Progressive Taxation = Marxism?
Hereabouts, the transtion from urban to agricultural and rural is abrupt. Very abrupt. As in, boom, it happens between two exits on I-40, so, especially as a lawyer, you get to circulate out of the city and out into the less citified areas, most of which bear very little resemblance to anything I ever saw on Andy Griffith. Living here, observing with an outsider's eye but raised among a different flavor of rural conservatives, was like having a ring-side seat for the parade of horribles that has been the last sixteen years.
Two of the most memorable floats in that parade were the beliefs of the Angry North Carolina White Guys (especially the religious ones) as I've come to call them, a particular species of North Carolinian with whom I became all too familiar, All of them seem to unconciously ape the dress, the mannerisms and the facial expression of their hero, Dale Earnhardt (who was, after all, one of them). The farmer cap, the pencil thin mustache, the grizzled hair and tough stringy musculature. And the hard eyes behind which a torrent of rage seemed just on the verge of breaking out.
They seemed to me to be very much men of their times, guys who were getting the shit kicked out of them by life and the economy pretty much 24/7/365, whose state was changing around them with bewildering speed but who always seemed to get the short end of the stick as first the tobacco business collapsed, then the textile mills shipped out to China and then the furniture companies followed.
To a man, they were hardcore Republicans, and so were their wives. They left the Bush/Cheney stickers on their cars til '07, listened to Rush incessently, got all their news from Fox.
And here are those two floats on the Parade of Horribles I was talking about, both pulled by these Angry White Guys and their angry, angry wives.
Throughout the 90s, to a man and to a woman, every last one of them was convinced beyond a doubt that Bill Clinton raised their taxes. It was absolutely incredible. Congress passed Clinton's budget that jacked the tax rate on the top bracket by three percent it went into effect and the Angry White Guys raged and frothed and stomped about their taxes going up, despite the fact that they hadn't. The witholding on their paychecks didn't change a bit. Their take-home pay did not go down one red cent and yet they knew, knew with absolute certanty, that Bill Clinton had raised their taxes.
Then came Bush/Cheney and the Bush tax cuts and I witnessed the second float in the Parade of Horribles. A lot of these guys lives got steadily worse under Bush. The once thriving industrial sector melted away faster than the ice caps. Factories shut down and the jobs were off-shored, one after another. Textile companies folded, reorganized under Chapter 11 and came out of it as brand that got slapped onto cheap imports. The federal government ended the tobacco quota program and the retail spaces in even Winston-Salem, home of R.J. Reynolds and one of the smokingest cities in America, had gone non-smoking. The furniture manufacturing industry, once the pride of the Piedmont, evaporated in less than a decade.
None of these folks were under any illusion that Bush had cut their taxes in any meaningful way. They were now too close to the margin to nuture that kind of delusion. All of them understood clearly that most of the benefit of the Bush tax cuts had gone to people making a lot more money than any of them would see in a decade.
But, the final fruit of the thirty year Republican campaign to portray our long-held civic virtues as positive evils, they believed that was a good thing. Rushbo told them on the radio that the rich folk need that money to invest and create jobs, and all of these guys nodded approvingly. They kept nodding for a decade while those rich guys took their extra lucre and invested it in ever more exciting new and innovative ways to make the the Angry White Guys poorer.
This is where we are now. Progressive taxation, a cornerstone of the civic values underlying the income tax since the 16th Amendement was passed, and one the rich used to actually take a certain grudging noblisse oglige pride in bearing, was now deemed a job-destroying scurge, a socialistic force of evil destruction that's probably just a big plot to take hardworking people's money away from them and give it to the blacks.
And now, the guys at the the Republican Party's Minitrue have finally managed to take this innovative thinking to a new level. Now, they've finally managed make a lot of these guys take the final step and proclaim progressive taxation to be a manifestation of Marxism. That's what what we saw Joe Biden get hit with by that fruitcake anchor lady in Florida and you saw how incredulous he was.
I wasn't. That's been knocking around in the emails the Angry White Guys and their wives have been sending each other for a couple of years now. Progressive taxation is Marxism. Not just socialism, nope, its outright Communistic, precious-bodily-fluid-contaminating Marxism. That's the received wisdom we have have to deal with now and that means we've got to go back to basics when if we're going to beat it back.
Where did this radical notion of progressive taxation come from? What economy destroying bleeding heart came up with it? What no-good job destroying libtard perpetrated this great fraud on the United States of America?
Ladies and gentlemen (as Joe would say), I give you the genesis of the concept of progressive taxation:
The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion
What rotten commie pinko fag said this? Was it Karl Marx? Leon Trotsky? Eugene Debs? Julius and Ethel Rosenberg?
Nope. That would be Adam Smith in "The Wealth of Nations."
Sigh. Why do Republicans hate capitalism?
















The actuality that the Republicans were able to sell their message that reducing taxes on the rich would benefit the middle class will, I think, go down in history as one of the great hoaxes of the ages. It defies logic, but plays to most Americans dreams of attaining great wealth, or alternatively their fantasies that they are wealthier than they in fact are.
Progressive taxation as Marxism is just another dodge for these guys, again appealing to the gut reactions of Americans against communism/socialism, while most of their intended audience as you so aptly point out do not understand capitalism let alone socialism. It's more rovian, (can we stop capitalizing that descriptor?), politics, playing to the uninformed electorate with key words designed to produce a visceral dislike to the target, (in this case Obama). What's even more deceptive is to imply that the Democratic platform is favoring progressive taxation while the Rs are not.
Why do Republicans hate capitalism? I think in the end it all comes down to the base of our economic problems to date. Greed.
October 26, 2008 1:37 AM | Reply | Permalink
Adam Smith is a Marxist? Does Marx know? More importantly, does Adam Smith know?
October 26, 2008 2:46 AM | Reply | Permalink
The issue ultimately isn't taxes -- it's what you can buy with the money you have.
Taxation may take money from you, but it keeps the value of the dollar preserved.
Overspend without taxing (as the GOP loves to do), decreases the value of the dollar.
The Dems, to my knowledge, have never really made an attempt to point this out... but the truth is that the GOP taxes you more: without a strong dollar, you can't buy much. It is also a terrible regressive "tax"... something that Joe Sixpack should be able to comprehend.
October 26, 2008 6:14 AM | Reply | Permalink
inflation tax seems 'flat' not 'regressive'. am i missing something?
October 26, 2008 7:24 AM | Reply | Permalink
If you have less money, the price of subsistence goods hits you more. A higher wage worker can survive much higher increases in prices -- because he has more money -- than a lower wage worker.
We saw this with gas prices this summer. While everyone was paying more, the first people to have a lifestyle change -- e.g. had to literally drive less -- were lower wage workers. They simply didn't have the money for gas if they wanted to pay their food and shelter bills. This is where the regressive nature of devaluing the dollar comes from. A $1K jump in an annual food bill (created by inflation) affects the $20K/year worker far more than the $100K/year worker.
October 26, 2008 4:43 PM | Reply | Permalink
You have described to a mustache one of my old buddies who left WV and went down the Hillbilly Highway (I-77) for the greener pastures of NC thirty years ago.
Except he met with great success and he attributes his success to Rushbo and the rest....another example for NC repubs to follow.
Although I constantly try to get him to understand economics, he seems evermore convinced of "progressive tax = marxism".
October 26, 2008 8:42 AM | Reply | Permalink
When the income tax was enacted, it ranged from 1% to a whopping 7% on incomes above $500,000, and only 1% of the population paid anything. Restore it to those levels, and I won't complain about it being progressive. However, with the top rate now 36%, and soon to be 40%, plus state taxes, ss, and medicare, people are paying half their income to the government off the top. Add to that the other taxes we pay (sales, excise, phone, gas, etc) and easily 2/3 of your income goes to taxes. That is criminal, or should be. All those taxes drive up costs, stifle the economy, cost jobs, and generally make life more difficult for everyone. Who benefits from them? Those that choose not to work and the democrats they give power to with their vote.
October 26, 2008 9:53 AM | Reply | Permalink
Your argument is bogus. Unemployment benefits do not go on forever and, in any case, aren't particularly lucrative. If they were, you would choose not to work yourself.
The only people in this country who can "choose not to work" are the very wealthy.
October 26, 2008 4:46 PM | Reply | Permalink
And I call bullshit on your contention that 2/3 of your income, or anybody's income, goes to taxes. If you're paying 2/3 of your income in taxes its time to stop trying to fill out your own W2s, get a good tax lawyer and file some amended tax returns, because you've screwed up your 1040s mightily and you've got a whopping refund coming.
October 26, 2008 7:06 PM | Reply | Permalink
You are equating taxes with Federal/State income. Bulldog is bringing up other 'hidden' -- and quite regressive -- taxes including (his words): "sales, excise, phone, gas, etc"
While I would also question a 66% figure... it would be an interesting study to perform.
October 26, 2008 7:26 PM | Reply | Permalink
A quote from that radical Marxist Theodore Roosevelt also drives the point home:
October 26, 2008 5:19 PM | Reply | Permalink
And the endorsement by the pinko paper (well, pink anyway) The Financial Times pretty much says everything, don't it?!
http://www.ft.com/cms/s/0/1d0b127c-a380-11dd-942c-000077b07658.html?nclick_check=1
October 26, 2008 5:28 PM | Reply | Permalink
I challenge "theCleverBulldog" to take his real numbers and find out his true 'effective' tax rate.
And by true effective tax rate I mean not just the calculation of his marginal rate for each increment of income but rather doing the following:
Add up all the income
Add up all the federal Income tax actually DUE (post AGI, post deductions)
Add up all the SS, medicare, medicaid, unemployment, any investment/savings taxes not previously included
Divide that into the income to find his real Federal Tax rate... As stated above - if he is really finding anything close to 1/3 of his money going to the feds... then he needs a new calculator and some tax advice or he is earning close to one million dollars a year - and I just can't feel pity for that.
Not the most recent data... but effective tax rates historically from the CBO are at this link...
http://www.cbo.gov/doc.cfm?index=6133&type=0
And WTH... even though it isn't the federal government's responsibility... Add up the local, state, city, etc. taxes (sales, excise, property etc.).
I am fairly certain even this won't rise to 2/3 of his income unless he has some truly peculiar circumstances.
October 26, 2008 10:41 PM | Reply | Permalink
actually for those over 500K your total tax bill is around 60%. Even middle middle class like me pay 50% of my income in taxes, which includes all the hidden taxes in your utility bills. 40% of my phone bill is tax. We are paying as much or more than many European countries and we have a massive deficit to show for it.
October 26, 2008 10:55 PM | Reply | Permalink
To add to what 'Clearthinker' above has said... it's amusing how the Republican economic folks accuse the Democrats of 'stealing' from everyone's wealth by inflationary fiscal policy... when to a great extent it is the Republican insistence on tax cuts without spending cuts that has had the most inflationary effect.
Ha ha ha ha ha... oh - but wait, this is the reality based world and isn't easily depicted in a bumper-sticker or by fake ranchers and plumbers.
October 26, 2008 10:44 PM | Reply | Permalink
Let's do some quick math here; say we're all in the 28% federal bracket... okay
28% Federal
7.5% FICA
10% State sales and income tax (higher in many places)
3% Property tax
These are the big and obvious taxes you pay, so where are we at here 48.5%. This doesn't tack on the other hidden taxes in many things we buy so add another 2 to 3% for that. ANY MORE QUESTIONS?
October 26, 2008 11:03 PM | Reply | Permalink
Actually, by that same logic, I'm paying at least 200% of my income in sales taxes alone!
5% sales tax on apples
5% sales tax on bananas
5% sales tax on broccoli
5% sales tax on oranges
5% sales tax on pasta
5% sales tax on soy milk
…
OK, I'm not doing that 40 times, but you get the point. You can't simply add your property tax to your sales tax to get a "total tax", any more than you can take your "tax bracket" and claim it as your income tax. You have to actually calculate how much you pay in taxes and divide it by your total income. (Also, there's some arguing at cross purposes here. Some find it meaningful to make the distinction between federal taxes vs. state/local taxes, whereas others only care that someone is taking their money.)
October 28, 2008 8:56 AM | Reply | Permalink
Let's do some quick math here; say we're all in the 28% federal bracket... okay
28% Federal
7.5% FICA
10% State sales and income tax (higher in many places)
3% Property tax
These are the big and obvious taxes you pay, so where are we at here 48.5%. This doesn't tack on the other hidden taxes in many things we buy so add another 2 to 3% for that. ANY MORE QUESTIONS?
October 26, 2008 11:04 PM | Reply | Permalink
But your entire income isn't taxed in your federal income tax. There are some reductions that go from Gross Income to Adjusted Gross Income, and then you get either the standard deduction on top of that (or more likely if you are above the bottom quintiles - you itemize to take advantage of things like mortgage interest deductions)... As I understand it - the AMT was introduced due to the fact that folks with legal, but tax-planned transactions could reduce their tax liabilities to '0' income tax.
Your property tax is usually on some fraction of the value of your property (mills or something like that because it is a tiny fraction of the 'market value) that is taxed.
October 26, 2008 11:12 PM | Reply | Permalink
In addition, the marginal tax rates aren't applied to the entire 'Taxable Income' (less than gross and less than adjusted gross)... Marginal rates are only applied to the PART of each income in that bracket...
I think most people read their 'bracket' and assume that A) that's the percentage used on all their taxable income and B) don't appreciate the ability of deductions to greatly reduce income from 'gross' to taxable.
Economy of thought... hence looking at data like EFFECTIVE tax rates calculated from averaged actual returns shows what percentage of income is effectively paid in federal taxes.
Also - CBO studies have shown that for almost every year I have seen, over half the corporations manage to use accounting or 'losses' to reduce their corporate income tax rates to '0'.
If our taxes were simplified that folks could see how much they effectively pay, then they could more properly assess what is going on.
October 26, 2008 11:18 PM | Reply | Permalink
okay, so i take a standard deduction and get back 5% -- that still leaves me at around 43 to 45% depending on what types of services or products i buy, but.... I'm self-employed which means i have to pay the entire FICA of 15% so that puts me back at 50%. This, folks, is why i will always support any candidate who is going to cut my taxes and vote against anyone who will raise them. We are paying enough in taxes. 50% is gross over-taxation in my opinion. I am fed up with both parties wasting my money -- and now they're handing it over to JP Morgan -- the largest bank in the country. It's time to reform the Sons Of Liberty. My ancestors were charter members.
October 27, 2008 9:08 AM | Reply | Permalink
The argument is about federal income tax.
Your property tax is excluded as local and irrelevant. Ditto state taxes.
FICA hurts you less than others lower down. But it benefits you less, so that's OK. (I used to be self-employed and it hurt me too, but it's the same number for me, except I don't see it happening. Without the employer contributing, I would be seeing more take-home, too.)
Back to 28% on the taxable portion.
Since the rates have been always been at least somewhat scaled, either with a flat rate above a certain threshold, or actually sliding percentage, America has had a long time to think about the fairness. It seems that voters are OK with it, just like to nudge the scale up and down.
Therefore, extreme-language talk such as "Marxist" is just not serious.
October 31, 2008 12:57 AM | Reply | Permalink
You may be in a weird situation - but it still sounds like you would benefit from a tax accountant's advice. Granted - it shouldn't be so complicated that the average person figuring out their own taxes ends up in that situation.
October 27, 2008 10:30 AM | Reply | Permalink
Jof, this isn't complicated. YOU are paying the same rates as a middle-class taxpayer. WAKE UP! You are paying tax rates higher than many European countries. Do the simple math i did on your own taxes in the state you live in. And take a closer look at your cell and phone bill next month. You will be shocked at how much you are already paying in taxes, and you're not rich. There is no way you're paying less than 40% and probably closer to 50.
October 27, 2008 6:18 PM | Reply | Permalink