Tag Archives: taxation

June 2023 in Review

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Most frightening and/or depressing story: Before 2007, Americans bought around 7 million guns per year. By 2016, it was around 17 million. In 2020, it was 23 million. Those are the facts and figures. Now for my opinion: no matter how responsible the vast majority of gun owners are, you are going to have a lot more suicides, homicides, and fatal accidents with so many guns around. And sure enough, firearms are now the leading cause of death in children according to CDC. That makes me sick to think about.

Most hopeful story: It makes a lot of sense to tax land based on its potential developed value, whether it has been developed to that level or not. This discourages land speculation, vacant and abandoned property in cities while raising revenue that can offset other taxes.

Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both: The U.S. may have alien spacecraft at Area 51 after all. Or, and this is purely my speculation, they might have discovered anti-gravity and want to throw everybody else off the scent.

land value tax plan

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Detroit is considering a land value tax.

The proposal, dubbed the Land Value Tax Plan, would increase taxes on land while reducing taxes on homes and structures by an expected 30%, or roughly $38 million total. This would apply to every neighborhood in Michigan’s largest city, requires no application and never expires.

If approved by the Michigan Legislature, and later by Detroit voters, Duggan said, the plan would provide relief to homeowners who have been struggling under the burden of high taxes, encourage further neighborhood growth and hold land speculators accountable.

Detroit Free Press

It makes a lot of sense to me. The cynic in me has to ask, how much are the politicians that would have to vote for this in on the land speculation game? Here in Philadelphia they certainly are. But I’m not one to name names…ah hell, COUNCILMAN KENYATTA JOHNSON I’M TALKING TO YOU.

fair start

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I’m not sure, I agree on everything in this opinion piece, but it does help make a connection between childcare and family policy and the rest of society.

These family policies (which might be called constitutive or de-constitutive) do nothing to ensure that all children are born into conditions that comply with the United Nations Children’s Rights Convention—the minimum children need to comprise democracies—but instead push children into horrible conditions with no minimum levels of welfare, something done to ensure economic growth and to avoid “baby busts” or declining fertility rates. This puts wealth in the hands of a few, argues Nobel Laureate Steven Chu…

These policies, designed around a system premised on unsustainable growth, aim to prepare children, already suffering from vast inequality, to become consumers and workers for shopping malls rather than preparing them equitably to grow up to become effective citizens in democratic town halls. These inequitable policies have created a fantasy world of self-determination—freedom to take part in markets—while stealing the power each voice should have in true democracies.

Alternet

Logically, if you wanted to create a truly equal opportunity society and level playing field for all people at the moment they are born, you would start with a 100% inheritance tax. Then you would provide some combination of excellent parental leave and childcare benefits and services, so parents have the choice to either take time out from a career to focus on young children, or else have excellent childcare options available to them. You would need excellent health care for all children. Then you would move on to excellent public education, probably extending all the way through four-year college. This would obviously be “expensive”, but the benefits to society would almost certainly outweigh the costs to society. The way to pay for it would be for everybody participating in the economy to pay a little bit for it all the time, rather than the cost falling just on parents just for a few years while their children are young. Society as a whole, and the vast majority of parents, would be best off under this system. A tiny fraction of wealthy individuals and organizations would be worse off, and as long as our system gives these people the vast majority of political power, they will fight like hell against this system and they will prevail.

Inheritance taxes are fair and logical, but I admit they seem distasteful because it seems like you have worked hard your whole life to set your children up for success, and then the government is taking that away and giving it to other children whose parents were not as responsible or hard working. Under this system though, you would know your children are going to be fine, and logically you should be fine with it. I am not claiming logic, human emotions and politics are closely correlated! A value added tax might approximate the same benefit and be more politically palatable. Serious campaign finance reform has to come first before we can even begin to consider this.

cold hard cash

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Axios has a short primer on the idea of giving out cash to alleviate poverty. Conceptually, I am more attracted to the idea that the government should provide services the private market is failing to provide, employ people at market/living wages to provide those services, and provide people with the education and lifelong training to succeed in the private marketplace. Along with that, it should provide generous unemployment, disability, and retirement benefits to those who have a good reason for not working. Also, child care and health care so people can work part time, start a business or study without one spouse being chained to a full time large employer to get those benefits for the family. Of course, we do have unemployment, disability, and retirement benefits, and these do amount to giving cash to people. We also have tax credits, which are mathematically indistinguishable from giving out cash but psychologically very different. Because we have a tax system that is intentionally designed to be hated so nobody will support it.

Bernie Sanders makes the case to (UK?) voters

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A guy named Bernie Sanders has an article in The Guardian. Who is Bernie Sanders, asks the UK audience. According to the article, “Bernie Sanders is a US senator. He represents the state of Vermont”. According to this Bernie Sanders,

If the Democratic party wants to avoid losing millions of votes in the future it must stand tall and deliver for the working families of our country who, today, are facing more economic desperation than at any time since the Great Depression. Democrats must show, in word and deed, how fraudulent the Republican party is when it claims to be the party of working families.

And, in order to do that, Democrats must have the courage to take on the powerful special interests who have been at war with the working class of this country for decades. I’m talking about Wall Street, the pharmaceutical industry, the health insurance industry, the fossil fuel industry, the military industrial complex, the private prison industrial complex and many profitable corporations who continue to exploit their employees.

If the Democratic party cannot demonstrate that it will stand up to these powerful institutions and aggressively fight for the working families of this country – Black, White, Latino, Asian American and Native American – we will pave the way for another rightwing authoritarian to be elected in 2024. And that president could be even worse than Trump.

The Guardian

It’s ironic that as the excitement of the election begins to fade, and the feeling sets in that we have dodged the bullet of a second Trump term, we now feel comfortable with beginning to feel disappointed with the Biden administration before it even takes power!

Prove us wrong Joe! I think Bernie has it right. The Democratic party’s message is overly focused on putting everything in race and gender terms, and not focused enough on an economic message that appeals to the working people of this country, which is the vast majority of people. Getting the basic benefits in place that people in other functioning modern societies take for granted – child care, education, health care, infrastructure in good repair – would disproportionately help people who need the most help, without the race and gender-based messages that are a turnoff to many voters and are ultimately ineffective at bringing about change.

“Fighting the special interests” means campaign finance reform. It probably means legislation or even a constitutional amendment clarifying that the right to free speech applies to humans and not dollars.

I have friends and family that voted for Trump. None of these people is openly racist, although only the hypocritical or naive among us think we are completely free of bias. Most of them honestly believe that Trump lowered their taxes and that Biden will raise them. Some are small business owners who honestly believe Trump, or any Republican at all, is pro-business and that Democrats are hostile to business. Some believe 1990s-era free trade agreements took away their jobs, the issue that I still believe edged out Hillary Clinton in 2016.

The solutions are pretty clear. The U.S. probably needs to take in more taxes and reinvest the money in smart ways that benefit working people, and that set the stage for long-term sustainable growth and innovation. This means the social programs I mentioned earlier, plus investments in infrastructure, capital goods, skills and training, research and development. These are also pro-business policies!

But how can you get people to support paying taxes when they have been subjected to decades of extreme anti-tax propaganda? This is really tough. That propaganda was created by decades of the rich and powerful buying off politicians to implant their extremist ideology in all our heads. I think Bernie is right that attacking those forces of propaganda is absolutely necessary. This is politically very tough and a very long game, and it is fighting the anti-tax message which is so simple to understand and so brutally effective.

Another idea, also politically very, very difficult, is to make taxes psychologically easier to pay. A value added tax would do this. This is how the rest of the developed world does it. It is the equivalent of a saved credit card in your iTunes app being so much psychologically less painful than writing a check each month to pay the electric bill. You just don’t “feel” that payment as much, and you see and enjoy the benefits that you getting in return every day. When I worked in Singapore, I submitted a tax return not unlike the one I submit here. But then someone reviewed that tax return and sent me a clear bill for the exact amount I had to pay. I was then able to set up an auto-pay from my bank account in twelve equal installments. Anything that gets tax payments into the background of people’s minds, kind of like the stored credit card on your Netflix account, might help.

People need to see and understand the value of the goods and services they are getting from the government in exchange for their taxes. We get enormous value from the government but we tend to take it for granted. Part of the propaganda has been for working people to believe that the taxes they pay provide benefits to other people, people not like them in one way or another, or people far away. I don’t have all the answers here, we could look at how companies create a sense of value for services. Advertising, branding, and marketing are part of the answer, whether we find that unsavory or not. Monthly statements, or the digital equivalent, might help.

There is also the flip side of helping people understand how much they pay for war and weapons, payments that do not bring any direct, measurable benefits to the people paying them. Federal tax revenue also gets sucked out of population centers where most economic value is created and redistributed to rural areas where it is not (out of proportion to the populations served, I am not suggesting rural people deserve nothing.) The brilliant, successful propaganda then convinces those rural voters that the exact opposite is true, that they are subsidizing the lazy people in the cities who do not create value! So we have to fight this too, and it brings us back to campaign finance reform, constitutional reform, and maybe democratic (small-d) reforms that get us closer to one-person, one-vote and lower the barriers to entry of candidates outside the two large parties. All politically very, very difficult! So who in the next generation will take up the Bernie Sanders mantle and make this case to the UK voter?!?

how to collect more taxes without raising taxes

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This Alternet article explains how the IRS has been defunded and hobbled over the last few decades. The rich are able to lobby for all kinds of loopholes and then find ways to exploit them, of course, but even if they outright cheat they are unlikely to get caught. Working people are audited at much higher rates. Audits for the rich and powerful are way down, and tax fraud prosecutions have been almost nonexistent under Trump. The article estimates $47.5 billion could be collected by auditing rich people. It’s good to keep that in perspective though of the annual federal budget of 4-5 trillion. So it would be a one-time recovery of around 1% of the budget. It would be enough to get a baby bond program going. You could give about $11,000 to each of the 4 million babies born in the U.S. in one year (but only that one year), or you could give less and spread it out over more years, or you could give it just to poor babies and spread it out.

Ralph Nader on R&D

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I’m still thinking about innovation – Ralph Nader says the U.S. government invests plenty in research and development, but only wealthy and powerful interests reap the benefits.

We send our tax dollars to Washington, D.C., and the federal government gives trillions of these dollars to companies in the form of subsidies and bailouts.

Trillions of dollars are devoted to government research and development (R&D), which has built or expanded private companies. These include such industries as aerospace, pharmaceuticals, military weapons, computers, internet, biotechnology, nanotechnology, and containerization.

Our taxpayer-funded R&D is essentially given away free to these for-profit businesses. We the People receive no royalties nor profit-sharing returns on these public investments. Worse, we pay gouging prices for drugs and other products developed with our tax dollars.

Counterpunch

Maybe, but if this means an obsession with patents and copyrights and other forms of “intellectual property rights” designed to capture value for investors, I think it can go too far and actually limit innovation. It might make more sense for the government to make the investments, institute a value added tax to recoup the benefits of increased progress economy-wide, and return some combination of benefits and services to the people. This would be a pretty obvious win to the private sector and the public at large. Of course, the illogical pro-business, anti-tax ideology U.S. corporations have spent decades manufacturing and imposing on the population makes this combination of policies politically almost impossible.

The Poor People’s Moral Budget

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This report tries to quantify the costs of inaction on a lot of America’s social and environmental problems, and makes the case that the cost of inaction is higher than the cost of action. I tend to buy this, although they don’t give references in their summary and I bet if you dig deeper they may have cherry picked studies that produce the largest savings. Still, it illustrates how easily politicians can trick people by comparing the cost of action to an assumed zero cost of inaction, which is never the case. I don’t how you would go about educating the public about that, other than starting in kindergarten and teaching people how to look at evidence, think and draw conclusions.

fair vs. unfair inequality

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This interesting article in Vox talks about academic ideas on how to distinguish and measure a difference between fair and unfair inequality. The premise is that there is no moral justification for leaving anyone below the poverty line, even if they are there due to bad choices of their own making. But once out of poverty, there is a need for incentives for people to make effort, make good choices and take the kind of good risks that sometimes pay off for society. There is also a difference between people who are less well off because of bad luck (often the luck of who their parents are) and people who are less well off because they have made less effort or bad choices. Of course, people who are better off because of luck or breeding will tend to rationalize their success relative to others as being due to superior effort and good choices, when in fact they may not be the case. So having an objective way to measure this is an interesting idea. It suggests you could have policies that kick in automatically when some measure of “unfair inequality” gets to a certain level. I don’t quite understand the measure itself, but this is a blog post referring to an academic paper, and I didn’t dig into the academic paper itself.

new political push for carbon tax in the U.S.

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There is a new emerging push for carbon taxes in the U.S., led by Republicans and using pro-business language. According to Bloomberg:

The campaign, dubbed Americans for Carbon Dividends, aims to bolster a carbon tax-and-dividend plan advanced by prominent Republicans a year ago, using more aggressive lobbying and advertising to line up support with hopes of winning congressional passage after the 2020 elections.

Under the Climate Leadership Council’s blueprint, every ton of carbon dioxide would be hit with a $40 tax, with the price rising over time and revenue redistributed to households in the form of quarterly dividend checks. In exchange, regulations aimed at cutting carbon dioxide emissions — and much of the Environmental Protection Agency’s authority to regulate them — would be eliminated.

Companies that emit greenhouse gas emissions also could win liability protection insulating them from litigation over the costs of climate change — a potentially enticing sweetener as lawsuits mount…

So, nominally anti-tax, anti-deficit politicians would get a revenue neutral program, anti-regulation politicians would get to trade away regulations in favor of taxes, and even the fossil fuel industry would get some liability protection. The other implication here seems to be that at least some Republicans in Congress are starting to think about a post-Trump world after 2020, and/or are willing to look for issues where a veto-proof super-majority could be possible.