
IMF strongly suggests countries tax the rich to fix deficit - Tsiolkovsky
http://www.rawstory.com/rs/2013/10/11/international-monetary-fund-strongly-suggests-countries-tax-the-rich-to-fix-deficit/
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sebkomianos
I am not sure about the strength of this suggestion and I am not going to
comment it (or the suggestion itself).

It's funny how many excuses people try to find against such "proposals". You
can hear/listen to all kinds of excuses. From "yeah, good luck making them pay
their taxes" to "if you tax them they will go to another country". Really?
They won't pay their taxes? Jail them. Really? They will go to another
country? Let them go then, and forbid them from operating in your country.

It's beyond understanding how such a big part of the "middle class" believes
we shouldn't touch the rich.

And, of course, it's also beyond understanding how we have allowed tax heavens
to exist. Very funny, for example, to watch Germany go all crazy against
private money in Cypriot banks but ignore Switzerland and Luxemburg ones.

~~~
Kaizyn
Generally, if you or I take what belongs to another person (wealthy or not) it
is called theft. However, when we start talking about governments
expropriating wealth for its own ends - such as paying off its spending
deficits - that's considered OK. No one argues with the concept that necessary
government services should be paid for by the people who live in a country and
make use of those services.

What is usually objected to is when someone gets the bright idea that because
wealthy people have money, that money should be taken to pay for irresponsible
government spending. It's no different than infamous bank robber Willie
Sutton. He was asked why he robbed banks and offered as a reply, "Because
that's where the money is."

~~~
sebkomianos
I am not for theft. I am for a more fair taxation system. Banks aren't even
being properly taxed at all anyway, for example.

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adventured
Higher taxes on income can help with the deficit, no question. However, you
realistically can't raise taxes enough in America to fill the $750 billion
deficit.

To balance the issue, I like to ask a simple question: what did America get in
exchange for doubling the size of its government between 2000 and 2012?
(during which population increased by a mere 11%)

Is our economy better off? No, we have the greatest amount of poverty since
the great depression (15% U6 unemployment, 46 million on food stamps, etc). Do
we have less debt? No, twice as much. Is our military stronger? No, it's worn
out, we've lost thousands of good soldiers and our weapons are destroyed,
having lost a small war machine in the desert. Is Social Security more
solvent? No, it's bleeding red ink now. Is our infrastructure better? No, it's
in shockingly horrendous shape. Is our electrical grid, and energy production
improved? No, it's collapsing, with black-outs ten times higher compared to 20
years ago. Are we safer, with a hundred billion in added domestic security
spending? I'd argue not, that it's mostly security theater. Do we have a
higher home ownership rate? No. Do we have less consumer debt? No, more. Is
our education system flourishing? No, it's an absolute disaster, from K-12
results, to the trillion dollars in college debt. Do we have more full time
jobs? No, seven million less since 2007, and about 92% of the jobs being
created over the last year are part-time jobs. Do we have more manufacturing
jobs? No. Has the long promised manufacturing boom from cheap natural gas
arrived? No. Is Washington DC functioning properly, such that we can trust
them to be responsible with our hard earned tax dollars? No. Do we have a lot
less people committing welfare fraud? No, SS disability has enrolled millions
in just six years that are lying about their inability to work. This list
doesn't stop going.

So what did we get for the extra $18 trillion above population growth in
spending over 12 years? What did we get for all the debt? Absolutely nothing.
So we should just keep spending more? That's going to have an obvious outcome.

~~~
millstone
> what did America get in exchange for doubling the size of its government
> between 2000 and 2012?

That's a valid question. Working from www.usgovernmentspending.com, I found
the increase to be about $1.7 trillion. $300 billion is health care, mostly
Medicaid; $500 billion from increased defense spending, and $300 billion in
transfer payments, including unemployment, food stamps, SSI, and the child tax
credit. Inflation accounts for about $500 billion as well.

So to answer your question, "what we got" is that we are able to pay for the
increase in medical costs, the increase in the number of people needing
assistance, and the War on Terror. With the exception of the military, these
increases are mostly in reaction to the changes in the economy, not due to new
policies. Hopefully an improving economy will lift incomes and reduce the need
for these programs.

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Mikeb85
It doesn't always work because there are too many tax havens. If you increase
the taxes too sharply, the rich will simply take their wealth elsewhere, and
then the government gets nothing. The recent situation in France (which ended
up being averted anyway) being an example, many of the countries rich debated
moving their assets and businesses to Belgium or Switzerland...

Taxes can be an effective tool, but they have to make sense. You can't kill a
businesses ability to compete, nor can you remove the incentives to build
wealth.

~~~
Shivetya
there isn't enough rich to tax to fix debt, unless you count everyone above
the poverty line.

~~~
seanmcdirmid
If the top 10% controls 80% of the wealth, there are definitely enough rich to
fix the debt.

~~~
sidww2
Wealth is not income though. Higher wealth taxes would go a long way but then
you again have the problem of the wealthy simply moving their wealth out or
not bringing it to the high-tax country in the first place.

~~~
zanny
> the problem of the wealthy simply moving their wealth out

I could easily see any nation trying to implement higher taxes on the rich to
also implement a wealth export tax that takes a tremendous portion of their
accumulated wealth if they try to jump ship and take it overseas.

> not bringing it to the high-tax country in the first place.

This is the larger concern, but if a society can't survive without the good
graces of the lucky rich, it is already their slaves.

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blisterpeanuts
In the U.S., the top 10% earners pay 70% of federal taxes. The bottom 50% pay
nothing at all (they do pay about 12% to state/local/sales taxes).

Then we have business owners and majority share owners and the like, who are
rich on paper, yet do not earn significantly more income than most middle
class salary earners. Should they be paying out more taxes since they're in
some kind of millionaire bracket, even though they're largely devoting their
assets to employing people to produce goods and services?

I realize these are over-simplified kinds of generalizations and there are
undoubtedly very wealthy people and cash-rich entities that pay little or no
income taxes or corporate taxes, thanks to offshoring their assets and other
workarounds.

But, I just don't see where all the money is, that's supposedly lying around,
waiting to be scooped up by the tax man. In fact, the situation seems to be
rather the opposite. Most of the money controlled by the rich in fact is being
put to work in companies, and attempting to get at it would probably cause
great damage to the economy.

To my (supply sider) mind, a simpler and far more effective choice would be to
cut government spending until outflow meets intake (and then go a few hundred
billion farther, so that debts can be paid). Among other things, this might
have a positive effect on business optimism, and we would experience an uptick
in hiring for start-ups and established companies alike.

~~~
millstone
> the top 10% earners pay 70% of federal taxes

What percentage should they pay? What percentage would be fair? We can't say
without specifying the income distribution. If the top 10% earned 95% of the
income, then paying only 70% of taxes would be criminally low. This statistic
says more about the income distribution than about the tax schedule.

> Most of the money controlled by the rich in fact is being put to work in
> companies

What data lead you to that conclusion? I see the opposite. Corporate cash
holdings as a percentage of assets are way up: the money is just sitting
there. The "invention" of crazy investment vehicles like CDO-squareds shows
there's too much money chasing not enough legitimate investment opportunities.

> cut government spending until outflow meets intake (and then go a few
> hundred billion farther, so that debts can be paid). Among other things,
> this might have a positive effect on business optimism, and we would
> experience an uptick in hiring for start-ups and established companies
> alike.

"Cutting government spending" means the government buys less stuff from
private firms and individuals. Firms generally do not increase their workforce
in response to reduced sales.

~~~
blisterpeanuts
The top 10% earned 43% of the income in 2009 and paid 70% of the income taxes
according to several websites I've looked at (ntu.org, heritage.org).

The bottom 50% paid 2% of federal income taxes.

I was responding to this IMF report which says, in effect, that more holdings
of the rich should be confiscated and redistributed. Arguably, the U.S.
already has fairly progressive taxation.

The payroll tax a.k.a. FICA is a slightly different story since,
theoretically, we all get that money back eventually.

As I understand it, the government's huge size and credit utilization
encroaches on private sector investment and expansion. Simply put, if it
didn't soak up $1T/year in loans, that loan money could be invested privately
and put to more productive and efficient use.

I didn't know that companies are sitting on cash. It was my impression that
money is being put to use no matter how it is stashed, except under a
mattress.

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PLejeck
I don't think we should view tax increases as a serious solution to debt so
much as a means to combat income disparity and provide safety nets.

The US government has shown us that tax increases usually go to fund
irrelevant wars on other continents or NSA spying. Very little goes to worthy
programs like NASA or helping the poor.

While I agree the rich should pay more, I think that we need to really take a
good hard look at what that increase in revenue would actually pay for, and
see if it's absolutely necessary.

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Qantourisc
Tax capitalism/making money of money. Also at what point does having money to
get certain things done stop severing the community?

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politician
If, once again, we're talking about a group of individuals that controls (once
again!) over a third of the wealth in their respective countries, then
shouldn't we conclude that money is a fairly poor form of rationing?

Putin's policies show that "the rich" are no actual threat to government. Why
would the IMF bother with this recommendation?

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incompatible
Allow them to build as many apartment blocks as they like. Supply and demand
will eventually sort it out.

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vinceguidry
Hah. That's a laugh. Never gonna happen.

