A good "revenue enhancement" idea

[CARLHAYDEN]

Professor Reynolds has an idea for a “revenue enhancement” which would restore a tax the nation had under FDR and Truman.

Seems like a good idea to me.

Sony pictures should be the first place visited by the tax man.

But they probably believe that like GE, taxes don’t apply to friends of Obama.

http://washingtonexaminer.com/opinion/columnists/2011/08/sunday-reflection-why-gop-should-give-obama-higher-taxes-he-wants

[CARLHAYDEN]

Industry specific excise taxes are in general not a good thing.  Exceptions would be if they are intended to discourage a specific activity, or to fund related government activities.  I can't see that there is any reason to discourage movie theatres or other forms of distributing audiovisual materials.  Even if we were to use such a tax to fund cultural programs (a dubious use as I see no reason to have the federal government spending its money on the arts) a 20 percent excise tax would generate way too much for such programs.

However, it is no surprise that CARL thinks having the tax code pick winners and losers is a good idea given his prior opposition to the closing of industry-specific tax loopholes.

It is no surprise the Ernest both disagrees with the point I made (well, he disagrees with just about everything I post) and thinks that more and higher taxes are good ideas, unless the taxes fall on industries which want to increase taxes on others.

Its also interesting to note that he makes an unfounded allegation of some supposed opposition on my part to closing industry-specific tax loopholes.  Cite please?

[CARLHAYDEN]

Yes, use the tax code to punish your enemies. That is one of the reasons it's so inefficient and nonsensical from any objective economic standpoint. But I can understand why CARL would enjoy the shear "shadenfeudic" spleen vented in this article - yes I can! 

Hmm.

You continue to assert that those who urge higher taxes on others, should be exempt from higher taxes themselves.

Yes, that's Torie.

[CARLHAYDEN]

I'm sure this all makes sense in mind of Carl, since the Right's political constituency is the rich (which we on left insist upon taxing), meanwhile due to the left's worship of Hollywood we would change our tune if the "leftists" were taxed. At least this idea of his had nothing to do with immigration, which I was almost sure it would have before clicking on the thread.      

You REALLY don't understand!

First, the tax which Prof. Reynolds (and I) suggest be reimplemented was in existance under FDR and Truman.

Second, the studio system in the American film industry has devised a 'accounting' system whereby by they avoid having taxable profits. 

Third, it seems to me that those who advocate higher taxes should have to themselves pay taxes.

[CARLHAYDEN]

Interesting that CARL would prefer a complex authoritarian government system cherrypicking companies that go against their interests, and then intruding with job killing taxes, over a simple, straightforward and unbias income tax code.  It's a funny world we live in.

First, its nice to see that you understand tghat taxes can kill jobs.

Second, as I have previously noted, the American film industry has devised accounting systems which allow them to avoid having taxable income (which seems to me is not "striaghtforward" nor 'unbiased.')

Third, the tax existed under what I guess you would call "authoritarian' Presidents like FDR and Truman.

Yes, you are very funny.

[CARLHAYDEN]

But you're not advocating something that corrects for a bias. You're just advocating swinging in the direction of another bias.

I say this as somebody who actually supports forms of Pigouvian consumption tax: This idea is not, in your case, motivated by any desire to raise revenue at all, at least not for its own sake. You're advocating this as a form of social engineering. There's nothing wrong with that--taxes can be used for both of those things--but trying to phrase it in ways like 'people who advocate for higher taxes should pay higher taxes' (as if this was about economic justice) is ridiculous. You seem to be using a synecdoche as a basis for policy proposals. You could just as easily eliminate the accounting gimmicks that you mention without imposing a new (or very old) tax, but I guess there's an aversion to eliminating loopholes within the Republican Party these days. I'm not saying that such aversion would be a stated reason for this proposal, but it shapes the narrative, and perception shapes reality in politics as in almost no other field except possibly religion and advertising (both of which are related to politics).

I'm not familiar with how the movie industry worked in the days when something like this existed under FDR and Truman, but I would hazard a guess that it was somewhat different back then, as was the economy in general considering we had just come out of a state of total war against three aggressive empires at once.

Nathan,

Again, you simply do not understand.

Through essentially fraudulent accounting, the American film industry has essentially made itself free from corporate (and individual) income taxes.

By imposing what is essentially an excise tax (we have those on gasoline), we will getting revenue for the government which would not be achieved unde the income taxes.

Next, you changed my statement about people who advocate for higher taxes should pay HIGHER taxes.  What I said was that those who advocate tax increases should pay the same taxes as anyone else.

Now, an excise tax is one method.

Another method would be a real Alternative Minimum Tax.

Remember how GE got away with billions in revenue and almost no taxes?

It seems that friends of Obama don't have to live under the same laws as the rest of us.

So, lets use something that worked under FDR and Truman.

Oh, and BTW, the tax existed befor World War 2.

P.S. - FDR enforced anti-trust laws, including on the film industry (this was before WW 2).

Would like to see anti-trust laws enforced against megabanks.

[CARLHAYDEN]

All right, I stand corrected on several aspects of this, though I still think the excise tax is a bad idea and would support the AMT more (as indeed I would on the banks and car companies and everybody else).

I misread your statement about people advocating for higher taxes. Sorry.

I agree with you about antitrust enforcement, with the addition that I'd like to see much, much stronger laws against collusion (which can very easily create trusts in all but name) as well.

So I guess my main concern with this is that I really think the excise aspect doesn't work as well as an AMT (which, again, should be applied across the board, not just to a specific industry).

The problem is the corporate income taxes are constantly being finagled to create preferences.

Did you know that Porkulus created the very preference for non-commerical jet aircraft that Obama supported in 2009 and railed against this year, and which I opposed then and now?

Oh, and I am looking for 'revenue enhancements' which would not seriously endanger the economy, but give Obama his 'pound of flesh.' 

[CARLHAYDEN]

was I the only one to think CARL was going to propose a deportation tax on illegals?

Why bother with something which cannot generate revenue, if that is the alleged purpose?

[CARLHAYDEN]

was I the only one to think CARL was going to propose a deportation tax on illegals?

I didn't.  I can't see CARL ever admitting that immigrants could ever be an economic benefit under any circumstances whatsoever.

Well, you 'sight' is bad once again.

Legal immigrants have generally been of great benefit, both economic and otherwise to the country.

I have in fact been on record on the Atlas Forum as recommending a slight increase in the number of legal immigrats to be admited to this country.

Illegal aliens, particularly illegal entrants, are a completely different story.

They (the illegals) are generally a very great aggregate loss for this country, both economically and otherwise.

I realize that you have difficult 'seeing' the difference between people who abide by our laws and those that don't.

You really need to get some intellectual glasses.

[CARLHAYDEN]

The very fact that so many people come here illegally is proof that our immigration system is broken.  Simply stepping up border enforcement will not solve the problem. Nor will a slight increase in legal immigration.  Any small increase in legal immigration will be filled mainly by skilled persons, but for the most part illegal immigration serves to meet an economic need for inexpensive semi-skilled physical labor that is not met by the legal workforce.  We can either revamp our immigration system to meet that need, or we can continue to have illegal immigrants.

So, are you now changing your story?

I thoroughly reject your advocacy of amnesty.

I do stongly support more legal immigration of skilled persons.

Enforcement, when actually tried, worked in the past (Eisenhower proved this).  We simply need to make real efforts to enforce existing laws.

Employers need to follow the 1986 law.

Border security desperately needs to be improved (yes, I know YOU are opposed to this, but the American people support it).

I do not expect perfection, but there is massive room for improvement if only real efforts will be made (neither Bush II nor Obama are making real efforts).

[CARLHAYDEN]

CARL, I think you should switch back and vote for Matt Damon with me if you really want to give Hollywood exactly what they want. Or better yet Sean Penn for Mayor, that way the next time LA is inevitably burned to the ground by the disadvantaged we won't have to worry about anyone bothering to rebuild.

Impossible to "switch back" to something (someone) I never supported in the first place.

But, it seems to me that Illinois is (eloquently) making the case against socialism.  

[CARLHAYDEN]

I thoroughly reject your advocacy of amnesty.

Who said anything about amnesty?  What is is needed is a significant increase in the level of legal immigration, both permanent and guest worker (for the seasonal physical labor that it is unrealistic to expect permanent residents in a society as well off as our own to provide) so that we can satisfy our economy's demand for semi-skilled physical labor without having a permanent group of people who can never fully integrate into our society.

As far as amnesty is concerned, the most I would advocate is not penalizing adults for previous illegal immigration if they apply for legal immigration, and for giving those who came here as young minors illegally because their parents brought them the means to become legal.  But even that level of amnesty is not a necessary part of immigration reform.

Wholesale amnesty for illegals that would give them a head start on becoming legal is not something that should be considered.

Well, I am happy to say that we are in fundamental disagreement.

We do NOT need more 'guest workers' as there is already high unemployment in this country (particularly for those with limited job skills) as experience has shown us.  When a business is compelled to terminate a significant number of illegals, they are inundated with job applications from Americans seeking unemployment.

What is happening is that some employers prefer to hire illegals as they can intimidate them to ignore environment and safety laws, which they would have problems getting American workers to flout.

[CARLHAYDEN]

By the way, while it is possible you simply missed this, your non-response does leave the impression that you are ducking the issue.

Its also interesting to note that he makes an unfounded allegation of some supposed opposition on my part to closing industry-specific tax loopholes.  Cite please?

I was under the impression that you supported the Nyquist position that the debt-ceiling package contain only spending cuts and no increase in tax revenues via the closing of tax loopholes.  If you do support for eliminating tax loopholes then name some tax loopholes you support eliminating.  That would be much easier than trudging through your posts for something I'm doubtful I would find in your posting history.  All you need to do to prove me wrong is list any tax loopholes you've supported eliminating.

Or are you going to chicken out as you've done with spending cuts when you've said you support eliminating the deficit with spending cuts while at the same time refusing to specify which spending cuts you would make to get us even a tenth of the way to that goal.

You are always misrepresenting what I post.

Example, I supported the effort in the Senate to eliminate the tax preferenes for ethanol.

Example, I have consistently opposed Porkulus, and the provision in it which gave overgenerous depreciation tax credits for non-commercial aircraft.

Example, I am opposed to the special loopholes created for GE to allow them to essentially escape taxation.

Finally, I have listed a number of ways to deal with spending, including specific cuts as well as freezes.  You have consistently opposed the cuts I proposed and supported more taxes and higher taxes.

[CARLHAYDEN]

You have consistently ... supported more taxes and higher taxes.

Yada, yada, yada.

I presume by "more taxes" you mean "new additional taxes" and by "higher taxes" you mean "higher tax rates", for unless you don't intend both to mean increased tax revenue, it appears you need to visit the Department of Redundancy Department to renew your redundant license of redundancy.

The only new taxes I would support would be a carbon tax, with offsetting cuts in other taxes, as a superior way to deal with energy independence/greenhouse gases than the bureaucratic nightmare that cap and trade will be and replacement of the current corporate income tax system with one that taxes gross income instead of net income.  So while I do favor some new taxes, I favor them as replacements for the ones we already have.

If we keep our current tax structure as it is, I don't favor passing any law that would increase tax rates, just closing tax loopholes.  If you want to call the ending of "temporary tax cut" passed by the GOP in 2001 a tax hike, go ahead.  All starve the beast has done these past ten years is raise the deficit and debt. If it caused either party to show spending restraint, I don't see it.  Unless we cut spending, we must raise revenues.  Tax and spend is bad; but borrow and spend is worse.  Any serious spending cut must affect one or more of Social Security, Medicare, Medicaid, or Defense.  There isn't enough spending in the rest of government to solve the deficit gap.

"Yada, yada, yada" - typical Ernest.

Lets look at the the details.

First, you now claim to only support a "carbon tax" as part of the more taxes.  I note that you have not stated how high the new (more) taxes would be.

Second, you note that you support increasing income tax rates from their current level, which to any logical mind means "higher taxes."

Third, you really need to deal with reality. Your "greenhouse gases" fixation is laughable.  Of course your solution is "more taxes" rather than encouraging nuclear power.  So, your supposed concern is absurd, and your solution of more taxes is your answer to just about everything.

Finally, if you were to look at facts, the problem is that expenditures have increased dramatically over the past few years.  In 2000 (when the nation was relatively prosperous), federal government expenditures accounted for approximately 18% of the GDP, whereas today they account for approximately 25% of the GDP.  So, what we need is to cut spending, not have more and higher taxes, as you advocate.

To provide detail, here are the “outlays” from some selected years as percentage of GDP (table 1.2):

Year             Outlays  
        
2000              18.2 %        
2001              18.2
2009              25.0
2010              23.8

http://www.whitehouse.gov/omb/budget/Historicals/

P.S. The highest percentage of GDP collected by the federal government as revenues (going back to 1930) was 20.9%  (during World War 2).  So, will the more taxes and higher taxes Ernest proposes set a new record?

[CARLHAYDEN]

First, you now claim to only support a "carbon tax" as part of the more taxes.  I note that you have not stated how high the new (more) taxes would be.

If you want a look at a more concrete carbon tax proposal, take a look at the one I proposed and got passed back in 2007 when I was active in Atlasia.

It called for gradually phasing in a carbon tax that at the end of a 10 year period would be $50 per ton of emitted CO₂, or in more consumer graspable terms that would be roughly $0.45 per gallon of gasoline, $0.05 per kWh of coal-fired electricity, or $0.025 per kWh of natural gas-fired electricity.

Your "greenhouse gases" fixation is laughable.  Of course your solution is "more taxes" rather than encouraging nuclear power.  So, your supposed concern is absurd, and your solution of more taxes is your answer to just about everything.

Oh, how do you propose encouraging nuclear power?  The simple fact is that nuclear power is not at present economically competitive with fossil fuel power.  The only two ways of bridging the cost difference by government action are to either subsidize nuclear power or to make fossil fuel electricity more costly.  I can't believe that you favor subsidies, and of the two methods to raise fossil fuel costs, a carbon tax is far simpler to implement than the ludicrous cap and trade scheme with its bureaucracy and questionable carbon offsets.

Finally, if you were to look at facts, the problem is that expenditures have increased dramatically over the past few years.  In 2000 (when the nation was relatively prosperous), federal government expenditures accounted for approximately 18% of the GDP, whereas today they account for approximately 25% of the GDP.  So, what we need is to cut spending, not have more and higher taxes, as you advocate.

Then cut the spending.  Despite your claims, I'm not opposed to spending cuts.  Indeed, I've proposed larger cuts here than you have because I've been willing to propose specific cuts in the big four segments of the budget. Even if the rest of the budget were zeroed out, we'd still have a deficit.  But if sufficient cuts cannot be made, then increasing tax revenue to close the deficit gap must be done, preferably by beginning with the elimination of tax loopholes and simplifying the tax code.

First, its not surprising you want more taxes and higher taxes.  That has been your consistent rant.  More taxes and higher taxes is your mantra!

Second, most of the problems in the 'cost' of nuclear power are those of harrasment.  Its like the cost of medical care, which is substantially increased by the cost of frivolous litigation.

Third, I noticed that while you pretend (now) to not really, totally being opposed to all budget cuts (you say), you are enthusiastic about increasing tax revenue. 

So, should the federal government increase tax revenue (from the more taxes and higher taxes you advocate) to a level higher (as a percentage of GDP) than at ANY time in the past 80 years?!?

[CARLHAYDEN]

I won't commen on Carl's intellectually dishonest arguments (apart from noting that certain posters manage to make him look reasonable in this thread...).

However, Ernest, while I see your rationale for taxing gross income wouldn't it be very discouraging to start-up businesses who often run at a loss for several years before picking up?

Gustaf,

While I realize you find any argument which opposes growth of the government to be "intellectually dishonest," I have cited facts and logic.

Since Ernest won't answer my question, will you?

Specifically, are you urging that the federal government extract more in revenues from the American people as measured by percentage of the Gross Domestic Product than has occured at any time in the past eighty years?

Oh, and was the economy of the United States worse off a decade ago when the federal expenditures were less than 20% of the GDP than they are today?

[CARLHAYDEN]

I won't commen on Carl's intellectually dishonest arguments (apart from noting that certain posters manage to make him look reasonable in this thread...).

However, Ernest, while I see your rationale for taxing gross income wouldn't it be very discouraging to start-up businesses who often run at a loss for several years before picking up?

Gustaf,

While I realize you find any argument which opposes growth of the government to be "intellectually dishonest," I have cited facts and logic.

Since Ernest won't answer my question, will you?

Specifically, are you urging that the federal government extract more in revenues from the American people as measured by percentage of the Gross Domestic Product than has occurred at any time in the past eighty years?

Oh, and was the economy of the United States worse off a decade ago when the federal expenditures were less than 20% of the GDP than they are today?

See, this is exactly what I mean when I say that you're intellectually dishonest. The answers is yes (for me, at least) and no, obviously.

But both questions are loaded and dishonest, as I'm sure you're aware.

So, let me make sure we have this correct.

You are agreeing that you want federal revenues to take up a larger portion of the economy than has been the case at any time in the past eighty years.

You also agree that the American economy was better off when the federal government was spending less than 20% of the GDP.

So, as follow up questions:

1.  Just how much higher do you want to increase federal revenues/taxes (last time I asked you this, you got rather evasive)?

2.  Has it ever occurred to you that there is a negative relationship between the level of federal expenditures (other than wartime),, and the overall health of the economy?

[CARLHAYDEN]

Gustav,

If we allow for:

State spending in 2011 of $ 1,303,000,000,000.00 and Local spending in 2011 of $1,577,300,000,000.00 (numbers NOT POOMA)

http://www.usgovernmentspending.com/#usgs302a

and we assume a 2011 GDP of approximately $15,319,155,000.000.00 (the government estimates $15,079,000,000.00, but I believe reducing government will increase the GDP), then since 30% of $15,319,155,000,000.00 is approximately $ 4,595,747,000,000 and if we subtract state and local spending from that number we would have federal expenditures totaling  approximately $ 1,715,447.00, which would be 11% of the GDP. (Please feel free to recalculate using government estimate of GDP if you prefer.)

Now, I’m a reasonable person and am willing to have federal expenditures reduced to approximately 18.2% of the GDP, which would be approximately $2,288,086,000,000.00., which is a whole lot less than the approximately $3,800,000,000,000.00 which Obama wants to spend.

Oh, and that total government spending would amount to approximately 34% of the GDP!  Significantly above the 30% level you suggested.

Next, you are quite correct that “the economy in itself is not the only thing that matters to society.”  That is a point I made some time ago, which you cavalierly rejected.  Robert Frost penned a rather eloquent poem about the dangers of big government.

Now, as you correctly pointed out, mere superficial expenditures over a long period of time have little relevance if inflation (and I would add, per capita) allowances are not included.  One of the problems with much of social science is that good data (such as GDP) does NOT go back “say 200 years.”

I did notice you did NOT answer my question.  So, do you really think the larger the percentage of the economy consumed by the government, the more prosperous the economy? 

Also, we cannot look merely at government expenditures, but must also include the impact of government regulation of the economy.

I do, however, want to thank you for your long term perspective (yeah, I know, Keynes said that in the long term we’re all dead), as it gives me a chance to quote to you a part of a seminal American political document (it’s a little over 200 years old):

“He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.”

The bottom line is that the federal government went crazy over the past decade, increasing its percentage of the GDP by more than 6%!

[CARLHAYDEN]

We do NOT need more 'guest workers' as there is already high unemployment in this country (particularly for those with limited job skills) as experience has shown us.  When a business is compelled to terminate a significant number of illegals, they are inundated with job applications from Americans seeking unemployment.

Yup, from Americans seeking unemployment checks, not from Americans seeking employment, as a number of the jobs are sufficiently physically demanding that getting American employees is difficult or even impossible, as the farmers of Georgia have found out to their distress.  Also many of those jobs are seasonal labor, not permanent jobs. They also offer little to no opportunity for advancement.  For seasonal physical labor, a guest worker program makes sense.

What is happening is that some employers prefer to hire illegals as they can intimidate them to ignore environment and safety laws, which they would have problems getting American workers to flout.

Here is one area we do agree on.  Solving the illegal immigration problem will require strict enforcement of employment laws.  Where we seem to differ is that you seem to think we need to focus on the employees, while I think we need to focus on the employers.  Unless we return to the days when we ignored civil rights, no employee-focused approach will work well enough to do much.

Ernest,

As I have previously noted, we need a full spectrum effort to deal with illegal aliens, including enforcement of existing laws against employing illegal aliens.  So your assertion that "you seem to think we need to focus on the employees" rather than the employers is simply false.

Why do you keep misrepresenting my position?  Are you incapable of comprehending what I have posted?  Or is it that you are unable to deal with my position and therefor deliberately misrepresent it?

[CARLHAYDEN]

Gustav,

First, you suggested aggregate government expenditures should be around 30% of GDP.  I was willing to settle for 34-35% (depending on estimate of GDP), and provided numbers (and source) for break-out of said expenditures/outlays,

Second, my basic point is that the increase in government expenditures (as measured by percentage of GDP) has been mostly at the federal level, with the highest rate of grown being in the last two and a half years.

Now, with the notable exception of Illinois, state and local governments arouund the United States have been involved in modest to significant expenditure reductions.  So, once again, the problem is (with the notable exception of Illinois), federal spending is out of control!

Third, when examining statistics on government policies, since a number of factors impact those numbers, to examine them from several different methodoligies.  One is time, a second is cross-national, a third is factorial analysis, but to name a few.

Now,  one of my favorite economists is Frecerich Bastiat, who was the first to really grasp the time element in economics.  Now, if you look at the history of governments moving to collectivism (the Obama approach), you rather consistently find a reduction in economic activity, although there is a time 'lag.'

Second, with respect to cross-national comparisons, I suggest you remember that in the nineteen seventies, while East Germany was the most sucessfuly of the eastern european economies, it lagged far behind West Germany.

Third, there really is rather massive evidence that (all other things being equal) that when the tax load  begins to exceed a quarter of aggregate income, disincentives for productivty result.  Milton Freedman documented this in one of his books in the late seventies/early eighties (can not remember the title off the top of my head).

[CARLHAYDEN]

Torie.

There are several factos at work,

First, unlike most of Europe, Sweden was able to avoid the costs and devestations of two world wars and the cold war.

Second, Sweden does (to an amazing extent) live off the heritage of some geniuses of the industrial age.  Just about everybody knows about Nobel, but some Swedish products are world class (the Bofors antiaircraft gun for example, which is used around the world for more than fifty years as one example).

Third, Sweden has profited from its iron ore exports.

Fourth, Sweden has significantly greater agricultural production than the other Scandanavian countries.

There are a number of other factors, which I am sure that Gustaf can provide.