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Thursday, October 9, 2008

Re: [DFC] Tax Cuts Favor Those Who Pay The Taxes

Jeffery J. Smith wrote:
> We must replace that with income predistribution.
Does that mean something other than equitable distribution of geo-rent?
In general, should "distribution" policy ever be calibrated according to
perceived inequality of market process outcomes? Shouldn't we just make
the market processes just, and then let the chips fall where they may?
How is any other policy not morally equivalent to arbitrary
income/wealth redistribution?
>> The top 1% of earners pay 40% of all income taxe
> I've seen that from the right before, but have not been answered if
> that's tax liability or actual taxes paid with refunds included.
Huh? You mean like post-April-15 refunds due to excess witholding? Tax
policy analysis of course reflects actual taxes paid after all
deductions, exemptions, preferences, refunds, credits, etc.

> Even if so, what about Warren Buffett noting he pays more than his
> secretary?
The plural of "anecdote" is not "data". An investor like Warren Buffet
can arrange for most of his income to be unrealized (e.g. as capital
gains not yet taken), and can arrange that his operating income comes
from tax-free instruments (e.g. municipal bonds, whose tax advantage of
course is bid into their price and so arguably aren't quite untaxed).

>> The top 1% of earners pay 40% of all income taxes while earning only 20% of all gross income.
> "Earning"? "only"?
Earning -- are you saying that income tax rate progressivity should be
determined by nebulous judgments about the extent to which income is
"earned"? Some people say only wage labor is "earned"; do you agree?
Wouldn't a Geonomics fan be opposed in principle to all taxation on
income, period?

Only -- 40% is higher than 20%, no matter how much you don't like the 20%.
> If the income tax were designed to fall on "unearned" income and all
> its revenue were earmarked for paying off the federal debt, so that
> when it's paid off, the tax expires, would that seem acceptable to
> you?
Trading more income redistribution in the short run for the mere promise
of ending income redistribution in the long run does not sound very smart.