Predictably, the Koch-funded think tanks are not happy with Elizabeth Warren's recently announced plan to tax wealth. Bernie Sanders proposed this in 2014...so "He who must not be mentioned" (no, not Voldemort, Sanders) got there first. Meanwhile, here is one editorial pooh-poohing Warren's idea from Tracy C. Miller of the Mercatus institute.
My response:
Let's take Ms. Miller's points one at a time:
1. Miller says: "in reality [Warren's wealth tax] will not raise enough revenue to pay for much."
Taxes do not provision the Federal government. That government is a sovereign, fiat money creator (with a floating exchange rate). It makes all the (non-counterfeit) dollars, and is the only fiscally unconstrained player in the economy.
Where would people get the dollars to pay taxes if government didn't spend them out into the economy first? Government spending is therefore not dependent on tax revenue. Taxes make the money valuable; they do not provision government.
So...It's not "tax & spend"...it can't be, logically. It's "Spend first, then get some dollars back in taxes." What do we call the dollar financial assets left in the economy untaxed? #1: Citizens' savings. #2: National 'Debt'. #1 and #2 refer to something that is exactly the same, just as your bank account is identically your asset and the bank's debt. It's just a different point of view. This is not exotic economics; it's double-entry bookkeeping.
Don't take my word for that declaration about the real use of taxes. Here's a 1946 paper from the chairman of the NY Fed called "Taxes for Revenue are Obsolete"
2. "According to Pew Research, in 2014, people with incomes above $250,000 per year paid 51.6% of all individual U.S. income taxes. The top 0.1% of income earners pay 31.1% of their income in federal taxes. Those in the bottom 50% pay considerably less than 10 percent, and many pay no federal taxes at all."
Since taxes don't provision government income tax proceeds really don't matter. Nevertheless, such statements as the above ignore the fact that (regressive) payroll taxes exceed income taxes for incomes below $50K or so.
So...Mitt Romney did pay 14% in 2011...less than many poorer people. Warren Buffett famously declared his secretary paid higher taxes than he did.
Saying the fix isn't in for the wealthy is simply specious.
This kind of propaganda agrees with Reagan's attempt to revive the economy by cutting the top marginal tax brackets by 50% while (between him and his successor) increasing payroll taxes eightfold. So 50% tax cut for the rich, but 800% tax increase for the poor. Gee, I wonder why income inequality plagues us now!
Incidentally, the Reagan budget deficit exceeded the sum of all previous deficits combined, and he did get an economic revival--called "Morning in America" by the Wall St. Journal. Actually it was an average business cycle recovery. For really big shifts in GDP growth rates, you have to look at the New Deal and that big public works project we call World War II.
Incidentally, for World War II, the government commandeered 50% of the economy. For the Green New Deal, it would require only 5%. How would we pay for it? The same way we produced trillions for wars in the Middle East and bank bailouts.
3. "In a market economy, we earn wealth as a reward for producing something consumers value. Steve Jobs accumulated $8 billion for developing products like iPhones that millions wanted and were willing to pay for."
Here are a few of the inventions Jobs (an adopted Syrian immigrant) used for his "products"... all of which were discovered with government-funded research (the funding agency appears in parentheses):
So Steve Jobs was a clever fellow, but the basic research he used came from government, not the private sector. In fact 75% of pharmaceutical innovation comes from government-funded research. (See Mariana Mazzucato's TED talk about government as innovator for more)
So this Mercatus propaganda really relies on the ignorance of the public, distorts just about everything it touches...and we wonder why we're in a mess now.
My response:
Let's take Ms. Miller's points one at a time:
1. Miller says: "in reality [Warren's wealth tax] will not raise enough revenue to pay for much."
Taxes do not provision the Federal government. That government is a sovereign, fiat money creator (with a floating exchange rate). It makes all the (non-counterfeit) dollars, and is the only fiscally unconstrained player in the economy.
Where would people get the dollars to pay taxes if government didn't spend them out into the economy first? Government spending is therefore not dependent on tax revenue. Taxes make the money valuable; they do not provision government.
So...It's not "tax & spend"...it can't be, logically. It's "Spend first, then get some dollars back in taxes." What do we call the dollar financial assets left in the economy untaxed? #1: Citizens' savings. #2: National 'Debt'. #1 and #2 refer to something that is exactly the same, just as your bank account is identically your asset and the bank's debt. It's just a different point of view. This is not exotic economics; it's double-entry bookkeeping.
Don't take my word for that declaration about the real use of taxes. Here's a 1946 paper from the chairman of the NY Fed called "Taxes for Revenue are Obsolete"
2. "According to Pew Research, in 2014, people with incomes above $250,000 per year paid 51.6% of all individual U.S. income taxes. The top 0.1% of income earners pay 31.1% of their income in federal taxes. Those in the bottom 50% pay considerably less than 10 percent, and many pay no federal taxes at all."
Since taxes don't provision government income tax proceeds really don't matter. Nevertheless, such statements as the above ignore the fact that (regressive) payroll taxes exceed income taxes for incomes below $50K or so.
So...Mitt Romney did pay 14% in 2011...less than many poorer people. Warren Buffett famously declared his secretary paid higher taxes than he did.
Saying the fix isn't in for the wealthy is simply specious.
This kind of propaganda agrees with Reagan's attempt to revive the economy by cutting the top marginal tax brackets by 50% while (between him and his successor) increasing payroll taxes eightfold. So 50% tax cut for the rich, but 800% tax increase for the poor. Gee, I wonder why income inequality plagues us now!
Incidentally, the Reagan budget deficit exceeded the sum of all previous deficits combined, and he did get an economic revival--called "Morning in America" by the Wall St. Journal. Actually it was an average business cycle recovery. For really big shifts in GDP growth rates, you have to look at the New Deal and that big public works project we call World War II.
Incidentally, for World War II, the government commandeered 50% of the economy. For the Green New Deal, it would require only 5%. How would we pay for it? The same way we produced trillions for wars in the Middle East and bank bailouts.
3. "In a market economy, we earn wealth as a reward for producing something consumers value. Steve Jobs accumulated $8 billion for developing products like iPhones that millions wanted and were willing to pay for."
Here are a few of the inventions Jobs (an adopted Syrian immigrant) used for his "products"... all of which were discovered with government-funded research (the funding agency appears in parentheses):
- Signal Compression (Army Research Office)
- Liquid Crystal Display (NIH, DoD)
- HTTP/HTML (CERN)
- Cellular technology (U.S. Military)
- Integrated Circults / Microprocessors (DARPA)
- The Internet (DARPA)
- Global Positioning Satellites (DoD)
- Touch Screens (DoE, CIA/NSF, DoD)
- Micro-hard drives (for iPods ... DoE, DARPA)
- Lithium-ion batteries (DoE)
So Steve Jobs was a clever fellow, but the basic research he used came from government, not the private sector. In fact 75% of pharmaceutical innovation comes from government-funded research. (See Mariana Mazzucato's TED talk about government as innovator for more)
So this Mercatus propaganda really relies on the ignorance of the public, distorts just about everything it touches...and we wonder why we're in a mess now.
Gosh! What could have caused that!
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