Post by 4aapl on Apr 22, 2024 22:27:41 GMT -8
The triumph of injustice - How the rich dodge taxes and how to make them pay - Emmanuel Sanz and Gabriel Zucman
This was one I forced myself to read, not really wanting to, and not really thinking I would agree with it or get much from it. But these UC Berkley professor's articles and books are the basis of many of the 'the rich are paying less than the poor' articles and mindsets that have been out there since these came out in around 2018. And even though most people don't read them and look at the calculations to see what assumptions they used, the "they are paying less" idea seems much more fact based than the "they aren't paying their fair share", which really comes down to deciding what anyone's "fair" share is.
This book came up as the source behind some statements made in an article that was posted here (I think by LC). It happened that it was available at our library, so I requested it.
The first ~150 pages were mostly about historical tax rates in the US, how they came to be, and how they were treated. It was very informative to me. In general, there was a long timeframe where federal tax rates were very high above a pretty high level, as much as 95%, and that basically kept the bell curve of income levels relatively tight. There wasn't much reason to make absurd amounts of money, if it was mostly just going to be taken away. But various other rules also kept this in check. Those rules faded later, with some tax shelters opening up, and then they threw Regan under the bus for lowering tax rates so much.
Switching to the current, and their calculations, they did what we see various politicians (I doubt I actually have to give her name) now use. First they put in all personal taxes, including things like the gas tax, property taxes, and vehicle taxes. Then they add in things like social security tax, even though that is payment into a retirement fund that people get back. But then things really get tricky. They add in the employeer side of social security, figuring it is a cost of having an employee, and that some company somewhere might otherwise pay their employee 6% more if they didn't have that added cost. Due to adding in these things and some others, they get that those in the top 1% of income still pay a little higher overall rate. And even the top 0.1%.
But then they get tricky again, deciding that wealth growth should be considered income. But it's not currently taxed by the IRS, since it is part of net worth and not income, until the income is "realized". No matter. They include it anyway, and now their numbers are that those in some tiny top fraction (I think it was looking at the highest 250 earners) are paying a lower overall tax rate than those in the bottom 10%.
I take issue with this calculation, mainly because they are trying to make data up to fit what they are looking for. This just seems too skewed. OTOH, I see what they are getting at, that especially at the lowest levels, there just isn't much left in the paycheck once all of these things are taken out (doesn't matter if you get SS plus extra back some day, if you have trouble putting food on the table today). I just wish they stated it as that, or said that they didn't feel people were paying their "fair" share, rather than trying to make their "statistics" match what they wanted.
They also had a section on trying to maximize taxation on the rich, first at an ideal level (they somehow came up with that ideal level being a tax rate of 75%, saying that there would still be enough incentive that people would choose to do more work to earn more at this level, even with 3/4 of it taken away. I disagree, deciding to earn less or give away my extra income when part of it was taxed at a net ~50% federal rate, due to overlapping tax rules), and then taking the next step to say that they might choose to tax at an even higher rate to disincentivize anyone wanting to make that much.
Again, I don't agree with this. At the same time, I think it is helpful to understand their viewpoint and try to understand why they feel that way. A lot of it is to keep that bell curve tighter, feeling that no one should make that much more than the average or lower end person. I get that, and at least partially agree with it. It just comes down to the method to get there, while also working within the existing rules, or changing rules to get there. I don't think it is right to vindicate current people who have done well and are following the current rules. But I also don't think it is right to make up new rules just to try to tax the snot out of people that have done well.
Personally, I think the whole thing should be simplified, taking away a lot of the various breaks and deductions, while also trying to make everything apply across the board. Maybe instead of an added wealth tax, you pre-tax capital gains after 10 years, at least partially. But if doing that for the wildly rich (say trying to tax Elon's Tesla holdings) you also need to do it for all, so taxing gains on houses, small businesses, and small farms. I'd mostly like to see a somewhat flattish tax (steps up some, but not a lot) applied to all people, with a standard deduction to get people up to some multiple of the poverty rate. But that's just my feeling on trying to have it relatively simple, relatively fair, applying to all, but still having reasonable incentives and simplicity to working harder to make more money.
...at the same time, I see their feeling to keeping that bell curve tighter. The bigger problem here is changing "taxing" to looking at all net wealth increases. Taking big risks to start and grow a company is tough.
In the end, while I like their idea of making that bell curve tighter, I think what they really want is to help bring people back together and unite us again, in these times where people seem to be getting more and more divided. If looking at it from that point, I don't think just "taxing those super rich people" is the right thing. Instead, looking at the history they shared, the thing to do is to find a common goal and unite the masses. This was done before, whether when trying to come out of the great depression, or getting through or out of a war. This is what is needed, to get people to look for the greater good, and have a common goal. And once this is pushed, and everyone is on board, then things can be pushed forward even if they sound drastic. And that is the time that you can change things majorly, even if it is a hard change for some or even many to swallow. But uniting the citizens is worth it, getting together to fight for the common good.
Anyways, that's what I came away with from this book. I think there was a lot of good stuff in there, along with some stuff that wasn't so good IMO. But in trying to understand their viewpoint and how they got there, along with how they got their data, it helps to show what they are really after while also thinking of other ways to get there. And right now, as the Jenna relationship pointed out with Elon in his book, there are a lot of divisions.
This was one I forced myself to read, not really wanting to, and not really thinking I would agree with it or get much from it. But these UC Berkley professor's articles and books are the basis of many of the 'the rich are paying less than the poor' articles and mindsets that have been out there since these came out in around 2018. And even though most people don't read them and look at the calculations to see what assumptions they used, the "they are paying less" idea seems much more fact based than the "they aren't paying their fair share", which really comes down to deciding what anyone's "fair" share is.
This book came up as the source behind some statements made in an article that was posted here (I think by LC). It happened that it was available at our library, so I requested it.
The first ~150 pages were mostly about historical tax rates in the US, how they came to be, and how they were treated. It was very informative to me. In general, there was a long timeframe where federal tax rates were very high above a pretty high level, as much as 95%, and that basically kept the bell curve of income levels relatively tight. There wasn't much reason to make absurd amounts of money, if it was mostly just going to be taken away. But various other rules also kept this in check. Those rules faded later, with some tax shelters opening up, and then they threw Regan under the bus for lowering tax rates so much.
Switching to the current, and their calculations, they did what we see various politicians (I doubt I actually have to give her name) now use. First they put in all personal taxes, including things like the gas tax, property taxes, and vehicle taxes. Then they add in things like social security tax, even though that is payment into a retirement fund that people get back. But then things really get tricky. They add in the employeer side of social security, figuring it is a cost of having an employee, and that some company somewhere might otherwise pay their employee 6% more if they didn't have that added cost. Due to adding in these things and some others, they get that those in the top 1% of income still pay a little higher overall rate. And even the top 0.1%.
But then they get tricky again, deciding that wealth growth should be considered income. But it's not currently taxed by the IRS, since it is part of net worth and not income, until the income is "realized". No matter. They include it anyway, and now their numbers are that those in some tiny top fraction (I think it was looking at the highest 250 earners) are paying a lower overall tax rate than those in the bottom 10%.
I take issue with this calculation, mainly because they are trying to make data up to fit what they are looking for. This just seems too skewed. OTOH, I see what they are getting at, that especially at the lowest levels, there just isn't much left in the paycheck once all of these things are taken out (doesn't matter if you get SS plus extra back some day, if you have trouble putting food on the table today). I just wish they stated it as that, or said that they didn't feel people were paying their "fair" share, rather than trying to make their "statistics" match what they wanted.
They also had a section on trying to maximize taxation on the rich, first at an ideal level (they somehow came up with that ideal level being a tax rate of 75%, saying that there would still be enough incentive that people would choose to do more work to earn more at this level, even with 3/4 of it taken away. I disagree, deciding to earn less or give away my extra income when part of it was taxed at a net ~50% federal rate, due to overlapping tax rules), and then taking the next step to say that they might choose to tax at an even higher rate to disincentivize anyone wanting to make that much.
Again, I don't agree with this. At the same time, I think it is helpful to understand their viewpoint and try to understand why they feel that way. A lot of it is to keep that bell curve tighter, feeling that no one should make that much more than the average or lower end person. I get that, and at least partially agree with it. It just comes down to the method to get there, while also working within the existing rules, or changing rules to get there. I don't think it is right to vindicate current people who have done well and are following the current rules. But I also don't think it is right to make up new rules just to try to tax the snot out of people that have done well.
Personally, I think the whole thing should be simplified, taking away a lot of the various breaks and deductions, while also trying to make everything apply across the board. Maybe instead of an added wealth tax, you pre-tax capital gains after 10 years, at least partially. But if doing that for the wildly rich (say trying to tax Elon's Tesla holdings) you also need to do it for all, so taxing gains on houses, small businesses, and small farms. I'd mostly like to see a somewhat flattish tax (steps up some, but not a lot) applied to all people, with a standard deduction to get people up to some multiple of the poverty rate. But that's just my feeling on trying to have it relatively simple, relatively fair, applying to all, but still having reasonable incentives and simplicity to working harder to make more money.
...at the same time, I see their feeling to keeping that bell curve tighter. The bigger problem here is changing "taxing" to looking at all net wealth increases. Taking big risks to start and grow a company is tough.
In the end, while I like their idea of making that bell curve tighter, I think what they really want is to help bring people back together and unite us again, in these times where people seem to be getting more and more divided. If looking at it from that point, I don't think just "taxing those super rich people" is the right thing. Instead, looking at the history they shared, the thing to do is to find a common goal and unite the masses. This was done before, whether when trying to come out of the great depression, or getting through or out of a war. This is what is needed, to get people to look for the greater good, and have a common goal. And once this is pushed, and everyone is on board, then things can be pushed forward even if they sound drastic. And that is the time that you can change things majorly, even if it is a hard change for some or even many to swallow. But uniting the citizens is worth it, getting together to fight for the common good.
Anyways, that's what I came away with from this book. I think there was a lot of good stuff in there, along with some stuff that wasn't so good IMO. But in trying to understand their viewpoint and how they got there, along with how they got their data, it helps to show what they are really after while also thinking of other ways to get there. And right now, as the Jenna relationship pointed out with Elon in his book, there are a lot of divisions.