(A) The real issue is not setting tax rates after some national soul searching, compromise and a moral-philosophical discussion about greed, wealth, liberty and so forth. It's not about economic theories. It's about practicalities. It is increasingly hard to tax the wealthy and large corporations. This is for reasons that are not easy to remedy, and may not be remediable. The reality in all developed countries is that (1) total budget/gdp is %35 - %45 and (2) the middle class pay disproportionately high taxes. This is effectively what you are working with as a leader in a 2016 developed country.
If you think you can get significantly more (ie percentage points of GPD) out of the wealthy... well... that's the significant part. Tell us about that. Lets debate that. Personally, I doubt it.
I think we need to acknowledge that these are the parameters of our nameless, global political-economic system. It carries some parts of the capitalism, welfare state theories, labour unionism theories, but it's pretty far from those on paper.
(B) There are examples in the US and elsewhere of high marginal taxes. This is not a venture into some unknown.
I'm not American, so no real dog in this race. That said, when I here someone talk in this way, as if from a sketchbook of political ideas, I kind of think it's naive.
Can the law not be modified to collect from corporations and trusts?
That's my concern with this line of reasoning: Money, which is just a transfer mechanism of wealth, is a human creation, just as the rules around its taxation are. People seem to think that "If you change the rules, people will just find other ways!". Well, the rules can change at any time.
> This is not a route to saner tax policy
A saner tax policy taxes the wealthy at a higher rate than the middle and lower classes. Trickle down has proven not to work.
> Can the law not be modified to collect from corporations and trusts?
I would hope so too, but functionally the only way to do this efficiently would be to tax them all at the same rate (meaning no marginal brackets). Any time you introduce different brackets, you leave yourself open to gaming the system. People will gravitate towards solutions that maximize their wealth.
Flat rate tax systems are not politically popular, since everyone paying the same rate has been portrayed as regressive (and arguably so, given the reduced marginal value of more money), so I find it unlikely for a political solution to be tenable.
> Well, the rules can change at any time.
Yes, well, starting a business in such a climate is sketchy. Just look at countries like Venezuela. You don't want things to change, you want certainty and stability for long term economic growth.
> Trickle down has proven not to work.
Really? Are the middle class living in poorer conditions than they were 100 years ago?
Wealth inequality is obviously destabilizing over a long period, and I agree that it would be better to live in a system that is inherently more stable and equal. However, if you look at inflation adjusted income or purchasing power, it's been getting better and better for the middle class for most of our country's history (flat the last 5 years, though).
> I would hope so too, but functionally the only way to do this efficiently would be to tax them all at the same rate (meaning no marginal brackets).
I've always thought that ideally corporate tax rates should be flat, and should be at the maximum marginal rate for personal income tax, but that all corporations (not just those which currently do this) should be able to take advantage of the lower personal marginal tax rates of their shareholders, essentially having the option to be taxed at a rate as if its taxable income were additional income to its shareholders, distributed in proportion to the ownership share, except for the income share of shareholders that aren't individual taxpayers (e.g., nonresident foreigners.)
However, I don't think that we're at the point where this would be administratively feasible. OTOH, given that there are options for corporations to distribute tax liability to shareholders, they just take special up-front decisions and impose some limits, I'd be happy to settle with corporate income tax fixed at the top marginal personal rate.
Capital is just more mobile than labour income. To take a big example, someone can just pick up and move somewhere for 180 days of the year. For more realistic examples, they just put their assets in a foreign corporation. The loopholes are sometimes intentional. But more often, they are just there because money is global and tax law is local.
US tax system is based around tax events, i.e. triggers, which require a transaction to take place. Unlike other economic systems, money sitting quietly will not be taxed until it kicks off a dividend, pays interest or changes hands thereby triggering capital gains.
Outside of municipal property taxes there's currently no framework for taxing wealth. An extreme theoretical case would be a billionaire with nothing but a savings account earning 0%. Under current system, he could while away indefinitely, making small withdrawals here and there to cover the lifestyle, while generating 0% tax burden.
Which is why discussing income taxes is a red herring - at this point people generating eight-digit incomes choose to work, and have a rather nice and comfortable way out if/when they decide to "spend more time with the family".
Wealth tax is a third-rail for either party, as majority of donors on both side are wealthy, but not necessarily high-income individuals.
I'm not american, so I may be missing the point. But isn't
ck2's point that this a President doesn't have the authority for this? Are't these supposed to be congressional authorities? IE, to get these policies people should elect legislators with these views.
> But isn't ck2's point that this a President doesn't have the authority for this? Are't these supposed to be congressional authorities?
Because the US doesn't have a parliamentary system where parties have clear parliamentary leaders (there are leadership in each party in each house, but there role is not the same as party leaders in a parliamentary system), and because the President has substantial powers not found in separately-elected heads of state in parliamentary systems, and because Congressional elections are separate by-seat elections and the Presidential election is (kind-of, the electoral college makes this not really true -- but closer than any other election) Presidential campaigns are single, national elections, the Presidential elections are a major nexus for national policy ideas that take legislative action to support (and Presidential primaries, particularly, set the ground for national party platforms in presidential election years.)
Technically? Sort of. Practically? Also sort of, but a little less so.
Technically speaking these bills originate in Congress. For financial matters, specifically the House. But the President does have veto power, so has a voice in the process.
Practically speaking, the President does a lot to set the tone. It's the only nationally elected position (even if elected a little weirdly). See "bully pulpit".
It's not an either-or thing -- you need to elect both local representatives AND a president who is interested in change.
A president cannot single handedly pass these changes, but he or she DOES exercise considerable influence on the kinds of things congress passes via the ability to refuse to sign things that congress does pass, so a president interested in change is a vital part of the process.
Consider that Barrack Obama campaigned on health care reform, and a health care reform package was passed during his first term. It's not a coincidence that that happened, even though the package had to be introduced by congress -- the electoral mandate handed to a president necessarily informs the legislative pressures congressional members feel, be it to support such a mandate, or to obstruct it, depending on the political inclinations of their base.
Health insurance had been attempted by the democrats a few times so there was definitely existing support. Also passed for children, also exists as medicare, medicaid. So it had examples for things being better, just needed a huge push.
Now the health insurance we ended up with is a horrible compromise (this is personal for me, I still cannot get health insurance).
And that's with so many congress people throwing themselves into the fire and literally ending their careers by voting for that horrible compromised bill.
How in the heck do you think the radical ideas Bernie is proposing is going to get 51% of the house and 51% of the Senate?
Everyone needs healthcare, so they can relate somehow.
Now compare that to the radical reshuffle that would be needed for "free" education (which to be clear I think is a good idea).
No way senate and house throw themselves into the fire for most of what Bernie is proposing, no way.
It's a non-issue anyway, there is no way in hell America is going to elect a 78 year old Jewish man who constantly waves his arms around when he talks.
He's a great guy and a great senator and he should be proud but this country is not going to make him president, hell the democrats won't even let him win the primary, no way.
ps. he also ran 4.5 minute miles in high school which is amazing
Election process is fairly similar to startup process, where you come up with a bunch of ideas, see what polls well with demographics and then compile the points that have the most rapport into your "platform".
We're being tested on attitude towards the top rates, just as we were tested on free college tuition paid for by financial transaction tax, radical rise in minimum wages, gun control and a few other things. Some of those you don't hear about anymore as campaign data scientists deemed it irrelevant.
Be sure to watch the protests and demonstrations at the taxpayer funded DNC and RNC every four years. Watch how that goes. You know where both parties fund the police to seize people without just cause or paint them in pepper spray.
Just like how protests prevented and ended the Iraq war. Oh wait, they didn't. You think more people will show up to protest for Bernie's ideas?
> How would he seek to do that without having a majority in Congress?
Why would he be the first Presidential candidate in history to not seek to have a Congressional majority supporting his policy objectives elected alongside himself?
(Sure, he probably won't get that, and he'll probably have to compromise with the Congress he actually has. But that shouldn't stop him from trying to build as much support as possible for his actual policy goals.)
Again, I think there's a real disconnect from reality and who actually votes in Congressional races. While he personally can try to build as much support as he wants for his policies, there is no indication that given the current Congressional battle lines will give way for someone even more far left than Obama.
