Saturday, April 14, 2007

Thompsonomics

Ezra Klein looks at the following comment from Fred Thompson and asks, "What the hell sense does that make?":
This issue is particularly important now because massive, unfunded entitlements are coming due as the baby-boom generation retires. We simply cannot afford higher taxes if we want an economy able to bear up under the strain of those obligations. And beyond the issue of our annual federal budget is the nearly $9 trillion national debt that we have not even begun to pay off.
Well it makes sense from the point of view of a contender for the Republican nomination for president, who very likely understands, but cannot explicitly acknowledge, that many members of his target audience would prefer that the government stop providing these entitlement benefits altogether.

Personally, I found another of Thompson's complaints even more preposterous:
Perhaps the most fascinating thing about this success story is where the increased revenues are coming from. Critics claimed that across-the-board tax cuts were some sort of gift to the rich but, on the contrary, the wealthy are paying a greater percentage of the national bill than ever before.

The richest 1% of Americans now pays 35% of all income taxes. The top 10% pay more taxes than the bottom 60%.
As of 2001, the richest 1% of Americans controlled 33% of the nation's wealth. Meanwhile, the richest 10% controlled 70% of the nation's wealth. Note that that is not only more than is controlled by the bottom 60%, but also more than is controlled by the bottom 90%. So it's not clear what to make of Thompson's comment, here, except to assume he thinks that under a fair tax regime, people pay a share of the taxes identical to their share of the population, with no reference to income or wealth. I say we call that the Super-Flat Tax, and give Thompson all of the credit for it.

5 comments:

Thinker said...

Since over 40% of that $9 trillion national debt is owed to the Social Security and Medicare Trust funds, do you think Thompson is suggesting that we default on those bonds? If so, what message will that send to those around the world who invest in US securities?

Ned Williams said...

Well, unless they come by it dishonestly or illegally, whose money is it?

And doesn't it make sense (I guess I should read what Klein wrote) that the issue is "particularly important now" because it is only going to exacerbate as our population ages?

Tommaso Sciortino said...

Whose money is it? Is the answer not obvious? Tax money belongs to the federal government. If some people feel they are too good to pay what they owe they are free to burn their draft cards and move to Canada.

Ned Williams said...

Well TS, sure tax revenues "belong to the gov't" but who determines the amount or rate of taxes? Who determines the level by which we will unequally protect different classes of citizens from onerous taxation.

I wasn't talking about the revenues, I was talking about the assets that are taxed.

Tommaso Sciortino said...

I'm playing dumb for a reason. I'm sure you have a real argument somewhere but we're going to have to get past several layers of hidden assumptions to get there. So if I may continue to play dumb, let me observe that the rate of taxation is set by our representatives who are duly elected by the people. We make decisions at the voting booth about how we tax different people. Like many orginizations the federal government has decided to pro-rate it's services - raising more from individuals who have been served especially well by our form of government.

I should add that I don't think our taxes are progressive enough. If you figure in state taxes and the lax ax law enforcement Republicans insist on it's hardly progressive at all.