Taxes

Taxes Are Getting Weaponized for Partisan Purposes

How willing are you to pay taxes when you know they're intended to do you harm?

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Bill Clark/CQ Roll Call/Newscom

Government agencies and laws have devolved into weapons to be wielded against political opponents in this country. Why wouldn't taxes follow?

Too many Americans promote taxes as a means of hurting people they dislike, putting the raising of revenue as a secondary consideration—or dropping it entirely.

Given the destructive nature of taxation, it's a potentially effective strategy, at least for a while. But it may also totally delegitimize the tax system in the eyes of the people who are supposed to pay the bills.

Social Engineering Takes to the Tax Code

With simmering partisan animosity in the U.S. has come a growing willingness to use government to extirpate anything perceived as bad or politically different. Financial regulators, law enforcement, and legislation have already been conscripted to the cause of hurting political enemies. Taxation is the just the latest weapon in the war.

Insisting that "a system that allows billionaires to exist … is wrong," Rep. Alexandria Ocasio-Cortez (D-NY), a self-identified socialist, wants to slap punitive taxes on the prosperous. Yes, Ocasio-Cortez thinks a 70 percent marginal rate will raise some money for her pet projects, but that seems to take a back seat to using taxes to remake the economic system and eliminate a class of people she believes shouldn't exist.

Sen. Elizabeth Warren (D-Mass.) warned that "a small group of families has raked in a massive amount of the wealth American workers have produced." Warren wants to confiscate part of their accumulated assets. "My proposal will help address runaway wealth concentration," said the likely 2020 presidential candidate.

"I can't wait to tax Howard Schultz back into the middle class," tweeted progressive columnist Ian Millhiser, after the former Starbucks CEO had the temerity to float a possible independent presidential run. For Millhiser, revenue isn't even a consideration—it's all about harming a partisan foe.

Not that Team Blue has a monopoly on valuing taxation for its power to destroy. The current resident of the White House likes that characteristic, too.

"They will be taxed like never before," President Donald Trump vowed after motorcycle-manufacturer Harley Davidson announced plans to move some production overseas in defiance of the president's nationalistic economic policies. Trump also threatened both tax and antitrust actions against Amazon, explicitly linking his threats to criticism of his administration by The Washington Post, which shares Jeff Bezos as an owner.

The potentially destructive power of taxation isn't exactly a new discovery. It was U.S. Supreme Court Chief Justice John Marshall who wrote in 1819, "That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create."

Governments have deliberately used that destructive power before. Notably, politicians impose "sin taxes," to economically suppress activities and products that they don't have the votes or the will to explicitly prohibit.

Teaching Tax Contempt

Sin taxes are a popular tactic—but never a successful one. They just drive people to the black market, failing both to suppress their targets or to raise revenue since underground sales aren't taxed at all.

Where sin taxes do succeed is in breeding evasion of and contempt for taxes. For example, more than half of the cigarettes sold in high-tax New York are smuggled or otherwise illegally sourced.

And after people have learned contempt for the tax system, unlearning may be difficult or impossible.

"Once tax evasion becomes deep-rooted, it is almost impossible to root it out," tax historian Charles Adams wrote in his classic 1993 book, For Good and Evil: The Impact of Taxes on the Course of Civilization.

In fact, that's proven to be the case with New York's thriving black-market tobacco trade.

"The problem is that the black market infrastructure has become well-established," commented James Calvin, director of the New York State Association of Convenience Stores. "Once the black market has developed a regular customer base, it becomes almost impossible for the state to muster enough resources to halt the illegal trade because of the scale of pervasive tax evasion."

If loading people with burdensome taxes as a backdoor effort to ban their vices earns their disdain and defiance, imagine the effects taxes deliberately intended to hurt them have on groups and individuals who are out of favor with whoever holds the reins of power.

"A respectful and fair treatment of taxpayers induces respect for the tax system and thus leads to co-operation," economist Benno Torgler wrote in a 2011 paper examining what drives people to comply with, or defy, taxes. "On the other hand, a higher perceived tax burden and inefficiencies and unfairness in the interaction between the tax administration and the taxpayers crowds out the intrinsic motivation to pay taxes."

That motivation is important because, despite the ferocious reputation of most tax agencies, none of them really have the means to enforce the compliance that governments require to function.

The somewhat incomplete tax compliance that countries see—currently 81.7 percent and slowly declining in the United States—is still way higher than economic models forecast. It's explainable only by a wide perception that the system is, to some degree, worth supporting.

Publicly vilifying people and announcing that proposed taxes are intended to harm them is a great way to convince people that they're being treated unfairly. It will then be only natural for them to feel perfectly justified in defending themselves against a malicious tax system.

On the plus side, once tax compliance tanks, there will be much less government left for the partisan factions to weaponize.

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119 responses to “Taxes Are Getting Weaponized for Partisan Purposes

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    1. That $10,000 a month sounds great until you pay 70% of it in taxes.

      1. Why do so few people understand the difference between marginal and effective tax rates.

        If you make 10 million plus 1 dollar, then with a 70% marginal tax rate for income over 10 million dollars, the 70% rate will only apply to that last dollar.

        The other 9,999,999 dollars will be taxed at various rates depending on which bucket they fall into.

        If you make most of your money from capital gains rather than from regular income, you get most of it taxed at the 15% capital gains rate. That’s why Warren Buffett gets taxed at a lower effective rate than his secretary does.

        1. Even understanding that (and most of us do – we pay taxes, after all) – who’s going to work for the next marginal dollar at 30 cents on the dollar? High marginal tax rates just convince people to forego valuable economic activity. And we know it does that, because regardless of the tax rate, the government captures about the same amount of GDP in taxes in the longterm. Tax revenues have been between 17% and 20% of GDP since after WW2, whether the top marginal rate was 90% or 40%.

          The majority of people who actually make ’10 million’ in income aren’t trust-fund kiddies. They earn that money through hard work. Rather than being jealous of such people, we should be inspired by them to aspire to achieve what they’ve achieved.

          Progressive taxation is just jealously with political clothes.

          Also, Warren Buffett was being intentionally disingenious with that particular line of comments. He knows most of his “income” is dividends, not income, and wouldn’t even be affected if the income tax was increased.

          1. That’s the real lesson. People somehow think you can cheat your way to becoming a millionaire, and they vilify billionaires even more. How stupid can you be? In order to make that much money, you have to provide value and you have to pay people fairly to help you along the way, otherwise you wouldn’t have any workers or any money. You might get lucky and you might be an asshole, but you have to at least have some marketable product that people want to buy.

            And to bring it back to taxes, let’s say you’re still so hungry for money that you don’t mind taking a huge hit. Your last million is taxed at 70%. What if it already costs you 40% to make money at that point?

          2. Also, people also seem to think that wealth is a zero-sum game. That makes no sense. But they float the lie that there are more billionaires than ever and the poor are getting poorer?only the first part of that is true.

      2. Chill out folks. This was a sarcastic response to the “I essentially make $10,000 a month” spam post that appears to have been removed. I’m well aware of how marginal taxes work. Based on the level of commentary I see on Hit, I suspect that most of us understand that. Yes, it’s arrogant to say this but I think the Hit commentariat is, on average, smarter than those you find on many other sites.

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  3. The normalization of tax evasion is one of the reasons I am optimistic about technology and wealth continuing the trend of reducing government’s interference in daily life. Whether the printing press started this, I do not claim, but the printing press and overbearing religion certainly accelerated it, and it’s been a fairly stead trend ever since. Steam power, the telegraph, telephone, radio and TV, and now the internet, have all loosened the government’s grip on information.

    The increase in tax evasion is just another sign of this trend.

    No matter how much increased power government gets from technology and wealth, it can’t compare to how much freer it makes individuals, because there are far more individuals than government bureaucrats. And the more bureaucrats there are, the more they have their own agendas, and the harder they are to herd as a single government enforcer.

    1. Don’t ignore the power of the social justice web to demand that government “equalize and make safe” everyone from cradle to grave.

  4. *Insisting that “a system that allows billionaires to exist ? is wrong,” Rep. Alexandria Ocasio-Cortez (D-NY), a self-identified socialist, wants to slap punitive taxes on the prosperous.*

    You know who else wanted to get rid of an entire class of people they didn’t believe should exist?

    1. Nikolas Cruz?

    2. Did they also frame their arguments around accusations that this class of people had unfairly accumulated wealth at the expense of more hardworking and deserving groups?

      1. Don’t they always?

    3. The accounting department at HuffPo?

    4. The legislatures in NY and VA?

    5. The producers of the Fire Festival?

    6. The current Virginia governor, Ralph Northam.

    7. The Elves?

      1. I’m not sure that’s the correct plural, but I assume you’re talking about Mr Presley and Mr. Costello?

        1. And here I thought libertarians were supposed to be the overly intellectual ones. Its obviously “elvii”

    8. 65% of the population including 54% of Republicans?

  5. As long as the DeRp’s get a return on that investment (more partisan rhetoric leading to higher probability of power), they will have all the incentives to keep doing it and leveraging up.

    Ultimately the success of it rests with us though – not the parties. DeRp voters will never change and it is complete delusion to believe they can. DeRp institutions know that and will keep discouraging non-voters from entering the fray to exert influence or make things unpredictable. And that seems to be working too.

    What we need is a successful invasion of DeRp-eating aliens.

  6. I knew this was a too-chilly article on the headline alone.

    1. It’s spelled “2chilli.”

      1. They sure did

        1. Sorry; squirrels

  7. Accumulation of wealth is a wonderful as long as it’s done fair and square. Americans get that, despite the laments of Elizabeth Warren and AOC. We don’t resent great riches. However the problem now is that Americans think that people will die in the streets if not for taxes. In fact the converse is true, as any communist country proves. An example is the recent Brooklyn jail fiasco. It lost power and the inmates were freezing. So most socialists think they should be given more money to fix the problem. But in fact we need to give the criminal justice system less money so that they can’t lock up so many people and ultimately have to rescind drug laws. The fact is, people are perfectly capable of taking care of themselves on their own without public assistance if you give them half a chance. This is what libertarians need to explain to people.

    1. We acknowledge that its the government that breaks our legs, yet we still can’t move away from the idea that only the government can then supply the crutches

    2. Maybe if libertarians actually went to the neighborhoods where public assistance, dependence, and the poverty trap are real things, then their understanding of what is actually happening and their trustworthiness about a prescription might take hold.

      Cuz otherwise it looks remarkably like ‘Top Men know what’s best for you’ and ‘Golly those people really are shiftless aren’t they’.

      1. Isn’t that what the socialist side is too though? Its just a different group of top men who know what’s best for everyone

        1. So the appeal of libertarians is supposed to be – we’re just like socialists but you never see us?

          1. Only if libertarians are exactly what you claim the look like (they aren’t)

          2. “So the appeal of libertarians is supposed to be – we’re just like socialists but you never see us?”

            Nope, more like: We’re just like other “ists” but you never see the tax bill.

          3. The appeal of libertarians is “We want you have every opportunity a free society can provide without the government fucking you over. We want taxes fairly imposed, no double taxing, and people are encouraged to give of themselves because nobody is forcing them to give up anything.”

      2. Isn’t that what the socialist side is too though? Its just a different group of top men who know what’s best for everyone

      3. Top Men know what’s best for you? Sounds like what they’re already hearing.

        “You know what’s best for you” is what they should hear from libertarians.

        1. You stated it better than I did

        2. Sounds like what they’re already hearing.

          No. What they’re hearing is ‘I know how to fix problem X so vote for me and I’ll fix it’

          What they’re hearing from libertarians is – absolutely nothing – cuz libertarians are busy talking to each other in the suburbs.

          1. No rural libertarians?

            And ‘I know how to fix problem X so vote for me and I’ll fix it’? TOP MEN.

            1. Yes I know it is TOP MEN – but it is not phrased that way precisely because it is personal face-to-face communication

          2. JFree, if you don’t think libertarian economies don’t flourish in urban environments you aren’t paying attention.

            Gig work, side jobs, cash deals, black markets, under the table work, you name it.

            It’s not all grinding despair and exploitation. And when it is, there’s a better than even chance that addiction is involved.

            1. The stuff you’re describing happened behind the Iron Curtain as well. In fact it has occurred in all countries at all times and all places from the Soviet Union to Somalia.

              What you’re essentially saying is that libertarian politics needn’t exist because people always are actually free (outside a physical straitjacket or solitary confinement – and I’ll bet I can get the guards to unleash the shackles and turn the other way to get a smoke/fix). So what if something is illegal or legal. People are always free to choose to do things legally or to do things illegally. We’re all already in libertopia. We just don’t realize it.

              What’s your interpretation of NAP? Just don’t rock the boat?

      4. I don’t have to go to a black neighborhood to know that ending the drug war will help them. I don’t have to go there to know that banning fast food restaurants will not help them.

        1. You do have to go to a black neighborhood if you want them to HEAR that.

          And far more importantly (in the same vein of Covey’s – Seek first to understand then to be understood) if you want to actually understand the issues that are important to them rather than the issues where you already have a solution in your pocket.

          Because I’m 100% certain that a)getting a job, b)getting TO a job, c)receiving the income from a job without my expenses going up by more than that income (the poverty trap) are far more important than your ‘solution’ re eg fast food restaurants. Which btw is not even part of the ‘unskilled jobs’ solution irl (in my city, only 4 of the 20 McD’s i can glance are within a couple miles of the poorer neighborhoods and only 2 are really serving those neighborhoods).

      5. Maybe if libertarians actually went to the neighborhoods where public assistance, dependence, and the poverty trap are real things, then their understanding of what is actually happening and their trustworthiness about a prescription might take hold.

        Maybe, but I doubt it, and I say that as someone who lived in both a UMC, mostly white suburb and a drug and crime ridden ghetto area growing up. While I realized how sheltered the former could be, and saw the dysfunctions wrought by the drug war in the latter, seeing how people in the ghetto operated actually made me a lot more callous towards their never-ending demands for government gibs. These are people who operated on the margins as hustlers while sucking off every government welfare program they could get their fingers on, all the while calling their welfare benefactors (and pretty much anyone who didn’t share their skin color) “racists” if they were ever told “no, sorry” in the most mild terms.

        Living in the ghetto area basically ensured that I’d never support left-wing positions, because I saw up close and personal how toxic their constituency was.

        1. You are making my point. All of that toxicity is seen by people living there as well. The reaction to it is not at all uniform. The only thing that is uniform is a)that people are trapped there by circumstances they can’t control and b)the VOICE they can have to change things is monopolized.

          D’s mobilize voice thru that whole ‘community organizer’ (young energetic local people who are PAID a salary by big donors to do old-fashioned grassroots politics – that’s actually a local JOB) thang.

          R’s do not mobilize voice – and never will cuz they depend more on mobilizing voice of the tutut-aren’t-they-lazy-immoral bums crowd.

          One side shows up – the other side doesn’t. Why surprise at the outcome?

          L’s could do something here – compete in cities which R’s have WAY too much baggage to do. But those urban L’s wouldn’t nec look like existing L’s – and obviously the American political system is designed to squash non-DeRp voice.

          1. ” a)that people are trapped there by circumstances they can’t control ”

            Except they can. You reference the poverty trap in another post, which is actually just a cost benefit analysis where govt bennies were chosen over personal agency.

            That’s very much a choice. Sacrificing some freedom for benefits is a choice. If they wanted it bad enougb, they’d find a way to do without those benniez and seek freedom. Some of them do. But the choice of most is obvious and easily seen.

            1. No it is not a choice in any meaningful sense (no more than involuntary homelessness is a choice) and it can be measured too. From eg – Heritage.

              Failure to address that as an issue means you are merely trying to sell some 19th century Victorian Horatio Alger myth to the poor. That is NOT libertarian. It is moralistic Social Darwinism. A big FYTW. Which works in the Republican Party – but because it appeals to the socons.

              1. Or give another example of it being a choice – it’s the same choice that the upper-income would have if AOC gets her 70% marginal rate. Why is it that everyone can see the disincentive to work of a 70% marginal rate at the top? But can’t see the disincentive of a 70% – 95% effective marginal rate for a single parent with a child which CURRENTLY exists for income between $10,000 and $23,000? See the first page of that Heritage link.


          2. The only thing that is uniform is a)that people are trapped there by circumstances they can’t control and b)the VOICE they can have to change things is monopolized.

            Trapped there by circumstances they can’t control, eh? And there’s a monopoly on voices?

            So, just so we’re clear, black people have no agency then? That would help explain why more black babies are aborted than any other demographic, I guess. It could also help explain why black men in particular are over represented in jails.

            They just can’t help it, is that what we’re saying? I mean, at least illegal immigrants are only guilty of the one crime and they bring food trucks.

          3. You are making my point. All of that toxicity is seen by people living there as well. The reaction to it is not at all uniform.

            The stats don’t really bear this out, considering the voting patterns. It’s only in a very recent time frame, maybe the last ten years, that poor whites have started migrating towards the Rs in larger numbers, as the Ds and the left in general continue the march of placing anti-white political narratives above class concerns.

            R’s do not mobilize voice – and never will cuz they depend more on mobilizing voice of the tutut-aren’t-they-lazy-immoral bums crowd.

            A lot of them are immoral, lazy bums. They’ll steal anything that isn’t locked up, tied down, and hidden away. They’ll shoot each other at the slightest provocation (if there’s any demographic that the left should really be targeting for encouraging “toxic masculinity,” it’s the ghetto). They’ll blatantly commit fraud if it means sucking up one extra dollar out of their mark, whether its the government or some rando on the street. They’ll blatantly lie to avoid any sort of personal or community accountability, even if their own neighbors were hurt.

            These are not the features of moral, hard-working communities.

          4. One side shows up – the other side doesn’t. Why surprise at the outcome

            It’s not a surprise. One side has promised government gibs for generations. One hasn’t. If someone is offering you a path of least resistance, in a community that is functionally crippled to the point that it can exercise no future time orientation at all, are you going to be amenable to the other one telling you that the grift is not the way to go?

            1. One side has promised government gibs for generations. One hasn’t.

              Again, let me fix that. One side is actually there in the neighborhood. The other side may as well be on the moon – or campaigning for votes in Tokyo.

              Guess which side wins. You really don’t need to know the content of their promise (irrelevant info). Merely their on-duty/AWOL status.

              1. The side in the hood don’t vote, so…

  8. Getting weaponized? It has always been this way.

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  10. How would the government tax wealth? Wealth is not money. Are these socialists going to confiscate stock? Steal factories? And if so what next? Sell the stuff to convert it to money to fund their pet projects? Who will they sell it to? Who will buy stuff from a government that will just turn around and take it away? It’s asinine.

    1. It would be a novel way to nationalize businesses, wouldn’t it?

      1. An idea that Elizabeth Warren proposed (more or less) last year.

    2. They believe that the wealthy keep all of their money in a giant safe, Scrooge McDuck style.

      They wouldn’t be able to make the connection between a wealth tax/top tax rate to 70% on income, and the massive layoffs that would follow in short order.

    3. Foreigners, that’s who. Look up how much US debt is owned by the Chinese. The only way they can “take it back” is by defeating them in war (or the threat thereof) and then declaring that existing debt contracts are null and void. Like they did with Texas.

    4. “And if so, what next?”

      Ummm…I think THEN you give it to your corps of revolutionary war heroes/vote enforcement gangs, right?

      Oh, sorry. That was ex-Rhodesia. But probably something similar, like “giving the workers control of the means of production” where they will vote themselves raises and go on weekly strikes for full benefits for life and retirement-at-35, until staunch Party members are brought in to provide wise (and well-compensated) guidance.

      Probably have them wear nice suits so the plebes can tell who is “guiding” them. And THEN things will be all different!

  11. “Sen. Elizabeth Warren (D-Mass.) warned that “a small group of families has raked in a massive amount of the wealth American workers have produced.” ”

    Now she’s plagerizing Huey Long speeches?

    https://m.youtube.com/watch?v=hphgHi6FD8k

    1. I thought she was talking about Congress.

  12. >>>”I can’t wait to tax Howard Schultz back into the middle class,” tweeted progressive columnist Ian Millhiser

    stupid *and* vengeful.

    1. Every generation must fight this fight anew, to learn the lesson anew…

      “I was brought up to believe that taxation is a bad thing, but the consuming power of the people a good thing. I was brought up to believe that trade should be regulated mainly by the laws of supply and demand and that, apart from basic necessaries in great emergencies, the price mechanism should adjust and correct undue spending at home?.I was also taught that it was one of the first duties of Government to promote that confidence on which credit and thrift?.can alone stand and grow. I was taught to believe that these processes, working freely within the limits of the well-known laws for correcting monopoly?.would produce a lively and continuous improvement in prosperity. I still hold to those general principles.

      “Socialists [on the other hand] regard taxation as good in itself and as tending to level our society?.Everything possible is done discourage and stigmatize the inventor. The Chancellor [of the Exchequer] speaks in slighting terms of profit earners?.What a lot of contempt he put into it?”profit earners.” There was an old Gladstonian expression: ‘Let the money fructify in the pockets of the people.’ That is regarded as a monstrous device of a decadent capitalist system.”

      -Sir Winston Churchill

      * Harry V. Jaffa, “Requiem for Socialism and the Iron Curtain,” Remarks on Churchill’s Birthday, 30 November 1990.

  13. I love this game where Reason pretends the two major parties are equally bad about taxes

    1. I don’t think he said that they’re equally bad about taxes. He said that both use the tax code as weapons. Which is true. Take, for example, the limit on state taxes in the 2017 tax bill. That was a shot at high tax Democratic states. So what if Republicans usually argue about double taxation of the same money. If it fucks people who are against Republicans, it’s fine.

      1. So reducing the SALT deduction is ‘a shot’ at high tax Democratic states, and the reason for that is clearly because Democratic states can’t lower taxes for any reason? That must be the assumption you’re using to make this anywhere close to try.

        Riddle me this: why should I help shoulder the state income taxes of people who live in New York when I live in Texas, notably a state with no state income tax at all? Because what you’re saying is that I have to do that, and if I don’t I’m ‘attacking’ Democrats.

        1. So you think that double taxation is ok? Or it’s only bad when it comes to, say, double taxation of dividends?

          Or are you one of those “I believe in federalism” guys unless the states are doing something that you think they shouldn’t, in which case it’s ok to interfere?

          1. Its not double taxed, that’s the 3rd or 4th time its taxed (and they aren’t even done yet)

            Corporate income tax (assume you work for a corporation)
            Payroll tax
            Federal income tax
            State income tax
            County/Local income tax (if you live where one is levied)
            And then, when you finally get to spend your money after its been stepped on as many as 5 times, you pay a sales tax (which can be another stack of 3 or more taxes: state, county and local)

            So unless you plan on eliminating or otherwise mitigating all but one of those, the “double tax” argument in favor the SALT deduction falls flat

          2. Look up what double taxation is, then learn about the SALT deduction, and then having educated yourself about the relevant subjects come back and feel free to admit you are clueless on this subject.

            1. And just for the record, I thought the same thing when I first read about this change a few years ago so you’re not alone in your ignorance. If changing the level of permissible deduction is double taxation to you, than it’s double taxation in both situations so this changed nothing if that’s your opinion.

      2. The feds reducing the federal income tax deduction for state and local taxes is not a case of double taxation.

        Double taxation is when the SAME government entity taxes the SAME income twice.

        Reducing the federal tax deduction of taxes paid to state and local governments simply means that residents of high tax states don’t get an offsetting break on their federal income taxes compared to people in lower tax states.

        An actual example of double taxation is that the federal government taxes corporate income at both the company level and stockholder level. And the stockholders are paying both as they are owners of the corporate cash that pay those corporate taxes just as they are owners of the individual cash that they use to pay taxes on dividends and capital gains.

        1. Capgains are not double taxed. Dividends are.

          1. Yes capital gains do constitute a double taxation of income – at least in part.

            Retained earnings (the amount not paid out in taxes or dividends) are part of the corporate balance sheet and are therefore part of the net book value. Increasing net book value affects the market value. When the stockholder sells his shares part of that value of what he is selling is those retained earnings accumulated subsequent to his original purchase of the stock. When he pays capital gains on those shares he is effectively paying taxes again at the stockholder level that had already been taxed at the corporate level.

            And then there is also the fact that long term stockholders who sell their shares are partly paying taxes on illusory gains that amount to nothing more than inflation adjustments that do not constitute real economic gains. Unlike the tax brackets on wage income that are adjusted for inflation every year, the cost basis for capital gains are not adjusted for inflation and therefore real economic capital gains are overstated.

            1. Oh FFS. What a bunch of BS.

              Let me repeat. Cap gains are not double taxed. Dividends are.

              1. Repeat whatever you want.

                You cannot disprove what I said.

                1. Of course I can disprove it. Companies are not taxed on their stock price appreciation.

                  1. Of course you can’t – as usual.

                    Companies are taxed on the earnings that they retain and reinvest in the business as well as earnings they pay out in dividends.

                    Those retained earnings go into the net book value and affect the stock price which in turn affects the capital gain the individual shareholder has to pay taxes on when he sells his shares. The corporation paid taxes on those retained earnings in the year they were reported as earnings and the stockholder pays tax on them as capital gains when he sells his shares. And that’s double taxation.

                    And that’s that.

                    1. So as long as a butterfly flaps its wings somewhere, then any tax anywhere that affects anything else is double taxation. Cool. got it.

  14. Socialists think, “If someone has a billion dollars they’re not using, then just take it and give it to a million people who need it for healthcare, housing or education.” Well that’s a great idea but it doesn’t work in practice. Why? Because sure, a thousand dollars will help these people, but it will also immediately inflate the prices in all these markets (healthcare, housing, education, food, etc), thereby hurting everyone else. This is the basic fallacy of socialism. Instead, the person should invest the money in businesses so that people can have jobs to support themselves fair and square. Which they can definitely do. Honestly, we live in the garden of eden. Even poor people. It’s about time we recognize that and stop bellyaching.

    1. That’s just it. They think the money is sitting there, unused. Probably guarded by a dragon. Rich people have them, you know.

    2. There is another reason that taking the money form the rich and giving it to the poor will not work. If all the money in the US was spread out so that everyone had the same amount of money it would be long that the money would be back in the hands of the few. Not because the few would steal it but because the masses will not do what they need to do to keep the money. The reason some people get rich is that they are willing to do what it takes to earn the money, namely work. I am not talking about working 8 hour a day but if it takes 18, 20 or more hours a day. Not just physical work but smart work, investing, taking a chance and most do not have the wherewithal to do that. That is the reason that I am not one of the rich people.

      1. This is exactly what is happening in France. The blue collar workers are so used to getting a check in the mail, they cannot accept that they have given up their individual rights by voting in of all of these free lunches. A lifetime of dependency is an illusion of freedom.

  15. There is another way that taxes are weaponized. That is where a state (generally a more progressive state) increases its local taxes and the federal tax payers in that state then deducts these taxes form their federal tax liability. No that dose not mean that the full cost of the state and local taxes are offset by a reduction in federal tax liability but a great deal of the state and local taxes are.
    I am against these high taxes in the states that want them but I am opposed to the use of the taxes to reduce the federal taxes. This is the reason why some states have very high taxes, the federal picks up a good part of the taxes the taxpayers in that state to relieve the pain of state and local taxes. If they want high taxes then let the taxpayer of that state feel the full pain of those taxes. It is only the pain the taxpayer feels that prevents the state from taking ever more of the income in their state. If the state taxpayer feels the full pain then the taxpayer will vote with their feet by moving to a state with lower taxes.
    There has been a big exodus from California to Texas, from a state with some of the highest taxes in the nation to a state with some of the lowest taxes but the problem is that these California immigrants bring the same ideas that made California taxes so high there to Texas. I will say that the nation needs to watch what happens in Texas because unless these immigrates are educated the state of Texas will follow in the footsteps of California.

    1. You missed the SALT change in the federal tax code didn’t you?

      Some people move to lower tax states especially retirees. Billionaires who like the weather in CA won’t move to Texas. The tech people aren’t moving to Texas despite the huge taxes and high home prices. That’s because much of Texas is a hellhole. Some of the cities are nice. I like San Antonio and Houston. A friend of mine had a job in Lubbock. Poor fellow.

      The high tax states are still the richest states. They gave more to the Federal Government than they got and will continue. Federal Welfare goes to the poor states. Most of the poor states have poor schools, poor infrastructure and low taxes.

  16. “the wealth American workers have produced”

    It saddens me how many people still believe in Marx’s labor theory of value. We need to enforce the Communist Control Act. Make Communists scared again.

  17. If I could added here, there is also a problem of Congress trying to address problems with the tax code that might be better addressed directly. Why give tuition credits instead of directly working to lower tuition. Why give a child tax credit that has no real relationship to the cost of having a child for a year. Why give an extra deduction for blindness. I have nothing against blind people, but what about amputees or the paralyzed? Again why extra deductions for those over sixty-five. A young person starting out a work career could probably use the extra deduction more.

    I favor a progressive income tax but I like one that does just that and doesn’t penalize or reward with a bunch of deductions, credits or added taxes.

    1. Because some of the things they want to do are not powers they can claim, but altering the tax code to influence behavior is an available legal option to influence…everything.

    2. It’s because when the tax code isn’t being used directly as a weapon, it’s being used indirectly as a weapon to win elections by favoring certain classes of voters. How else can you be sure to get the votes of the senior voting bloc unless you can scare them into believing that your political opponents will take away their gravy train?

    3. I favor a progressive income tax but I like one that does just that and doesn’t penalize or reward with a bunch of deductions, credits or added taxes.

      Except that is exactly what was in place during the 1950s, which is the decade of “90% tax rates” that these people are pushing.

      There’s a reason that the government has taken in revenues greater than 19% only five times since the end of World War II.

      1. “Except that is exactly what was in place during the 1950s, which is the decade of “90% tax rates” that these people are pushing.”

        Which is why nobody was actually paying those 90% tax rates.

        It is the effective tax rate that counts – not the nominal marginal tax rate. Back in that time there were a lot more deductions and tax shelters than there are now. Subsequently the TEFRA tax act repealed a lot of those deductions and tax shelters in exchange for lowering those rates. Of course after that the rates went back up but the tax shelters didn’t come back.

        Another thing about the 1950’s – the leftists like to imply that those high marginal tax rates had something to do with creating economic prosperity or at least didn’t hinder it. First as I previously mentioned, nobody was actually paying any 90% tax rate and second and more importantly, the economic prosperity that occurred in the 1950’s was due to the fact that WW2 destroyed most of the industrial base of the rest of the developed world. That meant that there was no foreign competition for U.S businesses for quite a while until the rest of the world rebuilt. That was a one time special global circumstance and had nothing to do with tax policy.

        1. And there was a growth explosion in the population along with a higher than previous generation skill set because woman had achieved so many new skills working while the men were at war.

          There are so many different reasons why the American economy grew in spite of taxes.

  18. Social Engineering takes to the Tax Code: Yes. Just read this past Friday that one of the bipartisan solutions to the retirement “CRISIS’ (aka..Idiots not saving for retirement or old age) is raising the age of withdrawal on 401ks (it is currently age 60). Punish thrift, saving and investing, Reward living above means and lavish vacations. I was under the impression that my 401k was MY MONEY. You make a deal with the devil (government) for the tax break, you risk your control over it. If I had it to do all over again (in my early 50’s), id save and invest after taxes. They are coming after anyone with wealth or any asset, this is not about multi-millionaires and billionaires.

  19. Well, I for one, am more than happy to pay for taxes that harm me as long as it harms a lot of other people too.
    After all, we must be equal in our distribution of pain, misery and oppression if we are to call America a free country.

  20. Wasn’t the last tax cut specifically set up to make people in blue states who didn’t vote for Trump, hurt by reducing the property and state income tax deduction to 10K per year? As well as hurting a lot of small business owners in favor of real estate investors by removing entertainment from being deductible as a business expense for pass throughs?

  21. AOC and her fellow Social Fascists are going to talk themselves right into helicopter half-rides.

  22. All taxes are harm. If they were not, the state would not need to use coercive threats and force to collect them…

  23. I would be far more receptive to the notion of highly-striated tax brackets if those advocating for them were promoting a reduction in unnecessary expenditures, particularly those relating to US foreign policy. But… OAC isn’t pitching an end to dropping multimillion dollar bombs on rudimentary structures housing targets that will just be replaced by new targets in new rudimentary structures.

    Cut spending first. THEN we can have a realistic conversation about Medicare, education, welfare, etc..

  24. Why is, it called the Black Market, rather than the FREE MARKET?!!

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  27. The Income Tax is not about weaponizing government to reward or punish persons based on their political ideologies nor is it about funding the government as both of these could more easily be done at far less cost by using a national sales tax. The current Income Tax system is about control; having the ability to directly interfere with citizens pursuit of wealth and as an excuse to invade the private lives of citizens under the guise of needing to know what they make financially so as to assess how much they owe in taxes.

    A tax on the sales side, when people spend money instead of when they make it would place the burden of tracking taxes on far fewer persons/entities, would see far less resistance because people would perceive having the ability to control how much they pay in taxation by controlling their spending and would bring in more money in the long run. It will never happen because it would mean a great loss of power that the politicians currently hold over the citizenry. They’d rather give every citizen the right to conceal carry then loose the income tax system.

  28. The only “fair” taxes: head tax and user fees.

  29. 2018 was a record tax revenue year. The problem is not that taxes are too low. We have a spending problem.

  30. Agree with much of the article but I don’t think the billionaires will every be “out of favor of those who hold the reigns of power”.

  31. Really? Reason writes an article about the IRS being politically weaponized, and they never mention Lerner?

    I guess some weaponization is more equal than others.

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