shit, and they would put a bullet in your head.

          1. You’re right–they love government, too, since it’s so easy to purchase.

            1. Trust max. He has the mad mob hook up.

    2. PL channeling Lysander Spooner:

      The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a “protector,” and that he takes men’s money against their will, merely to enable him to “protect” those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful “sovereign,” on account of the “protection” he affords you. He does not keep “protecting” you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villanies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave.

      The proceedings of those robbers and murderers, who call themselves “the government,” are directly the opposite of these of the single highwayman.

      1. It’s true enough. To be sure, it’s the difference between mere parasites and critters that will kill you off.

      2. Yes, government has more in common with the Mafia than with a mugger.

  7. You don’t have a right not to pay your taxes, Gillespie, you stupid fuck. You’re required to pay them by law. Jesus, I would love to see your fat ass in the slammer for tax evasion. Another inmate might not like that copy of Altas Shrugged you keep up there, though.

    1. Somebody call Craphole, Massachusetts and inform them we’ve located their missing village idiot.

      1. Just turn your self in, stupid.

      2. There’s a good chance they don’t want him back.

        1. To Mr. hmmm,

          Please cease and desist from your unprovoked attack upon our client – the current Craphole, MA village idiot.

          Your deliberate insinuation that the identity of our aforementioned client is the execrable troll “M_x”is defamatory and actionable.

          While it is conceivable that no one in their right mind would believe that said troll possesses enough intelligence to qualify as an ‘idiot’, we have obtained documentation from the Craphole City Council that specifically lists a rejected application for village idiot signed by the aforementioned troll.

          In light of the evidence we must warn you that continued comparisons will result in litigation.

          Sincerely,
          A. Retard, Esq.

          1. It’s hmm, two m’s. You fuckin’ retard.

            1. What I do at work is my own business.

              1. That would be a retard fucker, you fuckin’ retard.

                1. Not if I’m not fucking a retard.

                  1. God damn it! That was retarded!

    2. You don’t have a right not to pay your taxes, Gillespie, you stupid fuck. You’re required to pay them by law.

      Care to explain to us what right entitles the government to tax?

      1. The right to theft is implicit once a critical mass of idiots has been reached, didn’t you know?

        See… I can’t go to you by myself and take your money. And you can’t do it to me either – that would be illegal. But if the two of us go gang up on a third guy and call it a “tax”. It’s fine.

      2. Soshull Kontrakt!!!!!!

      3. so ok you don’t pay your taxes? HA.

  8. Clinton, of course, didn’t raise taxes in 1992 (he only took office in 1993).

    If I recall correctly – and I may not – he raised them retroactively, so even though he did not take office until ’93, taxes for ’92 went up more or less at his discretion.

    1. The tax increase was retroactive but only to the beginning of 1993. Still unconstitutional, just not as unconstitutional.

  9. Let’s say it again, this time in bold: We are in debt because we spend too much, not because we make too little as a country.

    Propaganda is always better in bold. Voodoo bullshit about Laffer curves and what not aside, this is a statement about policy preference, not an assessment of budgetary reality. Maybe we’re spending too much, or maybe we’re not raising enough. Depends on what you think we should be spending, and whether revenues account for it.

    Oh. And here’s why that graph is both telling and misleading. Tax rates have gone wildly downward, necessitating the 100-point scale. But revenue as a percentage of GDP won’t fluctuate as much over time, so it would be better to scale it smaller for that line if you want to see a relationship. Scaled correctly, that line would show that federal revenues tend to grow along with the economy as a whole, and that tax policy does indeed affect the budget. The notion has the added benefit of making rational sense.

    1. “Propaganda is always better in bold.”

      The government would spend less of our money if we gave them more of our money to spend.

      You mean like that?

      1. But I’m not making that claim.

        1. But that propaganda doesn’t look any better in bold–does it.

          If instead of putting it in bold, I’d said, “California’s budget problems would go away if only we got rid of Prop 13”? That would make it look any better than it is.

          Blowing smoke about the Laffer curve and voodoo economics tries to make chicken shit look like chicken salad too…

          Putting chicken shit like that in bold makes it look worse–like what it is. Not better.

          Our government over the past 10 years has spent like a bunch of drunken sailors–and the way to get drunken sailors to stop spending so much money? Isn’t to give them more money to spend.

          Squandering our future paychecks on government largess is not the solution to our financial problems.

          It’s the bold that makes it look worse. You were wrong about that. It looks worse all succinct and in bold. It looks like what it is.

          1. I’ve not known many propaganda ministries that prefer long passages of nuance in a subtle font, but okay.

            1. Ahh, but “tl;dr” is the subtlest of propagandas. Makes your citizenry too disinterested to fight back.

    2. Let’s see, the government spends around what, 30% of the GDP and there’s some debate about whether or not the governments spends too much??? What would be too much, exactly? 50%? 90%?

      1. Whatever works, and that certainly will not be informed by dishonest hacks who have no intention of ever endorsing a tax increase, ever.

        1. Spoken like a true dishonest hack who equates government spending with “doing good”.

          Spending other people’s money without accountability will never work, especially because of people like you, Tony, who cannot conceive that any government program could be a failure.

          Which leads to the ‘solution’ – more spending.

          1. I don’t equate government spending with doing good. Just some of it. Which is more nuanced than saying it’s all bad and we should do everything we can to reduce it no matter the circumstances, which is what dishonest hacks say. Are you really going to say that Nick Gillespie would be in favor of a tax increase even if the economy were strong? It’s his job to be against tax increases.

            1. No, it’s his job to advocate for increasing freedom, which is the primary concern of this site.

              Can you point me to the post where Gillespie advocates no taxes?

              You can’t, because that’s not his ‘job’.

              Your levels of projection are quite intense, because it is you who has the job of advocating for larger government and higher taxes, no matter what waste, fraud, abuse and contradictory results are demonstrated.

              Pick a subject – say the massive increase in public sector pay and pensions at the same time the infrastructure is crumbling, and tell everyone how granting even more funds will somehow convince unaccountable government bureaucrats to do the jobs that were the point of the original diverted funds.

              No accountability, immune from recession and unemployment. How exactly is that not a catalyst for abuse?

              Yet it’s Gillespie that’s somehow the big danger? He who writes no laws, no legislation, and who can back up his assertions with actual citations?

              Really, Tony, the only thing you seem to advocate is higher taxes and larger government, and anything written at Reason.com or H&R is just an exercise in hoop jumping for you to try and return to your dogma.

              1. I’m actually in favor of dramatic reductions in the scope of government in some areas.

                I’m just asking if you think Nick would ever, ever argue in favor of a tax increase. One would think that if he were a serious person discussing the budget, there would be times when such advocacy would be warranted. Do you think he ever would?

                1. Do you think he ever would?

                  You’re free to ask him, but my supposition would be that there is a large difference in the assumptions of what constitutes ‘taxation’, and that your argument for taxation ignores many components of the process. It is in the delineation of the makeup and effectiveness of these components that you and I (and Nick) differ – not the concept of taxation.

                  Your assumption seems to be that there are certain situations that warrant an increase in taxes. I would agree to that, but unfortunately that description so oversimplifies the process as to render it useless.

                  It is akin to the story of the Devil granting wishes – how many times has that worked out in favor of the grantee, and not the Devil?

                  Without sunset clauses, means testing, elimination of mission creep, increased transparency and open bidding, the idea of ‘taxes’ is a children’s book version of a bank heist.

                2. Taxation is theft, your moral retard. Get your hand out of my pocket.

                  1. Yeah well anarchy sucks.

              2. This, exactly.

                Let me put it fewer words for you Tony.

                Useless troll is useless.

            2. I really do appreciate Gillespie throwin’ in the moral component to all this…

              Really, once we’re done talking about how much of their own paychecks people should be allowed to keep–depending on what’s best for the rest of us–what should we talk about next?

              What they should be able to do in their own bedrooms? Who they should be allowed to marry?

              …’cause that should all depend on what’s best for the rest of society too, right?

              Putting other people’s property up to a vote really is the next worst thing to putting their other rights up to a vote too. And saying that minorities should be able to do things–only if those things are in the best interest of everyone else? That really is the first step to a whole lot of ugliness.

              Gay people, Muslims, pornographers–any other minority you want to name? Whether what they do is in the best interests of everyone really shouldn’t be the standard…

              And I don’t see why rich capitalists shouldn’t be on that list too.

              I’m not gay, but I don’t talk about gay people’s rights like my opinion should determine what they can and can’t do–and people like Zakaria really shouldn’t talk about my paycheck so flippantly either…

              Why shouldn’t he get called out on that!

            3. I don’t equate government spending with doing good. Just some of it.

              Yet I can’t recall you ever advocating for the elimination of a government program or department. Your assertion of “some of it” would imply that there is something ripe for cutting.

              Care to offer any suggestions? (Yes, we know, DoD – which many here advocate reducing as well – any others?)

              1. DoD is the big one. The other major components of the budget, medicare and social security, I’m not in favor of cutting significantly. Everything else is peanuts. I don’t mind deficit spending to deal with an economic downturn, but assuming things were OK and we were all interested in balancing the budget, I’d rather see rich people pay more than poor people lose services, because I have morals.

                1. Tony, your morals are slippery and misshapen, like turds my dog leaves in the back yard.

                  You actually believe that given Persons A and B, and a Mugger with a gun, that there are morally right scenarios were the Mugger can use deadly force to make Person B give Person A his stuff, while taking a cut for himself.

                  Of course, this is only if Persons A and B meet certain conditions of YOUR liking.

                  People like you disgust me because you are doing everything in your power to destroy virtue, charity, and civilized behavior; to be replaced with force, malevolence, and warring between groups of people.

                  So, I utterly reject your fantasy assertion that you are on the moral high ground. You are scum in the gutter.

                2. Get bent, you self righteous little twerp.

                3. So, cut what’s actually called for in the Constitution. Got it.

                4. I find it cute that Tony objects to the one major spending item the USG does which is actually mentioned in the Constitution. Arguements that the DoD spends too much can be made, but that he’d cut the thing the federal government is supposed to do, rather than the things it’s not supposed to do amuses me.

              2. I’d means test the hell out of entitlements and cut DOD by half if not more. I’d legalize marijuana and gambling nationally thereby allowing for cuts in law enforcement/corrections and increased revenue from taxation of it.

                That’s off the top of my head.

                1. The legalization of gambling and marijuana, without the corresponding legalization of prostitution, constitutes cruel and unusual punishment.

                  1. Not for those of us who can pull pussy just fine without paying, thank you 😉

                    1. You’re no fun anymore.

                    2. I get it for free too, but it should still be legal to pay.

                    3. you always pay, the only difference is that with one you pay up front and with the other you pay after the act

    3. The graph the other day showing tax revenue as a percentage of GDP versus the highest marginal tax rate, showing that revenue is relatively flat no matter what the top rate is. The information missing in that piece was GDP versus tax rates, as what effect taxes have on GDP is more important to actual revenue. The data available shows no support to the contention that raisng tax rates will significantly raise revenue.

    4. Tony’s using the old standby “rich people suck economic policy” argument again.

      In other news, water is wet.

    5. It’s the animal spirits, stupid!

  10. If the amount of income doesn’t matter, why should anyone care how much taxes go up? Just cut your spending.

    1. When your taxes are raised, you WILL cut your spending.

  11. Well, although this is ridiculously over simplistic, and sure to be dismissed as totally unworkable. . .

    Re-work the way the government handles money altogether. Instead of having the bozos decide what they want to throw cash at, with dollar amounts attached, limit them to haggling over percentages. What percentage of government revenue will be allocated to what program or sector. Then fill in the numbers when they know how much they’ve actually raised. Incentivize the bureaucrats and managers to run their programs to realize a surplus, with possibly bonuses or promotions for effectiveness and efficiency. Leftover monies returned to the Treasury are then used for ‘pork’ projects in representatives districts, after a percentage is set aside for ‘rainy day’ considerations.

    Yeah, way too naive and foolish to think something like that would work. It
    d take all the fun outta politickin.

    1. You didn’t really just advocate accountability, did you?

  12. That graph is deceptive in several ways.

    1. Are you going to elaborate or is this Unsupported Axiom Day?

      1. I thought Unsupported Axiom Day was every day that ends in “y” for H&R…

      2. The red line is on a scale that makes significant changes almost invisible. You can always squeeze a curve into a flat line if you choose a big enough scale. Putting “percent” on the y axis is irrelevant when you have two curves measuring percents of two entirely different quantities. You should have different scales for each line, and make them so the lines are comparable, so proportional changes in each line are equally visible.

        Second, the top bracket represents only a small portion of the GDP, so of course changes in the tax revenue are going to be smaller than changes in the highest tax rate.

        Third, the red line DOES follow the blue line in several places on the graph.

  13. Of course that graph is deceptive in many ways, but not in the way most statists wish.

    As a proportion of the entire economy the total direct tax revenue hasn’t changed much, but the total quantity has as economic growth rate has increased after economic liberalization.

    The DOW was 330ish in 29. 50 years later it had only grown to 780, but in the last 30 it grew to 14.5k. There is inflation involved, but quite a bit of that was real growth too.

    1. Rag:

      I think you forgot the last three years, where the Dow fell off a cliff despite record low net tax rates.

      1. I don’t think I have, but I think you have forgotten the difference between causality and causation.

        When I say economic liberalization I don’t mean just tax rates.

        What is more telling than an economic contraction during a recession is the length of the recession. Especially, when you consider its similarities with the last major recession in the 70’s. We learned a lesson then about Keynesian folly, but apparently have forgotten it recently.

        1. Again I must note the correlation between how much a person says “correlation doesn’t mean causation” and stupid.

          1. What do your notes say that correlation is?

            But a more poignant question, do you believe they are the same thing?

            I wouldn’t mind if you did. Being ignorant of history and economics sure must be difficult, so why not be ignorant of definitions and logic too?

            1. This is one of those cases where a little bit of knowledge is a bad thing, like all the people who scream “appeal to authority” when I argue how many scientists support AGW. You get taught “appeal to authority” in Logic 101 as an undergrad. And it is true that the very pronouncement of an authority itself does not warrant a conclusion the pronouncement is correct…Of course if you get further in the book to the chapters on Informal Logic and there you learn that it is perfectly logical to think experts in relevant field are more likely correct than non-experts.

              So yes in Stats 101 you get taught “correlation is not causation!” And it is technically true. But if you just repeat that mantra you forget something important, that correlation is not worthless. In fact correlation is one of the first and necessary signs of causation. More to the point in history and life as a practical matter you often don’t get much more than correlation (because of the difficulty of “controlling” for shit). If you do something and something bad happens over and over most sane people will stop doing it rather than stomping their feet and declaring “correlation is not causation!!!”

              1. That is the point people are making when they say it. You need much more than coincidence to make a statement about causes.

                Possibly most important is being able to verify a theoretical framework with predictive outcomes.

                If his statement is “low taxes on the rich cause recessions”, then he better be able to back it up with either historical examples or empirical tests.

                PS: Historical examples prove the above statement is at very least “not always true”.

                1. I think his statement is “high taxes on the rich don’t cause recessions” or “raising tax rates on the rich can raise revenue.”

                  “Possibly most important is being able to verify a theoretical framework with predictive outcomes.”

                  Kudos to you for this, but I have to tell you there are many Austrian types here that disagree with this statement.

                  1. Of course if you get further in the book to the chapters on Informal Logic and there you learn that it is perfectly logical to think experts in relevant field are more likely correct than non-experts.

                    Ouch. But then you go to science-y class and they instruct you that the percentage of scientists supporting a theory means nothing.

                    You’re confusing politics with the scientific method.

                    AGW is about as developed in theoretical predictability as eugenics, and, AFAIC, about as creepy.

  14. Is it me or does that chart make about as much sense as a chart showing the expenditure of a corporation on R&D as a % of total spending against the % of employee’s in the R&D department’s pay paid in the form of benefits.

    WTF?

    1. The chart is nonsense, as everyone knows that virtually no one pays, or has ever paid, the top marginal rate. Why would anyone be surprised that the top marginal rate has little impact on revenues, if almost no one is paying it?

    2. The chart is clear. Top marginal rates measured in an eighty year period of time versus revenue received as a percentage of GDP. Your analogy is meaningless for the purpose of being a descriptor for the chart.

      1. If the government collected revenue solely from top marginal taxes the chart may be saying something…

        1. If higher marginal rates on top earners made a significant difference on actual revenues coming in, the chart would reflect that even if other factors varied over time. You would see a huge drop in the bottom line in ’63 and ’82 given the policy changes of the previous years but because it stays close to flat it does indeed say something. Around 19 percent of GDP, you can expect diminishing returns to apply.

          1. Of course that is not true because there were countless other variables in effect. I mean, I could just do a reverse libertarian pick whatever other variable I want after the fact and say that messed up the effect that would have happened…

            1. countless other variables in effect.

              Countless other variables had no where near the potential weighting as that of those major changes in policy in those two years of significant overhaul. We are suppose to believe minuscule differences weigh more heavily? That is illogical.

              could just do a reverse libertarian pick whatever other variable I want after the fact and say that messed up the effect that would have happened…

              Not everything that is examined after the fact equals a post hoc fallacy, including this case. That is why the bottom line in the graph is there showing the steady rate over time, so it cannot be misconstrued as such.

              1. You have TWO points of data where you claim “significant” policy change in solely this area and from the non-drop in revenue following these two points you claim we can derive a general truth about the effects of lowering top marginal rates on revenue????

                Of course as someone else pointed out if only a small number of people were ever asked to pay a relatively small, but varying higher marginal rate, one would indeed expect it to have little to no effect on total revenue…

                1. I saw that earlier and found it curious that the argument would be made given where it would lead you if you chose to pursue the actual utility of those who are effected by the highest marginal rates, you would have to conclude it is not insignificant as you suggest given the effect we see of this change in policy in both the ’63 and ’82 examples (lower rates on those who invest, higher returns to the Federal coffers on a larger volume of investment (venture capital became an abysmal pursuit in the 70’s) with higher levels of productivity growth where the 19 percent share staying at an equilibrium in a growing economy). Nick G, was certainly aware of this when he wrote the above post, but he studiously avoided it as it was not needed for the point he wanted to make, and would have become a distraction. Why you or Chad would bring it up is a bit of a mystery given it doesn’t help your argument.

          2. “Around 19 percent of GDP, you can expect diminishing returns to apply.”

            Would you care to test that with a bit of comparative (international) analysis?

            1. My expectations: In a different society where wealth is distributed similarly as the United States, but the economy is centered around a single industry, the rate of diminishing returns would indeed start at a higher rate than 19 percent. The more diverse an economy the more counter productive would be higher marginal rates as the utility of productive capital over many industries would have a cascading negative effect on the productivity of that society; whereas in the latter you are dealing with scenarios conducive to oligarchies and state monopolies like Saudi Arabia and Mexico where wealth had been concentrated not only by economic means but political.

              1. I’m pretty sure that several if not many European and/or Asian nations with developed, diverse economies have had higher top marginal rates and revenue that exceeded 19%…

                1. I’m pretty sure that several if not many European and/or Asian nations with developed, diverse economies have had higher top marginal rates and revenue that exceeded 19%…

                  Do the returns at some point diminish, or not?

                  The data suggest that for the US for whatever other factors may be at play, the rate is around 19 percent, and has been for some time. Why would it matter what another nation’s data would suggest, as they would be an inaccurate application set against the points in the US data set, if anything they would give you a wrong set of conclusions to be drawn from either way they went.

            2. make that:

              as the utility of productive capital over

              as the misapplication of productive capital over

              meant ‘under utility’ but ‘misapplication’ is more accurate.

              had been concentrated not only by economic means but political.

              had been concentrated not only by economic means but political to a greater extent than in the US.

              I’ve worked in states like Louisiana whose oligarchy and political means are similarly concentrated as in Mexico.

        2. Democrats are arguing that raising the top rate to what is was in the Clinton era will help balance the budget. The chart clearly shows that raising taxes will actually have little impact on the revenue the government actually collects. In other words, if we want to balance the budget, raising taxes will not help.

  15. Your right to pay lower taxes begins the moment you have paid back everything society has given you, with interest.

    How much is your safety worth? It’s priceless. So you aren’t done paying.

    Grow up and pay your bills.

    Btw, your “19%” factoid is belied by the many nations which collect higher fractions of the GDP’s as tax revenues. Just because something hasn’t been done here doesn’t mean it can’t, especially when plenty of others HAVE done it.

    1. Your right to pay lower taxes begins the moment you have paid back everything society has given you, with interest.

      Sure, as soon as they get done paying me back everything they stole from me.

    2. Grow up and pay your bills.

      It’s other people’s bills that nobody wants to pay, including you.

    3. “Btw, your “19%” factoid is belied by the many nations which collect higher fractions of the GDP’s as tax revenues.”

      I thought the same thing when I read that. Many other nations have done it…

      1. Total government taxation as a percent of GDP is not very different from WE countries.

      2. Do they actually collect those taxes? Countries with very high taxes have a very hard time actually collecting them, unless you are a Swede, and seem genetically programmed to give everything you own to the fucking gov’t.
        Speaking of other countries…let’s horse trade a bit – would you take advocate the UK’s top marginal rate (50%) in exchange for us adopting their minimum wage (none)? I’d argue that taxes are fairer than the gov’t dictating wages to employers…

    4. How much is your safety worth? It’s priceless. So you aren’t done paying.

      Wrong. I’ll gladly pay for the justice system and the military that is necessary to defend our borders. A 5% tax rate should easily cover that.

      1. Everything else the government does lessens my safety by fucking up the economy and giving power-mad fuckwits the ability to run roughshod over the Constitution.

        1. “Everything else the government does lessens my safety by fucking up the economy and giving power-mad fuckwits the ability to run roughshod over the Constitution.”

          Yeah, no power-mad fuckwits running roughshod over the Constitution in the justice system or military!

          1. Yep, and we can thank your activist government for that.

          2. Really, who are you to complain when your reading of the Constitution enables every single abuse that occurs in the name of the Drug War, War on Terror, etc?

            1. Jordan you want to be able to call others statists and claim an extra amount of constitutional righteousness to what are in reality just your policy preferences. You’re for Big Mexican Hunting so you don’t have a right to criticize anyone for being in favor of other government programs on any grounds other than they are just policies you disagree with.

              1. Wrong. I have principles other than “might makes right” which inform my views.

                Big Mexican Hunting

                What the fuck are you talking about?

            2. WTF are you talking about? I’m guessing you are referencing my broad interpretation of the powers granted by the Inter-state Commerce clause? Because the last time I checked the WOT was not being waged on IC clause grounds.

              1. A government that can force you to purchase health insurance could easily justify the WOT on commerce grounds if it had to. Hell, how big of a hit did our economy take on 9/11?

      2. First, we spend more than 5% of GDP on the justice system and the military combined. And of course, the GDP in your feudal dream world would be very low, hence requiring even more oppressive taxes.

        1. Uh yeah, we also have a gargantuan national security apparatus that has nothing to do with a proper criminal justice system or a military which is not capable of significant force projection.

  16. Well now we know that Chad, Tony, and Max are the same sock puppet. It actually lends some credibility to Dan T.

    1. It’s always funny that on the one hand many H&Rers; bemoan the large number of “stupid liberals” out there and in almost the same breath seem obliged to argue that every dissenter on H&R must be one person and a dishonest one at that!

      1. Not me. I fully believe that large numbers of separate people can honestly be that stupid.

    2. Please… Chad/Tony/Max are obviously Reason employees brought in to raise the post counts on the blogs. Who else would care enough to keep making the same arguments over and over?

  17. You have Tony, Chad and MNG all in the same thread reiterating the same talking points that Nick G. took on and took down with out having to break a sweat.

    What is, why there is increasingly little reason for libertarians to post at H’n’R since there are are an infinite number of better things to do this evening for one thousand, Alex.

    1. Whatever, this is one of the most mindless pieces of libertarian bullshit talking points-filled hackery posted here in a while.

      1. Which is why you took the time to comment.

        1. It’s hardly the stupidest column at reason I’ve commented on. It’s a hobby.

          1. You use this word ‘stupid’, but as you apply it, to things for which it would not describe like a Nick G. post, it lacks any meaning.

            The stupid sun! The stupid moon! That stupid water fountain gleaming so stupidly! Roger, lets go get a stupid for dinner, you want to stupid it up a little?’

          2. It’s hardly the stupidest column at reason I’ve commented on. It’s a hobby.

            I think you’re missing the point.

            If it was my “hobby” to engage in auto racing, and I hired a pit crew, bought a car and paid a race entry fee, it might seem odd if I stood on the track during a fueling and tire change and said: “Wow, this is really stupid – just a bunch of idiots driving in circles.”

          3. It’s not a hobby, it’s your job. Not get back to work!

      2. In other words, you have no answer for it. Like Obama admitted when he was pressed, even if you collect less revenue due to increasing rates as a matter of your fucked up principles it is only about punishing the rich for being rich.

        1. See above for my answer. The rich haven’t been punished in a long time, though no matter the tax rate, some of them will certainly always complain that they are being punished.

          Despite historically low tax rates, despite the highest concentration of wealth in generations, there are still people who believe that the poor are oppressing the rich. The talking points never change no matter the circumstances.

          1. there are still people who believe that the poor are oppressing the rich.

            Only in your head does anyone think that. I read your answers above, they were even more lame than Fareed Zakaria’s and that takes talent.

            1. I pointed out just one of several reasons the graph presented is total bullshit. Others have elaborated. If your one piece of art is a total lying piece of propaganda, and the copy is nothing but mindless slogans using that worthless piece of art as the only evidence to support its claims, how could I do much worse?

              1. You did know such thing. You insulted the chart, you called it names, but you did not engage the underlying logic. MNG made an argument but it was a faulty one, as I showed above, but you did not even do that. Calling some ‘bullshit’ is not an argument, calling it ‘smelly bullshit’ is not the elaboration of an argument.

                1. But it’s ugly smelly bullshit.

            2. “the poor are oppressing the rich’

              “The poor” don’t write tax laws, Tony.

              But they DO get caught up in useless wealth-hatred. So do rich and middle-class people.

              Like you, for instance.

          2. The rich haven’t been punished in a long time, though no matter the tax rate, some of them will certainly always complain that they are being punished.

            And considering your intent to grant government increasing power to ‘distribute’ equality, it is people such as yourself who protect the rich – at the expense of the poor.

            This site continuously demonstrates that it is competition, and not larger government, that really scares the rich.

            Tell us, o wise one, how have Larry Summers and Hank Paulsen done now that Team Blue has been in charge? I mean, after all those arrests, it’s amazing that anyone’s left on the trading floor.

            1. “This site continuously demonstrates that it is competition, and not larger government, that really scares the rich.”

              Which is why the Chamber of Commerce spent so much money supporting anti-government candidates recently…

              I think liberals too often ignore how the wealthy can use government to their advantage whatever the legislation proposed, but libertarians ignore the fact that the wealthy often quite vigorously oppose certain liberal legislation. It’s hard to buy that it is all for them when they are fighting it…

              1. libertarians ignore the fact that the wealthy often quite vigorously oppose certain liberal legislation. It’s hard to buy that it is all for them when they are fighting it…

                Sometimes Apple fights with Microsoft, but I wouldn’t call either of them ‘poor’.

                What the left would like to obscure is the fact that the government has become an institution unto itself, one which grants power and takes it away – for the benefit of the elected officials, bureaucrats, public sector unions and the crony capitalists they empower.

                The Chamber of Commerce wants to reduce the power over it wielded by the government.

                What you fail to realize is that the government is fighting for itself, and not for the ‘people’.

                1. The Chamber of Commerce wants to reduce the power over it wielded by the government.

                  And they want to increase the power of government over their competitors.

                  The rallying cry of the CoC and other business advocacy groups should be, “Free market for our suppliers, interventionism for us!”

              2. Oh bullshit. None of the candidates the CoC endorsed are “anti-government”, they’re candidates the CoC thinks it can buy.

                1. “anti-government” = “people not in favor of huge, expensive, nosy, obtrusive, bully government”.

  18. The Laffer Curve is real. It has been proven over centuries. Arthur Laffer has obviously given up trying to explain it. Sort of like how Walter Williams has given up trying to explain how the War on Drug is causing more harm than good.
    Arthur and Laffer are of the intelligentsia/aristocracy. They could give a shit less about educating the uneducable.

    1. It’s almost become like “global warming” for some people–it isn’t about the science anymore. The Laffer curve for a lot of people has become something you believe in, almost like a religious thing.

      Of course the Laffer Curve is real!

      Ronald Reagan was right about a lot of things too, but I can’t invoke his name without a lot of people tuning me out either. …it’s mostly the same people who tune me out whenever I talk about the Laffer curve too.

      It shouldn’t be so hard to explain to people that cutting income taxes is a good idea when we’re trying to deal with unemployment. That making people less expensive to hire might be a good idea when we’re dealing with unemployment!

      …they treat that common sense like it was a discredited theory too! Like climate deniers treat global warming!

      1. People think of income mainly as something you spend, not as the resources you use to build factors of production (including intangibles like business institutions).

        When people can understand the difference between rich people dumping their income into buying a yacht made out of solid gold and rich people dumping their income into expanding a business, maybe they’ll stop cutting off their nose to spite their face. Problem is that while people engage in and somewhat understand “investment” (that’s where you let your money work for you and reap unearned benefits that can thus be taken away justifiably), they don’t really understand “entrepreneurialism” at all. Anyone can buy a couple of stocks, but building a business is essentially a trade in an of itself, and one which most people can’t perform or understand.

        But if that day does come, maybe we’ll replace the income tax with a progressive consumption tax.

        1. Hell, I’d support a green tax on energy use if it came at the “expense” of an income tax. I sometimes wonder if that might not be the key to getting some of these people on board. The income tax is so destructive; maybe the only way to get people to let it go is to tie letting it die to a green tax on energy use.

          If they can’t imagine letting go of the income tax to save themselves, even as they’re drowning in unemployment, maybe they’ll get on board if they think they’re doing it to save the planet?

          1. This is an idea I’ve been toying with for a while. An end-user carbon tax would be simpler to administer than anything proposed. Couple it with a prebate and I don’t see any objections outside accountants and dick compensators (F250 here). For all having sex with boy scouts and the not quite dolphins, it’s a consumption tax.

            1. The case for that would seem easier to make too using Gillespie’s chart up yonder…

              Despite every newfangled idea and salesman that’s come down the pike since World War II, the people will not accept taxation over about 20 percent of GDP.

              So, any tax they want to put on carbon emissions will necessarily have to come at the “expense” of other taxes anyway.

              Furthermore, if they want to put a tax on carbon that’s big enough to make an impact on the problem (as they see it)? It’s gonna have to be so big, it would crush our economy–so we’ll need to compensate for that blow anyway…

              That’s the pitch to the left–split the green vote off the class envy vote–and if that’s 10-20% of the voters out there? That’s more than enough!

              To the climate denier crowd on the right? We just make the case that it doesn’t matter whether global warming is real or not! …so long as we’re getting rid of the income tax?!

              From Barry Goldwater to Ronald Reagan on down–if it gets rid of the income (and capital gains) tax, I think conservatives should be all for it.

              I don’t care if global warming is real or not! Who says the left gets to monopolize all cute and cuddly critters? If the environmentally minded people out there want to save the polar bear? Then they need to get on board with getting rid of the income tax!

              1. It may be the insomnia talking, but I think your analysis is spot-on and this idea is pure gold. To the Kochtopus!

        2. @cynical

          “Problem is that while people engage in and somewhat understand “investment” (that’s where you let your money work for you and reap unearned benefits that can thus be taken away justifiably)”

          I can justifiably take any of your stuff that you obtained by being smarter rather than sweatier?

          That’d be pretty sweet if smarter was more likely from you…

      2. “Of course the Laffer Curve is real!”

        I’ll conceed that when you conceed something equally obvious: the peak is around 60-80%, not 15%.

        And of course, a smart nation would not use solely income taxes. It could have income taxes down near 35% (nowhere near the Laffer Curve peak), and use consumption, excise, user fees, and property taxes to make up the difference. You can push north of 50% of GDP as tax collection without significant harm to your economy, as evidenced by some European nations.

        Another point: Imagine the following two nations.

        In nation A, Social Security is privatized, and everyone is simply mandated to put 10% of their earnings in a 401k-like account. Health care is also private and usually provided by employers. Most employees have another 10% of their earnings deducted automatically to pay for their group health plan.

        In country B, there is a public SS program which is funded with 10% of wages, and a public health care system funded with a 10% income tax.

        Now, nation B has 20% higher taxes, yet a worker’s take home pay is the same, and there is no reason to believe that workers will be significantly less motivated in either nation. Ergo, a lot of your “tax rate as a portion of GDP” is just an accounting fiction. If SS were to be privatized tomorrow, I would immediately start putting the savings into my 401k or other retirement account. So would any other rational person. I would not be any better off, as while I could probably expect a higher return, it would only come at being at a much greater risk. It’s a wash or thereabouts.

        1. Let’s assume your 60-80% for the peak of the Laffer Curve is correct.

          I AM NOT INTERESTED IN MAXIMIZING THE EXPANSION OF GOVERNMENT AT MY EXPENSE, I AM INTERESTED IN MAXIMIZING MY PERSONAL LIBERTY AND FREEDOM!

          It is absolutely mind-boggling to me that people like you believe a dollar sent to the Gov’t is ultimately “better” used than one you keep in your pocket and spend as your personal wants/needs dictate.

          By the way, the EU is collapsing if you haven’t heard. And they are largely trying to change from their socialist way of life to one that is actually sustainable.

          1. It may be fun to argue with the Chads of the world, but ultimately it is futile. Their minds are permanently Borg’ed.

  19. I say we tax fuckwads like Tony at 10,000%

  20. The chart is B.S. Laffer and Hauser are B.S., as the criticism explains:
    http://en.wikipedia.org/wiki/Hauser‘s_Law

    The rich need to be milked. Then the poor can have milk.

    1. “The rich need to be milked. Then the poor can have milk.”

      Okay, then when the rich has been completely milked dry, where will the poor get their milk? Someone has to produce said milk, and if you think stealing it from the producers and giving away will encourage the producers to stay in business, you’re outta your mind.

      A better way, I believe, would be create an environment where the poor can learn to produce their own milk, if they get off their asses to do so. Oh yeah, that environment already exists: it’s called America.

      1. You mean “Amerika” where the rich corporations are worshipped by people like you. Take a look at the criticisms of Hauser’s law I linked, numbnuts.

        1. Say, Jackson, wouldn’t you be happier posting at, say, MediaMatters or DU?

  21. Several problems with Nick’s rant:

    1. I read the Constitution, and I see no protected right for you not to pay higher taxes.

    2. One of the huge problems in America is that half of the country pays essentially no federal taxes. There is no negative feedback mechanism when they demand more spending. SS and Med are outside the budget, so if Joe Taxpayer demands federal trash service, but he’s in the no-tax 50%, it’s of no cost to him.

    3. Buy plotting above on such a zoomed out axis, the chart hides the fact that in ’94 we started a slow increase from below 19% to over 20% due to a combination of growth and higher tax rates. That trend reversed in 2000, and kept going down through the bubble of the 00’s. Increase from 19% to 20% of GDP in a period of strong GDP growth is a significant increase in revenue.

    4. Fareed knows the spending argument, but he’s looking at facts. It takes congressional ACTION to cut spending, and the newly elected GoP has proven that it aint coming any time soon. Raising taxes now takes INACTION, which congress is excellent at (PPACA, financial reform, and TARP excepted).

    1. 19%, 20%, what’s the difference? 22% is still higher.

  22. Another ‘we all need to pay more taxes but uh, I think my mom’s calling me so I can’t pay more right now’ Liberal. Just like those idiot billionaire/millionaires who stepped up to the mic the other day wringing their hands that they might not pay enough. Note in EVERY SINGLE CASE none of them volunteer any more money. It’s all about you and me paying more. No wonder everyone hates them so much. No wonder everyone cheers when bad things happen to them.

    1. These left wing scumbags don’t even pay the taxes that they owe now as it is! If we raise tax rates, they’re only going to cheat the country even more than they already are.

    2. It’s worse than that: Buffett and Gates are making sure the govt doesn’t get their hard-earned money. They are donating all / most of it to charity. “Do as I say, not as I do.”

  23. Tell you what Fareed: The Treasury accepts donations, so send all your own money and post the receipt. Why is it that Leftards are never satisfied with spending their own money?

  24. Oh, and lost in AZ, you can find that right in the penumbra of the Second Amendment. Look at the prime motivators for the first Revolutionary War.

  25. Mr. Gillespie, a quick note:

    I would suggest that we NOT allow the $250K number to become a magic threshold for any sort of taxation due to the number of small businesses which fall into the

  26. What people like Fareed Zakaria do not understand is taxation is a wedge to the economy. The economy operates at maximum and all taxation reduces output. Zakaria completely misses the effect monetary policy has on GDP growth. Under Clinton, we had a strong dollar. Under Bush we devaluated our currency. Ergo the effect on GDP.

  27. More important, Zakaria claims that the “Bush tax cuts remain the single largest cause of America’s structural deficit”

    Let’s take Fareed at his word, that the Bush tax cuts reduced federal intake by $300BB a year. Defense spending, Medicare spending, Medicaid spending, and Social Security spending each exceeded this amount in FY 2010.

    So this claim is palpably false.

    “federal taxes as a percentage of the economy are at their lowest level since the presidency of Harry Truman.”

    This one may actually be true, according to the GPO. In the early ’50s total tax receipts were in the low 16% a couple of times. and dropped to the high 15% range in 2010 (estimated). Of course, they are projected to go up to the mid 17% range next year.

    So if this is true, it is true temporarily and to a trivial level.

  28. Absolutely.

  29. That graph is very powerful. I have saved it, and will tell others abut it. What it tells me is laffer is essentially correct. Raising taxes will not get the take over the 20%, and cutting them costs nothing in revenue. So trying to fix the deficit with tax hikes is completely futile.

  30. I would pay any tax rate, IF the rate at which the drops entering the bucket began to exceed the rate at which the water is spilling out through the bottom.

    The problem is that the govt is just using the revenues to leverage even more spending.

    If the libs want to donate to a their favorite charity, the govt, they are free to do so.

    worth noting that in 2007, more than 270 billion was given to charity by americans.

    all the govt would have to do is make the case that they are more efficient than charity.

    Borrowing 40 cents on the dollar?
    The govt makes the united way look good.
    **********************

    worth noting that erskine bowles target of 21.5% exceeds the clinton surplus projections rate of govt spending which was actually set at the more modest 19.5%.

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  34. A true muslim follows the hole-y quran and attacks the the infidel head on with full disclosure.
    A Radical muslim says “Go and peace be with you” then proceeds to shoot you in the back!
    There is no such thing as a muslim American
    there are only muslims who live in America whose allegence is to alla and the quran.
    islam is the religion/political system of peace- peace is achieved when all infidels are converted or killed! None of the above is opinion, It is unabridged fact as stated in the quran for all to see! The quran is the 21st century mine kampf! Isreal knows what is coming, will the rest of the world wake up in time? Please forgive my spelling as the teleprompter is broken.

  35. and got meager growth in return….

    I don’t like our current tax system. It

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