Europe and the IMF to Bail Out Greece

[opebo]

I want to get the exact terms of what will be done, of course.  But if what I'm reading is correct, I can now guarantee you that it will blow up down the road, as this basically amounts to a "paper bazooka".  Key point being - it won't be right now and it'll be market-positive, but I suspect it'll be quicker than you might think.

Ha ha, this was a classic SS post.  (not as classic as where he just says he knows something and refuses to divulge it, but close).

One wonders what could be done about a problem of inadequacy of funds other than to... provide funds?

[opebo]

Well, either the bazooka must keep firing (printing) until all of Europe's deficit commitments are paid off in the short, medium AND long term, or there must be sharp budget reform that restores sustainability. Probably it will have to be a combination of both. But it must be implemented, that is the key. And that requires not just the politicians but also the populace waking up to the need for tough or unusual measures. The US ought to take note as well.

Well, I don't know about 'tough or unusual' - would simply returning to the reasonable tax rates which prevailed before the Reagan debacle be 'tough' or 'unusual'?  More like a return to normalcy from my point of view.

[opebo]

Would that be sufficient is a better question? You seem to ignore the fact that these tax rates would prevail at constant levels of government spending, so it would certainly increase hardship compared to today.

What now?  I was proposing that a solution to our problems was merely to increase the tax rates on the rich to what they used to be.   The meaning of your response was quite unclear.

[opebo]

So, your proposed solution is not a solution to the problem Beet posed.

To be perfectly honest, I was not aware that Beet had proposed that the existence of any deficit was the problem.. as I understood it he seemed to believe that our current deficit level was 'unsustainable'.  I do honestly think that, even given your figures, raising the top tax rate to something in the 70-90% range would easily generate enough revenue to reduce the deficit to a very low - and certainly 'sustainable' level.

OK, I'll take a look at those web sites I just noticed you posted...

OK, so the top 10% of taxpayers is currently paying only 18.79% in taxes overall.. so lets say we do triple that, as you suggested - that gets us to just 56.37% (obviously that's overall, not a top rate, but perhaps that would be realistic if the top rate were set at 70% or 90% as it used to be?)

So, lets see, in 2008, that top 10% paid about 794 billions in taxes.. so multiplied by 3, that gives us 2 trillion 382 billion.  What was the deficit last year?  I think it was less than the 1.588 trillion increase in revenue that gives us.

Well, I guess now that I took the time to analyze it, given your sources - it does solve even the problem of totally wiping out the deficit.  Neat!

[opebo]

...I mean, now you're just trolling ...

Are you going to ban me for disagreeing with you?  I'm not 'trolling', I'm looking at the same web site you are:

Adjusted Gross income for the top 10% is 4.2 trillion according to that web site. 

The top 10% paid 784 billion in income taxes in 07.  That was 18.78%, again according to the website.

So, if we triple the amount paid, we get about 2.3 trillion, which is around 56% of the 4.2 trillion in adjusted gross income for that top 10%, again from the web site you supplied. 

So, I don't know exactly what rates would need to be imposed to extract that specifically, but the income is there, and the amount is 56% of it.  Whether that means a top rate of 70% or 90% whatever, or just an overall rate of 56% on all the income of that class, I don't know - there is some leeway in what rates would get you to an overall rate on the rich of 56%.  But the figures are right there in your web site.

[opebo]

I don't know what to say. I assumed that the economic genius that is Opebo realized the difference between marginal rates and average rates but I'm not so sure anymore.

I'll give it one more try:

1. The top marginal rate is 35%.
2. Tripling that rate is impossible (35*3>100).
3. Hence, you cannot triple the average paid by those people by adjusting the top rate.

What is it that you don't get about this?

We're talking about two different things.

I never proposed 'tripling the top rate'.  I proposed 'simply returning to the reasonable tax rates which prevailed before the Reagan debacle'.  I did not propose any specific rates - after all various rates, both top and on down the line, applied in the period before the Reagan debacle. 

What I did propose in my subsequent post was tripling the tax take.  Given that the current average is only 18.78 percent, this is easily doable. 

We have no way of knowing exactly what rates would get us to a 56% take of the income of the parasitic class instead of an 18.78% take - this would have to be adjusted as we go along.  But I'm sure it could be consistent with a top rate in the 70-90 percent range.

[opebo]

You cannot seriously be this thick...I'll try once more:

Since the top rate today is half of what it was then, doubling it will not be consistent with tripling the tax burden on this group. How can you not understand that? It isn't even necessary to know economics to comprehend this!

What does doubling the top tax rate have to do with what I was talking about?  You're just talking about a separate issue which has no bearing on my post.  

The web site you provided gave the tax take as 18.79% of the income of the top 10% of earners.  It is right there in the chart if you look.  Just click on it and look: http://www.taxfoundation.org/taxdata/show/250.html

So, the point is there is easily money there to eliminate the deficit.  I don' t know why you are continuously on about the top tax rate, as I never mentioned it.

edit to correct the percentage - it was 18.79%, not 18.78% as I had originally quoted.

[opebo]

Yes, precisely - in my original comment in this thread I did not mention the top tax rate. 

In the longer subsequent post in which I did mention the top tax rate, I specifically said that I was proposing to increase the tax take on the top 10% (from 18.79% to 56%), and that I did not know if raising the top tax rate to 70-90% would accomplish this or whether some other combination of tax rates would do so:

I do honestly think that, even given your figures, raising the top tax rate to something in the 70-90% range would easily generate enough revenue to reduce the deficit to a very low - and certainly 'sustainable' level.

...I'll take a look at those web sites I just noticed you posted...

...so the top 10% of taxpayers is currently paying only 18.79% in taxes overall.. so lets say we do triple that, as you suggested - that gets us to just 56.37% (obviously that's overall, not a top rate, but perhaps that would be realistic if the top rate were set at 70% or 90% as it used to be?)

Anyway, my analysis is correct:

The deficit could be largely eliminated by seizing the income of the top 10%.  As your source states, their income is 4.2 trillion, and they currently only pay about 794 billion (18.79%) in tax.  What was the deficit this last year?  Around 1.5 trillion?  So, tripling their tax would more than cover that, and still leave them with 44% of their income.

[opebo]

Increasing taxes on the rich=increasing the top rate. Otherwise you're raising taxes for everyone. But I assume this is another one of those cases where you prefer to delude yourself than to actually face reality, so I will leave you to it, I suppose.

Increasing taxes on the rich can (and should) include raising the top rate, but it can and should also include elimination of deductions.

If the upper class is currently paying only 18.79% of their adjusted gross income in tax, then we can increase this take by raising rates and making more of their income subject to taxation.  The observation that there is money there to be reclaimed is valid - as your website shows, they have 4.2 trillion income.

[opebo]

But that is not what you said! You specifically said going back to the top rates of the 70s would be enough and it clearly wasn't. You were, as usual, trying to claim that everything was better in the 70s and this was a good illustration of the fact that this is not based on real analysis from your side.

That isn't what I said, of course, but in any case it is worth noting that there was both no deficit and higher employment in the 1970s.  Certainly the 70s were enormously better than the present, though perhaps not 'everything' was better.

Your method of argumentation, Gustaf, is solely to put words into your opponents mouth and then make misleading claims about their supposed claims.  As your own source (the website) shows, there is plenty of money in the hands of the upper class to close the deficit.

[opebo]

All I did was point out that increasing taxes by such a huge amount would hurt the people paying them. You waved this away by saying that it would be sufficient to return to the tax levels of the 70s on the rich. I demonstrated that this was false.

You then changed your position, based on the data I gave you, no less, to develop a more sophisticated argument that may have more merit. The point is that you clearly had no idea what you were talking about and is not man enough to admit it. And it is, really, terribly shameless of you to try and run away from your argument now that you have been proven wrong.

No, I never 'changed my position', Gustaf, I never took the position you said I did in the first place.  I stated:

Well, I don't know about 'tough or unusual' - would simply returning to the reasonable tax rates which prevailed before the Reagan debacle be 'tough' or 'unusual'?  More like a return to normalcy from my point of view.

Firstly, I was speaking in the context of Europe, so obviously my point was not very specific about exactly what rates (and after all 'before the Reagan debacle' does include a lot of history, with top rates at varying amounts - but the point being they were mostly higher).  Secondly I also never made a specific claim about what this 'return' would do, beyond making the situation better and 'sustainable'.

Whether a return to a 90% top tax rate would precisely eliminate 100% of the deficit or not (who can say?) it would certainly make it a lot better.  And besides, 'hurting' those persons in that class is a benefit, not a downside for those of my political preferences.

My point or claim was obviously not as specific as you represent - I was presenting the idea that the general tax structure which prevailed throughout the world before 'the Reagan debacle' (neoliberalism/Thatcherism/etc.) was more normal, sustainable, and better than what is the situation now, and that returning to a rough approximation of same is a good idea. (and who could deny such a reasonable observation?)  I later examined your web site sources, and we can see from those that the elite class does have plenty of income that they are keeping (they only pay a very small percentage), so it is clear that their under-taxation could be considered a major part of the cause of the deficit.

Your attempt to pin me to the claim that a particular tax rate does not do a particular thing is disingenuous.

Lastly I'd like to point out that saying someone 'has no idea what he is talking about' is borderline personal attack. 

[opebo]

Your post wasn't very clear, as it was poorly formatted, but from what I guess to be your meaning, you are again precisely accusing me of what I did not do.  Yes, obviously I favor much higher taxation, but I did not post anything specific enough to be called a 'fantasy'.

In any case, as the web site you provided clearly shows, the deficit is very small compared to the income of the elite class, so it is hard to see how anyone could dispute the fact that 1.5 trillion could, in some way, be subtracted from 4.2 trillion. 

[opebo]

Your post wasn't very clear, as it was poorly formatted, but from what I guess to be your meaning, you are again precisely accusing me of what I did not do.  Yes, obviously I favor much higher taxation, but I did not post anything specific enough to be called a 'fantasy'.

In any case, as the web site you provided clearly shows, the deficit is very small compared to the income of the elite class, so it is hard to see how anyone could dispute the fact that 1.5 trillion could, in some way, be subtracted from 4.2 trillion.  

In the UK, the personal wealth of the Sunday Times Rich list (1000) is circa twice that of the deficit

Well I was talking about their income of course (that of the top 10%).  It would be nice to confiscate all their assets, but, perhaps we'd have a bit of a bloodletting getting to that level of reform.