Off With Their Riches: France Prepares A 75% Tax Rate For Top Earners

Various news organizations have been reporting an exodus of the superrich from France — often buying homes in England or surrounding countries to avoid the expected 75 percent tax rate proposed by the Socialist government of President François Hollande. While the rate would apply only to those making one million euros a year or more, I view it as a mistake. I admit that I tend to have great reservations about heavy tax hikes during economic crisis. We have debated the value and potential harm of such hikes on this blog. However, a 75% rate is in my view insane. As rational actors, top earners are likely to simply leave the country as they are doing. Hollande came into office on a wave of sentiment to soak “Les riches” and Hollande himself proclaimed “I don’t like the rich.” It is a bit too Robespierrean for my tastes as an economic policy.

Only around 30,000 people (out of 65 million) in France would be subject to the greater tax if it is approved. While that may seem to mitigate the concern over its social impact, it would also result in the collection of a small fraction of the needed revenue — even if they stay to be taxed. What is all does, however, is create the impression that France is hostile to top earners — a dangerous image for a like France with a portion of the economy catering to high-value estates and tastes.

Hollande insists that the 75 percent tax is “sending out a signal, a message of social cohesion.” Perhaps, but it also (in my view) sends out a message of economic chaos. The tax is a virtual invitation for the top earners to flee France for England. The result could be a modern remake of the “Tale of Two Cities” with London enjoying an infusion of capital and investment as wealthy French families shift assets away from Paris.

What do you think about a 75 percent tax?

Source: NY Times

82 thoughts on “Off With Their Riches: France Prepares A 75% Tax Rate For Top Earners

  1. I am moving to Holland at the suggestion of the President. We call it the Nederlands. He calls it Hollande. Aur revoir to the reservoir of fools.

  2. Dr. Turley:

    I have no problem with a 75% rate. I would structure it differently; and prevent anybody that tries to avoid it by moving from owning anything in France, living in France, or doing business in France of any kind. (I would do the same for anybody that renounces their American citizenship in order to avoid income taxation: Stay out, and we can prevent them from doing business here).

    a) Losing 30,000 rich people would not be so bad. If the 75% tax would not have made up much of the budget, getting rid of them won’t either. Force them to give up their businesses, too. From a business sociology point of view, that opens up niches for others to occupy, hopefully many others splitting that now-available pie, and that spreads the wealth.

    b) Your assumption that the wealthy would provide investment capital elsewhere is a rehash of the trickle-down theory. They do not. The vast majority of the money of the wealthy is in sterile income producing investments; they buy and trade income-producing shares of long-established existing companies, like IBM or P&G, but those companies do not benefit in the least from those trades. If I buy a thousand shares of IBM from you, IBM does not make a penny on that transaction. Only a small fraction of their money is risked in new ventures.

    c) I presume that, like us, the French have a perfectly legal way of avoiding those taxes: They can limit their income by spending their excess income on business expansion, and claiming those expenses as legitimate, untaxed business expenses. The rich benefit from owning MORE business assets with the money they spent, while the public benefits from the work created by the expansion, building factories and machines or offices and eventually working in the new businesses.

    I look forward to the French experiment. Everything for the rich is a trade-off, close the loopholes and they will choose to stay in France and pay the piper. A country could tax the income of its citizens no matter where they earned it, and they could tax the income of ALL money earned within their country regardless of whether earned by foreigners or not, and they could prohibit anybody that renounced their citizenship from ever re-entering the country for so much as a visit, and blacklist such people from owning or benefiting from any French company in any way.

    Treat them like citizens from a hostile country; that is what they are.

  3. Given the ridiculously low rates of taxation the wealthy pay here in the US, combined with how loudly they whine about it and how hard they play the system to hide money offshore, I am sure that a 0% rate would still cause some number of the numbnut freeloaders to emigrate.

    Welcome to the third world kids.

  4. This 75% tax on top earners is wildly confiscatory, but that’s just the start of the problem for France’s achievers. France also taxes wealth directly on assets over €790,000 at rates from 0.55% to 1.80%, called the Solidarity Tax on Wealth, or ISF. Some tiers of the ISF are increasing by up to 143% through a new surtax also being imposed.

    In combination these new tax levels on strong incomes and accumulated wealth will drive capital and talent from France rapidly. Individuals and families targeted by these new government policies who choose to stay may be subject to capital controls once the outflow starts and government seeks to limit money movement.

  5. The US has the lowest marginal tax rates it has had since the 1930’s. Doesn’t seem to be working out so well. We also have a presidential candidate that pays at an extremely low rate, maybe zero, in some years.

  6. “but that’s just the start of the problem for France’s achievers”


    The operative buzzword is “achievers”. The notion that most of the wealthy are “achievers” gives the “connotation” that they have an exalted status within society of making it run. The largest portion of these “achievers” have achieved by being born into it. These people mostly take far more from society than they give back. A country has the right to protect itself from those who would use its resources, but avoid paying their fair share for it.

  7. Hollande is probably going to make some deep cuts in France’s social programs in order to reduce the budget deficit. I suspect this tax the rich scheme is a political move he’s hoping to hide behind when the general population starts screaming about the cuts to their social programs.

    I’m only half joking when I suggest that, given the history, the overly-rich may want to be well out of the country when those cuts come.

  8. Since from a policy perspective, the rich seem to do the most damage to a country, a tax at the Pre-Reagan level when the US was much more equal and prosperous seems to be an effective tool. If they choose to leave, then it would only help the country whereas if they stay, then their boats would also be lifted by the rising tide.

  9. SwM,

    Thanks for that link. France has high corporate tax rates too, especially when compared to those in Ireland. I want to say 20% more(?).

    I don’t know enough about economics to venture an opinion on the strength of Hollande’s plan … I leave that to Tony C, Gene, and others but I am fascinated with the “politics, buzzwords, and overall propaganda” employed.

  10. @Mike: The largest portion of these “achievers” have achieved by being born into it.

    Exactly. More broadly speaking, by lucking into it, being in the right place at the right time, with the resources to take a risk. After that, the majority of even the self-made millionaires really did not do much besides work 60+ hours a week. My father did that for 30 years without ever becoming rich, as tens of millions of citizens still do today.

    In my opinion (and having known and worked beside many more multi-millionaires than most people) The majority of the rich have not really achieved anything special at all. They won the lottery of nature and circumstances, for their environment and time, so that their normal workday paid them much more than the typical person’s workday.

    To me an achievement is something that was a choice, planned and pursued with success. Graduating college is an achievement, becoming a master welder is an achievement. In my opinion being lucky is not an achievement, a lottery winner can be rich without having “achieved” anything.

  11. “Losing 30,000 rich people would not be so bad.”
    If the million dollar earners payout a net 25% rate, losing 30,000 costs $7.5 Billion. That’s a fair chunk of change.

    75% is clearly too far to the right on the Laffer Curve.

    I assume it would be on marginal income and eventually in time it would keep people from going out of their way to earn more than $1 million, which eventually would lead to a socioeconomic shift. If I have no incentive to earn more than $1 million from my business, but my business is going gangbusters, I’m going to end up paying my employee’s more so that less of that money gets ‘wasted’ into the government. Call it ‘forced trickle down’ In the long run, it may be a good thing, but there is large short to middle term pain.

    The rich need to understand that the better those below them are doing, the better they are doing.

    Say you have a society with one business serving all the needs of the people. Everyone works there or retired from there. In one scenario the executives make a BUNDLE of money…100 times that of their lowest employee. The employees can barely make ends meet and are forced to buy less of the companies products, certain non-necessity departments hurt and some are laid off, employees have to take pay advances to put food on the table and get into debt spirals… Ultimately, the company goes into its own recession, the executives get paid less and are forced to deal with a bad situation and a very unhappy workforce.

    Now consider that the company pays its executives a lower rate, say 25 times what the employees make. The business is able to pay their employees more and more of their money gets returned to the business, necessities and wants are bought, all the departments do well, morale is high and employees get more done. No one is going broke, no one is having to take excessive loans. The executives actually start to to make more money because the company is performing better.

    Which is a better scenario?

    Now consider that the business is the US economy as a whole, because it fits perfectly. If our top earners took less of a percentage of the overall earnings, they’d ultimately do better because us here in the middle class would have more to spend.

    I think of it as “trickle up” economics.

  12. JCTheBigTree,

    Thank you … first thing I had to do was google Laffer Curve. 😉

    You explained your position well so that even I could understand it.


    Be not afraid … it isn’t math.

  13. […] Off With Their Riches: France Prepares A 75% Tax Rate For Top Earners Various news organizations have been reporting an exodus of the superrich from France — often buying homes in England or surrounding countries to avoid the expected 75 percent tax rate proposed by the Socialist government of President François Hollande. While the rate would apply only to those making one million euros a year or more, I view it as a mistake. I admit that I tend to have great reservations about heavy tax hikes during economic crisis. We have debated the value and potential harm of such hikes on this blog. However, a 75% rate is in my view insane. As rational actors, top earners are likely to simply leave the country as they are doing. Hollande came into office on a wave of sentiment to soak “Les riches” and Hollande himself proclaimed “I don’t like the rich.” It is a bit too Robespierrean for my tastes as an economic policy. […]

  14. Well, that top French marginal rate pales in comparison to top US marginal rates which traditionally ran over 75% from the 50s through the 70s.

    Here’s the historic progression of top US marginal tax rates:

    Ordinary Income Earned Income Capital Gains Corporate Income
    Year (1) (2) (3) (4)
    1952-1963 91.0 91.0 25.0 52
    1964 77.0 77.0 25.0 50
    1965-1967 70.0 70.0 25.0 48
    1968 75.3 75.3 26.9 53
    1969 77.0 77.0 27.9 53
    1970 71.8 71.8 32.3 49
    1971 70.0 60.0 34.3 48
    1972-1975 70.0 50.0 36.5 48
    1976-1978 70.0 50.0 39.9 48
    1979-1980 70.0 50.0 28.0 46
    1981 68.8 50.0 23.7 46
    1982-1986 50.0 50.0 20.0 46
    1987 38.5 38.5 28.0 40
    1988-1990 28.0 28.0 28.0 34
    1991-1992 31.0 31.0 28.0 34
    1993 39.6 39.6 28.0 35
    1994-2000 39.6 42.5 28.0 35
    2001 39.1 42.0 20.0 35
    2002 38.6 41.5 20.0 35
    2003-2009 35.0 37.9 15.0 35

    Notes: MTRs apply to top incomes. In some instances, lower income taxpayers may face higher MTRs because of income
    caps on payroll taxes or the so-called 33 percent “bubble” bracket following TRA 86. From 1952 to 1962, a 87% maximum
    average tax rate provision made the top marginal tax rate 87% instead of 91% for many very top income earners. From 1968
    to 1970, rates include surtaxes. For earned income, MTRs include the Health Insurance portion of the payroll tax beginning
    with year 1994. Rates exclude the effect of phaseouts, which effectively raise top MTRs for many high-income filers. MTRs on
    realized capital gains are adjusted to reflect that, for some years, a fraction of realized gains were excluded from taxation.
    Since 2003, dividends are also tax favored with a maximum tax rate of 15%

    (sorry about the chart formatting, but you can find it presented better here:

    Note that the US top rate for individuals is now at its lowest ebb after running as high as 91% during the prosperous years in the 50s & early 60s. Corporate rates are way down too.

  15. @JC: The Laffer curve is bad science, bad economics, and irrelevant.

    The reason for that is the Laffer curve is both unproven, and based on a false premise even if it were: The idea that the purpose of the government is the same as the purpose of any business, meaning increasing revenue. That is not the purpose of a government at all, it is not in business to make a profit.

    Here is some business basics (I have been partners in several, I have been a division manager in a large company, I have been a COO of a regular and successful corporation): Business expenses are 100% deductible. You do not pay income taxes on expenses, and that includes expenses for advertising, expansion, equipment, materials, employees, benefits, and research and development.

    Let us make a distinction here between “profit” and “excess revenue,” because during the fiscal year “excess revenue” is not yet a taxable “profit.” If it is not used in the business it will become a taxable profit. But before then, “excess revenue” can be used to start another factory, or another outlet, or a whole different business, and then it has become a business expense and you pay zero taxes on it. Zero taxes.

    A business man NEVER spends after-tax money on expanding his business if he can possibly help it, he ALWAYS spends all of his excess revenue first.

    And here is how the Laffer curve is wrong: A higher tax rate probably WILL result in less revenue for the government, but it can still accomplish the government goal. Because the higher tax rate will discourage businesses from taking profits, and encourage businesses to reinvest their money in growing their business, their sales, and their production capacity. If I am a factory owner and I anticipate $10M in excess revenue throughout the year, and the tax rate on that would be $7.5M if I took it all in profits, I am faced with a choice: Come out at the end of my fiscal year with $2.5M in my pocket, or reinvest the money in my business and come out with $10M in assets and goodwill (the non-tangible or unquantifiable returns on advertising, employee benefits, charitable aid, sports sponsorship, etc.)

    When the income tax is low, the equation tilts for the rich in the direction of personal accumulation. Say the rate was 10%, and I could pocket $9M of the $10M. That is a more sure reward than reinvesting in my business. But say the rate was 90%, and I could only pocket $1M of the $10M. It seems quite likely that me spending $10M on expansion, new equipment, R&D, etc would return more than $1M in benefit, so the tax rate pushes me toward the risk of reinvestment instead of profit-taking.

    The goal of a higher tax rate does not have to be more government income, as Laffer presumed, it can be to steer the money into more productive outlets.

    The public has been brainwashed by the rich to favor the rich. Nobody in their right mind “creates jobs” with after-tax money if they can possibly help it. Every dime you can roll over into business growth is an untaxed dime, it is why we see only mature businesses pay dividends: They do that when using ALL of their excess revenue for growth would be a waste of money.

    Our government already provides the perfect tax rate for “job creators,” and that rate is 0%. If you create a new business and / or new jobs, you pay no taxes on the expenses of that. What we tax is the money that business owners chose NOT to reinvest, that is the money they took OUT of the business as personal “income.”

    If they were really going to use that to “create jobs” they would have done it before they paid any taxes on it, so they could get the full punch of the amount.

  16. Tony C.,

    I’m paying close attention to this thread and have already admitted a profound ignorance so please bear with me as I ask this next question:

    It seems to me that the repeal of the Glass-Steagall Act in 1999 put us in the toilet. Am I being short sighted or, even worse, falling into the trap of partisanship in that view?

  17. @Blouise: No, you are not being short-sighted. The Glass-Steagal act was passed in the first place because regulators saw what had happened before it (in the crash of 29) and that it would happen again without the act; and they were correct: It happened again after the repeal.

    What happened then, and again after 1999, is that banks (or savings and loans, under Reagan) have a one-sided incentive to speculate with their customers deposits. If they can win they get huge returns, and since their customers are typically entitled to just a tiny percentage of return, those huge returns end up being distributed as bonuses and salaries to the speculators. If they ultimately lose in speculation, they are not personally liable to their customers. Any salaries or bonuses they have already received are untouchable, and in todays environment they rely on insurance to make their customers whole (in 1929 the customers were just screwed). So, in both 1929 and now their personal risk is not much, and their personal reward can be measured in millions.

    Glass Steagal prevented banks from wild market speculation like this, it restricted the types of investment they could engage in.

    I wouldn’t call it a partisan thing to be in favor of Glass Steagal: The repeal was pushed by Republicans but Bill Clinton signed the repeal and he could have vetoed it without any significant political fallout. I believe Clinton signed it because his wealthy friends, contributors and cabinet members all told him it should be repealed.

    I wouldn’t say it was the Glass Steagal act alone, however. There were other big factors, such as the effective repeal of all Insurance Law in allowing the trading of Credit Default Swaps. A CDS is the equivalent of an insurance policy, but not subject to the normal laws governing insurance. So their invention created a wild west of insurance policies that were inter-linked in crazy ways, for example by letting Goldman Sachs legally buy the equivalent of a big life insurance policy on Lehman Brothers and then legally engineer the destruction of Lehman Brothers and collect on the policy.

    There was also the invention (or at least wild proliferation) of mortgage bundling, which created a classic conflict-of-interest situation for mortgage writers; if they were able to just sell mortgages it no longer mattered how good a job they did in vetting the loan. In fact it reversed the normal adversarial role of lender and borrower, it was in the bank’s best interest to approve every applicant as quickly as possible with zero money down, a situation that punishes competence and encourages fraud because the risk of loss is not borne by the banks but the chance of gain is all theirs. Hence the home real estate bubble, and the current commercial real estate crisis.

  18. Blouise, I am glad that you confirmed that there was no math required!:)
    I agree with Tony C. that the high rate of taxes can be a good thing for the economy.
    MIke S.,
    Good catch on the “achievers” label.

  19. “Mike S., You think that people like Paris Hilton didn’t have to work hard to achieve their wealth?????”

    Paris achieved fame the way many working in red light districts achieve wealth, on her back.

    “More broadly speaking, by lucking into it, being in the right place at the right time, with the resources to take a risk.”

    So much of luck is discounted in the story of financial success. Had Elisha Gray reached the patent office before Alexander Graham Bell, it would have been “Ma Gray” instead of “Ma Bell”.

  20. Tony C and gbk (thankfully re-hydrated and out of the forest😉 )

    I am sincerely grateful for the your time and willingness to help educate someone like myself who should know more about this subject but tends to get lost easily in the buzzwords.

    I admit to being a “calculated” risk taker who operates on, please don’t start shaking your head like that Tony, gut instinct. My last venture into the field of speculation was the mid 90’s when I decided to spend a few bucks on a new offering from a start-up called Amazon. I liked the idea of being able to buy books on-line and figured others would too. Yep, me and Forrest sitting at the bus-stop eating chocolates. Note I said a “few” bucks. (sigh)

  21. @Mike: In the case of Bell, we can add “lucky accident.” My understanding is that he was not trying to invent the telephone (long distance communication) at all, he was working on a hearing aid and inadvertently invented the telephone!

    Many a boon has been found while looking for something else entirely. Heck, penicillin comes to mind.

    There are strange correlations between achievement and luck. For an athlete or movie star or stellar scientist, how much of their success is achievement and how much of it is just winning the genetic lottery for athleticism, striking beauty, or superior mental acuity?

    I think it is hard to pin down. Is there much difference between being born with genetic gifts and being born to wealth?

  22. “Is there much difference between being born with genetic gifts and being born to wealth?” (Tony)

    IMO, yes. Being born to wealth is in many ways a handicap to achievement whereas talent (genetic gifts other than beauty) pushes the drive for achievement.

  23. tony c. thanks for the info. Our tax rates on the wealthy are obscenely low.

    Just rec’d an email from the right wing nuts. I’ve rec’d dozens over the past couple of years, all but one was false. This one is a link to a video on the 2013 budget and purports to show how that eliminating the government still won’t produce a balanced budget due to the amount being spent on entitlements. I’m sure it’s a bunch of hooey put together by those wanting to privatize social security, medicare, medicaid, etc. but consider all those who believe it. The copy lists tend to be 15-20 people in each forward. Yes, they aren’t even smart enough to strip out the emails of all those who received the first, second or whatever forwards. Sorry this is OT but I have this rant in me. I’m not even sure what I’m ranting about. (sigh)

  24. bettykath,

    If one looks at the original post concerning Hollands’s win in France, your rant is right on topic!

  25. @Blouise: I am not shaking my head, gut instinct has a very important place in investment; your subconscious can condense an enormous amount of information into an emotional reaction.

    There are things to worry about, confirmation bias for one, and getting manipulated for another: Con men prey upon gut instinct.

    It is also important in investing to ignore some gut reactions that are generated by our predisposition to see physicality where there is none; for example, if you look at a stock graph and a stock is going up, you have to remember there is no “momentum,” look at any graph of a stock that went bust and, if you cover everything to the right of the highest peak, it was going up like gang-busters right before investors lost it all.

    But I would not discount the importance of gut instinct, many stories are both good and real, and they do not have to be an Amazon or Microsoft to be a good investment.

    I personally tend to treat it as a veto signal; if my gut says no, I don’t go. On the other hand, if my gut likes it, THEN I investigate to make sure I am not being tricked by some sort of bias. So I only look for rational confirmation of good feelings.

  26. ” … if my gut says no, I don’t go. On the other hand, if my gut likes it, THEN I investigate to make sure I am not being tricked by some sort of bias.” (Tony C)

    Wise words.

    I’m not much of a gambler and the truth of the matter was simple where Amazon was concerned … books.

    My philosophy on money is also pretty simple: Enough to be comfortable but not so much as to handicap the next generation. It’s subjective, of course … my view of what constitutes comfort compared to someone else’s.

  27. Tony C.,

    Economics, business, taxes, gut reactions vs investments….

    What do you not cover Tony? My approval and thanks have been expressed before. Only now to repeat them.

    An aside, if rightly calculated, the French are proposing a tax for the one half percent. Heard that figure before.

  28. ” it was going up like gang-busters right before investors lost it all.”

    But the money didn’t vanish. All investors did not lose. It fell b/c some sold his. Those in the know made lots of money – all the money that “vanished” from the high to where it was immediately after.

  29. @bettykath: As a general rule, I ignore anybody complaining about “entitlements.”

    For the vast majority of people receiving SS, Medicare or Medicaid, either that money would have to be provided by family or the recipients would go wanting and die. Neither alternative is worth talking about, really, at least in my mind, I am not capable of that level of cruelty over a relatively affordable amount of money.

    My mother’s social security and Medicare lets her live independently, I (as the richest member of my family) would be paying her bills if those entitlements did not exist. She might be living with us in the guest bedroom (may fate forfend!). I do not begrudge my taxes to those programs, even though I doubt they will ever pay back what I have put into them, I consider it an investment in human dignity and the prevention of despair and misery.

    To be more analytical, the cost of SS, Medicare and Medicaid is about $14,200 per worker in the USA (there are 128M) and the average worker earns about $45,200. So this is 31% of our income. If it were privatized it would be run as a for-profit operation, and that would create more problems than it would solve; specifically the problems that led to the creation of these programs in the first place.

    a) No matter how much you exhort people to save for their retirement, they WON’T DO IT unless they are rich. People are not made for long term plans, it is not in our psychology, our psychology did not evolve in conditions where we lived much past the age of 40.

    b) Private companies go bankrupt, Insurance companies go bankrupt, banks fail, stocks fail, bonds go unpaid, retirement plan investors make stunningly bad investments or get conned, and retirement plans can go south with any of those, and there is nothing that can rationally be done once the money is gone. The market and private companies are fundamentally unreliable.

    c) Privatization is incentivized by profits. When profits are at stake, the private insurance company has a fundamental conflict of interest: The more benefits it pays out, the less profit it makes. A governmental program does not have that problem, because it does not have the goal of earning a profit, its goal is to do as much good as possible within the budget it is given. Also, it can use law to prohibit (or minimize) free riders, and it can ensure there is no surreptitious profit-taking by exorbitant salaries, perks, or benefits.

    It is my firm belief that there are some jobs that have to be done that the vast majority of us do not WANT done for a profit incentive, because a profit incentive creates a fundamental conflict of interest. I do not want an army with a profit incentive, or police force, or firefighters, or insurance companies, or even health care.

    I have no problem with those functions being staffed in a way that lets the market determine the wages of workers, but I do not want the organizations themselves driven by the bottom line. For example, I believe cops should be hired, and the wages should be set so we get all the qualified professionals we need. But what the cops DO, who they ticket and arrest and the laws they enforce, should not be driven by how much money they can make doing it.

  30. All you tax the rich folks, I would ask if you would like to “eat the rich” also, since this does seem to be a feeding frenzy. However, in just the last 4-5 decades the body styles between rich and poor have flip flopped. The rich were always fat going back to the Roman Empire, and the poor, thin. Now, it’s just the opposite so you wouldn’t get much would be lean however. One can’t truly understand history w/o an appreciation of irony.

  31. @nick: The rich always have the body style that money and leisure affords them. That used to be fat instead of starving. Now it is healthier instead of less healthy.

  32. Tony C.
    No, I think the laffer curve probably is correct. The “problem” is that there are no numbers associated with the curve. It probably is true that at some point raising the effective rate would reduce the revenue generated. The curve also suggests that lowering the rate past a certain level will reduce the revenue. The curve, as drawn on a napkin, (LITERALLY – IT WAS DRAWN ON A NAPKIN!) gives no clue where those breaks are.

    So lets look at the results of the tax rates here in the US. Reagan tax cuts – huge DECREASE in revenue. Bush tax increase – increase in revenue. Clinton tax increase – huge increase in revenue. Bush tax cuts – crushingly huge decrease in revenue!

    If these clowns really believe in laffer they would have to agree that our current rates are too low. But they don’t really believe in it – its just BS spread to convince people who failed math, logic and reading comprehension in school

  33. puzzling:

    this happened in England in the 60’s I think, it was called the “Brain Drain”. France will lose all or many of its achievers/movers and shakers.

    I guess France is ramping up socialism in a big way. I wonder how long it is going to take to ruin the wine industry? Which will be hurt with the tax on property. I wonder how many jobs that will cost.

    When you start eating the seed corn, no good can come of it.

  34. An excellent and enlightening thread, thanks for all of the info.

    TonyC: “@bettykath: As a general rule, I ignore anybody complaining about “entitlements.”

    Right. They will probably eventually rue their shortsightedness, or take the ‘entitlement’ when they can.

  35. @Frankly: The issue isn’t whether it is “correct,” the issue is about whether the Laffer curve says anything meaningful.

    I assert it does not: It should never be the objective of the government to maximize tax revenue! It is not a business, the focus is not some bottom line profit.

    If it were, then communism is the answer, just confiscate everything.

    The Laffer curve, in different form, is used to optimize pricing in business; there is a point of maximum profit margin. If you raise your price your profit margin per unit will increase, but your total units sold will typically decrease, so the question is what is the price that maximize profit? It looks like an upside down parabola that intersects the X-axis at the price of zero profit margin on the left, and the price of zero sales on the right, and the ideal price is at the peak in-between those two values.

    My point was that maximizing profits is not necessarily the point of taxation, high taxation can be used as an incentive for businesses to reinvest their excess revenue instead of taking it as profit.

    Finally, look above at Mespo’s post; we already proved between 1952 and 1963, with 91% income tax rates, that the rich did not stop their earning at all. So the Laffer curve as drawn is completely misleading, even when people could only keep less than 10% of their earnings they continued to increase their earnings (in truth, they couldn’t help themselves, because contrary to the mythology, the rich do not choose to earn, they are owners of profit-generating machines they cannot really turn up or down at will; and if the rich take the year off their machines will keep on chugging along).

    The Laffer curve is misleading because it suggest the peak is somewhere in the middle; but it is a bad guess and pseudo-science. It is one guy’s doodling bad guess that has been seized upon as if it were a proven economic theorem. It is junk science contradicted by actual fact.

  36. Let’s hope for France’s sake she doesn’t go after businesses as harshly. That would be catastrophic. And, let’s hope this isn’t just the beginning of the confiscation.

    I know many here have good reasons to believe the ultra rich should pay more but consider this. I have a close relative of mine actually left the work force because her husband and she have the highest marginal tax rate possible here. She looked at the total amount of wages she could earn, subtracted her payroll taxes and the likes, added commute costs, added clothing, travel, education expenses and the other sundry costs and what was left was not worth the headache to work a demanding job. Easier jobs paid less but the tax rate was the same and it was even less an incentive financially. So she takes care of herself and her family at home.

    So, no taxes are earned from her wages.

    I wonder if it will happen that some of these French Gentry will move not only their selves, but their company with them. Not good for employment I would say. I personally don’t need a million euros a year to be at peace with the world but some might, and I suppose many vote with their sneakers.

  37. I’ve been a bit out of touch this week and late to this thread, but so far I’ll have to go with a “what Tony said”. Government is not a business and they have a name for trying to run one like a business: corporatist fascism. The Laffer curve has nothing of utility to to add to the evaluation of and implementation of good governance.

  38. wow…the level of anger and envy on this thread is palpable. It’s what I always find amusing with “progressives”. The wealthy become “those people”. Without a name and face those people become expendable.

    This one is my favorite:
    “Losing 30,000 rich people would not be so bad. If the 75% tax would not have made up much of the budget, getting rid of them won’t either. Force them to give up their businesses, too. From a business sociology point of view, that opens up niches for others to occupy, hopefully many others splitting that now-available pie, and that spreads the wealth.”

    Round ’em up, take their property, redistribute. From each…To each…

    Progressives my ass…Lenin (and Stalin) would be proud comrades.

  39. Bron,

    Warning snart. Watching your apparent brain function based on what you write is truly amazing. Do you have a bowl of analogies wrapped in balls and pick them at random.


    Although less randomized, your posts are amazingly, coherently conservative. Are you reading from their bible?

    Two snarts a day will keep the idiots at bay.

    I said that.

    Publishing and claiming a new IMHO-type of acronym:

    JPVT Just Plain Vanilla Thanks
    An expression for prefering sometbing without all the bells and whistles.

    Blouise gets first use rights.

  40. “It’s what I always find amusing with “progressives”. The wealthy become “those people”. Without a name and face those people become expendable.”

    What I always find amusing by those whose nose is up the butts of the rich is that is how expendable and anonymous anyone without money or fame is to them.

  41. It strikes me that the proposal is not economic policy so much as social theater. Let’s see how it plays out.

  42. Can’t agree. Show me when the one percent will be threatened with a 75 percent tax in the USA.
    And they call themselves socialist in France. The horror…..! OMG!!
    Never in America.
    The banks own America. The people will strike in France. When did America have a national strike for political reasons? Ever? Never!

  43. @”Me”: I said losing them wouldn’t be bad; but it should be obvious, in the context said, I meant if they left voluntarily.

    It is amazing to me how stubbornly people in the 99.95% cling to their hopes of being in the 0.05% (30K out of 65M) despite decades upon decades of never being anywhere remotely close, not even to the 5%. How much proof do they need that they aren’t going to get lucky?

    if the 0.05% want to leave because we tax them too much, and they do not want to reinvest their earnings to avoid that tax with perfect legality and to great acclaim as REAL job creators (instead of the sterile investments they make that create zero jobs), then let them go. They aren’t creating jobs, they aren’t innovating, they aren’t doing anything to help anybody except feathering their own nest and ruining the humanity of their children by teaching them selfishness and money grubbing.

    Phuck ’em. We will do fine without them. In the USA, that would be about 150,000 people. Let ’em go, and lock the door behind them, and do all we can to prevent them from financially benefiting from American society. Believe me, we will do fine without them, and there are ten times as many people that would be happy to occupy their niche AND pay the taxes.

    Anytime somebody threatens to quit, you should ask them to do so immediately. There is always somebody else willing to take their place, earn their wages, and comply with your demands.

    It is the reason the rich will never REALLY go “Galt,” because they KNOW they aren’t “earning” their income, they KNOW there are plenty of others that can do what they do, they KNOW that if they gave up their high-paying economic niche, somebody else (or a hundred somebodies) would jump in to compete for their throne and they would NEVER get it back.

    Let them piss, moan and whine, phuck ’em, and if they want to take their ball and go home, let ’em, just make sure they do not sneak back in the side door.

  44. Here’s another way to “balance the budget” [sarcasm alert]

    Farmers lose tens of thousands because it’s cheaper than litigating.

    Federal government now ruthlessly stealing thousands of dollars from small farmers’ bank accounts via ‘Bank Secrecy Act’

    Tuesday, August 07, 2012 by: Jonathan Benson, staff writer

    If you run a family farm or other small business in which you regularly make large cash deposits at the bank, you could be in violation of a little-known federal law called the Bank Secrecy Act. Making regular cash deposits of any amount, in fact, could land you in the crosshairs of government tyrants who, according to CBN News, have already seized tens of thousands of dollars from family farmers whose only “crime” was depositing their hard-earned cash in their bank accounts.

    When it was first passed by the U.S. Congress back in 1970, the Bank Secrecy Act was intended to combat money laundering and other criminal activity by identifying so-called suspicious depositing activity. This law requires financial institutions to keep rigorous documentation of all individual cash deposits exceeding $10,000, which is considered to be suspicious, and submit this information to federal authorities.

    Many criminals; however, allegedly began trying to evade this law by spreading out their individual cash deposits to numerous bank accounts in order to keep them below $10,000, which prompted the federal government to amend the law to prohibit individuals from so-called “structuring” their deposits. Anyone who deposits even moderately-sizable sums of cash, in other words, becomes a potential target under this unreasonably vague and all-inclusive law.

    This is where the Sowers and Taylor families, both of Maryland, come into the picture. According to CBN News, both families operate small farms in Maryland, and both regularly make cash deposits at the bank. Both families were also recently targeted by the Feds for simply following the advice of bank tellers who advised them to avoid laborious paperwork by spreading out their individual cash deposits in order to keep them below the $10,000 threshold.

    In the Sowers’ case, business at their independent dairy farm, South Mountain Creamery, has been doing so well in recent years that cash flow began to creep up into the “suspicious” territory. Randy Sowers, owner of South Mountain Creamery, decided to take the advice of his local bank and spread out his deposits in order to keep them below $10,000. As far as Sowers was concerned, there was nothing illegal or wrong about cooperating with his bank’s counsel.

    But in February of this year, federal officials targeted Sowers and his farm, and in the process seized roughly $70,000 in financial assets. In the end, Sowers decided to simply settle the case with the government rather than contest it, and like a pack of ruthless pirates, the government agents that targeted Sowers decided to keep $30,000 of his money for absolutely no reason.

    An almost identical situation occurred on the other side of Maryland to the Taylor family, which had $90,000 of its hard-earned cash seized by government officials. Like the Sowers, the Taylors spread out their deposits in accordance with their bank’s advice, and became a target for potential criminal activity. Even though the Taylors committed no crime, federal thieves ended up keeping about $45,000 of the Taylor’s earnings that had been seized.

    “We found out since that there’s a lot of other people this has happened to, but they all just kind of crawled into a hole and didn’t say anything,” Sowers is quoted as saying to CBN News about this massive government theft racket. “And then the government can go ahead and get away with it because nobody says anything.”

    Most ordinary Americans, including farmers, do not have the financial resources to fight government tyranny, so they simply accept it
    Sowers says he tried to fight back against the ridiculous charges levied against him, as his cash deposits were clearly not in violation of a law that is intended to target actual criminals like money launderers and drug dealers. But because of the enormous expense involved in fighting back, Sowers decided to simply settle rather than seek justice. And many others like him, including the Taylors, have reportedly taken a similar route as litigious dealings can be unbearably costly and time-consuming.

    As far as the Bank Secrecy Act is concerned, the federal government is now openly abusing this law to tyrannize honest, hard-working Americans. In mob fashion, these federal kingpins are taking advantage of every possible opportunity to shake down farmers, small business owners, and others who make cash deposits, accusing them of violating a skewed law that technically every person could be conceived as violating on a regular basis.

    “It’s so broad now that they can criminalize anyone,” said Liz Reitzig, co-founder of the Farm Food Freedom Coalition (FFFC) and visionary behind the Raw Milk Freedom Riders campaign “(These farmers) are providing economic prosperity to their rural communities. They’re creating jobs. They are producing something for the American economy. And they’re the ones who are targeted.”

    Be sure to read the full CBN News report on the Sowers and the Taylors here:

  45. Tony C- “Anytime somebody threatens to quit, you should ask them to do so immediately. There is always somebody else willing to take their place, earn their wages, and comply with your demands.”

    Tony, Tony, Tony. All about complying with the demands. You are, in essence, a thief. You’ve made well worded arguments, and some interesting points regarding taxation rates vs. income streams, but… you are ignoring some very important and relevant concepts, and in the end, you show your motivation. You want things your way, and damn all who resist. Force compliance. Comrade Tony, I’ll die with my gun in hand well before I comply with the type of demand involving you stealing money from me. (Assuming I was the super wealthy, anyway.) Basically, you are arguing that the wealthy aren’t entitled to their money because they lucked into it. And? So you’re advocating robbing someone who just one the lottery? (We’ll just call it taxes.) You are ignoring the very basic concepts of individual liberty.The first is one you allude to, but don’t follow through with. Spreading the wealth. You make a broad assumption in moral values that spreading the wealth is a desirable outcome. I disagree. No one deserves so much as a penny of the wealth I have in my possession (a laughably small amount, to be sure. Guessing here, but I’d say your income is easily five times mine. I’m only technically above the federal poverty line atm, thanks to some opportune investments in the oncology department that have paid off well in terms other than fiscal). So I’ll match your claim of “knowing business” with my claim of firsthand knowledge of what poverty and suffering really is. You know, those handy fallacies of appealing to expertise and anecdotal evidence.
    Given my current income, and the fact that I’ve been in the low six figure bracket at one point, and the fact that I grew up in a “one percenter” household, and the fact that I’ve been homeless, and the fact that after I turned 18, my parents have not given me even a single penny, I’d like to point out that I don’t care about your moral preferences. That’s your baggage. Don’t assume I do or should have the same morals you do. I don’t want money I haven’t earned, I don’t want a social safety net that someone else has to work and pay for, and at this point I would rather die than take government assistance unless there is absolutley no alternative form of legitimate income. It comes with too many strings on liberty for that. I’m all for charity. I donate regularly when I have the ability to, but charity is not something that someone demands of me. The very fundamental concepts of liberty and freedom equates with greed. Greed was the foundation this country was built on, and the foundation that this country has thrived on. The equivalance of greed with moral wrong is wrong, all the way through. I’m going to make my next argument fromt the perspective of my parents.

    Father- Born in Hawaii to dirt poor US Navy deck ape, who liked his booze and breaking random bones of his children. He then worked his buttocks off all the way through school. Graduated in San. Francisco top of his class in High School. Graduated top of his class at Texas Tech. No student loans, partial academic scholarships throughout. Finished college and married my mother in the same year. My mother went on to four more years school, then eight more years of residency. Their first honeymoon was to split a hotdog at Wienershnitzel. He got his first job at a cement factory as a double entry book keeping accountant. That company shut down as a result of a labor strike. He went from there to work as an accountant at one of the Big 6 accounting firms. From there he went to work as a controller at Six Flags Corporation. From there he went to work as CFO of a small startup that went bankrupt during the Dot Com bubble burst. He then went to work as a VP for Chase. From there he took over as CFO of a medium sized firm. He then started his own company. He sold that company for a few million. He started another company that is worth even more now. So… how exactly did luck play a factor in any of that? Oh, and my mother is a heart surgeon, who by herself easily fits into the “1%”. Her abilities are luck? There was no work involved? She became weatlhy on the sweat of others? An obvious response is, “They are outliers”. Really? Show me the data, show me the evidence to prove that. Because in the end, that 75% margin, once accepted for one bracket, can be moved to another as that bracket collapses and the wealth is “distributed”. So why not tax yourself at that bracket, Tony? Hmm. I like that idea. And if you decide to leave this country at that bracket, we’ll ban you from entering or participating in the US. And when that bracket is removed, we’ll tax the next bracket down at those levels. Sounds like a plan to me…

    The problem isn’t the top .05%. We can tax 100% of income above one million, and that won’t solve our economic problems. Would make them a bit worse I’m thinking, as the government has never, ever, even once, been an efficient organ of economic activity, and never should. That’s not its function. The function of the Government is, as you said, to perform functions that society thinks shouldn’t be burdened by a profit motivation. That’s all well and good. How that relates to taxing the top whatever percent is beyond me. You have plenty of rhetoric and hate for the super wealthy, but to me, YOU are the super wealthy. Using your own morals, I would therefore hate you, and my parents, and most doctors, and most lawyers, and top college professors, all who make obsene amounts of money. I would hate the local tax accountant, or the gentleman who lives a few houses down from me who makes around 500k a year by buying foreclosed homes and then renting them out. It was just luck, good genetics, and right place right time that got you those opportunities. I want your money, so go ahead and give it to me. That’s your philosophy. Own up to it and send me a check. I could use it, I just dumped my life savings into my cancer treatments.

    Don’t give me your morals of redistributing wealth. I won’t want them. I don’t even want your money (unless you happen to need the services of a fairly decent engineer). What I want is to be allowed to bear the fruits of my own labor. If I start up a company, I don’t want some greedy bottom sucking toads, or greedy top sucking government pukes, taking what I suffered and sacrified for. If I don’t work hard, if I don’t sacrifice, and I don’t get ahead, I have no more right to the money of those who do than you do. And for those that inherited it? Good on them. That’s one of the motivators for people to thrive at such a level, to pass onto their children (theirs, not yours, not everyone else’s, theirs) a better lifestyle, a life of less sacrifice. For those that earned it based on their looks (actors, etc.) good for them. Really not their fault, that’s a cultural fault. If people are willing to pay to watch super good looking people, then suckers be them. In other words, I don’t want you in America anymore, Tony, Please move to France. I don’t want you breathing the air that I have fought for. I don’t want you enjoying the freedom to work for and startup and own business that I have fought for. I don’t want you walking the ground that was founded on the principle that working your tail off and getting paid, and then investing that, and gambling with that, and making more money, is a good thing. In other words

    We don’t need you. At all. Fudge off.

  46. @CLH: Basically, you are arguing that the wealthy aren’t entitled to their money because they lucked into it.

    Far from it, I am arguing that the wealthy do not get to ignore the law we democratically passed, just because they are wealthy. And YOU make the mistake of believing it is “their” money, when it is not: The wealthy use our public assets, courts, police, and social safety net to make that money. The reason my mother can drive to the store and buy ice cream is the social security payments she receives.

    It is not “their” money, they are working in our mall, and they have to pay the rent we demand, and just as most malls charge their tenants a percentage of sales for access to the venue, on top of CMA (common area maintenance, including utilities and security), we charge businesses a percentage of their profits on top of our “CMA.”

    In the mall, those charges are mandatory and non-negotiable; the mall is more than just a landlord, it is your contractual partner in your business and entitled to a share of profits. If you do not agree to partner with the mall, you do not get to set up shop in their building. Further, the mall is in many ways the senior partner, they dictate the terms of your lease and those terms include canceling your lease and throwing you out if you refuse to abide by their rules.

    A businessman that is the General Manager of a business with a non-working partner never “owned” the profits of his business, the share of profits his partners take from the business are not coming out of his pocket, it is something the non-working partner (like the mall) is entitled to take, and trying to keep those profits or hiding them from the non-working partner is theft, and the non-working partner should treat it as such and recover the property he is entitled to with lawsuits and / or police force if that becomes necessary.

    The country is allegorically the same; the “building” is our country, and the common area is our infrastructure (including military, police, courts, prisons, social security, medicare, medicaid), and if you want to operate in this mall then you will pay your share of the CMA, your rent (in property taxes) and the mall is your financial partner: The income taxes you pay are the share of income the mall demands. It was never your money to begin with, the fact that you collected it at the register does not make it yours, at the end of the month you have to pay for your supplies, pay your rent, pay your employees, and with what is left over, pay your partners: One of them is the “mall,” which is the USA, and we effect that payment with taxation. But the money was never yours, we are entitled to it.

    Get that straight. This country provides a venue that has proven to be excellent for business, but we do not provide it for free, and we do not set a fixed lease rate, we partner with people and businesses that want to use our infrastructure and live by our rules, and if any of them do not like it they are free to stop earning or move to some other mall, although I think they should be forced to surrender all claim to our protection and all access to our infrastructure if they do that.

  47. @CLH: So I’ll match your claim of “knowing business” with my claim of firsthand knowledge of what poverty and suffering really is.

    Welcome to the club. As I have mentioned before on this forum; I worked my way through high school; the last two years I was on my own, paid rent for a room, I was responsible for my own food and clothing, and worked full time as a dishwasher, janitor, and manual laborer after school. (My parents left the state, and I chose to remain behind.) Growing up, two of my siblings were murdered in separate incidents; another sister was maimed for life in a “practical joke” by neighborhood kids. So, our experiences may be different, but I think I know something about poverty and suffering too.

    My parents were married when my father was 15 and my mother was 16 and pregnant, both went to work immediately and neither graduated high school (although both got GEDs in their thirties), and we were firmly well below average in income for my entire childhood.

    The very fundamental concepts of liberty and freedom equates with greed.

    That is completely false, it equates money with freedom and that does not even make sense.

    The freedom afforded by the founders of this country had nothing to do with money; read the Constitution. THEY believed (although to some extent their beliefs have been eroded by later generations) that you have the right to speak your mind, you have the right to practice your religion, you have the right to be charged and tried before being imprisoned, you have the right to bear arms, you are protected from unreasonable search and seizure of property.

    None of the Bill of Rights or Constitution in general is about “greed,” not a line endorses “greed,” what the founding fathers considered liberty was self-governance. Not freedom from law or freedom from taxation, self-governance, and that has nothing to do with greed.

  48. @CLH: So why not tax yourself at that bracket, Tony?

    You do not seem to comprehend any principle of relative harm; CLH. A 10% tax on a person earning minimum wage does them FAR more practical harm than a 10% tax on a person earning a million dollars a year.

    One person is forced to a smaller budget for housing, schooling, nutritious food, health care, and all sorts of things. The rich person really gives up nothing except a number in bank account, and perhaps is forced to choose between a more prestigious house or car and a less prestigious house or car, but probably not even that.

    I am not in the top 0.05%, but I certainly should be charged more in taxes than those earning half what I earn, which is common. I believe in a graduated, progressive income tax because I believe in sharing the economic pain of supporting the government equally, and that cannot be done with a flat tax, or a percentage tax. Heck, taxation on the poorest causes so much economic pain we are better off not taxing them at all.

    Personally I do not think 50% of the people should pay any income taxes at all, I think the burden of support should go to the most fortunate, and that is the top 50% (where I reside). That might increase my taxes, but I would advocate for that and take the hit as long as that was the strongly enforced rule for everybody.

  49. Tony C.- I said the country was founded on greed, not that the constitution was written for it exclusively. And greed and freedom do run hand in hand. Freedom is another word for power of the individual. Power is represented by the choices a person can make. Now perhaps we’re working on differing definitions or perceptions of what greed is. I view greed as wanting to acquire as much as possible, and keeping what you acquire, and passing on what you acquire to your family/tribal unit. I view greed as the desire to build your name, your power base, your choices, into history. More money means more power, more power means more choices, more choices means more freedom. The principles of the constitution were written with the primary motivation of property and personal protection and self governance. It was founded by people wanting to take power for themselves, to have freedom for themselves, and to have prosperity for themselves, so that they could have more choices in their lives.

    “The rich person really gives up nothing except a number in bank account, and perhaps is forced to choose between a more prestigious house or car and a less prestigious house or car, but probably not even that.”

    Wrong. The rich person gives up money that is his. He gives up options that are his. He gives up power that is his. What right exists to take power and choice from one person to give it to another, simply because of envy, when that person has done nothing wrong to deserve having his choices taken away and limited?

    Now on the other hand, I never said there should be no taxes. I never said that there shouldn’t be progressive taxes. There is a difference between taxing at a bracket to share the practical sacrifice between economic actors, and taxing at a bracket as a punitive, political measure that’s only used to stir up hatred. That is what France is doing. That’s what Hitler did. That’s what Lenin did. That’s what many, many would be dictators and charlatans have done. They are punishing people for having money simply to create an Us v. Them. And they will always pick on those with massive numerical inferiority in a democratic form of government.

    By breaking up these concentrations of wealth, and allowing “ten people to move in” who are willing to take the same sacrifice burden for less reward, you decrease the value of a person’s time and labor and skill, making their efforts less meaningful.. In essence, you make people poorer without any real benefit. And the relative impact on quality of life between the different economic strata isn’t the sole point, It’s the moral and ethical issue of theft. And simply claiming that they would stop at one bracket does not convince me that would be the case. No government ever freely relinquishes power, because they are comprised of people, and no person truly wishes to relinquish their own choices and freedoms. Bit of the slippery slope argument there, but it’s one I stand by.

    As long as there are global markets and the freedom to move, people will move in accordance with their greed and self interest. That’s human nature. To whine about it is simply wasted air that has been passed from one person and one party to the next. Europe’s problems aren’t the wealthy not paying enough taxes. They pay more taxes in Europe than virtually anywhere else. Their problems are the result of rampant overspending on social programs, horrendous labor contracts that make it very difficult for companies to actually extract value from employees, and a refusal to pay the piper his due. In other words, it’s a moral issue, a basic lack of a fundamental ethic. People want resources without the necessary sacrifices to obtain those resources that otherwise might be required.

    Now, there are cases where people use fraud and theft to further their interests at the expense of the rights of others, quite a few of them. I’m not a pure libertarian in regards to government regulation of industry, I believe that heavy guards should be in place to guard against predatory, deceitful, and malicious manipulation of markets by corporations. But that is where government intervention should end. It should not be involved in assigning who succeeds, and who fails, provided that fraud and deceit and coercion are not involved. And yes, I agree that those things exists rampantly, disastrously, in most Western Cultures. But taxation isn’t the solution. Work, the decreasing of entropy, the extraction and production of resources, is.

    There is a cost associated with all things. There are finite resources. The great debate, as framed in all of politics and economics, is how this scarcity is managed. Do all people get equal access to all resources? At what point do you differentiate the economic value of a single unit? At what point do you decide what the quality of life should be as a minimum for all citizens? And at what point to set aside ideology for practicality?

    The practicality of your arguments are their strongest point, IMO. I’m not even sure I’m against raising the overall effective tax rate on the brackets. I’m a firm believer in paying for debts, and living within your means. We as a nation have put into place certain costs, and we have to bear the responsibility of those costs. But I’m also a firm believer in using the absolute minimum resources necessary to support legitimate government functions, those purposes that have no basis in profit.

    I believe that a safety net should be a very short term thing. I believe that those who work, in good faith, should be paid a minimum wage that keeps people above the “basket of good” model of the poverty line (Around 11.50 in the US when residing in an area with average cost of living). And if they make poor choices, people should face the full brunt of those choices, except that brunt that others voluntarily take upon themselves. (Voluntarily being the key word there.)

    Socialism has failed, and failed horribly. The problem with socialism is, as I’ve said many times before, is that it requires people to act morally and ethically in managing the resources of others when they have no vested stake in managing those resources ethically. That can not, will not, and has not ever been sustained in the entire history of mankind. A few outliers are the genuine saints of humanity, those who governed with the sole purpose of bettering their people, of serving their people. Do you think that any single politician in Washington deserves that kind of trust? At all? Anyone? One single, decent person who can be trusted to take that kind of power into their possession and not be corrupted by it.

    No. Such. Person. Exists. Nor, until human psychology, and perhaps biology, evolve, will any such system last the test of time.

    They are literally using the mass vote to take what is the property of the wealthy, owned rightfully and legally, to give to others. That’s my definition of theft. It’s not that they are or aren’t paying their fair share. (Note: Fair means equal, not unequal, a pure “fair” share would be a flat tax on existence, equally sharing the cost of government across each individual citizen, regardless of income. What’s morally and practically feasible, however, is not fair, it is the progressive tax.) The problem is nowhere near so simple as that. Complexity of regulation is a huge problem, and simply simplifying and reducing regulatory hurdles (and there are plenty even the most progressive, “big government” type would agree could be cut with no damage to the safety and rights of others, be of any damage to the environment) would help considerably. Dropping the tax rate, and creating a strict border taxation policy, and then eliminating the vast bulk of the myriad of tax exemptions would also help. As it stands, we are one of only a handful of countries that tax both money earned outside the US, which is also taxed by the country in which it is earned.

    I just don’t think that simply being successful should be a basis to be hated, to be called greedy and evil. I don’t think being successful should be the basis for people taking money from you. Governance of the people by the people is not the sole aim of the Constitution. It’s multifaceted. It’s also set up to protect the individuals fundamental human rights from mass rule. In a lot of ways, it was set up to protect the wealthy against the masses against this kind of thing. Note that there was this brief little period where there were things like, oh, slavery, Jim Crow, male exclusive suffrage….

    Long posts short, it is one thing to tax based on what one believes will be effective in meeting the legitimate purposes of the government. It’s another to launch class warfare, to use rhetoric and greed (of the masses) as tools to manipulate power to your control. And that’s all socialism ever mounts to. It has never come to anything else. Power will always go to those who seek it, who are more ruthless than their competitors in that pursuit, and as far as power seekers go, there are far worse types of people than the “one per-centers” of this world.

  50. @CLH: I view greed as wanting to acquire as much as possible,

    What is “possible” is far greater when morality is ignored, when the pain of other people is ignored, when you purposely disregard any effects of your actions if you cannot be forced by other people to pay for those effects. Thus putting greed above all else makes you a sociopathic criminal, by definition: Nothing else matters, under your sick philosophy if you can get away with it you should, no matter who it hurts or kills as long as it benefits you.

    Wrong. The rich person gives up money that is his.

    No, you are wrong, because that money does not BELONG to him, for every dollar of revenue he gets parts of that dollar go to expenses, and a part belongs to his partner in business, America (or France), which is providing the environment in which he thrives. If you do not believe that, take that rich person and drop him in Somalia, and see how long he “thrives” there, see how much MORE he will have to pay for protection against predation there, let us see how much it costs him to build his own roads, his own schools and universities for his kids, his own fire protection and emergency response organizations, and their training and equipment and family expenses.

    Not every dime that comes in is his to keep, he has bills to pay, and his taxes are the bill for the infrastructure he is leveraging.

    They are punishing people for having money simply to create an Us v. Them.

    You can see it as a punishment, it is not. It is the partners in the business (the country and its infrastructure) getting its fair share of the wealth created by their partnership with that rich person. Saying it is “punishment” is you making an arbitrary decision that the rich man was more important to the creation of the wealth than the country was; that his 25% share of the profit is too little for his contribution to the wealth.

    Says you; I disagree. How many billionaire businessmen (not dictators or kings) are there in third world countries? None. Why is that? Because those countries just do not have the infrastructure to support earning a billion dollars. They do not have the right kinds of workers, utilities, roads, communications, trade, courts, police or other protections. They just do not earn enough to support a retail society. How many billionaires are there in the aboriginal tribes of Africa, South America, or the Australian outback? None, because those societies also do not have the infrastructure to support earning a billion dollars.

    People do not become 8 and 9 figure wealthy unless they live in first world countries with first world infrastructure, which means the majority of their wealth is predicated upon the environment in which they operate, and that environment is what a first world country (and its owners, their society) brings to the table as a partner in their business; and that is why the country, as the partner bringing the most to the table, deserves the majority of profits. There are no businessman billionaires without the technologically and socially advanced countries, period. Without us, the only billionaires are kings, emperors, and dictators, those people that have acquired in some way the wealth of a nation.

    (Note: Fair means equal, not unequal, a pure “fair” share would be a flat tax on existence…)

    That is only true if the quantity you want to measure is money, and I specifically rejected that as a measure of fairness, and I will again. It is not “fair” in any useful sense to take an equal percentage of income from those living on starvation wages and those living on a million dollar annual income. No matter what the percentage is, the poor will suffer disproportionately. The fact is that a $100 to a billionaire means nothing, and a $100 to a part-time minimum wage worker means a great deal. The fact is that a 10% income tax a billionaire will not affect his life in any way whatsoever, and a 10% income tax on a part-time minimum wage worker will affect his life in many ways. The billionaire will not be forced to go without food, or shelter, or transportation, or health care, he can afford every single necessity of life and live in average comfort on 5% of his income, just as the average person does. For the part-time minimum wage worker that is simply not true.

    What is “fair” is an equal distribution of the relative hardship of supporting the government. A flat fee or flat tax or national sales tax do not distribute the relative hardship equally, they cannot, because ANY reduction in buying power is going to be a great hardship to the desperately poor.

    What might work is a flat tax on all wages in excess of the median wage, it would tax only those doing better in society. That might not be a terrible plan, but it isn’t a flat tax on all earnings.

    …to use rhetoric and greed (of the masses) as tools to manipulate power to your control.

    That’s funny, you hypocrite, you were just advocating greed as the ultimate good, until it is used in a way you dislike, then it is the ultimate bad. You should try to get your story straight.

    It just is not true that socialism has never come to anything else; the happiest countries in the world are socialist countries, they are the best educated, healthiest, and most entrepreneurial of countries as well. Look at Norway, for one stellar example. FWIW, Norway also has billionaires and millionaires that began in the middle class and worked their way up; and the vast majority of them are not in energy or oil. Socialism and Capitalism work just fine together; Norway is an example of that. I suspect you do not understand what “socialism” even is.

  51. @CLH: Complexity of regulation is a huge problem,

    It may be, but that complexity is directly traceable to greed, because virtually every regulation on the books is there because somebody was doing something the rest of us thought was reprehensible, fraudulent, misleading, or unacceptable. Why do we have to regulate food production? Because without those regulations meat packers exposed us to toxins, animal waste mixed into ground meat, diseased animals, and all sorts of unclean bacterial and viral infections. Why did they do that, and why didn’t the free market correct it? They did it because carelessness is very profitable, nobody could trace their disease back to any specific negligence, and no private citizen or organization had any power to compel the industry to do otherwise.

    Why did we have to outlaw child labor? Same reasons, basically; it was profitable and no private solution could be found to stop the practice.

    Why did we have to outlaw unsafe workplaces? Same reason, unsafe workplaces are far more profitable than safe ones.

    Why did we have to legislate the labeling of food with nutritive value? Because it is good for the public to know, but the vast majority of food producers were not willing to do it because they correctly assumed it would only cost them sales.

    Why do we have to set standards for accounting and make it illegal to cook books? Because cooking books and deceiving investors and creditors and suppliers is profitable.

    Greed makes companies do whatever they can legally get away with, and part of what they can get away with, if it isn’t illegal, is subterfuge, and endangering the lives, limbs, physical and financial well being of their employees, customers, investors and the public at large. That is profitable.

    The complexity of regulation is an ugly testament to the sheer ruthless inventiveness of those that put their greed above all else.

  52. “The unnecessary complexity of regulation is an ugly testament to the sheer ruthless inventiveness of those that put their greed above all else.”

    I make this editorial suggestion because 1) although complexity can create error and must be attended to 2) good drafting practice requires that laws – including naturally regulations – be written clearly and without ambiguity but with sufficient complexity to achieve the desired goal, i.e. 3) the regulation must be as simple as possible but sufficiently complex enough to address inherently complex issues and/or goals.

  53. Hmm. So a couple of things I can see. First, you’re right. A given infrastructure is part and parcel of the success of any enterprise. But you are still completely ignoring the individual. What happens to the individual in the by and large? So individual achievement, brilliance, and hard work mean nothing? Boy, am I barking up the wrong tree! I should be marching up to Goldman Sachs and demanding my share. Why should I bother working for a living? Why should I bother trying to learn everything I can in my field? So much effort, so little reward that way! Secondly, there is no way that you can convince me that simply existing in the same country as another entitles you to their wealth. I agree with you that taxing those below a certain threshold actually negatively impacts the economy. I agree that “fair” is actually a share of the actual proportional sacrifice (I wrote that section poorly, and didn’t think it all the way through). But there are limits. And there are very, very large differences in the two forms of greed I was referring to, though. One form of greed- earning everything you can through legal and ethical means. The other- earning everything you can through taking from someone else. My failure was in not differentiating the two.

    And I thought I already said I know that there is a valid need for taxation? You still don’t address the ethics of government. You still don’t point to anyone in Washington who can be trusted with that kind of power. You still don’t point out how, exactly, that socialism works out in the end.

    And Norway is an outlier, and their government will not be sustainable in the long run, became their oil will not last forever. And they have just a slightly smaller population than the US. And they are still running a budget deficit. And their rate of taxation across all spectrum is prohibitive. And they own 30+ percent of the means of production. What happens when the oil runs out? What happens when the aluminum runs out? Then there is the slight matter of the cost of living, which is one of the highest in the world. The tax burden on purchases is also one of the highest in the world. Socialism has worked for some countries in the short run, but as I said, show me where it will last. It won’t. And of all the countries that have tried socialism, you can find one that has worked?

  54. @CLH: So individual achievement, brilliance, and hard work mean nothing?

    I do not know how you draw that conclusion if you agree the country and its infrastructure are partners in enterprise. As a partner, you are entitled to a share. The better you do, the more you make, with no limits. If your individual brilliance lets you bring in a billion a year, you get to keep over $250M of it, every year.

    I should be marching up to Goldman Sachs and demanding my share.

    You do not have a specific share (unless you own stock), however the country should be doing that and demanding our share on our behalf and spending our share on infrastructure and services that will make us all better off.

    Why should I bother working for a living?

    For the same reason anybody works, so you can live a better life than you have by not working. Socialism does not have to be practiced in a way that gives everybody an equal life, it can provide everybody with an equal floor on desperation.

    Socialism does not mean you will live in spacious comfort with 500 channels of cable. It can simply mean that life-support is handled, that you will have calories, shelter, and medical care. In Norway, it also means (wisely) you can have as much education as you can succeed at. want. In the United States, we have socialism of a sort for the elderly with SS and Medicare.

    If that is enough for you, if you are willing to live in 250 square feet (I think that is the minimum in the International Building Code) and live on Taco Bell so you can do nothing at all, so be it. The Socialism will pay for that. Maybe your engineering is just a cover and you are secretly an artist or writer, I don’t know. Maybe you are a perpetual student and want to aim for seven PhDs.

    Fine, I would accept that system, because I know (including from data in Norway, where something much like that is the choice of any citizen) that people do not opt for that. They do want TV and cable, they want cars, and vacations, they want gadgets, they want fashion, they want toys and games, they want movies and big screens, they want to attend sporting events, barbecue, go rafting, visit Paris and Rome, become gourmet chefs (or just gourmets). They do not want to live a basic minimalist life.

    I will accept your distinction of types of greed, read the list above: If you believe “wanting more” is a part of human nature, as I do, then you do not believe many people will opt for the no-work life. The data will back you up on that. Almost nobody in the USA that could support their lives with less than full time work actually does so. Why do actors keep acting after becoming multi-millionaires, why does Buffett keep earning millions in his 80s, why would Bill and Melinda Gates retire to full-time jobs? Why would a lawyer work for more than ten hours a month? Because they all want something more than mere survival, and so do about 97% of people.

    I encourage you to make a distinction between a need and a want, which you seem to confuse. The key is in the consequences of not receiving it. The line can be drawn somewhat at your personal discretion, but in my view I consider what people need as the minimum necessary requirements to be a functioning member of our society, meaning a person with a job, that can get back and forth to work, that is not desperate for food or medical care or education or the basics of life like hygiene or basic clothing or shoes.

    I am not saying they must have a job, I am saying that if they want a job then nothing is practically standing in their way; they can be washed, dressed, educated, healthy, and get back and forth to their job (say via public transportation).

    Why should I bother trying to learn everything I can in my field? So much effort, so little reward that way!

    The reward is hardly different than what you have now. The 75% income tax we are talking about applies to multi-millionaires, not you, and those people received millions in rewards before they ever got to that bracket. Further, I do not think such people are rewarded for effort at all, they are rewarded for circumstantial luck and moments of insight that led them to make a bet. Massive wealth is more like a chemical chain reaction or the physics of an explosion; the energy differentials involved between no reaction at all, a small puff of smoke, and total violent conflagration is actually minuscule. Just like many mathematical proofs, the entire thing hangs on one crucial insight, which may have come in a flash or after a few days or weeks of actual ‘work’ trying to solve it.

    The ultra-wealthy did not really ‘work’ for their money, but quite often fortunes are based in a useful epiphany or invention of something that really works like crazy, and a risk taken to prove that. But once proven it is a self-sustaining reaction, it takes on a life of its own.

    I reject the idea that the rich work for a living. They can have one or more epiphanies the market decides are worth billions, but for those epiphanies to be monetized it takes the infrastructure of a country. McDonald’s cannot drop a restaurant in the middle of the jungle and make money on it.

    Secondly, there is no way that you can convince me that simply existing in the same country as another entitles you to their wealth.

    Once again, you mistake who owns the wealth, and who the partners are. You stubbornly insist on the childish premise that if you have money in your hand it is yours.

    Virtually nobody “simply exists” in a country, they are part of an economy (even those in a coma are consuming resources). Citizens pay taxes for law enforcement, courts, roads and bridges, they support businesses.

    Not everything you ring up on the register is “your profit,” employees and suppliers are extending you credit continuously and collecting periodically. Just because your business and salary expenses are paid does not mean you have paid all the expenses of your business. You weren’t robbed or killed, thanks to police and courts putting robbers and killers into jail, after investigative work and risking their lives and sometimes losing them. You owe for that protective service. You were not invaded and overrun, thanks to the military and soldiers dying to prevent that. You owe for that service. You were not poisoned by your food, there were no heavy metals in your medicine, your car did not explode and kill you, the brakes did not fail on somebody else’s car and kill you, thanks to government oversight. The building you are renting did not collapse on you, or spontaneously burst into flame.

    Your supplies were shipped by the cheapest means possible, and that made heavy use of government roads that reduced your cost of goods by a considerable amount; so much so that your supply-footprint has expanded by orders of magnitude, and the same socialist network of roads has expanded your market area by more than an order of magnitude; compared to the ill-maintained dirt-road that used to exist.

    It isn’t all your property, you do not get to be a free rider on these programs. The ultra-earners owe most of their income to the environment that produces it, they didn’t work any harder than their janitor (and having worked both jobs I think they worked quite a bit less).

    As for Norway, you do not know what you are talking about. Nothing happens when the oil runs out; the Norwegian government does not support itself on oil revenue, by law. Specifically, all oil revenue is deposited in a fund, and the government is only allowed to use profits from that fund, and I believe the rule is they are not allowed to fund more than 10% of their budget with the earnings of that fund; the rest MUST be funded by taxation. Excess earnings are retained in the fund, there are no roll-overs.

    Also, Norway was socialist for over a century before oil was discovered in the North Sea, and funded by taxation. It is not a flash in the pan. They did find something valuable that helped, and they are managing that very responsibly by not spending the capital, so it can provide permanent and long term benefits, they are not eating their seed corn, as you imply.

    Norway works, there is no good reason other than your own bigotry to think it won’t work. You cannot point to any mechanics of their government that are not logically sustainable. Norway employs a mix of socialism and capitalism; a minimalist safety net (but more than we have) that ensures health, safety, shelter, nutrition and education, with the opportunity to earn more if you want more than an ascetic life-style, which the vast majority of their citizens do.

    The reason you will not find a reason for that to fail is that it isn’t much different than any other country. In the USA you expect “socialism” to protect you from murder by punishing murderers, investigating murders and bringing the murderers to justice, and by providing that punishment deterring murders and keeping murder-for-self-gain from becoming rampant. We rely on “socialism” to enforce contracts, deter crime and fraud. “Socialism” gives us the power of the cops and courts when we would otherwise be powerless.

    The Norwegians simply raised the ante; instead of just protecting against crime, they protected against desperation. That has worked for them, as it turns out, there are a very small number of free riders, but the greater opportunity and freedom presented to the vast majority that WANT to work for something better pays off, overall they are higher educated, more entrepreneurial, more willing to take chances with their careers and work, because they aren’t risking their lives to try something new. That greater freedom more than pays for the few free riders they have. Norway is your example, it will work just fine in the long term; it worked before oil, it will work after oil. It is a blend of socialism to cover the basics, and market-based capitalism to cover more than the basics. That is what works.

  55. @Gene: Yeah, I agree, some complexity is necessary. It would be nice to say the law is “no phucking people over,” but of course it requires a lot of language to make sure we are all on the same page as to what that really means.

  56. Tony C, I could have a stand-up act on the “No ph*cking people over” law and its application.

    “I hired this a55hole to do my yardwork but instead of buying good turf he just got some fertilizer and when he finished it didn’t look good and I wouldn’t pay him but then he started to threaten me that he would get the cops to come and make me pay him back for the fertilizer he bought! I TOLD HIM that I’d have him arrested for trespassing. Bum tried to ph*ck me over.”

    “This b*tch came on to me and then wouldn’t put out. I gave it to her in the back of the car and then smacked her a few times to teach her a lesson. I said, ‘no teasing; no ph*cking men over.’ I think she got it; she doesn’t dress up any more and I haven’t seen her at any parties.”

    “This guy was trying to take away my promotion because he wanted it. I fixed his personnel file so he couldn’t ph*ck me over.”


  57. About the idea that there is a “minimal subsistence guarantee” for people who are not able to compete (or who choose to be lazy, whatever) it is so obvious that it works that all arguments to the contrary sound foolish. When my kid was 18 and saw me drop some small change into a pan-handler’s cup he asked me why people who didn’t work SHOULD be supported. (He later went through a period of time when he couldn’t work and I supported him, but this was when he imagined that could never happen to someone like him.) I said, “Well if he committed a serious crime today like killing somebody, they’d take him to jail and while he waited for his trial he would be entitled to a place to sleep, three meals, bathroom facilities, water to drink, and medical care. If he went to trial and got convicted to life in prison without parole, he would have to have all those things for the rest of his life. And that would be for DOING A SERIOUS WRONG. So since that guy has refrained, today, from doing a serious wrong like killing somebody, I figure he’s entitled to at least as much consideration as the nearest murderer, at least today. So I gave him a few coins because our society doesn’t provide those benefits for free to anyone who isn’t charged with a crime.”

    He said, “Damn, I never thought of it like that.”

  58. @Malisha: I think the same, basically, although I would make prison both far safer and far more inhospitable for prisoners, but basically the same. I recently read of a real case where a man held up a store clerk at gunpoint, instructed the clerk to trip the alarm and call the police, all with the express purpose of returning to prison so he could get free life-saving medical care; that is pretty ridiculous.

    I also find it hilariously hypocritical of those that insist it is human nature for people to act in their own greedy self-interest, but if you provide them with basic life support, that will stop immediately. As if everybody is working for nothing but survival, when the obvious truth is that the vast majority of people willingly earn well over just what they need for basic survival. It is just silly.

    In the USA, personal financial failure can mean a loss of shelter, health care, and it can mean sacrificing the future education and well being of your children, and it can put a burden and financial stress on your family in helping you get back on your feet. In countries where that is not true; where complete financial failure does not risk the lives of yourself or others, people are more free and independent, more able to reach their potential, more free to take risks and fail and still bounce back. That freedom and independence creates economic wealth. Most people strive to succeed even with the safety net in place. Without the safety net, fewer strive because they fear the consequences of failure may be more than just disappointment, they may be catastrophic and physically harmful.

    Those that do not strive are at least less likely to commit crimes to support their laziness (a documented effect), and such free riders are easily paid for by the greater economic wealth created by those that do strive to achieve their dreams.

  59. After reading MOST of the comments here….. I would vote TONY C. for President…..

    Tony, you have given the MOST BRILLIANT answers on a forum, that I have EVER seen….

    and just in case OTHERS want to make any STUPID Assumptions….

    I live in Sweden….. and I am in the 1%…..

    and I think Tony is RIGHT ON!!!

    Had those people lived in France, they would not have had the success that they have to even have a Million Euros……

    They could have been born in the Sudan…. or Congo…. These places have NO taxes… and well….. you get where I am going with this….

  60. Thank you, Gurl. I fear my political career would be rather short-lived, as an open atheist I am in one of the least trusted groups of all. Which I think is kind of irrational of people, because if I really was untrustworthy, why would I be honest about being an atheist?

  61. Come to Sweden Tony…. we Atheists are in the 85% ….:-)

    maybe this is why it is a more compassionate country…..

  62. Tony C. 1, August 8, 2012 at 8:15 am

    Dr. Turley:

    I have no problem with a 75% rate. I would structure it differently; and prevent anybody that tries to avoid it by moving from owning anything in France, living in France, or doing business in France of any kind. (I would do the same for anybody that renounces their American citizenship in order to avoid income taxation: Stay out, and we can prevent them from doing business here).
    Good idea. There will be plenty of others to fill the void. The filthy rich pukes are parasites. In England wants to let them be parasites over there, the English can have it. Is that what the Channel Tunnel is for?

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