I don't know why people keep harping on corporate taxes. If anything, taxing corporations is regressive -- the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
Taxing corporations doesn't produce magic money -- it's still taxing people in the end, but it's the consumers. Far better is higher tax rates on investments, and higher taxes on the rich. We should be taxing the people who own the corporations, or are paid huge salaries by them -- that is, if you believe in progressive taxation.
No, its not.
> the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
It increases producer prices which shifts the supply curve to the right, but its pretty self-evident that the effect on actual prices is dependent on price elasticity of demand in the markets for particular products, and that price elasticity of demand is not independent of the income of the people in the market for the product.
> Taxing corporations doesn't produce magic money -- it's still taxing people in the end, but it's the consumers.
No more than taxing labor income (which the US does disproportionately, as much capital income faces lower income tax rates and labor income is subject to additional, non-income taxes) is really taxing corporate stockholders, because it shifts the supply curve for labor increasing market clearing prices of labor and eating into corporate profit margins.
> We should be taxing the people who own the corporations, or are paid huge salaries by them -- that is, if you believe in progressive taxation.
But taxing high salaries is "regressive", just as much as taxing corporations, taxing consumers -- after all, if you shift the supply curve for management work and increase the market clearing price of that good, you are increasing producer costs and, therefore, shifting the supply curve for the good produced in a way which increases the market clearing cost, resulting in price increases to the consumer to pay the taxes. If you are going to make this argument for corporate taxes, you have to apply it to whatever you present as the alternative to corporate taxes, as well.
Of course, but there's still the "minimum profitability" that a business seeks to have. Suppose three firms compete to sell widget X, and consumers are willing to pay up to $10 for it, but the companies sell it at $5 due to competition (it costs $4 to make and distribute). Then the price is determined by supply cost + reasonable profit, determined by competition. If the government removes part of that profit, they'll raise prices accordingly, and sell for $6 instead, since that's still within the demand price elasticity -- otherwise the firms would decide there wasn't enough profit and get out of the business entirely.
> No more than taxing labor income... is really taxing corporate stockholders
The difference is that taxing labor income can be intentionally progressive, which is widely believed to be a good thing.
> But taxing high salaries is "regressive"
That just doesn't make any sense -- words can't be redefined like that. The very definition of progressive taxation is taxing high salaries (EDIT: incomes) of individuals at a higher rate than lower ones.
I understand your overall argument -- it's certainly debatable to what extent you believe corporate taxes to affect prices, vs to what extent you believe personal income tax to affect market salaries. But that doesn't affect the point I was making, which is that corporate taxes are ultimately passed onto people, and that this is not done in a progressive way. But by taxing people directly instead, this can be done progressively.
I don't really get this argument. It's always made as if the taxes are applied in a vacuum where market forces no longer exist.
If corporations are operating in a competitive market, they will seek cost advantages and continue to compete for market share. Raised taxes represent an additional expense (for the purposes of this discussion), much like raised energy prices. It is not always the case that these costs are passed on to consumers. Rather, smart companies seek to become more efficient, reduce costs elsewhere, or even realize a slightly lower profit margin per unit in order to maintain or increase market share vs. other competitors.
There's also the option to reduce executive compensation, decrease shareholder dividends, and a host of other options available in the interest of remaining competitive. A smart company could actually outmaneuver other competitors, wind up with more volume, realize the same net profit after taxes, and pass lower prices on to consumers.
I mean, there are just a ton of other variables here. And, those who advocate low or no corporate taxes are frequently free marketers. So, it's very interesting to me that they all but completely ignore very relevant free market mechanisms that can countervail the effects of raised corporate taxes.
IMO, it's just an oft-repeated meme that "higher corporate taxes are automatically regressive because they automatically create higher prices for consumers".
I'll try an example, although that might not be totally valid (I'm not really up on current tax laws). These are all made-up numbers and rates:
Say you sell a widget for $100, and it costs you $70 to make. Your profit on that is $30, of which let's say you pay $5 in taxes, so let's say you walk away with $25 per widget.
If the government bumps up the taxes by a percentage that makes the tax be $6. As a corporate policy, the easiest way to keep the same returns to investors is to tack on another dollar to the price and sell it for $101. Profit is $31, pay $6 in taxes, still walk away with $25/widget.
Your competitors are in the same boat as you are, regardless of what the tax rate was/is. Theoretically, if they weren't stealing your business at the lower tax rate, they won't steal it any more or less at the higher tax rate.
Sure maybe you consider some other areas to cut costs, but haven't you done that already? I know it's a silly over-simplified example, but if I own a company and I don't want to give back my profit, I raise my prices to compensate, and so do all competitors. The people that lose are the customers.
Smart companies may hold their prices constant and take a per unit profit hit to capture more share, allowing them to maintain or even increase overall profit. They may introduce higher margin products and/or develop entirely new strategies or lines of business.
And that is the free market mechanism that I mentioned: each company must adjust to the new reality and try to use it to gain an edge over its competitors. They do this all the time.
And, given this new incentive to maintain profits, they may be more aggresive in finding cost reduction elsewhere. One might argue that companies are doing all they can now, but you might be surprised at how new realities create new incentives.
The other important thing with returning shareholder value is how Wall Street works. It is very much a time-relative game. For example, how did the company do vs. last quarter or same quarter last fiscal year? Viewed this way, you can see why some companies pump the brakes on all out profit-maximization over a given timeframe, instead opting to ensure that the line keeps moving up and to the right over a longer period. So, it's more complicated than all companies are always maximizing profit at all times.
Finally, your example that the easiest thing to do is to raise the price by, say, $1 doesn't really hold, irrespective of what direct competitors do with their pricing. They must still keep prices in line with what the market will bear. If not, consumers may begin looking for substitutes or go without (depending on the product). So, while it might be the simplest thing for a company to try, it might not be accepted by the market.
This is all part of the free market at work. So, your simplification is tempting, but I think it goes back to creating that vacuum I mentioned, ignoring all of the many market variables that countervail the assumption that $1 in increased "cost" equals $1 in increased price.
I get what you're saying regarding only pricing what the market will bear, but on the flip side of all this, consumers suddenly have more money, so I could make the argument that the consumers are willing to pay more because they suddenly have more in their pockets, and around the mulberry bush we go...
Any variable can change competitiveness, as companies may differ in their responses to it.
For example, look at fuel prices for airlines. When they increase across the board, some airlines may raise prices, others may cut back on services offered, still others may add baggage fees, some may focus on increasing volume on more profitable routes, some may lower prices and heavily promote their lower fares to gain market share, while others may risk prepaying for fuel at current prices or hedging with shorts, etc.
Point being, of course, that the same change that hits every competitor will produce different responses and effects. This can completely alter the competitive landscape. And, it's virtually a guarantee that you won't simply get some uniform, across the board price increase.
If we don't acknowledge this, then we are looking at the change in a vacuum, completely insulated from the realities of free market behavior.
>I could make the argument that the consumers are willing to pay more because they suddenly have more in their pockets
Yeah, I think I actually mentioned that in another post (too much risk/work to view another post mid-reply on this tablet). Anyway, it could definitely be the case that consumers can bear more, however, it is not neccesarily 1:1. That is, there are a lot of variables that might impact whether they'd be willing to spend that extra money on that product. Also, there is still some price that the market simply won't bear for a given product, irrespective of the extra money in consumer pockets. In any case, there is certainly no guarantee that companies can simply pass on the additional cost.
And, it can also be the case that some companies can, but others cannot, given their prior prices.
Just too many variables.
Like by hiring less employees.
In any case, one of the big premises of the article is that hiring less is happening anyway and contributing to the need for a basic livable income. So, that's a bit circular.
And, of course, that's just one of many potential cost-cutting measures.
Raised income taxes aren't really an additional expense, because they are taken out of after-tax net income, not gross income. That complicates the analysis substantially.
Perhaps you can provide more detail as to how you think it changes the analysis in the context of this discussion.
In your example, if taxes of $0.50 are added, the firm may still sell widgets at the post-tax price of $5 and accept the reduction in margin from $1 to $0.50.
I used the quotes and the "just as much as..." reference because I was applying your logic about corporate taxes to the alternative you proposed. I don't agree that either is regressive, obviously, and I laid out exactly why that logic was wrong earlier in the post, before showing how if you ignored the fact that the logic was wrong and applied it consistently, it would say the same thing about your alternative as it said about the thing you proposed the alternative to.
> The very definition of progressive taxation is taxing high salaries of individuals at a higher rate than lower ones.
Actually, the usual definition is about taxing higher incomes at a higher rate. Confusing income with wages or salaries , so that one ignores non-labor (and, particularly, capital) income in considering the progressivity of taxes, is a pretty serious error.
I disagree here. For this to hold, executives would have to strive to keep their pay where it is. But this simply isn't realistic. Executive pay has exploded beyond belief in the last half century, it's completely unprecedented.
There is no reason to allow individuals to siphon off so much capital, and no benefit to it. Standard of living with $1B is no different than $10B (which is why after Steve Jobs hit $6B he stopped bothering with making any more money).
If you're taxing corporate income, it's pretty clear that Apple's and Google's supply curve will shift to the right. Not so much Samsung's or Nokia's. Taxing corporate income harms exports. Trying to tax only the corporate income from products and services sold in the US is in essence a VAT and then we're not talking about corporate income tax.
If you have a point to make, please try doing it without blatantly lying. It's common knowledge that the US has substantially higher corporate tax rates than almost anywhere else:
However I believe the parent's point was just that taxes on personal earned income represent a much larger share of total U.S. tax receipts than taxes on corporate income do, i.e. the U.S. mainly taxes labor income. And that is true; the corporate income tax accounts for only 10% of federal tax receipts: http://www.cbpp.org/cms/?fa=view&id=3822
I'm not blatantly lying. US taxes on labor income are disproportionate to taxes on other income sources, both because of the favorable rates applied in the income tax system to capital income, and because labor income is subject to additional taxes.
> It's common knowledge that the US has substantially higher corporate tax rates than almost anywhere else
Whether that's true or not, its entirely irrelevant the claim I was making.
Do you have other evidence that shows that investment income is in-fact taxed higher than labor income in the US?
This year, the 28% tax bracket for a single individual stars at $87,850 taxable income. The Social Security cap is $113,700, and the Social Security tax is levied on all income below this. The individual standard deduction is $6100 and the personal exemption is $3900.
That means that for an individual, a 28% income tax rate means income is above $97,850 while paying Social security taxes means income is below $113,700. I sort of doubt this covers "most people".
For a couple, the 28% bracket starts at $146,400 taxable, the standard deduction is $12,200, and personal exemptions are $7,800. So in this case the rate you quote applies to income over $166,400 and below $227,400 if both members of the couple have equal salaries. Again, hardly "most people".
Finding good numbers on this is hard, but http://answers.yahoo.com/question/index?qid=20101119053457AA... suggest that somewhere around 46% of taxpayers fall in the 10% or 15% brackets, and that's ignoring the effects of EITC and whatnot....
Of course the 15% bracket definitely has a marginal rate of 23% or so, again ignoring EITC and various other tax credits you can claim at those income levels that phase out with income, since they're certainly paying FICA at that point.
> investments are only taxed at a flat 15%
It really depends. Dividends are sometimes taxed at this rate and sometimes at your normal income rate, depending on whether they're qualified or not. Capital gains are, if you hold long enough. And capital gains can, of course, still affect your AMT exemption, meaning that if you're in the the AMT phaseout range your marginal rate on even long-term capital gains is about 22% (15% + 25%*28%, since the phaseout applies to normal income).
Of course once you make so much money that the AMT becomes irrelevant your marginal rate on capital gains drops back down to 15%.
Actually, its a lot higher than that, because marginal rates aren't overall rates.
So let's say your stocks in aggregate rose 4% that year, and the inflation was 3%. You made 1% profit (in purchasing power). You pay 4% * 0.15 = 0.6% which is 60% of your profits and only 38% of your income.
Your employer makes money and is taxed. Some of the resulting money is given to you as payroll and is taxed.
Ok, granted, not all the money that the company has on hand that is paid into your salary is taxed as corporate income, but the idea is valid. I agree not at the same level as taxing profits and then taxing dividends which is essentially the same money.
I'm just going with the notion that it is not uncommon for money to be taxed as it is exchanged from one entity to another.
"Most people are taxed roughly 36% (28% income tax, 2% medicare, 6% social security) on their labor, however investments are only taxed at a flat 15%."
"Double taxation" may not be an entirely accurate label (more like "an additional pass of taxation"), but the fact that dividends (in particular) are taxed as corporate profit before being taxed as individual profit makes that 15% figure misleading for dividends, which is what the child comment brought up: "Arguably, you get double-taxed if you own stocks."
Really, the number of times the money is taxed is irrelevant (except wrt paperwork) and we should be looking at the total tax level, but the point is that it's more than the nominal tax rate on qualified dividends if we're going to be comparing tax rate on labor income to tax rate on non-labor income, apples to apples.
Of course, that's specifically for dividends; bond premium payments and capital gains are a different discussion.
> it reduces or eliminates the tax disadvantages of distributing dividends to shareholders by only requiring them to pay the difference between the corporate rate and their marginal rate.
At always comes back to prices being the equilibrium of supply and demand. Taxes on corporate profits obviously have no impact on demand, so we must look at supply. Does taxing corporate profits reduce the amount of supply producers are able to put onto the market at a particular price? In a totally competitive market, profits approach a marginal amount and there is very little to tax anyway. So what about not perfectly competitive markets? If you tax Apple 10% of their profits instead of 5%, does that reduce the number of iPhones they are willing to supply at any given price? If taxes are applied uniformly through all industries, so that Apple can't get a lower tax rate by going into a different industry, then not really.
This is of course a very simplistic analysis. You have to consider things like elasticity of demand, etc. But basically, you can't ignore supply and demand. If you raise prices, quantity demanded will go down, and so the profit-maximizing price is not necessarily or even usually one in which the consumer bears the full amount of the tax.
As you raise more corporate tax in US, doing business in US becomes less and less attractive. As business move away from US, there will be less and less jobs in US. This already and undeniably happened with manufacturing sector. Unfortunately, people are now again arguing for increasing more taxes in US which will further lead to more business moving their business to other countries.
Better would be trying to tax the beneficiaries of the corporation. The best measure of profitability is some benefit to the owner. Usually capital appreciation or dividends, but sometimes outsize cash or non-cash compensation in an employee context, or as a non-arms length counterparty.
Increase the dividend and capital gains* rates substantially, start taxing fringe benefits, transform the corporate income tax into a very small tax on revenue to prevent the multiplication of corporate entities, crack down on people who renounce US citizenship (by for example making them inadmissible) and call it a day.
*Also eliminate the capital gains basis reset when assets are transferred at death. That makes no sense at all.
While high corporate taxation environment is great for boom years (unless your corporate constituents relocate), it necessitates bailouts during the bad years. Good example would be some European socialist economies overly reliant on state enterprises.
Actually, the studies show that corporate taxes are essentially a proxy for the taxing the ultra-wealthy - a cut in the corporate tax rate is very similar to cutting the highest marginal income tax rate.
After all, if corporate taxes truly fell on the poor, Republicans wouldn't be for cutting them.
It's no secret that Republicans largely support "base broadening", as well as less-overt attacks on the finances of the poor like their CURRENT attempts to divorce the farm bill from food stamps, to further cut food stamps.
You're trying to enforce some politically correct echo chamber where a national political party isn't responsible for their votes and their policy.
Republicans are openly for raising taxes on the bottom 50% of Americans, are openly for decreasing wealth transfer like foodstamps, welfare and unemployment, and are openly for lowering (and abolishing) corporate taxes.
Those are their policies and it is utterly and totally fair to state that and reference it.
Your comment and jellicle's comment are not quite the same thing.
Even then, you are painting some of the party's platform in a negative light without showing why exactly that is their platform to begin with nor why you consider them terrible ideas. Some of their reasons may be bad, but that doesn't mean all of their reasons are.
Disagreeing with someone's idea doesn't inherently make that idea bad. People who have the notion that another person's idea is bad solely because they disagree with them with no other evidence is simply a shallow person.
Yeah, this line of discussion is going to get us far.
Who is blocking comprehensive reform of the banking sector (which arguably drove not only the US into a recession, but the world as a whole)? Republicans
Draconian anti-abortion laws? Republics
Raising student loan interest rates while keeping lending rates to banks near zero? Republicans
Supporting egregious amounts of defense department spending (The US spends more on defense then the next 10 countries COMBINED; http://en.wikipedia.org/wiki/List_of_countries_by_military_e...)? Republicans
Blocking immigration reform? Republicans
Trying to prevent the implementation of universal healthcare? Republicans.
I could go on, but it would be pointless.
There is plenty of evidence that the risky loans associated with the home mortgage crisis were motivated by federal policies advocated by Democrats such as the implicit guarantees associated with Fannie Mae and Freddie Mac.
The student loan debacle is another example of unintended consequences of government loan subsidies and there is considerable evidence that those subsidies are simply captured by the colleges and universities when they raise their rates.
Regarding defense spending, it isn't a surprise that the US spends lots of defense since the US basically provides a national defense capability for itself and most of its close allies. There is certainly plenty of ways to be more efficient on defense spending but Congressional support for inefficient defense spending is hardly a Republican phenomena. It is a systemic problem.
Anyone who thinks that the ACA is the be-all-and-end-all of healthcare systems is delusional. It is a bureaucratic nightmare riddled with stupid incentives, accounting flim-flam, and ridiculous complexity. Add to that the completely reasonable thought that the more appropriate location for these services, if they are going to be provided, is the states.
Immigration reform: Unending posturing from Democrats who seem to want no limits to immigration and Republicans who seem to want no immigration at all. On top of that, I don't think the public knows what it wants (i.e. no real grassroots consensus)
Abortion: I'm not going there other than to say neither Republicans nor Democrats are uniform in their opinions on this topic.
My basic philosophy is that neither party is acquitting itself with much distinction these days. It is foolish to think that the flaws in our public policy are the fault of either party alone -- they are both complicit.
Maybe the reason they oppose abortion laws is because they feel they are saving human lives who have no say in the matter?
Maybe the reason they support such amounts of military spending is because they feel it is the nation's responsibility to do its best to provide for a safe and secure world, including using the military for life-saving operations?
Maybe the reason they are blocking current immigration reform is because they disagree with the methodology being proposed that is possibly unfair to current citizens including the ones who immigrated here legally and followed the law to become citizens?
Maybe the reason they are trying to prevent implementation of universal healthcare is because they feel the current law is ripe with corruption, waste, fraud, eventual failure, and will in the end actually make things worse?
You are again one of these people going with the notion that since you disagree with the other people's ideas you get to assume that the ideas are somehow bad. Notice that in no way did you explain why these ideas are inherently bad, you simply disagree with them. You are perpetuating the fallacy that they are bad simply because you say they are while ignoring the possibilities that they have good reasons to think that way. Next thing on your agenda will be to ridicule them in some way to show your superiority over such backward-thinking people in a feeble attempt to convince us you are right without actually having to prove anything nor support your accusations.
Not at all. Being young, I will simply wait until the older majority dies off. It happened with black rights. Its happening with gay marriage, and it will happen with other socials issues.
I've got nothing but time.
If your ability to win a debate that involves deciding how society should function is based around outliving the people you simply disagree with then I foresee a sad future. Because one day the younger generation will follow your example to disagree with you and put your older self out to pasture as that stupid old person who doesn't know anything.
But I suppose they may be right.
By the way, read your history. Black rights didn't happen in the US because the older generation died off; a few brave souls of the generation that was in charge stepped up to make it happen. Some of them died for it so you should at least have some respect. At least they were able to make a valid argument as to why they were right and not fall back on meaningless talking points that made them feel smart.
Currently, I see gay rights moving forward without anyone waiting on people to die off. Your argument is not only comical, it doesn't exist.
I don't post here to stroke my ego. I could not care less what someone on Hacker News thinks of my ideas or perceptions, although I do enjoy quality discourse.
Go take a look at historical trends with regards to polling on gay marriage: http://www.gallup.com/poll/117328/marriage.aspx
You can CLEARLY see how public sentiment towards gay marriage has changed over the last 10-15 years. Either this occurred because of people changing their belief structure (doubtful) or because people with one mindset aged out of the population.
Totally not fair to present only the allegedly "bad" parts of a position without the good goals that necessitates it. Opening the paths to hiring more people is quite fairly coupled with telling the capable to stop sitting around collecting checks; if you're going to socialize health care payment, you'll need to stop giving companies reason to not have more than 49 employees.
Wow, you really do drink the trickle-down effect Kool-Aid.
The burden on wealth producers is very low, one of the lowest points in the modern era.
You would expect in this era of hyper-rich and low-taxation that the wealth would be spreading around.
But it's not. Record profits for corporations (read: wealth producers) is turning into record stock highs, record numbers of billionaires and record lows for the middle class.
I refuse your argument because the world around me clearly shows that our "wealth producers" have figured out how to depress labor costs and increase investor returns. Great for them, but that concept is 100% contrary to your "wealth producers spread wealth".
No, wealth producers rightfully squeeze labor costs and rightfully return the biggest amount of money to themselves, their boards, and their investors. That's not spreading wealth downwards, it's spreading laterally only.
It's a pretty well supported fact that lessening the tax burden on the mega rich doesn't cause them to go opening businesses and it's surprising people ever believed such nonsense. Why would a rich person take a risk on a new business venture when the a fund can provide a steady, predictable return year after year with very little downside?
A businessman doesn't open more businesses when he has more money.
A businessman opens businesses when investors will pay and the market will support it.
Turns out, a businessman doesn't need his own money to start businesses, because without a market, there's no point of starting the business, and with a market, there is investment available to seize it.
Your assertion that my comment was the political one is nonsensical.
We've got serious long-term and structural problems in this country. We've got to find a way to discuss them that rises above trite generalizations.
I didn't take potshots at Democrats, I just pointed out that taking potshots at Republicans wasn't furthering the discussion.
So why tax by proxy and not wealth directly?
If by "wealth" you mean "net worth", then because that is even harder to administer than income taxes.
If by "wealth" you mean "income", we do that, but earning income through an entity with separate legal entity whose income is not taxed and retaining it in that entity becomes an effective tax dodge if it is permitted. Which is why corporate "income" tax (which is effectively a tax on retained profits) is included as part of the income tax system.
There will be some complicated edge cases but there will be relatively few and the ability to game them is less because wealth is a simpler concept than income.
> There will be some complicated edge cases but there will be relatively few and the ability to game them is less because wealth is a simpler concept than income.
How is wealth a "simpler concept" than income. AFAICT, income is far simpler (and, in fact, involves a strict subset of the assessments necessary in assessing wealth.)
Wealth is the value of everything you have less what you owe. Every item can be valued by seeing what people would pay for it, which is usually just its current market price. How do you determine income objectively? You could merely take wealth at two points in time but our society has declined to define it that way because much of the money coming in might go to some sort of expense which ought to be excluded, which is neither objective or simple, and because some changes (such as fluctuations in asset prices) are assumed to be transitory and therefore impractical to tax. The latter is actually the source of most of the perfectly legal tax evasion in this country: Hold stocks, generate value, pay nothing until you sell which needn't be ever.
"What people would pay for it" is a controversial quantity that can only be speculatively and uncertainly answered unless you are actually selling it in an open, unrestricted auction (even actual sale under real-world conditions often doesn't answer this, since its possible that both buyer and seller have non-financial interests which motivate the sale decision such that the purchase price does not represent the market value.) For pure interchangeable commodities with robust markets, this is less of a problem, but for many real world assets (including real estate) this is not the case.
Note that while real estate is already subject to ad valorem taxes (and other value-based policies, such as eminent domain), valuation is not at all free from contention even with those taxes as just one piece of the overall tax picture; if wealth-based taxes were the primary tax system, that problem would be magnified.
> How do you determine income objectively?
If you can value wealth objectively, you can value income objectively, since income is just a subset of the changes in wealth. The problems in income valuation are problems in wealth valuation (which is why, e.g., capital assets are valued at sale for income purposes, which becomes less viable of a solution to the problem of valuation if you aren't taxing the change in wealth but taxing the wealth in each year it was held.)
Yep. A friend thinks we should have a "You bought it!" law for insurance companies that assess the value of your belongs to calculate a premium. Basically once they give you their assessment, you have to right to say, "You bought it!" and they have to take it off your hands at that price. Not that such a law could work in the real world, but it is pretty clever. I bet a lot of people wish they could use such a law for property tax assessments.
But I could imagine a "We The People Buy It" under a system of wealth taxes. That the gov't could choose to buy any asset for a modest premium over what the taxpayers asserts it was worth for purposes of taxes last year. Heck, maybe any citizen should be allowed in on that game?
"Hmmm, you say your restaurant business is worth only $300k? It is your lucky day! I just bought it for $360k."
Real-estate appraisals are imperfect but getting within 20% most of the time is quite achievable. The main problem is for unusual or expensive properties which could be handled similarly to hard-to-value assets.
Your statement doesn't follow unless defining that subset is easy. What should be included or excluded? As we're discussing corporations, we have ample evidence of the ability to game. You could suggest closing loopholes but most of the loopholes also have legitimate uses.
You write that "capital assets are valued at sale for income purposes" is a solution to the difficulty in measuring their value. Why is this the case? Remember that the origin of this discussion is whether it's better to tax corporate income or the wealth of those who own the vast majority of that income. Are you asserting that valuing a person's equity holdings is difficult?
If we don't ignore non-financial, non-real estate assets, then difficulty of estimating their value becomes a significant issue.
 One of the reasons the US got into the health care mess they have now was companies taking over the payment of health insurance instead of giving a salary increase. Workers liked this because it effectively meant they paid less taxes.
That is the standard argument, but countries have been taxing property a lot longer than they have been taxing income. Some even manage to tax property at current market prices (e.g. Canada).
That countries have been taxing selected forms of property longer than they have been taxing income is in no way inconsistent with taxes on net worth being harder to administer than taxes on income (and even if they had been taxing net worth longer than income, it wouldn't be), so that's not even a counterargument.
It would seem to me that an unconditional basic income could therefore be paid in part through this mechanism, with the inflation caused by simply increasing the amount of money in circulation. That is to say - the money could simply be created by the government. You can frame this as deficit spending (if you'd like) or you can frame it as the equivalent printing of money. This could (by act of Congress) be done without floating bonds to cover the deficit, but that might cause some conservatives to freak out.
The other problem is that while inflation incentivizes moving up the risk curve, capital gains work in the opposite direction, incentivizing idle cash balances. One side of the government wants you find yield, the other punishes you for finding that yield.
At the end of the day, you're just going to make people find that yield (they have to) and you won't increase tax revenue. People can stomach _some_ risk, but not an infinite amount (especially the institutional guys).
Developing countries frequently switch to USD/EUR in times of financial calamities, as marketplaces there gravitate towards currencies that preserve wealth, not erode it, which is what you're planning to institutionalize.
That kind of presupposes that Republicans are all about saving big business and not the poor.
What if Republicans favor cutting corporate taxes because they are regressive, and their support of 'family' values means they want to protect the income and lifestyle of the poor to middle class families that make up the majority of the American voting population?
As for the economic payers. Consider what happens if we eliminate corporate taxes: The company has more money. It can use that money in three general ways: Lower prices, raise pay or return it to shareholders. In a company with little competition, the optimal calculation is fairly simple. Does the additional return enable new entrants at current prices? Do we have employees who could leave and create competition and to what extent does the additional cash-flow make it more likely? In a competitive environment, the right answer is based on the sensitivity of profit to talent, the sensitivity of talent to pay increases, and the sensitivity of consumers to price decreases.
Given this different factors, what's the empirical answer? It varies based on circumstance and no one can say definitively. Here's an example of one attempt to answer based on variation in European tax rates that suggests that 49% of the taxes are paid by workers: http://www.econstor.eu/bitstream/10419/51691/1/66322666X.pdf. You can find many more papers with different points of view through your favorite search engine.
Or, paid out to executives as bonus.
And I'm honestly wondering - what percent of payroll is the typical CEO or CEO bonus?
And I personally don't think the harm is in what percentage of the profits is paid to them per se, I think the more harmful aspect is the perverse incentives that are created when executive compensation is tied to short term corporate performance.
It's also worth noting that short-term investors are a greater threat to long-term focused decisions than pay incentives. Most CEO's aren't actually foolish enough to risk destroying their company for more money in the near-term. They like their jobs so what does terrify them is an investor demanding more leverage or adopting a riskier strategy on pain of advocating removal or a hostile takeover. When Chuck Prince said he couldn't sit down until the music stopped, he wasn't worried about a smaller bonus but about posting lower profits that would have led to calls for his removal. "There was a merchant in Baghdad..."
I don't understand the fuss over corporate taxes
This has never seemed like a strong argument or an accurate description of what actually happens to me.
If it's true that businesses just pass along taxes, then:
1) I'd think businesses wouldn't be so concerned with minimizing/fighting taxes. What we seem to see instead is that businesses seem to be concerned they will be carrying the cost and investors seem to be worried it will cut into profits.
2) I assume that's true for me, too, of course -- presumably, I don't pay income/payroll taxes either, I just pass along the cost of those taxes to my employer. My employer, as given, just passes those costs along to consumers. Consumer just figures in the costs of goods/services and calculates their asking price for their market offerings accordingly...
So nobody pays taxes?
It seems more likely to me that rather than people "just" passing costs along whole is that everybody pays the tax by finding some economic balance between what they can/must pass on and what they can/must absorb. How much is passed along probably depends on how competitive the market for each exchange is along every cascade and how price sensitive buyers are.
> Taxing corporations doesn't produce magic money
I don't think anybody really thinks it does. The idea is to distribute the load, which taxes (passed along or not) do.
Tax on corporate profit does not need to have this effect, because it only applies to profits, not to revenue.
Sure, if a corporation wants to keep the same amount of profit after a tax hike it has to put its prices up. But because we're only taxing what's happening after deduction of costs, there's room for others to come in and compete with a lower margin (and lower taxes as a result).
It encourages firms to reinvest, to hire more people and to find other productive ways to use the money rather than either sitting on it or passing it directly to shareholders.
Now, if we're talking about a company that just puts all those profits in the pockets of their upper management then I suppose who cares. But the smaller companies, those that survive on razor thin margins and need every penny they can get to keep going, those are the companies that have to constantly adjust their prices to deal with tax liabilities.
--edit-- this is exactly how amazon operated for a long time. They paid next to no tax because they reinvested everything.
Tax on profit does not tax business expansion, it taxes retained profit at the end of the tax period.
Rather all ways of extracting money from corporations should be taxed at a high income tax level (rather than the low dividend and capital gains levels).
Corporate taxes are not a disincentive to make money. They are (since the structure of deductions applying to them makes them a tax on retained profits more than income) a disincentive to retaining profits within the corporation to avoid the taxation the stockholders would pay were the profits distributed (or earned by a business subject to personal rather than corporate taxes in the first place.)
Raising corporate tax rates might or might not result in higher consumer prices. Depending on the company or industry, it might instead result in lower profits (which harms investors not consumers), or different management decisions--for example it might lead companies to invest in more growth abroad than domestically since the tax rate is lower abroad.
Couldn't that cause corporations to become bloated monsters?
Granted, you still have capital gains from stock trading, etc. But if corporate profits not taxed, the company can simply sit on the money. They don't have to spend it on R&D, or anything else, as they do not need a tax write off.
It's a double-edge sword and there really isn't a silver bullet.
That's the whole point -- without corporate taxation, shares in corporations are more valuable, and the taxation is drawn from capital gains instead -- and capital gains tax should be far higher, of course (and ideally progressive as well, based on your total income).
Sure, companies can "sit on their money", but they already can. And that money is presumably invested anyways, so it's still being productive (on R&D in other companies, for example), and it certainly gets spent eventually.
Not entirely, it is taxed at least once when earned (corp earnings tax).
Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it.
Not sure exactly how this works, but Switzerland appears to be taxing total networth. http://en.wikipedia.org/wiki/Taxation_in_Switzerland#Propert...
A very low rate would still amount to a huge sum if you consider the total networth of all US "natural persons".
Interesting. I hold the opposite position as I would rather make company re-investments more attractive.
> ...Switzerland appears to be taxing total networth.
This is a wonderful idea! Though I could imagine the games that could be played with valuations.
More importantly, this is partly incorrect as it applies to employees. Employee wages are an expense deducted before corporate profits are taxed; I believe (though I'm less confident) that in the case of profit sharing money going to employees could face double taxation.
Most importantly, though, "double or triple taxation" is misleading. Every time the money is taxed needs to be taken into consideration, to be sure, but the ultimate question is the overall rate, not the number of passes. (Please, please, please QUINTUPLE TAX me at 0.01% per pass...)
With loopholes and exemptions and deductions and sliding scales and different rates in different jurisdictions and everything, that's not a simple question, unfortunately.
Oversimplifying, though, for a single example...
Consider the following individuals in a State (fictional, if necessary) with no corporate or individual income tax and no tax on dividends, interacting with a corporation in the same State. The corporation turns a profit (income minus expenses) of $2 million/year, some of which it saves year-to-year and the rest of which it pays out in dividends.
1) Middle-class employee of the company.
2) Super-wealthy stockholder in the company.
3) Minimum wage employee of the company.
4) Middle-class stockholder in the company.
2) Assuming their income is such that they can be reasonably assumed to be paying the top bracket on their average dollar (this person is really making a ton of money, and it's not all coming from this company): A dollar of corporate income that will wind up in this person's hands is taxed at approximately 34%. The $0.66 cents per dollar that he's receiving is then taxed at 20%, meaning a total of 47.2%.
3) $7.25 * 40 * 52 = $15,080 / year. They pay only $901 in income tax, but the $1870 they pay in FICA brings it up to $2771, which is about 18.4%. They may or may not qualify for assistance under one or more of our various current means-tested systems.
4) Profit within the corporation is taxed the same as for the wealthy investor, but now the $0.66 cents per dollar income is taxed at only 15%, for a total of 44% instead. This assumes they are making more than $36,250, which seems fair - but if they are not, the tax rate on the dividend income is 0%, so they are paying in total only the 34%.
I'm not making any particular point regarding what tax policy ought to be, just trying to shift the focus to numbers that are more meaningful.
From my point of view, it is easier to decide how much to tax a particular good or service e.g. a luxury car vs. a basic car vs. public transport. Another example would be a salon visit vs. a doctor visit. In addition, sales taxes are less personal (maybe even less controversial). As opposed to taxing "me" or "you", tax that "thing". Finally, sales tax seems easier to enforce since it is applied at the point of sale. However, I will admit that it's easy to avoid paying sales tax if transactions are paid for by cash.
Taxing corporations may not produce magic money, but it is certainly more efficient than taxing individuals. Look, for example, at the Canadian tax system which offers near full integration for corporate taxes. Corporate taxes be a way of capturing money up front and limiting tax avoidance.
If we had a flat tax with basic income, one could scrap taxes on employment and just tax corporations by denying salary as a deduction. This would be equivalent to the standard approach of writing-off salary expenses and taxing individuals.
This is not to say that printing any money ever is a disaster, but simply that there are absolutely constraints imposed by economic realities.
If it is added where it will directly translate to demand (e.g. eliminating payroll tax) then you will get more spending, which will cause businesses to hire, take on loans to meet the new demand. At some point if you keep adding, you will surpass the ability of the market to absorb the demand and you will get inflation.
If it is added on top of already flush corporate balance sheets (e.g. eliminating corporate taxes), then you most likely won't see much difference in the current environment. They won't use it to hire more people because the demand isn't there.
Loans in and of themselves don't add net dollars to the private sector, as they create a liability for the exact amount of the loan (plus interest). For the domestic private sector to experience a net increase in financial assets, either the sovereign government (whoever's name is on the money) or the foreign sector must increase its deficit.
in which Murray goes into detail about how much a program of guaranteed income for everyone would cost in the United States, and some probable effects that would have on everyone's everyday behavior. I read the book a year or two after it was published.
Murray's own summary of his argument
and reviews of his book
may inform the discussion here. Big public policy proposals are not easy to discuss, but the big public policy proposal of a guaranteed basic income for all is a response to existing policy of supposedly targeted social welfare programs that are just about equally expensive, but more costly to administer.
Compare welfare and social security for a classic example of the difference.
Attempts to answer this question also need to deal with human beings as they are, not as they could be if we were all just really good and pure and all motivated by selfless interest only in the good of humanity as a whole or something, because presumably this is being proposed as a real policy for real people and not some fantasyland.
(Also, I do not consider "well we already have some programs like that today" to be a defense... I'm not entirely convinced that's just going to turn out peachy keen in the end either. I'm personally pretty convinced we've already passed a threshold at which a significant chunk of our government is actively pursuing government dependency as a conscious policy, and that's not going to end well either, as the same mechanics take sway... there is always a reason to grow benefits, it's always evil to cut them, and there's no feasible way to bound the growth of promised benefits to real growth, other than the really, really hard one of simply running out of resources.)
While this is a criticism of mine, and I am not trying to hide my general skepticism as seen in my second paragraph, I am posting this also in a genuine spirit of inquiry about what answers to this question may have been developed. I acknowledge the problems the BI idea is trying to solve, and I acknowledge that I have no answers (including, alas, BI, unless someone can convince me here).
The parent idea reminds me of a certain system advocated by Thomas Paine, the famous American revolutionary who came up with a more liberal ideal of Social Security which offered every child a natural inheritance on coming of age. He suggested this in addition to subsidies for old age. Ironically, this is the same guy Tea Party members love to quote when they disparage taxes.
His pamphlet, Agrarian Justice, is well worth a read.
Because a non-trivial percentage of the population wants them, whether or not you agree with them. Who's going to vote to receive less money?
On balance it seems like a better risk than the current welfare and disability systems that dehumanize people and create a perverse incentive not to work in order to survive. If efficiency and automation trends continue some sort of wealth redistribution will become strictly necessary whether that is done through government policy, charity, or revolution. BI for its potential flaws doesn't look so bad compared to the alternatives.
OK, yes, but what's going to keep it a tiny fraction of the GDP? The BI's natural "lobbying organzation" is the entire public... not even the entire voting public, but the entire public. No current structures have that characteristic. For almost the entire population, $10,000 is a lot of money. Even people making $150,000/year are going to still appreciate $10,000, and we're now talking well above median.
If there was a lobbying force large enough to actually countervail the entire public's interest in voting themselves more money, I'm pretty sure it would not be hard to drum up a mob against them.
As I understand it, Basic Income's distinguishing characteristic is that everybody gets it. You can't use our experiences with things that well less than half the population gets to judge the effect it will have on voting patterns.
You can't just think about the first year of Basic Income's implementation. You have to think about the second year. You have to think about the tenth year. You have to think about the 18th year, when people who have never lived in a regime other than having BI exist start voting themselves. Are they going to understand that it's a bad idea to listen to the politicians promising to make it larger? Because there will be such politicians. Probably all of them, honestly.
Er, no, its not. The natural lobbying organization is the people whose have an expected positive net utility from an increased BI. That's not the entire public, as both increased public debt and increased taxation have negative consequences for members of the public. (And as, empirically, its been shown that increased income has a declining, and beyond a certain point, immeasurably small contribution to experience utility.)
> You have to think about the 18th year, when people who have never lived in a regime other than having BI exist start voting themselves. Are they going to understand that it's a bad idea to listen to the politicians promising to make it larger?
Sure. They'll probably understand the effects of BI level changes a lot better than people in the first year do.
Then why couldn't we get universal health care passed through decades and decades of attempts?
I think you are assessing the human psychology factor incorrectly. The US population is not a lobbying organization. Just because something is in their interests does not make people rally behind a cause. A lobbyist has an agenda, but the very existence of BI does not make it everyone's agenda to increase it. The person making $150k has better things to worry about than exerting pressure to increasing BI, and in fact, will likely be a business owner and someone that is very receptive to the argument that raising taxes will hurt production. Similarly, raising BI is not a cause that fuels people's competitive spirit and drive for meaning. Certainly there will be a socialist contingent that does have that agenda, but I don't see why you are so convinced that it will inevitably become a runaway train.
> You can't use our experiences with things that well less than half the population gets to judge the effect it will have on voting patterns.
Exactly what I said previously—we're both speculating.
Those seem some pretty strong assumptions to me, and they deserve to be further justified.
Why do you actually think that making the BI larger is a bad idea? And why do you think that people will disagree / not add one and one together?
If you think that increasing the BI requires tax increases, well, there will be people complaining about the tax increases, and your argument goes poof.
If you think that increasing the BI causes higher inflation, then either people will decide that having a higher BI is worth it, or there will be people complaining about the higher inflation, and your argument goes poof.
I think you're misunderstanding the nature of lobby and power in the United States. It doesn't matter the size of your lobby, only the size of their wallet. An entire public who are only getting BI are going to have virtually no financial power to wield.
Also, your speculation ignores the fact that the "red states" are also the largest benefactors of welfare. It wouldn't surprise me at all to see a large percentage of the public saying that they themselves should be getting less BI because it's "socialism" or some such nonsense.
There are no democracy on this planet in this century and the last where people could vote _directly_ for any kind of numbers regarding money matter.
On the contrary, nowadays the elected leaders vote their own salaries (I live in Europe)... and force austerity upon the weakest.
The same reasons that people vote themselves lower taxes every year, though they do vote themselves lower taxes sometimes:
1. We don't have a direct democracy, so people don't vote for policies directly;
2. Quite a lot of people, even if they can't analyze all the implications, can see that voting yourself a lower net contribution to government (either via lower taxes or greater benefits) has consequences that may be undesirable.
> How can you both have the (modern conception of the) vote, and a basic income at the same time?
The same way you can have the modern conception of the vote and have taxes at the same time. Mostly, this involves relying on an electorate that is largely composed of at least modestly responsible adults, rather than infants that gorge themselves on candy without limit given the opportunity without thought of the consequences.
Sometimes I'm not very confident we have that; but that's not really an argument against BI specifically as democracy in general...
If you have well-enough educated, hopefully reasonable people I don't think this will become an issue. Swiss recently voted down to get more holidays (
http://www.telegraph.co.uk/news/worldnews/europe/switzerland...) and it wasn't even close of getting through. Now this of course doesn't prove anything (we also voted to ban minarets for instance, which definitely wasn't very rationally based), but it shows that people will not just take the short sighted approach only thinking of immediate rewards and instead try take the whole economic outcome into account.
Of course it was. The law itself was stupid, but it highlighted a real issue. Notice that after that vote France, Sweden and a few others looked at the Muslim integration problem (i.e. a large portion of the Islamic community simply don't) as well.
There is an issue here that needs to be addressed, it was just the way they chose to do it was silly but the people didn't let that stop them from using it to voice their opinion.
My quite tentative, back of envelope analysis:
If it grows at a fixed rate, then when inflation outpaces it we will see the real value shrink. Since a larger BI is likely to be inflationary, this shrinkage would lead to some deflation (or at least reduced inflation), which will grow it again. Hopefully this would act as some stabilization and give the Fed a hand at targeting a particular rate of inflation, and a predictable rate of inflation seems to be what's best.
To expound on the point, absent other economic factors, an inflation-adjusted UBI pretty much guarantees that next year's inflation will be greater than this year's inflation.
Some rational voters, however, would want to mitigate their downside risk, and therefore wish to have a basic income despite its cost.
It is impossible for something to be for a certain segment (defined in large part by income) of the population and for it also to be meaningfully like Basic Income.
EITC is a fairly standard limited-eligibility social welfare program, which is what BI is offered in opposition to.
> One often needs a revolution to make a constitutional amendment. I don't think we want to go there.
I don't think the facts justify that that is often the case, unless you mean "revolution" in some very loose sense that doesn't justify the "I don't think we want to go there" comment.
I mean, there are 17 amendments to the Constitution that weren't passed fairly contemporaneously with the original document: can you point to the "revolutions" which were necessary for these?
Maybe the rise of organized crime under prohibition could be considered a revolution prompting the 21st amendment, but that seems quite a bit of a stretch...
In terms of whether the US could legally establish a BI without constitutional amendment, I am inclined to agree that it's allowed.
I think there is some argument for avoiding a simple majoritarian decision for how the rate is determined; I am not certain whether it is a sufficient one, but I don't think there's reason it shouldn't be part of the discussion, and constitutional amendment is the most secure process to elevate something above majority rule in the US.
I disagree that it "often takes a revolution" to amend the US constitution - if there is enough popular support that amending by that means would be practical, amending without it should be - and indeed, only twice of the 17 times we've amended the constitution has it involved a revolution (once successful, once unsuccessful).
Congress has that authority over their own salaries, and they haven't abused it.
The article asks to get more money from corporations which I do not think is feasible. I am in the UK now and this country decided to go for universal income we would have to either close the borders or convince at least the whole of EU to do the same at the same time.
Please expand your comment if you can.
That's something of an issue of the EU being a union that is very much like a traditional state, limiting -- by design -- the ability of the subordinate elements to effectively manage certain kinds of policy on their own. That's not an issue with BI, that's an issue with the UK as the unit of analysis in considering BI.
You'd have the same problem considering BI in California, for instance.
This is assuming that the influx of population actually would be a bad thing, though, which I'm not sure of one way or the other - I see some arguments on both sides that hold at least a little water.
This could be bad. Very popular programs never get reconsidered, even if they have bad effects.
Much of the special exemptions relating to health care and insurance which effectively tie it to employment, while restricting the ability for other groups to form for pooled risk. Addressed somewhat under Obamacare.
Big Ag subsidies.
Patent and copyright laws.
Our Federal Government is not responsible for most of the major functions of governance because our states cover most functions. Also, we aren't at war with a major foreign power.
Edited for clarity.
There an elite few controlled all the money, and the middle classes simply had no economic room to exist. The result was patronage, on a scale equivalent to a welfare system, with ordinary Romans queuing each day to recieve a daily "wage" in return for loyalty / obligations / it's complicated - http://en.m.wikipedia.org/wiki/Patronage_in_ancient_Rome
I mention it simply because Rome also could afford to pay all its citizens a living wage, but instead choose to keep the money in the hands of the powerful and use it for political purposes
Trends do not make a destiny.
"It's complicated" indeed.
One key to thinking about how the Plan [improves quality
of life] is the universality of the grant. What matters is
not just that a lone individual has $10,000 a year, but
that everyone has $10,000 a year and everyone knows that
everyone else has that resource. - Charles Murray
Case in point, you'll be much less likely to be shot and killed for the contents of your wallet when both you and the mugger start from an equal footing. It's the mismatch between the mugger's means and his expectation of yours that motivates his malicious intent. When everyone gets a UBI, you straighten the Lorenz curve, and everyone gets closer to equality.
Which seems like it would make the situation worse, long term. We can increase density further, but there's a limited amount of SF to go around, so driving overconsumption would raise prices, and then we'd need to raise the subsidy we give SF further.
There is an impression that your IQ score is a fixed thing that you're born with, but in reality you can "study" for the IQ test and get better scores at it. There is also the whole issue that IQ scores have been rapidly rising in the past few decades.
This might just mean that IQ score merely acts as a proxy for socioeconomic status and education level and a bunch of other factors, and it doesn't really measure your true maximum intelligence potential.
Thus, the fact that some groups have lower IQ than others wouldn't necessarily point to them being inherently / genetically disadvantaged.
As an aside, I don't know anything about the book or the authors' alleged motivations, but if they truly had no agenda, it's not very fair to be called racist because the result of your research says something politically incorrect, and you conveyed your true results to the best of your knowledge. This kind of torches-and-pitchforks behavior is just as bad for the advancement of knowledge as fudging up the numbers for ideological motivations.
An IQ score is literally your score on an IQ test; I think it’s more correct to talk about g (“general factor”) which is the principal component of intelligence you get if you measure a group of people on a battery of tests, and is the most predictive way to summarize an individual’s mental ability in a single number. A good IQ test is highly “g-loaded”, that is, it does a good job predicting someone’s scores on other tests that are g-loaded to some degree.
Intelligence, as with most traits, is influenced to some degree by genetics and to some degree by environments. This can be (approximately) measured by comparing differences in intelligence between people of varying degrees of relatedness (somewhere between being identical twins and being randomly selected people), who grew up either in the same families or separated. Usually people are interested in pairs of siblings or identical twins where one was raised by families of different socioeconomic statuses. When The Bell Curve was written, the authors said the consensus was that intelligence is between 40%–80% genetic, but I think it’s now thought to be on the high end of that. Intelligence is actually more influenced by genetics in adults than in children, which is the opposite of what you’d expect if environment actually did have a large effect.
When you say you can “study” for an IQ test, I think this is kind of tautological; e.g., you could memorize the answers to the hard problems, but intelligence is largely stable through life. It’s true that IQ scores have been rising for several decades (the Flynn effect), but I don’t think it’s ever been explained really well (maybe fewer people growing up in damaging environments?), it’s not clear whether or not people are actually getting smarter or they were just scoring better for some reason, and I think there’s evidence that the trend is starting to stall or maybe even decline since the mid 1990s.
Intelligence and socioeconomic status are certainly correlated, but I think it would actually be more correct to say “socioeconomic status is a proxy for intelligence” than the other way around. If intelligence is mostly genetic, with a small environmental factor, as it seems to be, and more intelligent people make more money on average, which they do, then socioeconomic status is certainly largely influenced by intelligence, and the heritability of intelligence at least partially explains why social mobility isn’t higher than it is. It’s probably the case that there’s some intelligence benefit from environmental factors resulting from socioeconomic status, but you can’t just try to throw out all the differences correlated with socioeconomic status, because there’s certainly some (likely more) influence in the other direction.
If measured average test score differences exist between genetic groups of people (they do), these differences again have to be some amount genetic in origin and some amount environmental. The amounts for between-group variation are probably similar to the amounts for within-group variation, but there are reasons why they might not be exactly the same. People often claim the tests are biased; what you can do to rule this out is to look at individual questions that certain groups of people get wrong more often, since it’s more likely that individual items are biased than that every question is biased by exactly the same amount. You can also look at things the tests predict, and see if they have the same predictive power across groups. For example, if someone claims the SAT is biased against racial minorities, you can look at college students in different racial groups and their SAT scores and see if the students in different groups with different average test scores do better or worse in college classes (I don’t know a good source off the top of my head, but to the best of my knowledge, the SAT is equally predictive across racial groups).
I strongly agree that the people claiming that psychometrics researchers have a racist agenda to prove white (or Asian?) superiority have a political agenda themselves, whereas the research in question seems to me pretty statistical, honest, and carried out without regard to the conclusions, and the researchers seem like they have to be very brave to carry out (or at least publicize) this research in the current political climate.
Some things in the papers made actually doubt them more. For example they mentioned one pair who they found wearing the same clothes and having given their kid the same name. I'm sorry, but there is no gene for tastes in clothes, at least not to that degree. Neither is there a gene for picking kids names. So those studies certainly overshot in some aspects.
In the actual IQ data there was also quite some variation.
Reading the summary at the top of the Wiki entry, it's already not surprising the book has been labeled racist. Any book that discusses race, inheritance, and socioeconomic class always gets called racist.
The Bell Curve is labeled racist because it is myopic about the existence and importance of race. Race is not a valid scientific categorization: it is not based on statistical grouping of DNA, or anything concrete other than "people used to be assholes to foreigners." There is an order of magnitude more genetic + cultural diversity among each race than there are between the races.
Examples, please, of books that investigate socioeconomic status & race that have not been called racist? Because I can't think of any. By the way, I'm not talking about literary explorations of race like "Huckleberry Finn". Although that was called racist too.
There are orders of magnitude more genetic [...] diversity among each race than there are between the races.
Hold it right there, buddy. License, registration, and sources please. Mostly sources.
Or you could read The Bell Curve. It is positing a small difference between "races", a difference so small that it is very minor compared to the expected range of deviation for a populace.
The idea that there is a scientifically definable thing called "race" lacks data. That is your row to hoe if you believe other. Skeptics are not required to disprove the existence of the tooth fairy, Nessie, or "race".
Or that asians and whites have wildly different reactions to milk.
Or that some diseases only affect blacks, or whites, or whatever?
This is not data? People use freely the same techniques to categorize humans, to categorize other animals with significant variations in their species, why only humans you must not use the word "race" and use other words to describe the same thing?
Asians and whites don't have wildly different reactions to milk. Adult mammals are generally lactose intolerant. There is a mutation that, in humans, is found far more often in people with ancestry in Northern Europe (which isn't coextensive with "whites") than any other origin, but which is neither universally absent in all other people or universally present in people of that origin that results in lactose tolerance.
Most supposed "racial" differences (EDIT: that is, most that refer to anything that is actually a measurable difference between real human populations at all) are of this type -- things that are statistically more or less common in a population of a particular origin that is not coextensive with any of the usual "race" categories with which the supposed hard-and-fast difference is popularly associated.
Thanks Wikipedia. Regarding being labelled racist, fine, everything gets labelled that. Even this post. I took your statement for something bit more meaningful than the cynic's "woe is the opinion of The Populous".
This is completely f'n stupid...
BTW, I find it funny that you're wiki-scholaring using old sources that date back to before we learned all non-african humans have some neanderthal dna in them.
My own guess is that for some blacks, there has not been enough time for the Flynn Effect to occur for them to catch up with the general population. This is not due to any fault in them, but a result of no/substandard education for many generations. I imagine in a few generations any difference from the average will disappear. http://en.wikipedia.org/wiki/Flynn_effect
Would have been curious to get an opinion by somebody who read it recently.
But if we could trade B.I. for Social Security, Medicare, Medicaid, SNAP, and other social progams-- it would probably be more cost efficient as individuals look after their money better than other people do.
Here's a video from Milton Friedman (not Tom Friedman!) who is advocating for a negative income tax-- a variation of basic income.
> The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
In your case I am wondering why exactly is that we can't turn people away - in aggregate it is likely to save more lives since seeing people dying would be an excellent motivating factor for others to make sure they pay their health care insurance -- and since they would therefore have it and would be able to get treatment earlier, which is cheaper, thereby causing the price of health care to be pushed down (treating people in ERs is frighteningly inefficient).
How exactly does this help people in emergency situations? Or those who go undiagnosed with a condition despite having a primary care physician? What about those folks with a disability that makes it difficult for them to access health care? What about people who are discouraged from getting health care because of discrimination? What about people who live in rural areas far from some kinds of medical treatment?
Bottom line is that death is not a motivator for people in the way you think it is. Even if it was, what kind of society threatens its members with death for failing to participate in your model vision of capitalism?
Good analogy is car maintenance. Most people are very diligent about oil changes because they (inherently, I would argue) recognize the cost structure.
And I would say people don't change their oil because they know their engine will die if they go too long. They do it because it's been ingrained in their head as required maintenance, and that sort of thing is normally taken care of nowadays in a much larger package that includes filters and belts (because people vaguely remember about oil, but they're clueless about the other things.)
I'm not the one you were responding to, but my point here is that people aren't going to ensure prevention without a ton of conditioning or some greater authority forcing them to do so. The voter turnout for Australia, where people are forced by law to vote, was 93% in 2010. In the USA? 41%. People can't be asked to run over to their local elementary school for 20 minutes and pick the first name that pops into their head once every four years, so I doubt any sort of repercussion not mandated by law will have an effect.
"You can always count on Americans to do the right thing - after they've tried everything else." - Winston Churchill
Go to work as an inner city teacher? Here's an extra 20% in your BI.
Live in an area damaged by a hurricane? We'll bump your BI for a year or two.
I don't think a "simpler" tax code would last much longer for the same reason.
The only way I think it could actually work is if we turned over the whole thing to a bunch of unelected technocrats like the Fed (which might not be a terrible idea since it gives them another lever on economic policy...)
So ... politicians would suddenly start to pay people to teach in the inner city? Those scoundrels! I can see why you're opposed to this concept.
In fact you support that point. Many of the complexities we have now come from adding "just one more feature" to the tax code, until we end up with something so complex that there is an entire industry built up around paying taxes.
If he said "In exchange for supporting inner-city teachers, we will be indirectly subsidizing H&R Block to the tune of $2B" you might ponder whether or not it's worth it.
It is true that over the entire history of the United States, the American public has proven itself apathetic to the abuses of their politicians, but that is a cultural problem that needs to be solved regardless of having a basic income or not.
Yes, you can.
> It operates similarly to a pension fund
It presents itself as one, but it really operates as a general-tax-supported social-benefit program with a variety of eligibility criteria.
> so it would be equivalent to confiscate peoples lifetime savings.
Sure, some people would politically attack it that way, particularly if the general BI reduced the SS benefits to which people already qualified would receive. Its less subject to this political attack, however, if SS is merged into BI in such a way that no one currently paid into SS ends up with less BI at any point than they would have received from SS.
For the record, you have zero ownership rights in your SS benefits. They can be changed at will.