Blow Up the Tax Code and Start Over

[Liberty]

The way I look at it, abject poverty for most people is the default state in history. Most rich people were warlords in one way or another. The people who end up being written about in history book tend not to be part of the 99.99% common people, so don't let that distort your view.

 

Capitalism is a method for increasing productivity (by coordinating unrelated parties, efficiently allocating resources, creating specialization which allows technological progress, etc), which reduces poverty.

 

Blaming capitalism for the people who are still poor is like blaming the scientific method for the things that we don't yet know. Doesn't make much sense.

 

Granted, that doesn't mean that capitalism will accomplish all the goals that we can find worthwhile, but blaming it for poverty is strange.

 

People who are big fans of the welfare state might argue that there isn't enough redistribution and safety nets, but the reason why we can pay for these things and get out of the default state in the first place shouldn't be forgotten or damaged too much.

[RichardGibbons]

Life is not fair and by trying to make it fair you make it even more unfair.

 

LOL. Asserting something like this doesn't make it true, except on Fox News.  To what do you ascribe the reduced income inequality and greater economic mobility in welfare states relative to more purely capitalist countries?  Correlation, not causation?  :)

[RichardGibbons]

The way I look at it, abject poverty for most people is the default state in history. Most rich people were warlords in one way or another.

 

Capitalism is a method for increasing productivity (by coordinating unrelated parties, efficiently allocating resources, creating specialization which allows technological progress, etc), which reduces poverty.

 

Blaming capitalism for the people who are still poor is like blaming the scientific method for the things that we don't yet know. Doesn't make much sense.

 

Granted, that doesn't mean that capitalism will accomplish all the goals that we can find worthwhile, but blaming it for poverty is strange.

 

People who are big fans of the welfare state might argue that there isn't enough redistribution and safety nets, but the reason why we can pay for these things and get out of the default state in the first place shouldn't be forgotten or damaged too much.

 

Yeah, I agree. I think the problem you elegantly expressed in your last paragraph will probably be one of the biggest economic challenges this century.  I think there's a risk of things getting out of balance and ending up in a bad place (e.g. the poor rising up and killing all the rich, or the rich establishing enough power to permanently subjugate the poor.)

[Rainforesthiker]

The capitalists helps the economy, which helps the downtrodden, by helping himself.

 

Yeah, sure. Tell this to all the people who died in the capitalist mines, factories and farmfields.

 

Capitalism is certainly not perfect.  No human system is or can be.  But it is the best system in terms of efficiency and producing the greatest amount of wealth and opportunity overall for the greatest amount of people.  Just look around.  If you somehow disagree with that, then observe how people vote with their feet.  People risk their lives trying to get to capitalist societies, whether that is the US or Western Europe.  Those people struggling to get here don't see much traffic going the other way . . .

[onyx1]

 

The way I look at it, abject poverty for most people is the default state in history. Most rich people were warlords in one way or another.

 

 

Capitalism is a method for increasing productivity (by coordinating unrelated parties, efficiently allocating resources, creating specialization which allows technological progress, etc), which reduces poverty.

 

 

Blaming capitalism for the people who are still poor is like blaming the scientific method for the things that we don't yet know. Doesn't make much sense.

 

True.  And you need not look any farther than the new economic policies in the last 25 years that lifted tens of millions of people out of poverty in India.  Or when similar wealth generating policies were put in place in China, a million people a month have risen out of poverty. 

 

One might think that would be enough to arouse the curiosity of those who claim to be on the side of the poor.  The reality is that social crusaders have little interest in anything that doesn't put them on a moral high ground against the forces of "evil" (as defined by themselves of course).  So instead of considering policies that have actually worked to relieve poverty, they create and then rail against a boogie man like the 1%, evil corporations, or low minimum wages.  This way elites can look upon themselves as a defender of the downtrodden and get the special status they believe they deserve.

[Jurgis]

Blaming capitalism for the people who are still poor is like blaming the scientific method for the things that we don't yet know. Doesn't make much sense.

 

Nobody's blaming capitalism. You guys are taking my posts out of context. :)

 

I was answering to:

 

The capitalists helps the economy, which helps the downtrodden, by helping himself.  Thus I'd rather have a world full of greedy capitalists than a world full of Mother Teresa wannabees.

 

Emphasis mine.

 

Yes, Liberty, you are totally right. Capitalism is the best system we know. But that does not mean that "greedy capitalists" are better than people who try to help the people in poverty.

 

Here is another self-righteous libertarian moralist:

 

Life is not fair and by trying to make it fair you make it even more unfair.

 

I call it being popular by spending someone else's money.

 

Yeah, right. Who talked about spending someone else's money? If people donate to charities like Doctors Without Borders or Seva, if they volunteer for charities, clearly they are "being popular by spending someone else's money".

 

And actually:

 

Capitalism is certainly not perfect.  No human system is or can be.  But it is the best system in terms of efficiency and producing the greatest amount of wealth and opportunity overall for the greatest amount of people.  Just look around.  If you somehow disagree with that, then observe how people vote with their feet.  People risk their lives trying to get to capitalist societies, whether that is the US or Western Europe.  Those people struggling to get here don't see much traffic going the other way . . .

 

Right. But ask rkbabang and wachtwoord and they'll probably tell you that US and Western Europe are socialist.

 

Cause they clearly limit the ability of greedy capitalists to do what they would want to do. There are labor laws, safety laws, environmental laws, etc. Let's ask our libertarian friends if they would keep any of these laws. So perhaps Rainforesthiker answered it the best: people vote with their feet. And they vote for capitalist societies that also have great social safety nets and limit the power of "greedy capitalists".

[Rainforesthiker]

 

The way I look at it, abject poverty for most people is the default state in history. Most rich people were warlords in one way or another.

 

 

Capitalism is a method for increasing productivity (by coordinating unrelated parties, efficiently allocating resources, creating specialization which allows technological progress, etc), which reduces poverty.

 

 

Blaming capitalism for the people who are still poor is like blaming the scientific method for the things that we don't yet know. Doesn't make much sense.

 

True.  And you need not look any farther than the new economic policies in the last 25 years that lifted tens of millions of people out of poverty in India.  Or when similar wealth generating policies were put in place in China, a million people a month have risen out of poverty. 

 

One might think that would be enough to arouse the curiosity of those who claim to be on the side of the poor.  The reality is that social crusaders have little interest in anything that doesn't put them on a moral high ground against the forces of "evil" (as defined by themselves of course).  So instead of considering policies that have actually worked to relieve poverty, they create and then rail against a boogie man like the 1%, evil corporations, or low minimum wages.  This way elites can look upon themselves as a defender of the downtrodden and get the special status they believe they deserve.

 

+1

[wachtwoord]

Life is not fair and by trying to make it fair you make it even more unfair.

 

LOL. Asserting something like this doesn't make it true, except on Fox News.  To what do you ascribe the reduced income inequality and greater economic mobility in welfare states relative to more purely capitalist countries?  Correlation, not causation?  :)

 

Equality is not equivalent with fairness. Reduced income inequality is unfair as those that contribute the most are significantly underrewarded in our society.

 

And yes, the US is socialistic now. Western Europe is borderline communistic (France is in my top 10 of worst places to live worldwide).

[RichardGibbons]

Equality is not equivalent with fairness. Reduced income inequality is unfair as those that contribute the most are significantly under rewarded in our society.

 

OK, I get it. I, too, am worried that Bill Gates and the Koch brothers are underpaid. It's totally unfair to skew the equitable and just results of the genetic lottery.

 

And yes, the US is socialistic now. Western Europe is borderline communistic (France is in my top 10 of worst places to live worldwide).

 

Wow, that's quite the statement about France.  Just so I can see where you're coming from, which eight of these countries would you prefer to live in above France? 

 

Iraq: Hang out with ISIS

South Sudan: Civil war, famine, high chance of genocide

Sudan - 65% of citizens below the poverty line, frequent civil wars & genocide

North Korea - Communist dictatorship, prison camps

Somalia: The most unstable country on the entire planet, black market, warlords. But super-cool Pirates!

Venezuela: Corrupt populist/socialist rule, 100% inflation rate, food shortages, violent crime

Syria: Civil war, Sarin gas, and murderous religious folk

Ivory Coast: Multiple civil wars, rape and murder!

Chad: Most habitants live in abject poverty. Repeated coup attempts, Life expectancy below 50.

Congo:  Unstable, corrupt, civil wars killing over 5M people since 1998

Central African Republic: Ongoing fights between the government, Christians, and Muslims; ethnic and religious cleansing, and no safe drinking water

Nigeria: No real rule of law, human trafficking etc.

Laos: Single-party, corrupt Marxist republic

Cambodia: Corrupt communist country with a history of mass killings ruled by an oppressive warlord

Sierra Leone: Frequent civil wars, ebola outbreaks, and an average life expectancy of 46

Myanmar: Ethnic and religious fighting, frequent civil wars, military government

Zimbabwe: Corrupt, human rights abuses, state expropriation of private companies, land redistribution

 

I'm guessing maybe the pirates and warlords are on your list?  They do make video games about such people, so I can see why someone might think they're kind of cool....

[APG12]

I thought this was a great article and pertinent to this thread given the several examples of greedy businessmen that were cited.

 

But those who set the intellectual tone of our culture want us to believe that selfishness requires the destruction of others. They blur the obvious distinction between a producer and a predator, between someone who makes money and someone who steals it. They fuse the two into one fuzzy "package-deal," leading people to believe that, just as a predator is committing a moral crime, so is anyone who pursues his true self-interest.

 

We are thus left with the false alternative of either being altruistic by sacrificing ourselves to others, or being "selfish" by sacrificing others to ourselves.

 

http://www.huffingtonpost.com/peterschwartz/reconceiving-the-idea-of-_b_7927220.html

[rkbabang]

Yeah, sure. Tell this to all the people who died in the capitalist mines, factories and farmfields.

 

Where they worked voluntarily.

 

... as it was their only alternative to starving to death in the streets in a cold, capitalist world where they lost the genetic lottery.

 

(No idea if this is true or not. I just like "build the sentence" games.)

 

Yes, when you are born into this world you need to find someway to survive, to find food, to protect yourself, to keep warm, to find shelter.  All animals do (including human beings).  This isn't some heavenly utopia where some God, Dear Father, Uncle Joe (or Sam) magically takes care of everyone by turning water into wine or calling forth to the great god of socialism a chicken in every pot, it is reality where nothing is created unless some human being does the work of creating it.

 

We are all standing on the shoulders of those who came before us and built our civilization from the ground up. Many of our ancestors lived through hell for us to live in comfort, it isn't capitalism's fault that they went through hell, that is the default state of existence, it is capitalism's fault that we aren't in a living hell as well.

[Liberty]

And yes, the US is socialistic now. Western Europe is borderline communistic (France is in my top 10 of worst places to live worldwide).

 

Pretty sure people who have lived through real communism might want to disagree with you...

[Jurgis]

But those who set the intellectual tone of our culture want us to believe that selfishness requires the destruction of others. They blur the obvious distinction between a producer and a predator, between someone who makes money and someone who steals it. They fuse the two into one fuzzy "package-deal," leading people to believe that, just as a predator is committing a moral crime, so is anyone who pursues his true self-interest.

 

We are thus left with the false alternative of either being altruistic by sacrificing ourselves to others, or being "selfish" by sacrificing others to ourselves.

 

http://www.huffingtonpost.com/peterschwartz/reconceiving-the-idea-of-_b_7927220.html

 

I don't think anyone on this thread claimed that all businessmen are evil. Actually I'll go on the record stating that I believe in moral business practices and I believe that sometimes moral business practices may even be the best for both the owners/shareholders and the employees and the customers and any other parties (like environment).

 

However, just as we should not say that all businessmen are evil, we should not say that all businessmen are moral paragons just because they create jobs for people and drive economy. There have been numerous examples of business owners that exploited workers, produced substandard products, and engaged in other practices that harm a lot of people in the past and there are such examples right now - mostly in corrupt countries without sufficient laws and protections.

 

Also we should not dismiss people working or volunteering for non-profits or government agencies as non-productive or not contributing to the benefit of humanity. As with the capitalists, not all of them are doing things that are positive, but there are non-profits and, yes, there are governmental organizations too who do great things.

 

Let's evaluate both sides on the concrete results they achieve and not on some simplistic separation.

 

Edit: regarding the article: it's a tricky subject and I think the author does not do it justice. Yes, doing things that may look selfish might be good, and even altruists have to do things for themselves or risk a burn out, but there are selfish things and selfish things... (let's open new thread if there's interest in more discussion)

[Jurgis]

And yes, the US is socialistic now. Western Europe is borderline communistic (France is in my top 10 of worst places to live worldwide).

 

Pretty sure people who have lived through real communism might want to disagree with you...

 

I have nothing to add.

 

 

;)

[Guest Schwab711]

Yeah, sure. Tell this to all the people who died in the capitalist mines, factories and farmfields.

 

Where they worked voluntarily.

 

... as it was their only alternative to starving to death in the streets in a cold, capitalist world where they lost the genetic lottery.

 

(No idea if this is true or not. I just like "build the sentence" games.)

 

Yes, when you are born into this world you need to find someway to survive, to find food, to protect yourself, to keep warm, to find shelter.  All animals do (including human beings).  This isn't some heavenly utopia where some God, Dear Father, Uncle Joe (or Sam) magically takes care of everyone by turning water into wine or calling forth to the great god of socialism a chicken in every pot, it is reality where nothing is created unless some human being does the work of creating it.

 

We are all standing on the shoulders of those who came before us and built our civilization from the ground up. Many of our ancestors lived through hell for us to live in comfort, it isn't capitalism's fault that they went through hell, that is the default state of existence, it is capitalism's fault that we aren't in a living hell as well.

 

+10

 

I think the importance of this gets overlooked much too often.

[Guest Schwab711]

The US really can't get much farther from socialism unless they stop providing basic necessities for survival to citizens (food/water/shelter/medical care). That is basically the extent of our socialist programs. Proposing state ownership, economic planning, or cooperative ownership (outside of farming), while in power, is a great way to get tar-and-feathered in the US :)

[wachtwoord]

Your government is huge with huge funding and much power. The power of the 3 letter abrevation agencies approximiates police state.

[rb]

Your government is huge with huge funding and much power. The power of the 3 letter abrevation agencies approximiates police state.

 

I think you don't really understand what socialism is. Just because the US spends a lot of money on a large military and the adjacent agencies doesn't make it socialistic in the least. The US is probably as far away from socialism as you can get in the developing world and much further away from socialism than it has been in the past.

[Liberty]

Your government is huge with huge funding and much power. The power of the 3 letter abrevation agencies approximiates police state.

 

http://www.louisaheinrich.com/wp-content/uploads/2015/03/inigo-montoya_that-word.jpg

[rkbabang]

Your government is huge with huge funding and much power. The power of the 3 letter abrevation agencies approximiates police state.

 

http://www.louisaheinrich.com/wp-content/uploads/2015/03/inigo-montoya_that-word.jpg

 

Yes clearly we are closer to being a fascist police state than a Venezuelan socialist paradise.

 

[Liberty]

Constant hyperbole does no one any good, and if things start to get really bad, nobody will listen to those who have been crying wolf about police states, communism, fascism, totalitarism, etc, for years.

 

It's fine to say that things are bad/sub-optimal in ways X,Y, and Z, and that they could be improved through A,B, and C, without constantly evoking Stalin, Mao, and Hitler.

 

If I had a time machine and gave these people the choice to live where they live now or to be transported to being an average citizen in one of these regimes they constantly reference as being like today's, I'm pretty sure that they'd stay right here.

[rb]

I read up on the thread and I think it got a bit sidetracked. It started up on how the tax code should be reformed and it ended up in a discussion on how wealthier people are persecuted by the inheritance tax.

 

The way I see public taxation is that first society has a discussion on what services they want the government to provide: emergency services, public infrastructure, military, education, healthcare, etc. Then you sum up these services and they cost X and you have to collect more or less X in taxes. Then the decision comes how to divvy up the X amongst the people.

 

One thing to keep in mind is that the government is elected by all people and (ideally) its job is to look after the wellbeing of all people. Its job is not to protect the wealth of a select few. Throw in a couple of extra things like in most developed societies you have certain social norms and values - such as we don't let people die on the streets because they are poor and what you get is progressive taxation.

 

I personally agree a lot with progressive taxation despite the fact that I'm the top tax rate. Putting aside my personal political views I also like it because I think it makes good economic sense. I'll get to that in a bit.

 

I also saw there's quite a bit of preference for flat taxes of VATs. Those are highly regressive. The VAT is particularly bad because it's not only regressive but it also discourages consumption. So lower consumption => lower production -> lower sales, lower profits, unemployment, not good.

 

So how is a progressive tax system good for the economy or wealth. Well lets take me. I have everything I need. I buy certain things and my income is higher than my expenses by a significant margin. If you give me $100 I will not put it in the economy. I'll just save it. I don't even get gifts because there's nothing that I need. Now if you take someone that's poor and you give him or her $100 they go and spend it. That works it's way through the economy with a multiplier attached. So you get lower unemployment (which leads to lower govt expense and more revenue btw). However what you get is higher sales and profits for companies which leads to higher stock prices and higher wealth for me. The fact that it leads to more equal societies with less poverty and less crime is a nice bonus too.

 

However the reason the US Tax code should be blown up is that it's been so contorted by special interests that the statutory tax rates don't mean anything anymore. But I think it needs to go deeper than that to a societal change. Because if you start with a brand new code the powers that be will contort it back in no time. My personal opinion is that the US citizens need to become less partisan. Too many people identify themselves as republican or democrat and stick with the heard through thick and thin. I head from conservatives a lot of talk about social Darwinism. Why shouldn't that apply to politicians. How can you expect congressmen to behave properly if they do not fear for their positions. If one of them doesn't behave, break with the heard and vote for the other guy. I have a feeling that will improve things a lot.

 

Sorry for the essay

[wachtwoord]

Higher spending does not equal a better economy. That's like saying that breaking people's windows is good for the economy. Progressive taxes make no economic sense as it discourages contributing positively to society (if I were a Swiss national with 2k Euro badic income I'd quit my job and never work a day again despite my high education).

 

To put this in context thus far in my life I have on net petsonally benefitted from our socialistic system (no student debt gor instance). It just leads to a suboptimal economy which degrades over time. That's what's happening in Europe right now and it seems to be nearing the end game (but for all I know it takes decades).

[rkbabang]

Constant hyperbole does no one any good, and if things start to get really bad, nobody will listen to those who have been crying wolf about police states, communism, fascism, totalitarism, etc, for years.

 

It's fine to say that things are bad/sub-optimal in ways X,Y, and Z, and that they could be improved through A,B, and C, without constantly evoking Stalin, Mao, and Hitler.

 

If I had a time machine and gave these people the choice to live where they live now or to be transported to being an average citizen in one of these regimes they constantly reference as being like today's, I'm pretty sure that they'd stay right here.

 

 

 

I think if you were one of the millions in jail in the US today you would think that it is already pretty bad.  If you were one of the thousands killed by police your loved ones would think it was already pretty bad. 

 

Just because it was much worse in other places and times doesn't mean that it isn't bad and getting worse here and now.  We live in interesting times, the private sector is doing amazing and wonderful things that are making all of our lives better by the day, but at the same time the government is gearing up for an all out war (both overseas and at home).  The police are killing thousands every year, hundreds every month, often getting away with murder even though the video is on youtube.  Business is operating under the weight of crippling regulations & licensing schemes in an almost outright crony-capitalist system.  Taxes, well this thread has gone over taxation already.  Imagine what would be possible if those weights were removed.

 

I never mentioned Hitler btw, I had more of the Mussolini/Italian system in mind when I said "fascist" not trying to imply the bigotry/antisemitism images that the words "Hitler" or "Nazi" seem to bring to mind.

 

The US has the most sophisticated spying system the world has ever seen, dictators and fascists of previous generations could never even dream of having the capabilities of the current CIA/NSA/FBI/etc. 

 

The US military is the best equipped in the world. As are the US police forces (federal, state, and local).

 

When it does get "really bad" it may happen quickly.  IMHO the only thing holding the whole leviathan back is the knowledge that there are more than 88 privately owned firearms for every 100 people in the United States.  When it does get "really bad", as you say, it will be really messy on all sides, which is the one reason it may never get to that point at all. It is more likely to get a little worse, but never cross the threshold where people rebel.  It may never get "really bad", but that doesn't mean it is good.

 

[ERICOPOLY]

I suppose a hippie "commune" is communism.  You all supposedly live equally and share everything.  In theory (or myth).

 

Relative communism is a spectrum between where you keep all of your assets & earnings, and you keep X% (and pay the rest in taxes to be shared with the rest of the inhabitants).

 

So a state like California is relatively more communistic than a state where the taxes are less.

 

Just thought I'd point out that the more taxes you pay, the more it looks like communism.