
Ocasio-Cortez Says 70% Ultra-Rich Tax Could Pay for Climate Plan - rhegart
https://www.bloomberg.com/news/articles/2019-01-04/ocasio-cortez-says-70-ultra-rich-tax-could-pay-for-climate-plan
======
nonbel
I look at these "tax the super-rich" ideas like this:

>"Added together, the total net worth for 2018's billionaires was US$9.1
trillion"
[https://en.wikipedia.org/wiki/The_World%27s_Billionaires](https://en.wikipedia.org/wiki/The_World%27s_Billionaires)

Meanwhile, the US federal government spends ~$4 trillion per year:
[https://en.wikipedia.org/wiki/United_States_federal_budget#/...](https://en.wikipedia.org/wiki/United_States_federal_budget#/media/File:CBO_Infographic_2017.png)

So even confiscating all the wealth of the top couple thousand richest people
in the world (not just US) would only fund the US government for 2-3 years.
And that would be a one-time event.

Basically, the amount of money spent by the US government is already so
massive that I don't see how giving it more can possibly help with anything.
It would be much more realistic to attempt making the government slightly more
efficient and then reallocating the money saved.

And that ignores that barely anyone will end up paying these 90% taxes, just
like almost no revenue was collected from the 90% bracket in the 1950s since
various accounting methods/etc were be used to avoid it.

~~~
L_Rahman
Taxing the rich isn't about generating revenue to make something. It's a
reallocation mechanism for dollars that already exist in the economy to things
that we want as a body of people.

If this seems radical, notice that this is already part of the American social
contract. We already tax people to provide services and invest in long term
projects. All this does is change the rates and the allocation direction.

~~~
geezerjay
> Taxing the rich isn't about generating revenue to make something. It's a
> reallocation mechanism for dollars that already exist in the economy to
> things that we want as a body of people.

That simplistic logic fails to account for the fact that pursuing income is an
incentive to allocate resources to productive investments that are self-
sufficient and pay off tons of taxes directly and indirextly, such as by
paying salaries and generating demand.

Once you start to impose communist "reallocation mechanisms", not only are you
eliminating incentives for productive investments as they effectively cease to
be productive due to state intervention and actually create incentives to move
production and industrial capabilities out of the country.

In short, you're advocating that the goose that lays golden eggs should be
slautered to get to someone else's eggs.

~~~
dragonwriter
> Once you start to impose communist "reallocation mechanisms"

You mean, like a heirarchy of preferential tax rates for different income
sources where capital income is favored over general income which in turn is
favored over labor income?

~~~
geezerjay
Robbing someone of 70% of their income is way more aggravating and profoundly
totalitarian than a simple progressive tax. It's one thing to grant a small
share of your income to the state in order to keep social institutions
running, but it's an entirely different thing if the state robs you off the
majority of your total income for no reason at all.

In a free and democratic society, a citizen has the right to the fruit of his
labour, not just to a small fraction of what he worked for.

~~~
dragonwriter
You seem to be responding to something other than the post yours is attached
to, but:

> Robbing someone of 70% of their income is way more aggravating and
> profoundly totalitarian than a simple progressive tax.

A 70% top marginal rate isn't taxing (much less “robbing”) 70% of your income,
unless your income is literally infinite.

Also, the top marginal rate was at or above 70% for every year from 1936
through 1980, yet for some reason those 44 years aren't usually considered a
“profoundly totalitarian” period in US history.

------
weberc2
I applaud ambitious efforts and I'm open to raising taxes for the very rich
(albeit easy for me to say down here in the middle class), but AOC doesn't
strike be as competent in the slightest (although as her supporters are so
fond of rationalizing, she's not the _least competent_ public official). She
has charisma, which is an important leadership quality, but not much else as
far as I can tell. Certainly not the person I want leading the charge on
climate change.

~~~
tracker1
I'm not... I've seen enough government operations that you cannot convince me
that additional taxation is necessary vs. reducing excess spending and
bureaucracy.

~~~
goalieca
Haha. You will never be convinced the. There’s been ample examples of
austerity and cutbacks and government audits at all levels of government in
all countries. This libertarian ideal of wasteful spending and government
mismanagement is kind of a dumb one. Things are actually pretty well done
unless the politicians are corrupt. But if corrupt politicians are the problem
then the solution is to fix the corrupt politicians.

Every large organization (public or private) has waste the same way every
large computer system has waste. Management is complex and there’s simply no
way to optimize all resources in real-time. In software we may lament some of
the bloat but we generally accept it as a necessary evil. In places where
performance is extra valuable we profile and optimize the path. Well the same
thing happens in government and corporations. Government of Ontario spends a
good chunk of money on grants to health care system researchers to
incrementally make things better and the system is doing really well
considering how underfunded parts of it are.

~~~
tracker1
I've seen $80k phone systems denied, while $180k systems get approved... I've
seen fixed telecom rates nearly 5x what private businesses pay. I've seen
contracts burn through cash only to cancel projects after billions have been
spent. I've seen $100 office chairs denied, and $580 chairs ordered instead...
because of anything from approved vendor lists, to just plain shifts in
corruption. In the end, it all sucks a lot.

These are just off the top of my head. I'm not saying there aren't things that
do run relatively effectively... I will also say there is gross overspending
at all levels.

For the most part, the military could be cut to a fraction of the current size
without much lost. A lot of the rest could be made up by shifting IP
registration costs, and reducing protectionism. There's plenty of fat to
trim...

------
CWuestefeld
Not a word about the logistics of making such a huge change in such a short
amount of time? Surely AOC realizes that money isn't the only obstacle, but
also replacing an enormous amount of infrastructure. When you think about how
ubiquitous our usage of gasoline, home heating oil, CNG for heating and
cooking, and on and on, it quickly becomes clear that while finances would be
very difficult, that's dwarfed by the amount of physical change that would be
required.

Start looking at how all the replacement transportation can be put in place 11
years - either getting all cars off the road, and manufacturing new electric
ones; or building other mass transit that can serve everyone (and how long
does it take to get a train line built these days?). How are we going to find
enough building contractors to install electric heat or heat pumps into every
house that uses oil or gas, and to build and install electric stoves?

And of course there's the upheaval of jobs for all the people in the current
industries, and trying to find a place for them in the new industries.

Money's not the bottleneck here, we're more constrained by logistics.

~~~
L_Rahman
I'll leave the tax plan aside to respond to this. As slow and creaky as the
world is, when a government as powerful as the United States aggressively puts
forth a vision for the world the systems of the world bend to make it work.

Remember also that the vast majority of logistical challenges with climate
change aren't developing new products, but handling coordination problems
around deploying existing ones.

Things that might happen if America decided to commit seriously to a Green New
Deal: \- automotive roadmap overhaul to 80% electric drivetrain for all
deliveries in the United States by 2030 \- tectonic shift in land use around
the country to higher density zoning, mass transit, HSR \- hundreds of
billions of dollars of research to public and private institutions to map all
the carbon in our system and the most effective ways to remove it

But these are all giant changes. Here are simple ones that are straight up
applications of government power: \- switch all major urban areas to Tokyo
style zoning with property taxes tied to mass transit investment \- steep
cliff on ICE vehicles delivered in the United States hitting some x00% in 2030
\- end all fossil fuel subsidies \- move all energy supply to a Texas style
market

Emergent properties of human behavior responding to incentives would take care
of the rest.

~~~
CWuestefeld
_Remember also that the vast majority of logistical challenges with climate
change aren 't developing new products, but handling coordination problems
around deploying existing ones._

Yes, that was exactly my point. There simply aren't enough people making
electric cars, heat pumps, and all those other new products, to eliminate
fossil fuel dependence by 2030, which was what AOC was advocating. Diverting
enough resources would be disastrous to other industries, and then once we've
made the huge investment to build all that, we suddenly don't need the
capacity once we hit the goal. It's economic suicide.

 _Emergent properties of human behavior responding to incentives would take
care of the rest._

You're outlining programs that would push us in the right direction, which is
good. These are not things which will eliminate fossil fuel dependence by
2030, which is what AOC was shooting for, and which I'm criticizing.

------
throwawaysea
[https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...](https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates)

> During World War I, the top rate rose to 77% and the income threshold to be
> in this top bracket increased to $1,000,000 (equivalent to $19.6 million[68]
> in 2018 dollars).

> During 1944 and 1945, the top rate was its all-time high at 94% applied to
> income above $200,000 (equivalent to $2.85 million[68] in 2018 dollars).

Nominal Tax Rates and Brackets, 1913-2013:
[https://files.taxfoundation.org/legacy/docs/fed_individual_r...](https://files.taxfoundation.org/legacy/docs/fed_individual_rate_history_nominal.pdf)

Inflation-adjusted Tax Rates and Brackets, 1913-2013 (in 2012 Dollars):
[https://files.taxfoundation.org/legacy/docs/fed_individual_r...](https://files.taxfoundation.org/legacy/docs/fed_individual_rate_history_adjusted.pdf)

------
jeffdavis
The vast majority of wealth is stored in abstract things like stocks and
bonds, not possessions stored in a bunker somewhere.

To pay high taxes, that means liquidating those stocks and bonds (or in the
case of income taxes, never buying them in the first place). That limits the
financing that corporations can get, preventing expansion or causing them to
downsize.

In other words, taxing the rich actually takes from corporations. Maybe that's
the goal, but it has consequences, like job losses, greater dependence on
foreign investment and imports, etc.

------
bigfartchili
I openly admit I am a republican but I have never understood why there are not
more tax brackets. A person making 100k per year is not even close to the same
as a person making 100m per year but are taxed at the same rate.

~~~
wafflesraccoon
I've never really understood why there are brackets in the first place, can't
we just write a function to calculate your taxes based off your total income?

~~~
noobiemcfoob
Because income tax in the first place is a compromise with people who don't
want that system at all. So you get a solution that isn't what anyone wants.

------
jakelazaroff
To put this in context, a 70% rate on the top marginal income tax bracket is
not unprecedented, or even high by historical standards [1]:

 _> Sanders said income tax rates under Eisenhower were as high as 90 percent.

> A look through the records shows that top earners in the eight years of
> Eisenhower’s presidency paid a top income tax rate of 91 percent. It was
> even a bit higher before he took office.

> We rate Sanders’ statement True._

[1] [https://www.politifact.com/truth-o-
meter/statements/2015/nov...](https://www.politifact.com/truth-o-
meter/statements/2015/nov/15/bernie-s/income-tax-rates-were-90-percent-under-
eisenhower-/)

~~~
kansface
> income tax rates under Eisenhower were as high as 90 percent.

Climate change is not WWII.

~~~
kenforthewin
You're right - the stakes are much higher with climate change.

~~~
kansface
Sure, but they are not imminent (what is the pearl harbor of climate change?).
Further, climate change is highly politicized whereas WWII mobilized the
_entire_ country in purpose.

~~~
InitialLastName
> what is the pearl harbor of climate change?

I'd say Katrina, Sandy, Irene, Maria, Camp, Woolsey, and Mendocino, but if
you're not convinced already you'll never be.

------
e40
70% was the highest tax rate in 1980, so this is not as insane as it might
seem on the surface.

[https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...](https://upload.wikimedia.org/wikipedia/commons/8/8c/Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg)

~~~
thatswrong0
IIRC the _effective_ tax rates that the top 1% pay haven’t really varied much
over the past half a century.. it’s always hovered around 30-40%:
[https://files.taxfoundation.org/20170804133536/Average-
Effec...](https://files.taxfoundation.org/20170804133536/Average-Effective-
Tax-Rate-on-the-Top-1-Percent-of-U.S.-Households.png)

Note I just grabbed the first google result, may be inaccurate / biased

------
microcolonel
"Ultra-Rich" and "Could" are going to have to be refined as ideas; bearing in
mind that a) the proportion of GDP which goes to taxes has not changed in any
great measure for a very long time, including since the top marginal tax rates
were already that high (though the bracket was... pretty high, and other
factors reduced its purpose), and b) the U.S. already has the most progressive
income taxes in the developed world as far as I can tell.

I know it's fashionable these days to play on people's resentment for "the
rich" (however that is conveniently defined at the time), but this is
budgetary advice from somebody who didn't think far enough ahead to budget her
first month of rent in DC (or find a roommate), and who once said that the
reason unemployment is low is that "everyone is working two jobs".

If you want a progressive policy, this person is not likely to be able to hold
that policy's basic premise in her head, let alone any important details. I'm
not a progressive, but surely it's easy to see how a Tulsi Gabbard, for
example, is actually likely to produce some form of meaningful policy on at
least some issues, whereas AOC mostly relies on desperately clawing to
relevance through cheap popularity stunts and gaffes.

------
AnimalMuppet
She cites Lincoln and FDR as evidence that radical ideas can be good ones. But
"there have been radical ideas that have been good" does not imply " _this_
radical idea is a good one".

Her idea may in fact be good, but on this point, her logic does not work.

As for the idea itself: IIRC, there seem to be significant second-order
effects that keep the federal government's income at 18-22% of GDP, no matter
what the tax rates are. So raising the rates like this may provide
significantly less new income than she expects.

What's more, if you have a pot of new money, there will be competing ideas for
how to spend it. This green initiative may be a good idea. Somebody else may
have a good idea - say, Medicare for all. And a different somebody may have
another good idea - say, guaranteed basic income. The problem is, even if
raising the taxes provides the expected money, the money is only enough for
one of these ideas. You can only spend that pot once. But Congress being
Congress, they're going to want to spend it three times. (Note well: This
specific paragraph is not a criticism of Ocasio-Cortez's idea; it's a
criticism of Congress in general.)

~~~
dragonwriter
> She cites Lincoln and FDR as evidence that radical ideas can be good ones.
> But "there have been radical ideas that have been good" does not imply "this
> radical idea is a good one".

But it does rebut the common line of argument that it is preemptively deployed
against, which is “Radical ideas should be rejected as bad _merely because_
they are radical.”

> As for the idea itself: IIRC, there seem to be significant second-order
> effects that keep the federal government's income at 18-22% of GDP, no
> matter what the tax rates are. So raising the rates like this may provide
> significantly less new income than she expects.

To the extent that revenue seems relatively stable with apparently large
changes in rates, I don't think those are “second order effects”, I think that
they are coordinated changes to tax policy other than rates. The US doesn't
have some kind fof special _sui generis_ immunity to policy changing effective
rate of total taxation.

Also, US federal tax revenues were 27.1% of GDP in 2017 [0], so the 18-22%
range is not only not immutable, but also not what is recently observed.

[0] [https://www.oecd.org/tax/revenue-statistics-united-
states.pd...](https://www.oecd.org/tax/revenue-statistics-united-states.pdf)

~~~
AnimalMuppet
Your first part is fair, and your second part has actual data. I'm not sure
why you're being downvoted.

There might be some kind of gaussian distribution on good ideas, though. The
more radical an idea, the lower probability that it's correct. It's still not
zero, and the idea should be judged on the merits. But the further out the
idea is, the more radical it is, it seems reasonable to say that the level of
skepticism should go up.

------
sharemywin
[https://en.wikipedia.org/wiki/Green_New_Deal](https://en.wikipedia.org/wiki/Green_New_Deal)

\-- Government-led investment in energy and resource efficiency, as well as
reusable energies and microgeneration;

\--Low-carbon infrastructure redevelopment in order to create jobs;

\--A directed tax on the profits of oil and gas companies with proceeds being
invested in renewable energy and energy efficiency;

\--Financial incentives for green investment and reduced energy usage,
including low interest rates for green investment;

\--Re-regulation of international finance, including capital controls, and
increased scrutiny of financial derivatives - likely along the lines of Basel
II;

\--Curbing corporate tax evasion through compulsory financial reporting and by
clamping down on tax havens;

------
umvi
Diminishing returns sounds like a good idea on paper, because then the richer
you get, the more you contribute. But remember that the people who are
experiencing the diminishing returns aren't going to like it (besides Warren
Buffett) and will probably fight against it.

It's a bit of a conundrum. The richer you get, the more power you have (via
money). We want to tap into that wealth/power for the greater good. Those
affected might disagree and can wield said power to prevent you from doing so.
You might be able to legally force them to using the power of democracy, but
this could cause all sorts of other problems (the rich fleeing to other
countries, etc.)

~~~
maccio92
Because if I'm able to make myself sufficiently wealthy, I should be trusted
to handle my money myself, not have it redistributed by some third party that
doesn't always operate very efficiently.

~~~
tashoecraft
This isn't about trust, no one cares whether a rich person can handle their
money. That's not why they pay taxes or that those who aren't super rich pay
taxes because they can't be trusted. It's about funding the society that
helped enable you to become wealthy. That instead of relying on the christian
idea of charity that we instead fund a society that can create a more stable
environment.

~~~
tracker1
And what's so wrong from wanting to support charities that pay for the things
you want and care about vs. more money to the militarization of police, or the
military industrial complex in general?

~~~
goalieca
Charities are only needed because the government doesn’t provide the necessary
services in those areas. The unfortunate thing with charities is that it’s a
whim of the donors what gets covered (1 dollar = 1 vote) and sometimes they
are religious (not all inclusive)

~~~
tracker1
I'm not a socialist and am in favor of maximizing personal liberty. Likewise
I'm against corporate protectionisms and in favor of reigning in IP law. I
don't want more government as a general rule.

------
cleansy
> Income tax hikes are dead on arrival while Republicans control the Senate
> and White House. Such a steep increase also isn’t likely to find much
> support among many congressional Democrats.

And rightfully so. When pretty much everyone benefited from lax climate
controls and externalities that are not directly included in the price of a
product or service, why should only on special group pay for it? If there were
a global move towards pricing in climate change into the end price, however
that may work, I would strongly suggest that everyone has to pay their share.
Or am I missing something here?

~~~
johnny313
> When pretty much everyone benefited from lax climate controls and
> externalities that are not directly included in the price of a product or
> service

I think the argument would be that the ultra-wealthy benefited more from a
carbon-based economy than the average worker, in the form of their accumulated
fortune.

~~~
cleansy
I think that argument is not valid. The "ultra rich" would benefit from any
kind of capitalistic economy, they are "ultra rich" because they have more
capital than 99.9% ( or whatever) of the population. And most of this fortune
stems from having shares in businesses.

However, IF we would have taxed the greenhouse gas emissions into every
product, maybe not even the middle class would have been able to afford it.
But since gas was cheap, a lot of people were able to afford having a car,
building houses, getting to their jobs without moving their homes and were
able to improve their lives.

I do see the point in your argument, I just think it would be a fairer
solution to tax everyone for the climate change linear to their consumption.

~~~
goalieca
Consumption is one way to see it. But if, as you were saying, society
benefited a lot from greenhouse gases then perhaps tax those that benefited
most from our society :)

------
thinkingkong
In federal accounting how does one allocate tax revenue to a project? Is it
not just a big fungible resource that then gets allocated? To me the funding
doesnt seem to be the problem in so much as making tackling climate change and
allocating actual dollars.

~~~
AnimalMuppet
Congress at least nominally operates under pay-as-you-go rules. If you're
going to propose a new program, you have to propose where the money's going to
come from.

(I say "at least nominally" because I'm not sure that this actually works as
advertised. If it did, the deficit shouldn't increase from one year to
another, except perhaps in an economic downturn.)

------
LyndsySimon
Here's what I don't understand - the US emits in the range of 15-20% of the
world's total carbon emissions. If we were to reduce that by 20% (which would
be a huge undertaking), we're talking about a 4% worldwide decrease at most.
In order for any drastic change to happen, the US cannot do it alone.

Therefore, domestic policy is not the place where a real impact can be made.
It's a foreign policy matter, and something that can really only be
accomplished through treaties and the like.

China's contribution to carbon emissions is approximately twice the US's.
Trump wants to threaten to harm China's economy through tariffs. Why not
combine those two goals and craft legislation so that tariffs are set on a
sliding scale based on the origin nation's total carbon emissions?

------
candiodari
Man, that article is _very_ light on actual content.

------
gkoberger
Agree or disagree, there's a few things this article left unclear.

First, the US has a progressive tax code. So, you wouldn't be taxed 70% on
your entire income, only the money over a certain amount. Plus, due to
deductions and other loopholes, nobody will actually pay this full amount.

Secondly, this rate isn't a new idea. It was 94% under FDR (democrat) and 91%
during the Eisenhower (republican) administration, and both resulted in times
of prosperity. And it was 70% as recently as the 80s.

~~~
lghh
The first point was mentioned in the article.

~~~
gkoberger
It does include the quote "That doesn’t mean all $10 million are taxed at an
extremely high rate", however it wasn't explained for anyone who's unfamiliar
with our system.

------
smadge
The US has previously had top marginal income tax rates even higher than 70%.
As far as I can tell, currently the highest tax bracket is 37% at income over
$600,000. Why not add more brackets with progressively higher rates? The
largest barrier is that usually to get elected to to the federal positions
that are required to pass this policy you need the support of the donor class,
exactly the constituency that would be opposed to the policy.

------
pmdulaney
What if we were to have an amendment to the Constitution such that income
taxes for each income group would have to be approved by a plebiscite of those
actually IN that income group? I wouldn't feel nearly so uneasy about taxing
the ultra-rich at 70% if the majority of them were in favor of it.

~~~
dragonwriter
> What if we were to have an amendment to the Constitution such that income
> taxes for each income group would have to be approved by a plebiscite of
> those actually IN that income group?

Similarly, we should also require that regulations on industry be approved by
the regulated industry, and that criminal punishments be ratified by those who
are guilty of the specific crime.

~~~
pmdulaney
Well, I think if we can impose 70% taxes on the ultra-rich, perhaps we should
pass a law that Asians have to pay 50% more than other groups; I believe we
still can outvote them.

~~~
tracker1
I know you're probably trolling/joking, but I've thought that we should have
something like this for non-citizen workers combined with more open borders
for migrant workers and H1B floors for pay.

~~~
pmdulaney
Well, I would say it is neither trolling nor joking, but rather a kind of
thought experiment. Isn't soaking the rich (if I'm not rich) very similar to
placing exorbitant taxes on the Asians (if I'm not Asian)? It's really just a
matter of how far you think we can take the notion of the tyranny of the
majority until it becomes morally repugnant.

~~~
tracker1
I, honestly think that taxes are all around too high, and spending more so.
I'm in favor of flat taxes. I would suggest that higher non-citizen taxes as
well as a pay floor (must be at least X) for h1b visa workers. Those would be
mainly to offset immigration. I'm not against immigration, however drawing too
many people will create resource constraints on one side, and depression of
income and lifestyle on the other.

------
chroma
Although Ocasio-Cortez minored in economics, she doesn't seem to understand
simple concepts such as unemployment rates. In a recent interview[1], in
response to a question about how low unemployment rates undermine her message
of the working class falling behind, she said the following:

> I think the numbers you just talked about is part of the problem. Because we
> look at these figures and say, "Unemployment is low. Everything is fine."
> Well unemployment is low because everyone has two jobs. Unemployment is low
> because people _are_ working 60, 70, 80 hours a week and can barely feed
> their kids.

This was so incorrect that Politifact rated it "pants on fire".[2]

AOC also doesn't seem to have an understanding of basic historical facts.
Immediately after she put her foot in her mouth on labor stats, she said:

> Right now we have this no-holds-barred wild west hypercapitalism. What that
> means is profit at any cost. Capitalism has not always existed in the world
> and it will not always exist in the world. When this country started, we
> were not capitalist. We did not operate on a capitalist economy.

That is not the sort of mind that I want tinkering with the economy I am part
of.

1\. Starting around 5:45 in this video: [https://www.pbs.org/video/alexandria-
ocasio-cortez-barhhq/](https://www.pbs.org/video/alexandria-ocasio-cortez-
barhhq/)

2\. [https://www.politifact.com/truth-o-
meter/statements/2018/jul...](https://www.politifact.com/truth-o-
meter/statements/2018/jul/18/alexandria-ocasio-cortez/alexandria-ocasio-
cortez-wrong-several-counts-abou/)

