For months, I have criticized the tax policies of France’s Socialist President Francois Hollande, particularly the confiscatory 75 percent tax rate for the wealthiest French. In addition to being in my view unfair, it is extremely bad economic policy. France’s Constitutional Council now appears to agree — at least on the equitable side. On Saturday, the Council rejected a 75 percent upper income tax rate on annual income above 1 million euros ($1.32 million) as an unfair treatment of different households. Popular figures like French actor Gerard Depardieu have opposed the tax and even left the country. The French experience should get some in the United States to dial down on our own over-heated rhetoric on economic policy. (Yes, I will now vent a bit on economic policy).
The court appears to have taken the second guarantee of Liberté, égalité, fraternité as extending to taxes.
Undeterred, Prime Minister Jean-Marc Ayrault said the government would redraft the upper tax rate proposal to address some of the equitable issues. It is not clear how these changes would suffice to answer the Council if the rate remained at 75 percent.
French officials have said that the loss of the controversial tax would not materially impact their deficit reduction plan. The tax rate was in my view a uniquely bad policy. In the end, it only applied to a few thousand people and could be circumvented, but the tax sent a hostile message to the top earners in the country. England has recently reduced its tax rate after top earners began to flee the country.
This “eat the rich” hostility is unfair and often ignores the substantial contributions of many wealthy family not just to the vast majority of tax revenue but to charitable and philanthropic enterprises. Some cities like New York continue to raise their taxes despite evidence that wealthy citizens are responding to the taxes by leaving the city. The same rhetoric is evident on the corporate tax rate which is too high in the U.S. The Canadians have lowered their tax rate because they are not idiots. With the rate so high in the U.S., Canada is draining our economy of businesses which respond as rational actors to one of the lowest rates in the world (and leave one of the highest). While Obama admitted during the campaign that our rate was too high, his administration has done little to rectify it in past years. However, it is the rhetoric that amazes me as smart people like John Stewart slam the proposals to lower the rate. Once again there is this rage that is blind to basic economic realities. Once again, I am not against increasing taxes. Yet, this is just stupid. Why do we think these businesses will stay in the U.S.? We are running our economic policies on soundbites and emotive appeals. As with the French tax rate, we think that these businesses are somehow a captive audience. We sit between Mexico and Canada and we are doing everything that we could do to increase that “giant sucking sound” to the South and the North as businesses leave the U.S. We are already a consumer economy and that trend will only worsen until we stop treating economics as part of a class war against the wealthy.
I am also critical of President Obama’s long campaign to raise taxes on people earning $250,000 and more as “the wealthiest” members of our economy. While I support increasing taxes, the rhetoric against top earners in this country has often outstripped reality. Those making $250,000 a year and more pay for the vast majority of tax revenues in this country and their demonization by many commentators is unfair and counterproductive. Nancy Pelosi has proposed a tax for those making $1 million and more in a compromise. In the end, I believe we have to raise taxes and can do it without negative economic consequences. However, Obama and Congress continues to spend wildly, including sending billions abroad to Iraq, Afghanistan, Israel, and other countries. My concern is that increasing revenues will take pressure off politicians to cut back on such expenditures as well as pork barrel projects.
Recently, in our return from Chicago on the holiday, my family was caught on the latest toll road off of I-66 in Washington. This thing is unbelievable. Not only does this road entrap drivers but you cannot get off of it for miles. While we have an EZ Pass, friends and family members have been nailed with an automatic ticket even if they have multiple passengers in the HOV lane (you also must have an EZ Pass). I cannot imagine why state and federal officials are not being tarred and feathered over this absurd project (I may have been particularly on edge after sitting for an hour at that vortex of hell known as Breezewood maintained by our politicians and government officials) It is also the latest example of handing over a core government function to a private contractor. We are sending billions to Iraq and Israel but we cannot simply pay for a highway outside of our Capital. Instead, average citizens are clipped for tolls and tickets.
Likewise, in Chicago, a contractor was given a 75 year exclusive contract for parking meters in a corrupt deal under the Daley Administration. The result is that Chicagoans are now in the gripes of a company that has made parking the most expensive in the nation: soon to be $6.50 an hour. These are regressive hidden taxes that are rarely discussed as our country burns hundreds of billions on foreign wars and military loans as well as other inviolate expenditures. It is doubtful that any of that will change as we increase revenues this year.
I find both the Republican and Democratic parties to be equally mindless on economic policy. We are unlikely, however, to have our courts play much of a role as they have in France. While no one is talking about a ridiculous tax like the 75 percent rate, tax policy in the United States is viewed as a political question to be left to Congress and the White House.
Source: Reuters
There are ways to fix the economy to make it more fair. But fair is not what the rich want. They want more, like any greedy individual. And of course they are probably afraid that change is coming so they resist more. If there is class warfare, or perhaps more accurately a divergence of class interests, it is not because the 99% have allowed themselves to fall behind. And it is in large part because the likes of Goldman Sachs unfairly gamed the system to create artificial wealth which has now been converted into actual wealth via being underwritten by the US Government. The Congress will assure the rich remain rich, the defense industries remains slush funds, etc. And the cry will continue to rectify the situation on the backs of the 99%, because this seems to comport with the “center right” nation that the compliant media assures us we are (helpful to have permanent enemies to keep the dissenters in their place).. The rich are not excoriated, except as a foil.
Whether the tax on incomes should be 250 or 500K doesn’t matter that much. The folks at 250K are convenient, useful idiots, for everyone whose income vastly exceeds that, not to mention the moguls whose fortunes are already assured anonymity and shielded from taxation here or abroad.
Playing the “unfair to the rich” game is easy because it relies on shaming us into agreeing that our calsl for fairness are based on unseemly emotions. While a wonderfully logical, morally highly perch, it amounts to feeding into the incredibly skewed narratives that maintain the status quo.
How very convenient that the PTB are stoking a skirmish between the modestly well off and the true middle class.
mespo, I watched this doc awhile back, it is enlightening in many aspects. As I’ve said previously, my blue collar old man taught me to judge people on their character, not anything else..an Italian MLK as it were. Somewhat serendipitously, I got to know the patriarch of one of these families, ironically from the same state of Wi.. Herb Kohler owns the family biz. He’s a Choate and Yale grad. My sister got to know him when she worked for Yale development and convinced him to be the Chairman of the Board @ Choate when she went to work there. There was a board meeting @ Kohler, Wi.[he owns his own town] back in 2004 and myself and my wife were welcomed to a night there. Kohler’s grandfather came to the US fron Europe w/ nothing. He built a plumbing empire. All the Kohler kids worked summer jobs, not cushy ones, in the factory making plumbing fixtures. The Kohler family treat their employees w/ respect and dignity.
Herb Kohler is a man’s man. We spent an evening w/ him. As you might expect, I can spot a phoney and smell bullshit a mile away. I saw this guy was the real deal. He is the type of conversationalist that is intersested in you. He engaged both my wife and myself in a wide range of topics from, food to art to plays[he was a theatre major] to politics[pro choice Rep] and many other topics. He had just finished sponsoring the PGA Championship @ Whistling Straits so we spoke a lot about that. We had just returned from Banff and Lake Louise. Herb had filmed a movie w/ Keving Costner, Open Range, up there. He had many funny stories about that.
Two years later a young woman who is like a daughter to me had a baby in need of state of the art heart surgery. She lives in KC. She had spent several months @ the Lucile Packard Hospital @ Stanford. Her baby was on oxygen when released. Going commercial was a huge hassle w/ incredible stress involved. I called a man I had dinner w/ two years prior. Without a question he sent a plane to pick up the baby and parents. He wanted no credit or kudos. There are always two sides, I was taught to see both.
The largest retail corporation in the US by earnings is Walmart. All of the others come in sorry seconds, thirds… I am pretty sure the rich consumers who allegedly drive the consumer economy are not shopping at Walmart.
Most plutocrats in the US are held up on the muscular arms of the taxpayers who don’t get to enjoy the comfort, security and benefits of the “privatize profits socialize loses” system that passes for capitalism in the US.
There are rarely black and whites in situations like this but I must disagree when the claim is made that we should be eternally grateful and eternally generous to profit mad “plutocrats” who act like sociopaths and have convinced our government to do the same while insisting that taxpayers must support their every need. With all due respect, Entrepreneurship has become the new religion in the US and its fanatical adherents have become as dangerous any other fanatics.
There once was a time, short lived I agree, when corporate leaders like George Romney no less, recognized the importance of treating workers with dignity and respect because their contribution was just important to the county’s success as his. Of corse, that was long ago in a land that no longer exists called. America.
SWM, Elaine and I have had this debate and came to substantial agreement on the 500k level. I would like to see it a bit higher but that’s what compromise is about. The 250k is something too many resentful people believe is correct. I’m sure some here would want it @ 100k. They want to eat the borderline middle class!
JT points out the beginning place for any discussion of economy, which is first determine the structure of government that controls it:
So, just what kind of “economy” do we have?
Is it as JT argues, a “consumer economy”, or is it as others point out, a plutonomy?:
(The Homeland: Big Brother Plutonomy – 7). In substantial degree, the financial folk at CitiGroup and others of the financial world, which I will quote during this thread as need be, declare that the U.S.eh? is now a plutocracy with a plutonomy, not a consumer economy anymore.
It would seem that this fundamental issue must be resolved before any remedy can be appropriately fashioned:
(Who Are The Job Creators?). Is there one size that fits all the types of governments, one policy?
If not, then the nature of the current financial dynamics and structure of the country should be addressed before “the cure” is applied.
* 1) we will see wealth taxes directly on ASSETS as income taxes get tapped out for their ability to raise higher revenues
” However, Obama and Congress continues to spend wildly, including sending billions abroad to Iraq, Afghanistan, Israel, and other countries. My concern is that increasing revenues will take pressure off politicians to cut back on such expenditures as well as pork barrel projects.” (JT)
And the evidence that squeezing Congressional spending will result in reduced defense spending, irrational wars, and fewer giveaways to Israel and the like is . . . ????
I agree on the proliferation of back door taxes. The trend toward increased privitazation, I fear, is funneling more money directly into the pockets of the wealthy, not creating greater efficiency and reducing overall cost of services.
And what Justice Holmes said , particularly about NY and Bloomberg’s massive giveaways to his wealthy friends.
The rich will continue to find workarounds and avoidances to keep skimming the wealth. So we should just sit by, beg them to be nice citizens and see if they’ll agree to kick in a couple of percent more?
see chart in income inequality growth:
http://s3.amazonaws.com/dk-production/images/11557/large/cbpp_inequality.png?1354835448
I don’t believe in confiscatory taxes either and it is true that some of our nation’s wealthy families make substantial donations to charity — usually for tax rather than social reasons. There is a certain arrogance that comes with being rich which anyone honest will admit.
I suggest you watch the documentary “The One Percent” and then we can debate how sorry to feel for those who regard us as mere balls in their world of croquet. Let ’em eat cake, indeed.
Here’s a primer:
JT,
US empire building will not end until the currency collapses or we suffer a massive attack as blowback from our continuous wars in the Middle East. It’s simply not in the interest of those in the US government oligopoly limit their global power, though it clearly is in the economic and security interest of citizens. Most simply do not understand the economic realities we are facing.
I have predicted here before that:
1) we will see wealth taxes directly on taxes as income taxes get tapped out for their ability to raise higher revenues
2) government will mandate that 401(k)’s / IRA’s hold a substantial portion of US treasuries to increase government borrowing power
3) entitlements will be heavily means-tested in the future so that those who have saved responsibly will be further subsidizing those who have not
4) money printing will continue to accelerate, driving the most regressive tax of all: inflation
5) once the government believes that large numbers of people may begin to seek flight from the US dollar or confiscatory taxes, we will quickly see capital controls that restrict the ability of US citizens to send money abroad and into alternate currencies
On the toll road question, the best execution of that I have seen is in Texas, where is it nearly invisible and car owners are simply sent a bill depending on their use. No passes, collectors, or anything required. Ultimately these types of systems will become much more commonplace and be used for time-of-day pricing for roads. The argument will be that it will ease congestion, but like traffic cameras will primarily be for revenue.
Oh, yes, toll roads. I avoid them. I’ve had occasion to go to Albany. The most direct route is the thruway. So is route 20. I go route 20. Going west there are toll roads in, I think, Ohio, maybe Illinois. Always found another route. Paid a toll a year or so ago in Va, near DC. It was late, I’m not familiar with the area, the traffic was miserable, no place to stop and check for an alternative.
And the bridges going into NYC. Don’t go there anymore except maybe by train. Apart from the tolls, the guys who go around with their computers to check license plate stole my car twice. It cost me hundreds of dollars each time to get it back. It’s a racket. They take out of town cars figuring people will pay to get their cars back. The impound guys get to keep all that money.
I spent a year in a motor home traveling around the country. Never went on a toll road. Spent very little time on the free interstates, mostly traveling on back roads. I checked the map for the interstates that ran parallel to the direction I was traveling and just stayed between them. Except for San Francisco, I stayed out of the cities, too.
I think $500,000 might be a better place to raise taxes but Boehner failed, and the Bush tax cuts will expire soon. The middle class tax cut is possibly the only one that will be voted on before the end of the year.
I too am upset by the constant flow of our tax dollars being sent over seas for no other reason than to help increase the hatred the rest of the world has for our nation. We here in the US really need to get our house back in order instead of trying to tell the rest of the world how to live.
1. To use NY as an example of a city that abuses its really rich residents is rather “rich”. The billionaire mayor hands out tax gifts and grants to billionaire developer friends like lollipops. Billionaires are able to buy apartments, and I use that term broadly, for $100 million and pay less real estate tax than the average coop owner.
2. “Eat the rich” is hardly the theme of the Obama economic plan. The mega wealthy have done very well under Obama, very well.
3. The Republicans are masters at class warfare and unfortunately for most of us they have been very successful.
So successful that banks, whose loses were covered by the taxpayers, now get free money while depositors must virtually pay banks for the privilege of putting money in the banks while being scolded by the very rich including well taken care of Congessmembers for not saving enough for retirement.
So successful that Romeny had to have his accountant fiddle his taxes so that he could show a 14%tax rate on his last years taxes. A tax rate most of us see only in our dreams.
So successful that government contractors still get billions in government contracts while avoiding taxes.
The list goes on and on.
There is a need to act responsibly, of course, and $250,000 may not be the place to start to raise taxes. However, the reality is the very very wealthy have done everything they can to create a crisis in which even rational people think teachers, seniors, police officers and unions are the problem and the causes of our economic collapse. If we are going to solve our problems, I don’t think putting the blame where it belongs is either uncivil or warlike. It is the truth.
bettykath, What’s your favorite Eat The Rich recipe? Any gluten free ones?
I guess the Professor Turley likes the way the wealthy get wealthier and the middle class is disappearing. Part of the reason is that the effective tax rate on most of the wealthy is actually closer to the 14% paid by Mitt Romney due to all the loopholes and the fact that making money from money is treated much more favorably than making money from actual labor. Considering that many of the most wealthy got there and continue to thrive due to favorable government laws and hand outs that most of us don’t get, paying extra taxes on that money only seems fair.
While the top US corporate tax rate is at 35%, it is graduated from 0%. And then we have many corporations that pay absolutely nothing and even get money back without paying anything in. A few years ago GE owed millions in back taxes. They got a rider on a bill that wiped it out. Wish I could do that.
How many houses and cars do people really need? John McCain doesn’t know how many houses he owns. Mitt Romney has an elevator for his cars. How many cars can one drive at one time?
OS, I drive to San Diego from Wi. every winter. Like yourself, I love the Charles Kuralt routes. That’s the best way to eat local food and meet local folks. The website Roadfood is a good resource in that regard. Those “rugged individualist” out West are not monsters, unlike what some believe. They’re great folks who will help you find a place or help you change your tire. Unlike many city folk who will just walk past w/ a smirk.
What about the physical cliff? I dont want to hear about France or toll roads.
Billions for Iraq but not one cent for toll roads.
Wow, Mr. Turley. I would vote for you for prez. The Chicago parking meter travesty is classic Chicago corruption. It’s amazing some here refuse to believe it is the most corrupt in the country. This “eat the rich” feeding frenzy is more than a bit disturbing. I appreciate your rant. The folks here who adamantly disagree will be civil toward you.
I make a habit of going out of my way to avoid toll roads and toll bridges. They show up on my map searches, and I always look for alternate routes. That also has a great side benefit. Rather than the sameness of a controlled access 4+ lane road, we see great old barns, livestock, quaint churches, interesting communities and farms. Ever try to look at an historical marker while driving on an Interstate?
My dad had a great observation about driving fast. He could do some quick mental arithmetic and show me that by driving fast, I would only save a few minutes on my trip. He asked me what I was going to do with the time I saved…..then he would answer the rhetorical question. “Stand around scratching your butt, wondering what you are going to do with that extra half hour you saved.”