Re: The Power of the SCOTUS IV: Gays, Guns, and Immigrants, OH MY!
Agree in theory, disagree in practice, which is why most tax reform proposals [quite rightly in my opinion] are focused less on rates and more on all the goody-bags politicians insert for their favored constituencies. The tax code is riddled chock-a-block with all sorts of narrowly-targeted deductions, credits, exemptions, etc. etc. which is why high tax rates are never actually paid.
In other words, progressive tax rates, in isolation, do treat everyone equally; however, the definition of taxable income does not. Some people benefit more than others, generally (though not always) based NOT on economic reasons but based on reasons of who they know and who they can buy off. (I always cite Chuch Schumer championing carried interest because so much of NY State revenue depends on hedge fund people. He doesn't want changes in the US tax code to cause all hedge funds to relocate to Bermuda, and as long as he can keep carried interest taxed at 15% the hedge funds will stay in NY. Increase their tax rate to 45% and they'll all start leaving left and right and NY State loses over half of its state income tax revenue).
it's also a good (cynical) explanation of why apparently high tax rates remain: it's a way for politicians to <strike>extort</strike> "solicit" campaign contributions from lobbyists so that they can insert all those special provisions. Get rid of special provisions in exchange for lower rates, reduce the ability to raise campaign funds.
I can't remember all the details, sometime in I think the 1980s there was a bill regarding the Generation -Skipping transfer tax, and some Congressperson from CA inserted a few technical provisions that on the surface seemed innocuous enough, about grandparents and grandchildrens and separate trusts. It turns out that this particular section was of tremendous financial benefit to the Gallo family, whose founder / brothers were getting on in years and who wanted to keep their winery intact in a series of family trusts and family partnerships.
So one really rich, well-connected family with a clever lawyer was able to get a special provision inserted into the law to benefit them.
To the Confiscator-in-Chief, the economics don't matter: to him it is all symbolic. All rich people (other than himself, naturally
) should be punished merely for the fact of being rich. It's a moral crusade that makes no logical sense. If you were logical, you would be concerned about revenues, rates would be secondary. Lower rates with fewer deductions are clearly and unequivocably much better for the economy than higher rates with oodles of credits, exemptions, carve-outs, and the like.
Agree in theory, disagree in practice, which is why most tax reform proposals [quite rightly in my opinion] are focused less on rates and more on all the goody-bags politicians insert for their favored constituencies. The tax code is riddled chock-a-block with all sorts of narrowly-targeted deductions, credits, exemptions, etc. etc. which is why high tax rates are never actually paid.
In other words, progressive tax rates, in isolation, do treat everyone equally; however, the definition of taxable income does not. Some people benefit more than others, generally (though not always) based NOT on economic reasons but based on reasons of who they know and who they can buy off. (I always cite Chuch Schumer championing carried interest because so much of NY State revenue depends on hedge fund people. He doesn't want changes in the US tax code to cause all hedge funds to relocate to Bermuda, and as long as he can keep carried interest taxed at 15% the hedge funds will stay in NY. Increase their tax rate to 45% and they'll all start leaving left and right and NY State loses over half of its state income tax revenue).
it's also a good (cynical) explanation of why apparently high tax rates remain: it's a way for politicians to <strike>extort</strike> "solicit" campaign contributions from lobbyists so that they can insert all those special provisions. Get rid of special provisions in exchange for lower rates, reduce the ability to raise campaign funds.
I can't remember all the details, sometime in I think the 1980s there was a bill regarding the Generation -Skipping transfer tax, and some Congressperson from CA inserted a few technical provisions that on the surface seemed innocuous enough, about grandparents and grandchildrens and separate trusts. It turns out that this particular section was of tremendous financial benefit to the Gallo family, whose founder / brothers were getting on in years and who wanted to keep their winery intact in a series of family trusts and family partnerships.
So one really rich, well-connected family with a clever lawyer was able to get a special provision inserted into the law to benefit them.
To the Confiscator-in-Chief, the economics don't matter: to him it is all symbolic. All rich people (other than himself, naturally
) should be punished merely for the fact of being rich. It's a moral crusade that makes no logical sense. If you were logical, you would be concerned about revenues, rates would be secondary. Lower rates with fewer deductions are clearly and unequivocably much better for the economy than higher rates with oodles of credits, exemptions, carve-outs, and the like.
Last edited:
