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21 July 2009

What a Waste of a Tax Surcharge

Getting a tax surcharge passed is going to consume a great deal of political capital. I'm certainly not against the surcharge. I'd prefer a more passive/aggressive approach that would impose an additional 1/2% on each 100k, topping out at 20% at around $4.3m. Only a few years ago I'd have dismissed this as socialistic looniness, but it's become apparent that the wealthy in this county do little good with their money.

The idea behind low marginal tax rates is to encourage entrepreneurship by allowing the innovative geniuses lurking in our midsts to keep more of their hard-earned money. Well it hasn't worked - it's only encouraged them to keep more of our hard-earned money. These innovators haven't been developing full-sized cars that get 100 miles per gallon, or devices that sort and fold your laundry; they've been developing credit-default swaps and securitized debt instruments. So f-em.

But we're going to use this tax windfall for health-care reform? We're already spending massive amounts of money on health care - do we really need to spend more? There really isn't enough money already in the system to conjure up a way to provide some basic insurance for the "working poor" to get some decent medical care for emergencies, operations and chronic conditions? Let's use that surcharge to lower the deficit, not add more money into an already bloated sector.

9 Comments:

Anonymous Anonymous said...

"But we're going to use this tax windfall for health-care reform? We're already spending massive amounts of money on health care - do we really need to spend more? There really isn't enough money already in the system to conjure up a way to provide some basic insurance for the "working poor" to get some decent medical care for emergencies, operations and chronic conditions? "


Our collective American diet is awful. Probably half of us get literally almost no excercise whatsoever. If we mereley ate 'half-way' right, and got in 20 minutes a day on a cheapo treadmill, I wonder how much money it would wind up saving us nationally?

We smoke, drink-to-excess, use drugs (prescription stuff like Xanax and Soma is rampant with the underclass), dont excercise, and eat processed "gunk"-food, and drink HFCS-Sugary-carbonated-tarry-cola-water. .

One wonders how many cases of diabetes, arthritis, heart disease, kidney and liver maladies, hypertension, blood clots in veins (strokes), gouts, and other chronic disorders we might have avoided paying for?

July 21, 2009 12:32 PM  
Anonymous Polichinello said...

Well it hasn't worked - it's only encouraged them to keep more of our hard-earned money. These innovators haven't been developing full-sized cars that get 100 miles per gallon, or devices that sort and fold your laundry; they've been developing credit-default swaps and securitized debt instruments.

???

You're talking to people across the globe on technology that was developed with capital largely created by those low rates. We're able to carry around miniature phones that were the stuff of scifi a mere three or four decades ago. VCRs, DVDs, plasma televisions, all developed or commericialized in the period you're blowing off.

As far as developing fuel efficient cars, take a look at what Pinto got in the 70s to what you can get from a larger car. Hell, the Prius is a mid-sized car. Mind you, too, this increase in fuel efficiency came with more stuff in the cars: airbags, crumple zones, nicer stereos, AC, cruise control and so forth.

I don't know about sorting and folding laundry, but have you seen what copiers can do these days? How about security alarms, or automatic sprinklers, or hell a lot stuff you can get to work on the lawn. Have you seen what washers and dryers can do? How about refrigerators? All of these are available at prices that only the wealthiest could have afforded mere decades ago.

Don't be deceived by flashy headlines. The Wall Street scandals are bad, but they're nowhere near close to erasing the real gains made over the past thirty years.

As far as national debt goes, increasing taxes won't make it go away. Whatever revenue increases the government realizes will be quickly earmarked for special interests.

July 21, 2009 2:02 PM  
Blogger ziel said...

You're talking to people across the globe on technology that was developed with capital largely created by those low rates. We're able to carry around miniature phones that were the stuff of scifi a mere three or four decades ago. VCRs, DVDs, plasma televisions, all developed or commericialized in the period you're blowing off.

Not true. The transistor and integrated circuit were invented many decades ago, during the time of 50% marginal tax rates. The PC was developed and first marketed in the pre-Reagan tax cut era as well. VCR's and laser disc technology were also invented in the 60's/70's, and were never even built in the USA.

In 1975 the VW Rabbit got 50 miles a gallon. You mention the Pinto - that was 1973 - 36 years ago. 36 years before that was 1937. We were driving cars then, and 74 years later we're still driving cars!

40 years ago the 747 was introduced. A 747 represented an almost infinite improvement over the airplane technology of 1929. How big an improvement is our current fleet of planes over the 747?

And what can washers and dryers do that's so much better than 40 years ago? You got me there. Refrigerators? They were pretty much the same then too - an icemaker was expensive, but certainly available. Granted, with cheap labor producing this stuff overseas, it is all more affordable, and that's good - there again the true innovation is 'offshoring' - not technology. I don't see any wonderful innovations that require gentle tax treatment. We made bigger gains with much higher tax rates.

July 21, 2009 9:53 PM  
Blogger Black Sea said...

"Our collective American diet is awful. Probably half of us get literally almost no excercise whatsoever. If we mereley ate 'half-way' right, and got in 20 minutes a day on a cheapo treadmill, I wonder how much money it would wind up saving us nationally?"

Well, since we have a government sponsored pension system, it probably wouldn't save us anything. Physically fit, abstemious, diet conscious 40 year olds become 80 year olds with frightening regularity. Then they develop Alzheimer's and you have to put them in a "home" for the last few years of their lives.

We save money on people who eat like pigs, drink like fish, smoke like chimneys, and drop dead at the age of 55, "in harness," as it were. I propose government rebates on booze, cigarettes, all food products containing partially hydrogenated vegetable oil, and flat screen TVs. (I'm joking . . . sort of.)

July 22, 2009 12:52 AM  
Anonymous Not Dead Yet said...

The US government actually spends more on health care, in terms of % of GDP, than several countries with universal coverage. I'm not talking about total health care spending, just what the US government spends.

Most people don't know this, but the Beverage plan in the UK was partly an efficiency measure, the UK actually had public health care before that, much of it put in by Neville Chamberlain, but it was a crazy quilt of plans that didn't cover everyone, like the US system. The NHS rationalized things.

So a public plan that covers everyone will probably be cheaper, in terms of government spending, than the current system. Now it can be made more expensive, but someone basically has to be trying to make it more expensive.

The reason for the additional taxes is that we are not talking about a public plan that covers everyone, it tries to preserve as much of the current system as possible. Also there will be inevitable transition costs.

Medicare benefits are generally agreed by people who look at these things to be too high. A good public health care plan will likely be less generous re care for the elderly and particularly end of life care. Such a plan will obviously be opposed by the elderly. So even a completely universal, single payer plan will probably grandfather in the current level of benefits for the current elderly (which would disappear as these people died) and be more expensive in the short term.

Alot of the objections to a new health care plan in the US comes from people who have things pretty good with their own health care plan now, and screw everyone else.

July 22, 2009 8:31 AM  
Blogger ziel said...

"Alot of the objections to a new health care plan in the US comes from people who have things pretty good with their own health care plan now, and screw everyone else."

But that could be a majority of the population - that's a problem for any kind of reform.

July 22, 2009 9:00 AM  
Anonymous Polichinello said...

The transistor and integrated circuit were invented many decades ago, during the time of 50% marginal tax rates.

But they were commercialized under the low-tax regime. The capital was available to make the investments necessary to make them economical.

In 1975 the VW Rabbit got 50 miles a gallon. You mention the Pinto - that was 1973 - 36 years ago. 36 years before that was 1937. We were driving cars then, and 74 years later we're still driving cars!

Yeah, we still wear clothes, after thousands of years, were still using clothes. Imagine that.

Do remember folding yourself into VW Rabbit or the Pinto hatchback? Mind you, these are vehicles that had a strap to protect you in a wreck, not impact-activated airbags. They came with an AM radio standard, and your navigation system was a tattered roadmap and slackjawed gas-station attendants. The interiors fell apart after a couple of years, and the trim would be lucky to last a year. My mom had a Vega that was burning oil after 2,500 miles.

And what can washers and dryers do that's so much better than 40 years ago?

They have sensors that can monitor your clothe's progress. My dryer, for example, lets me know when it's done. My fridge maintains different temperatures in different compartments. Compare that to frost accumulating heaps we got in the 70s.

40 years ago the 747 was introduced. A 747 represented an almost infinite improvement over the airplane technology of 1929. How big an improvement is our current fleet of planes over the 747?

You're picking and choosing here. A 747 is end result of a field having been explored for decades, with a generous amount of government subsidy, though civil and defense contracts.

Fine, why not compare communications technologies of, say 1979 to now? Right there you have a huge revolution. Be aware, too, that air travel was pretty expensive before deregulation. I remember paying a few hundred dollars for a trip from San Antonio to St. Louis. I pay that much now for a flight from Houston to LA. Once you factor in inflation, that's a bargain.

Granted, with cheap labor producing this stuff overseas, it is all more affordable, and that's good - there again the true innovation is 'offshoring' - not technology.

Cheap labor does not account for the closed costs. It helps, but the shoddy workmanship and ineffciency involved undercuts the gains. The gains are closer related to improved manufacturing processes.

Look, if you think higher taxes are a solution, take a gander at California. They have the 6th highest rate now and the innovative industries that made the place are leaving in droves.

July 22, 2009 12:37 PM  
Anonymous Polichinello said...

Alot of the objections to a new health care plan in the US comes from people who have things pretty good with their own health care plan now, and screw everyone else.

90% of the country has coverage, so what you're really saying is that you want screw 90% of us to serve the other 7%, many of whom are either illegal aliens or young singles who choose not to buy insurance.

July 22, 2009 12:38 PM  
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