How is characterizing your opponents as "trolls" good public policy? Or are you just promoting bad public policy on your own time?

While we're nitpicking at your language, I don't think the Nobel Prize in Economics confers automatic credibility on anything a winning economist ever says -- unless you want people to reply with what Milton Friedman thought states should do in a recession.

I think we've got it all backwards.

Why isn't anyone simply talking about a flat tax. Well, we all know the answer: A flat tax takes the politics out of taxation. There isn't an ability to push social doctrine or political favors through the tax code. I'm not pointing to the right or left on this. Both sides use the tax code for favors and political football.

We have plenty of examples in Europe of countries that have raised taxes to find it doesn't work, and then are forced to lower them to become competitive again.

The Obama plan will raise the number of the voting public that pays no taxes from 40% to 49% when you include the refundable tax credis(see WSJ Article today, quoting study by Brookings Institution and Urban Intitute).

Taking from the most productive and giving to the least productive is nothing more than an expansion of the welfare state. Bill Clinton fought this. As Democrats, we should fight this too as it goes against the grain of what has made this country great.

Troll crude comment from http://24.21.79.108/ happily deleted.

Chuck - strange, huh. It's volatile, and almost a no-brainer posture piece for some. Give it some time. It'll fire up. The thinkers are all fixing dinner for husbands and wives, settling in for the night.

Wow. I am a troll? Did you bother to check my comment history on the site? I thought my comment was a clever reference to the rather obscure picture accompanying the article, and it was not crude.

Bite me.

Chuck and Obama, two peas in a pod.

[T]hey came first for [those making $250,000], And I didn’t speak up because I [didn't make $250,000];

And then they came for [those making $150,000], And I didn’t speak up because I [didn't make $150,000];

And then they came for [those making $100,000], And I didn’t speak up because I [didn't make $100,000];

And then . . . they came for me [because I made $75,000 ... And by that time there was no one left to speak up.

Chuck,

You're clearly a socialist, just like Obama.

Ya, Chuck, stop trying to put wealthy people into death camps.

Scott J wrote:

The Obama plan will raise the number of the voting public that pays no taxes from 40% to 49%

Just about everyone in the US pays taxes. Your statement is FoxNoiseSpeak.

All right, I'll attempt an actual semi-substantive reply, but glaring, though ultimately irrelevant fallacies like those above are surely worth pointing out.

First, the authors do not use the term "hide", they use the term "misreport" which I think is important - some fraction of this misreporting is probably unintentional, though if it's true that (from the paper) "57 percent of nonfarm proprietor income is unreported" it's probably mostly intentional. The authors don't seem to distinguish between intentional and unintentional misreported income. Second, as the authors point out, higher incomes are associated with types of income that are more easily hideable -- people with lower incomes more frequently receive paychecks from which their tax is withheld; if that weren't the case, you can bet they would fail to report it at even higher rates, simply because they need the money more than richer people. I certainly would. The poor pay taxes through coercion, not virtue.

As for Stiglitz's recommendations, (your second link goes to the same place as the first, by the way) they seem reasonable, but surely the question of whether spending is less harmful than taxing the rich depends a lot on what the state is spending money on, such as, say, expensive foreign wars.

And if the state is spending a lot of money on those, and by the way is in place due to dubious elections and has very low approval rates (in other words, does not have the consent of the governed) I'd say the rich are perfectly justified in not paying their taxes.

That last bit applies more to the federal government, obviously, not Oregon, but then again, so does the paper.

A rallying cry of the McCain campaign is that Obama is a Socialist bemoaning his plans for "wealth redistribution". Of course, I am sure they would ignore the fact that all those "job-generating" tax cuts for the wealthy we've been blessed with from Reagen through Dubya were a in fact part of a wealth redistribution plan.

Rich-Poor Divide Worst Among Rich Countries

-tl

If we wanted to have a substantive debate on equal footing, we would need data that show how much the "poor" overstate their deductions, since as the article states, the "rich" have a capacity to understate their income in a manner the "poor" do not.

Only then would we be able to pass judgment on who really is cheating the system, rather than the meaningless crap that is posted here.

I'm not making claims about anyone's motivations, I'm just saying they happen to have a justification.

The less rich are already coerced into paying taxes -- instead of extending that upward, let's remove it from the poor and instead create a government that responsible people can be happy to pay their fair share in. I just voted for 26-94 and 26-95, for example, raising my own property taxes, because these are valuable ways to spend money. All I see on the federal level are wars on drugs and for oil, welfare programs that appear to be designed to perpetuate poverty, not end it, domestic spying, oppressive immigration control -- the list really does go on and on. What kind of person would voluntarily pay their fair share in that?

Chuck, you must be pretty out of touch if you believe that with people with incomes under the median pay their 6% share of income taxes on their 10% share of income out of a sense of patriotism.

Even after cheating, the rich still pay the majority of income taxes. It's easy to find summaries of this, but you might justifiably dismiss them all as right wing propaganda. See here instead -- look in the "Tax Generated Classified by Tax Rate and Size of Adjusted Gross Income" section. In 2006, the 99th percentile by number of tax returns (over $500,000) received 26% of unhidden income and paid 35% of taxes. The top 25% received 72% of reported income and paid 80% of income taxes.

I've certainly heard that corporate taxes are the real issue, but I really don't know anything about that. Government corruption is the real issue as far as I'm concerned, and that's been going on since long before I was born, with either party in power.

And by the way, this just occurred to me -- the highest rate of misreporting in the paper was about 22%, for the $200,000-$500,000 income level. That's about the same as the percent difference between the share of tax that income level paid and the share of income they earned. Scott J, they've got an effective flat tax. That's not a general trend, of course -- higher incomes paid more than a flat tax even on what the authors estimate as their real income.

Tom,

I should have been more specific when I stated the "pay no taxes" part.

I'm speakin in terms of Federal taxes. Close to 40% of the population do not pay any NET taxes. While they may have payroll witholding, they end up getting this back in the form of tax refunds.

What's wrong with a flat tax, NO exemptions?

Scott J ....

I'm speakin in terms of Federal taxes. Close to 40% of the population do not pay any NET taxes. While they may have payroll witholding, they end up getting this back in the form of tax refunds.

Other than stimulus checks like we had earlier this year, how does that 40% get a refund of their payroll taxes? They may or may not get a full return of their FICA/Medicare taxes through Social Security and Medicare (if they live long enough to account for the time value of money).

What's wrong with a flat tax, NO exemptions?

There's an old adage in the tax game that "a fair tax is not a simple tax, and a simple tax is not a fair tax." One of the goals of these schemes is to eliminate the tax code and make calculations simple. It usually takes me a few questions to a proponent to obliterate their argument. For instance, 1) Are you going to tax a business' GROSS or NET income? If you say "gross," you'll put every merchandising business and farm in the country out of business right away. Not to mention the effect on residential rentals, etc. If you say "net" then, 2) How do we get from gross to net -- what deductions are allowed and which disallowed? It takes a large (and complicated) body of tax law to set forth these rules. (As someone who thinks the economics of professional sports have gotten completely out of hand, I sometimes think it would almost be worth seeing us take this approach just to see how the house of cards that supports most pro sports teams would come tumbling down. Few teams would maintain anything close to their current revenues without the write-offs for season tickets, luxury suites, and other benefits subsidized by the U. S. tax code.)

Let's go to 3) What do you plan to do with the itemized deductions for mortgage interest and property taxes that support the housing industry; or for contributions to charity; or for medical expenses? There will be a lot of unhappy people if you do away with those -- and they're not just Dems. Then there's 4) No exemptions, huh. So you're not going to provide any benefits for those who are married and/or have kids? That will get an interesting reaction from the "anti-marriage penalty" and "pro family" elements of the right wing.

Chuck .... Don't you think that one of the true elements of genius (??) of Reagan and the Rs for the past 30 years has been their ability to convince a substantial percentage of Americans to vote against their own economic interests so as to make life better for the 5-10% at the top? And then to argue with a straight face that income redistribution downward is "anti middle-class" and amounts to "class warfare?"

I look at Ohio, where I was born, in complete bewilderment. Here's a state with a middle class that has suffered major job losses and that has been decimated by the war against unions. A state that's steadily losing population, and where home values are relatively low. Certainly a state that pays a big price for the conservatives' love of "free markets" (as if we really have those). Yet, here they are, likely to vote for the Rs again this year. Oh well, at the rate things are going for Ohio, they soon won't have enough electoral votes to matter any more.

It would make a great country and western song. "He got me fired, he stole my money, he took my woman, and he kicked me out of my house. But he's still my best friend."

Dear Rural,

I have no misconceptions about how unpopular a flat tax would be from those on both the right or left.

I'm not really interested in winning popularity contests. I'm interested in solving problems. The reason that Bush has an approval rating in the 20's and the Democratic majority Congress has an approval rating EVEN LOWER, is because problems NEVER get solved, only deferred.

A flat, with no deductions, is simple and fair. Eliminate all corporate taxes. Tax all dividends and capital gains rates at the exact same flat income tax rates.

Income would flow through to owners and would get taxed. No loopholes.

You could file your taxes on a postcard. Tax receipts would go up dramatically.

O Greg D, I'm not blond, and I don't drink; I'll date a crinkly ol' man now and again, sure.... but I'm not the girl you want to bite you. Unless you can trade the she in the picture for coyote-silver hair and a bellicose temperament.

Bite you I shan't, and laugh at your comment I did. Bite ME.

How to put this simply?

You have no damn idea how much money the top 0.1% actually make in one year, the IRS tables are just so much junk since that is the income they couldn't shield from tax liability. You have no idea how screwed you are on tax rate once FICA etc are in the picture.

The problem is that if you could get a really good tax accountant to take the time to list the how it is done it would be so long and boring it wouldn't get read. Oh well, there's no talking to the wealth appologizers.

Chuck: So you dispute the reliability of the paper we're discussing? On what grounds?

Scott J ... You never answered my questions -- especially the one about taxing the gross or net income from businesses, farms, etc. That's pretty important to the implementation of your concept.

If you're taxing the net, people won't be filing their returns on a postcard. If it's the gross, these same people could; they'll be out of business. It had better be a BIG postcard, however, given the many potential sources of income we report on current returns.

My analysis is that this doesn't solve a problem as much as it replaces one problem with another.

Also, you're not worried about whether it's "popular." If it isn't, what do you think it's chances are of getting through the legislative process?

I keep waiting for some politician to whom the media pays attention to take on frontally the canard that redistribution of income -- downward -- is somehow evil. Perhaps we need to find a different term to describe a truly progressive tax system (since "progressive tax system" doesn't get much use), but the truth is, without a tax system that redistributes wealth, via progressive taxation, so that the wealthier you are the more you pay on the margins, you can pretty quickly kiss liberty goodbye. The reason: without it, within a remarkably short time -- probably less than three generations -- wealth becomes so concentrated at the top that you wind up with economic oligarchy, and I guarantee, when that happens you will very shortly have political oligarchy as well. Look at Cuba under Batista. Or Paraguay, or Uruguay, or Bolivia, for the better part of the last two centuries. Or for than matter, Mexico. People innately strive to hang on to their money, and their power. As wealth concentrates upward, the ability to hang onto and increase both wealth and power goes with it. It's silly to bemoan this, or to criticize the behavior; it's simply a fact of human nature, and I suspect you and I, if among the blessed few, would do likewise. Heck, we do it already -- just on a much smaller scale. It is simply a fact that must be addressed, and the best way we've come up with so far is progressive taxation. Bill Gates and I pay exactly the same rate on the first 15K we make: namely, none. We pay exactly the same rate on the next 15, and the 15 after that. As my income tops out, and his keeps going up, he should pay more on incremental levels, and I frankly think that the Rooseveltian 90% at the very top was not that far from what makes sense. "Fairness" is not the nub of the argument(although a philosophical case can certainly be made that nabobs do benefit so much more from the security a compliant populace gives, which is the sine qua non justification for government, that they out of simple fairness should pay more). It's the fact, whether we like it or not, that if you don't do that, very soon the Murdochs and the Forbes wind up running the entire show.
Which over the last 28 years, they've come perilously close to already. (That's what the Bush tax cuts were all about, for pete's sake! Remember Michael Moore's movie? The most insightful piece of the entire show was Bush saying to a big-money, black tie fund-raiser, attended by the rich and the representatives of the very rich [the latter of whom typically stay in the background] "I call you my base.") It's too late to start confronting the Joe the Plumber bullshit just 12 days before the election, but someone, or hopefully many someones, will start talking about it very shortly thereafter, so the electorate will be less likely to fall for it next time 'round.