When my friend Joanne Freeman and I were hosting the Now & Then podcast, it became a joke at our weekly planning meetings that I almost always suggested we should focus the following week’s episode on tax policy. Since it appeared that other people have a lower tolerance for tax policy than I do, we usually didn’t end up landing on that topic.
The real deal breaker is the wealthy want all government spending to benefit only them, but they do not want to pay any taxes.
Senator Whitehouse has been very good at pointing out the corruption in the Supreme Court.
That headline from Public Notice is about as clear as it can be: "SCOTUS is making major decisions based on outright lies." The whole article is horrifying but really worth reading.
"If this was before a normal Supreme Court, rather than our current hyper-conservative one, this would be a major scandal, one which would, at minimum, earn the Moore lawyers an ethical complaint for failing to be truthful to the Court and, at maximum, would result in the case being thrown out. But since we have the current Court, there’s no sign this bombshell will even be an issue for conservatives at the oral argument tomorrow.
And why would it? The Court has already proved it is perfectly comfortable with litigants who lie to it and, worse still, with justices who write majority opinions that wildly mischaracterize the facts before the court."
I wasn't aware of Public Notice until this HCR mention. Thank you.
When you see, in writing, just how many millions of dollars could bring people out of poverty, house the unhoused, provide really affordable healthcare, and educate those who want it, it is truly mind-boggling. This tax system would stop aiding and abetting the filthy rich if we get rid of Criminals United. Did I say that? HA! Meant Citizens United but you already that. I honestly dread how SCOTUS will rule tomorrow. I will not be surprised but I will be very very angry.
I had no idea. Thank you, once again and always, HCR, for bringing an important truth to light, be it historical or contemporary or both.
Isn’t there some kind of perjury involved in knowingly bringing a case to court based on a fictional event? Shouldn’t decisions based on such fictional events be nullified?
The New American Nazi Party sees fit to create its own reality out of whole cloth when the facts are inconvenient or even non-existent.
These fictional test cases are Stalinist. Talk about show trials! It's truly crazy they are allowed.
Tax and spending policies have the potential to benefit millions of Americans and already have. Payroll taxes fund social security and Medicare. Those programs make many millions of Americans more financially secure in retirement. The challenge is making the system as fair as possible. Taxation based on the ability to pay seems a reasonable approach. Republicans are locked into tax reduction and tend to blame Democrats for overspending. In reality, both parties spend but only one party wants to pay for spending.
Until a few years ago, I was not aware of that non-citizens who live and work in America pay Federal and sometimes State income taxes. (https://blog.taxact.com) Nor was I aware until a few years ago that a large number of wealthy individuals paid relatively little to no State or Federal taxes.
Our taxes help pay for our military to protect us and our interests. It pays for our government, justice system, law enforcement, public schools (now private ones too, it seems), public libraries, social services, postal services, maintenance of roads and bridges, etc.
Ultra wealthy people don’t seem to have any need or desire to be a tax-paying citizen of any one country when they can instead buy politicians and law enforcement wherever they have business interests and property.
If a country they reside in experiences war or natural disaster, they can pick up and leave with very little pain while the rest of the residents must stay and suffer.
They who have so much wealth, seem contribute so little of the percentage of that wealth compared to working people of little to average income, and yet they are better protected and benefit most from regular people’s hard-earned tax dollars (both citizens and non-citizens).
It is sickening that our military, largely made up of regular people, sacrifice so much for our country, protect the little tax-paying wealthy too, who even financially profit from their pains.
It is sickening that the salaries of the law enforcement and justice systems are largely collectively paid for by regular people hard-earned tax dollars seem to better protect the rights and property of the wealthy who pay less.
It is sickening that the wealthy and their companies who greatly use our roads and bridges to travel and make profit pay very little towards their maintenance compared to collective burden on regular people.
The Supreme Court is largely paid by for by regular people, but clearly controlled by gifts from the wealthy is just another example of how the unfair tax distribution system is working against regular people. If the wealthy can afford to own the members of the Supreme Court, they’re way under taxed.
Near-perfect analog of the hypocrisy: they readily pay club (restricted) membership fees. Then deduct them from their income.
It is a continuous outrage that unfair (immoral?) policies get cemented in place, using bunk, hooey, balderdash, and fairytales as aggregate and reinforcement.
No wonder I’ve been angry most of my life.
Ah, tax policy - and HCR is interested in it. We all need to pay more
attention to this crucial aspect of our economy.
'U.S. Deficit, Pegged at $1.7 Trillion, Effectively Doubled in 2023' (NYTimes, excerpt)
'The widening gap between what the government spends and what it earns comes as Congress continues to spar over the proper levels of federal spending.'
“The Biden administration continues to focus on navigating our economy’s transition to healthy and sustainable growth,” Treasury Secretary Janet L. Yellen said in the release. “As we do, the president and I are also committed to addressing challenges to our long-term fiscal outlook.”
‘The widening gap between what the government spends and what it earns comes at an uncomfortable moment, as the president looks to a divided Congress for aid to Israel and Ukraine amid concerns about government spending and whether the United States can afford to finance two wars.’
‘Republicans — who helped run up big budget deficits with tax cuts and increased spending when they were in power — have begun insisting on deep budget cuts in order to reduce the federal deficit. The fact that the shortfall widened could make it even more challenging to get Congress to agree on a series of spending bills that must pass by next month in order to prevent a government shutdown.’
‘On Friday, Mr. Biden’s administration formally asked Congress to approve more than $100 billion in emergency spending that includes military aid to Ukraine and Israel, humanitarian assistance in those countries and in Gaza, and a range of new efforts to improve America’s border security.’
“America can certainly afford to stand with Israel and to support Israel’s military needs, and we also can and must support Ukraine in its struggle against Russia,” Ms. Yellen told Sky News.’ (NYTimes) See gifted link below.
‘Despite growing concern in Washington and on Wall Street about the grim fiscal trajectory, lawmakers have been unable to coalesce around plans to enact meaningful spending cuts or tax increases. ‘
'THE MONEY ISSUE (NYTIMES MAGAZINE, EXCERPT)
'How Many Billionaires Are There, Anyway?'
'— America has some 735 billionaires now according to Forbes, collectively worth more than $4.7 trillion. A decade ago, Forbes counted only (“only”) 424. A decade before that, 243. They keep multiplying, and their collective wealth grows, even, or especially, as the rest of us fall behind.'
'So where are they all coming from? Depends who you ask. An optimist might tell you that an economy producing so many billionaires is an economy that’s growing, which is certainly true of ours. Nothing wrong with that. In the 1950s, the economist Simon Kuznets popularized the idea that inequality was an unfortunate but self-regulating side effect of economic growth; whenever it got too high, Kuznets reasoned, the political process would rein it in. This was known as the Kuznets curve, a parabola that showed inequality soaring before being slowly brought back to Earth through redistribution. Kuznets believed that the richest societies would eventually be the most equal.'
'But in the last 12 years, the American political system has delivered Citizens United, a top marginal tax rate of 37 percent (down from a high of 94 percent in Kuznets’s day) and a billionaire president openly hostile to the democratic process — along with 332 new billionaires. The Kuznets curve has fallen out of favor, too, replaced by something called the Kuznets wave, which shows successive peaks and valleys of inequality. Branko Milanovic, the economist who put forward this revised model, thinks it might take at least a generation to tamp down the current peak.'
'In his book “Ages of American Capitalism,” the University of Chicago historian Jonathan Levy describes the era of capitalism we live in as the Age of Chaos: a time in which capital has become more footloose, liquid and volatile, constantly flowing into and out of booms and busts, in contrast to the staid order — and widely shared prosperity — that characterized the industrial postwar economy. Levy begins the story in 1981, the same year Forbes thought of his list. That was the year the Federal Reserve, under its chairman, Paul Volcker, raised interest rates to 20 percent with the goal of ending inflation. Volcker’s Fed succeeded at that, but the decision, Levy notes, had far-reaching consequences besides, accelerating America’s transition away from the production of goods to a form of capitalism never seen before. The dollar skyrocketed in value, making American exports even less attractive and imports even cheaper; many factories that remained profitable were closed, because compared with the incredible returns money could earn in such a high-rate environment, they simply weren’t profitable enough. When the Fed began to loosen its grip, the widely available credit unleashed a speculative bonanza, which benefited a newly empowered corporate class that felt little obligation to the work force and profound obligations to shareholders.'
'Typically the economy expands when investments are made in productivity, but this expansion was different: It was, Levy writes, “the only one on record, before or since, in which fixed investment as a share of G.D.P. declined.” In other words, our industrialists were investing less in productive stuff — ships, factories, trucks — while making more money doing so. In fact, they were often tearing that stuff up and shipping it abroad; this was the age of the corporate raiders, who would book enormous profits while putting Americans out of work. You can see this, in crude terms, as the birth of the Wall Street-Main Street divide: a severing of the finance industry from the “real” economy.'
'This shift to a highly financialized, postindustrial economy was helped along by the Reagan administration, which deregulated banking, cut the top income tax rate to 28 percent from 70 percent and took aim at organized labor — a political scapegoat for the sluggish, inflationary economy of the ’70s. Computer technology and the rise of the developing world would amplify and accelerate all these trends, turning the United States into a sort of frontal cortex for the globalizing economy. Just as important, the tech revolution created new ways for entrepreneurs to amass enormous fortunes: Software is by no means cheap to develop, but it requires fewer workers and less fixed investment, and can be reproduced and shipped around the world instantaneously and at practically no cost. Consider that the powerhouse of 20th-century capitalism, Ford Motors, now employs about 183,000 people and has a market capitalization close to $68 billion; Google employs about 156,000 people and has a market cap of around $1.8 trillion. This new economy would be run by, and for, knowledge workers, who would reap most of the gains, and therefore have more money to spend on services — a sector that would come to sort of, but never fully, replace the manufacturing this transformation did away with.'
“During the Reagan years,” Levy writes, “something new and distinctive emerged that has persisted down to this day: a capitalism dominated by asset price appreciation.” 'That is, an economy in which the rising price of assets — stocks, bonds, real estate — would be, somewhat counterintuitively, a fuel for economic growth. It has been a good time, in other words, to own a lot of assets. And owning assets is mostly what billionaires do.'
'In his book “Capital in the Twenty-First Century,” the French economist Thomas Piketty notes that the new economic order has made it difficult for the superrich not to get richer: “Past a certain threshold,” he writes, “all large fortunes, whether inherited or entrepreneurial in origin, grow at extremely high rates, regardless of whether the owner of the fortune works or not.” (NYTimes) See gifted link below.
Today's GOP, and its Federalist Society Supreme Court, is defined by populist racial injustice and movement conservatism economic injustice. A nation which will not protect equality before the law and equal representation, will not uphold government regulation and equitable taxation. The former 'culture wars' gets most of the publicity, while the latter is the primary purpose. It's why Charles Koch et al funnel immense amounts of money through innumerable shell companies to a myriad of antidemocratic causes - and fill the war chests of GOP legislatures to craft inequitable tax policy and grease the palms of GOP jurists to select and decide cases in their favor. It is no coincidence that Speaker Mike Johnson's religious extremism is spotlighted but his long association with Leonard Leo is not. Nor is it any surprise that Johnson's first legislative proposal was to defund the IRS - specifically to remove money the Biden administration requested to hire accountants with the expertise to efficiently process tax returns which are thousands of pages long documenting the shifting of money through shell companies, accounts, and not for profits to avoid taxation. While the 1% has grown in number, IRS staffing is around 12 expert accountants.
Did I mention, Koch bagman and court capture operative Leonard Leo - who infamously recently got $1.6 billion tax free - in addition to the routine millions - is being investigated for improperly shifting money from his non profits to his pocket? Here on Mt. Desert Island he's purchased two estates. Under an LLC arrangement he's also purchased a church building from the Catholic diocese which he plans to use as a Catholic cultural center and he is funding extensive renovations of the church still run by the diocese. All most likely with what should be our tax money. Leo has also influenced impressionable and sympathetic police and town officials to arrest and other wise intimidate people protesting his agenda. While implicated in compromising some local media outlets. Leo is in effect using this small island as a lab for the repurposing of the American democratic republic to a clerical fascist state. In a predominantly Democratic voting municipality. It can happen here.
This Letter unintentionally highlights something I've wondered about for a while, namely, the form of wealth assessed and taxed. For instance, Jeff Bezos is estimated to be worth ~170 billion dollars, but I'm sure that the vast majority of it is in the form of "non-liquid" financial instruments such as stock, property, etc. For all I know, he barely has $10 in cash to his name.
But taxes have to be paid in cash, so I understand. Presumably, this means that a wealthy individual (or corporation) would need to sell the assets that were used to calculate the tax in order to pay the tax.
So, what would be the effect of allowing the government to receive tax payments in the form of stocks and bonds, rather than in cash, and hold those assets in their non-liquid form, realizing the benefit of appreciation of those assets when it's most advantageous, just like the original owner? What would happen if the government, after a suit for tax delinquency, became a majority owner of a corporation -- must the government then immediately have to sell the asset to satisfy the tax debt? What would be an alternative?
I freely admit to being a tax/finance numbskull, so I hope that a more knowledgeable commenter will enlighten me. While this current case before the Court is an open attempt to eliminate the capital-gains tax, at least, even if the current right-wingers rule against the Moores the case does raise deeper issues, too.
Thank you, Professor. History can be painful but also rewarding. It comes down to greed and lack of compassion for everybody in America from those who have the most. I fear that there will never be a sense of fairness in that regard.
I vaguely recalled the first progressive form of income tax was during the Civil War, but appreciate the fuller history.
It cannot be a coincidence that the show "The Gilded Age" is currently on PBS. And I'm reminded of something Romney said when filmed at a fundraiser at either a country club or someone's mansion: "Democrats think no one should live like this, and Republicans think everyone should." Neither is true, of course,; but it's definitely true that Republicans don't think like that at all based on their tax plans.
“Tax policy shows what a society values.”