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Shouldn’t Progressives Love Billionaires?

Posted by Chance on March 17, 2007

In my last post Michael commented”If what it takes to get such a society is that no one earns a billion dollars, fine. We don’t need billionaires, but we do need basic life and human flourishing for all.”

Here is my question. If you have a progressive tax system, isn’t having a few billionaires a good thing?

I know that capitalism (or an economic system tilted towards capitalism) has many criticisms from liberals, such as destruction of the environment, worker conditions, substandard wages, etc… And maybe I am going after a strawman here, but it seems that liberals fear the massive accumulation of wealth, or they see it as unfair. However, if we have an economic system in which wealth accumulation is possible, yet it is taxed and given to government programs, isn’t that better than a regulated economy in which less overall wealth is possible?

It seems that for something to be given away, whether through the government or private means, money must be earned. So isn’t the existence of wealth a good thing in a progressive society?

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8 Responses to “Shouldn’t Progressives Love Billionaires?”

  1. Michael Westmoreland-White said

    I’m not sure that we need billionaires. This system worked really well before there were any billionaires in the U.S.

    But I didn’t say that I wanted to get rid of all the billionaires. I said IF that was what it would take to eliminate poverty, I would be all for it.

    We do need a progressive tax system–which is nearly flat now. But more than that we need (a) to plug the loophole that allows businesses to move offshore and avoid all taxes, (b) to quit taxing salaried (wages) income far more than dividend income, (c) quit allowing business owners and property owners (landlords) to self-report their taxable income with very little verification while wage earners are checked at every point (most tax cheating is from landlords, business owners, and income from dividends, as well as those dealing on a cash basis), and finally (d) quit cutting funds for the IRS auditing and giving orders for the auditors left to go after poor and middle income folks first and penalizing them for investigating the rich. Those loopholes being closed, we can have a progressive tax system that is fair–and we probably will have a few billionaires, too–and not just billionaire tax cheats.

  2. Chance said

    “We do need a progressive tax system–which is nearly flat now. “

    All I can say is that it is easy to root for something in which there is absolutely no cost to us.

  3. Michael Westmoreland-White said

    Well, it may be easy to root for a progressive tax system when I would benefit, but many wealthy people are for it, too. There’s an entire group of people who call themselves “Responsible Wealth” who have been furious at the Bush tax giveaways. And there arguments are very similar to mine–or to Jesus’ “to whom much is given, much is expected.” They want to be part of the solution, not part of this massive redistribution of wealth UPWARD which we have seen in recent years in this nation.

    They also know that progressive taxation does NOT hurt business. American businesses were at their strongest in the early ’60s–and that was when taxation was at its most progressive.

    These are people whose major income is from dividends, but they agree with me (and many others) that we should tax dividend income more than salaries/wages, not vice versa.

    In 1993, every Republican on capital hill predicted that if Congress granted Bill Clinton’s request to restore the capital gains tax, it would send the country into a recession. Instead, by paying down the national debt, it lowered interest rates and helped lead to an era of incredible prosperity.

    In the 1950s, businesses payed about 50% of all U.S. taxes. Now they pay barely 20%. But our manufacturing base is gone, NOW, not then. THEN was when we bragged that American workers made more, had more benefits, and worked safer and shorter work weeks than anywhere else–claims we cannot make now.

    So, yeah, voting for a progressive tax system would not hurt me, but give me relief. But since I, like the rest of the lower middle class, have been bearing more and more of the tax burden during the last several years while the upper 1% of income people have been given huge tax giveaways, I am not going to feel guilty about them paying their fair share for a change.

  4. Chance said

    Michael, you bring facts into the debate, which is good. But terms like “fair share” and “huge tax giveaways” are matters of opinion. They are subjective. To me, reducing the top tax rate from 38% to 35% does not seem outrageous. But you do bring facts into it (of course not sources, but when debating on blogs I myself don’t have time to look up every source, so that is not a criticism).

    I would have to look for myself to find correlations of tax rates vs. business growth.

    But looking at the facts, tax revenues have actually grown despite decreases in tax rates. A liberal would be quick to point out other factors, which may be true. But I think the goal of a liberal would be to investigate the claims that reducing taxes actually increases tax revenues, at least to a point, rather than just try to throw those claims out. It seems that the focus has been on taxing the rich more, not producing more tax revenues.

    Mathematically this makes sense. After all, taxation vs. tax revenue is not a straight line curve, it’s going to be somewhat curvy. If taxation is 100% (even for a certain bracket), tax revenues will be small (as their will be no motivation to earn over, say 1 million, if all of that is taxed. So obviously, there is a maximum or peak of this curve.

    It sounds like you believe this is much higher, 60%, 80%.

    But here’s another issue, if my response to problems is simply tax the rich more, I don’t really have a vested interest in how efficiently this money is being spent. Never mind that our current tax revenues may be spent poorly, it seems the obvious response is to simply vote to tax more.

  5. Chance said

    Correct me if I am wrong, but it sounds like you believe government (or the people to put it in a kindler sense) is really the ultimate owner of our money, and we should be thankful for what we have after taxes? Or am I putting words in your mouth?

  6. Michael Westmoreland-White said

    I believe in in the social contract: that we are all in this together. Taxes are a “civic tithe” we pay for good roads, good schools, safe drugs, etc. It works on a “to whom much is given, much is expected” principle–and the common good benefits. I also believe, based on public info., that few rich people or businesses got their money “on their own.” Pharmaceuticals benefit from government research, for instance. There is much else like that. So, if “we the people” contribute, we can expect contributions back to the common good.
    38%-35% are both pitifully low for top income tax brackets, but the cuts to dividend income are much bigger. We used to tax the top brackets much higher–with no damage to the economy–often even benefit.
    It’s true that I usually cite my sources on main blog posts, NOT in reply comments. I can stop and footnote if you want. Some of what I was talking about in terms of tax cheating and investigation was on NPR the other day–and came directly from the IRS.
    I do contest your statement that tax revenues have grown in the last several years. That contradicts the budget shortfalls in the states. I’d have to check sources for that.

  7. Chance said

    “I do contest your statement that tax revenues have grown in the last several years. That contradicts the budget shortfalls in the states. I’d have to check sources for that.”

    I’m not sure about the states’ tax revenue, I was just thinking of federal. Shortfalls can also be caused by spending however.

    “It’s true that I usually cite my sources on main blog posts, NOT in reply comments. I can stop and footnote if you want. Some of what I was talking about in terms of tax cheating and investigation was on NPR the other day–and came directly from the IRS.”

    Don’t worry about that. I’ll just ask for a generic source if interested.

  8. Chance said

    Also, in a post some time back, I said that the growth of government would prevent the church from doing its part, and you strongly disagreed. Wouldn’t a 91% tax rate kinda hinder how much someone could give to the church? I mean, how is someone supposed to actually tithe (give 10%) if they have less than 10% in their pockets? (Yes, I know the 91% tax rate would only be on a portion of their income, but if someone made enough the marginal tax rate would approach this number). Goodbye missionary support.

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