The Stupid, Stupid Bush Tax Cuts

Image via WikipediaThe Bush tax cuts are the reason the Great Recession happened. The continuation of the same is the reason we are not fully out of the recession yet. And now I have Warren Buffett seconding that opinion.

New York Times: Stop Coddling the Super-Rich: While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors. ........ These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places. ...... Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent. ....... If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot. ....... Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot. ........ I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation. ........ In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent. ........ 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.) ....... I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get. ....... for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

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• Stop Coddling the Super-Rich (stevebeckow.com)
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London Has Become Cairo (2)

Image via Wikipedia

Wall Street Journal: Repressing the Internet, Western-Style: As the British police, armed with the latest facial-recognition technology, go through the footage captured by their numerous closed-circuit TV cameras and study chat transcripts and geolocation data, they are likely to identify many of the culprits. ..... Authoritarian states are monitoring these developments closely. .... They hope for at least partial vindication of their own repressive policies. ..... Prime Minister David Cameron said that the government should consider blocking access to social media for people who plot violence or disorder. ...... After the recent massacre in Norway, many European politicians voiced their concern that anonymous anti-immigrant comments on the Web were inciting extremism. They are now debating ways to limit online anonymity. ....... acts of terror briefly deprive us of the ability to think straight. We are also distracted by the universal tendency to imagine technology as a liberating force; it keeps us from noticing that governments already have more power than is healthy. ...... After violent riots in 2009, Chinese officials had no qualms about cutting off the Xinjiang region's Internet access for 10 months. ...... In their concern to stop not just mob violence but commercial crimes like piracy and file-sharing, Western politicians have proposed new tools for examining Web traffic and changes in the basic architecture of the Internet to simplify surveillance. ..... Should America and Europe abandon any pretense of even wanting to promote democracy abroad? Or should they try to figure out how to increase the resilience of their political institutions in the face of the Internet?

I have never believed in political violence. I don't today. But I do believe in mass action. I don't believe in rioting. But then I don't see the London riots as simply a law and order problem.

The economic roadmap that the Conservative government in Britain has in place as the solution to the recession is precisely the wrong move to make. This is a time for massive rethink on the part of governments and also massive spending to make up for lost private expenditures. Britain is going the wrong way.

If America were to go down that cut the spending route, the recession would deepen, and there would be riots in America.

What is happening in London is less a failure of the British police to control mobs and more the failure of the Conservative government. It is primarily a policy level failure.

There is a need for a massive rethink of the nation state also in long established democracies. Instead of protesting Wikileaks (Learning The Wrong Lessons From Wikileaks) government departments and agencies should be embracing social media like tech startups.

The Internet And The Emperors

There should be talk of one gigabit per second kind of internet access for all and the resultant universal lifelong education. The goal should be universal health care. The goal ought be a Global Marshall Plan.

When it is time to think big, Cameron has thought small. And he has problems on his hands. Tea Party, take note.

London Riots: Debate
The Stimulus Bill Was Messed Up
Three Million Jobs
Global New Deal Needed
London Has Become Cairo
A Second Stimulus Bill Needed

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