Your Lying Eyes

Dedicated to uncovering the truth that stands naked before your lying eyes.

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30 April 2011

Royal Musings

Steve Sailer often notes that Obama proclaimed himself the great uniter in his 2004 Unveiling by noting his bi-racial descent, much the way Henry VIII would claim to unite the White and Red Roses of England as a descendant of the houses of Lancaster and York. Meanwhile, Larry Auster notes that the last time an English King was married to a commoner things didn't work out so well.

Continuing on that theme, it should be noted that the War of the Roses had its origins in the untimely death of Edward the Black Prince. Edward was the heir apparent to the great King Edward III, whose rule ended on his death at the age of 64. Unfortunately, his son Edward died the year before, just one week shy of his 46th birthday. A great military commander, the Black Prince would surely have had a formidable reign that would have given the Plantagenet line a firm footing to rule for many years beyond. But just as Prince William is second in line behind his father and would thus accede to the throne if Charles were to predecease the Queen, upon Edward's death his ten year old son would be crowned the following year upon the death of his grandfather, Edward III.

That son was Richard II, and the resentment that brewed in his uncle, John of Gaunt, during the young King's maturation and later assertiveness resulted in the Plantagenet schism. Gaunt's son would of course end up usurping Richard's crown as Henry IV and founding the Lancaster line, while his great-grandson would be overthrown by another Plantagenet offshoot, the Yorkists. What followed from there were Edward IV, the two young princes mysteriously dying in the tower, Richard III wishing for a horse, and the Tudors. Hopefully, should Prince Charles meet an untimely death, we won't find Charles's brother the current Duke of York, combat-veteran Andrew, leading his old naval-air comrades in a coup against his upstart nephew - though that would be kinda cool, I must admit.

17 April 2011

Business and Health Care

Obviously insurers who make money selling health insurance must lobby like there's no tomorrow to protect themselves when it comes to health-care reform legislation. But what of the rest of Corporate America? Do they stand back, not wanting to interfere in a "not our issue" kind of attitude? Do they stand together with the insurers out of some sense of Corporate Solidarity? Basically, what I mean to ask is - does Big Business generally support the status quo in health care, and if so, why?

Are GE, Google, Ford, Bank of America, Boeing all pleased with America's current health-care financing system, which calls on large companies to pay for their employees' health care? Are they thrilled with having to expend resources negotiating with health insurers and understanding how this coverage affects employee compensation? Do those with large unions find that adding health-care to the equation simplifies the collective bargaining process? Do they not feel they're at a disadvantage with their global competitors most of whom don't have these health-care responsibilities?

Perhaps they'd prefer to avoid getting in the middle of controversial issues, but you'd think they'd be highly motivated to get rid of that particular albatross. They wouldn't have to actually come out publicly - they could just set up some "think-tanks" staffed with articulate, otherwise 'conservative' pundits who would talk about how exceptional health-care is and that while we hate 'socialism' if there's any industry that could use a little 'socialism' health-care is it!

Perhaps they've made an attempt, with those DOA Republican proposals for eliminating group-health plans altogether and moving to individual 'tax-subsidized' vouchers, to push a right-wing solution to their health-care problem. But you've already got a public that overwhelmingly expects someone else to pay for their health care - why not push a little harder on that front - it seems like a surer path to success? Instead, they end up with the worst of both worlds - Obamacare.

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06 April 2011

How Much Blood Can We Get out of Wealthy Stones?

Greg Cochran challenges my assertion last week that if we were to raise taxes on the rich we'd get "probably no more than about $100b per year" with a pithy "Ridiculous." Had it come from any normal commenter, I'd have simply ignored such an offhanded dismal - but coming from a rocket scientist, I feel obliged to research further.

First off, given that Obama had proposed raising taxes 3.5% on incomes over $250k, which was supposed to bring in $700b over ten years, and that proposal didn't even pass in an aggressive lame-duck Democrat congress, a $100b upper bound on potential additional annual tax revenues from the rich doesn't seem particularly ridiculous.

But what if we were to get more aggressive, and implement a more progressive tax increase? Surely the very wealthy could afford more than a mere 3.5% tax increase.

The IRS publishes tables showing how many taxpayers there are, their total income and taxes paid, at various income brackets. Suppose we were to implement the following tax increases on additional income (starting at $200k as the definition of "rich") as follows:

IncomeTax Increase
$200,000 under $500,0003%
$500,000 under $1,000,0004%
$1,000,000 under $1,500,0005%
$1,500,000 under $2,000,0006%
$2,000,000 under $5,000,0008%
$5,000,000 under $10,000,0009%
$10,000,000 or more10%

So this would implement the 3% tax increase, then up it progressively until we're hitting incomes over $10m with an additional 10%! (FYI - Congresswoman Pat Schakowsky has proposed something similar, but only on incomes over $1m - and it's projected to bring in $78b). So how would my proposal fare in the revenue generation sweepstakes?

I calculated its impact based on 2008 IRS data. Using 2008 income data and these tax increases, I come up with about $90b in increased revenue. My math can be checked here.

What if we get even more aggressive, employing a tax increase that looks like this:

IncomeTax Increase
$200,000 under $500,0003%
$500,000 under $1,000,0005%
$1,000,000 under $1,500,00010%
$1,500,000 under $2,000,00011%
$2,000,000 under $5,000,00012%
$5,000,000 under $10,000,00013%
$10,000,000 or more14%

Well then we do indeed breach my "$100b" ceiling. We'd pull in about $124b in additional revenue. But in today's climate, it would take the mass deployment of pitchforks and torches against congressional offices across the country to pull of these rates. And though 25% higher than my off-the-cuff guess, $124b isn't all that much more help than $100b when you've got deficits well in excess of $1,000b. And this is based on 2008 income - as I pointed out in that prior post, it appears we're losing revenue mostly among the wealthy, so current revenues would probably be less.

I'm not saying we shouldn't tax the rich more heavily - I doubt these more aggressive rates would reduce economic activity much - though I might lay off the <$500k incomes.

Conclusion: My putative $100b dollar ceiling on additional taxes from the rich might not hold true under every possible scenario, but I do not admit that it is "ridiculous."

And, by the way, now that the 2008 data is available, we can compare 2007 to 2008 taxes by income to see whether my hypothesis - that the big hit in tax revenue was from less income among the wealthy - is falsified.

Well it sure wasn't falsified - the impact of taxes on the rich in this recession are clear. Of the $84b loss in tax revenues from 2007 to 2008, 72% of it came from incomes over $1m. And it wasn't due to shirking - at each 1,000,000+ bracket, the income drop was larger (albeit only slightly) than the tax drop. Unfortunately, since it appears the 2008 data was only just published, we might have to wait another year for the 2009 numbers, where the revenue loss was even worse.