Don’t follow the herd…
by Serban V.C. Enache
Recently, a talk about the size of Marginal Tax rates has entered a part of public discourse. The claims are that higher taxation on the margin is morally acceptable, because people making more money than others pay more in taxes, and the body of citizens benefits from Public Services, which are thus ‘better funded’ in this situation. If you’re a regular reader of this website, you’re familiar with Chartalism, so I won’t bother to (again) debunk the orthodox myth of ‘tax more, so we can spend more’ in a context in which there’s plenty of idle land, labor, and factories to go around. I will instead focus on the fraudulent claims these politicians and leftist activists make regarding marginal tax rates in the USA and the so-called moral soundness behind them.
First of all, marginal tax rates ARE NOT effective tax rates. In the mid 1940’s, the effective tax rate for the Top 1% reached an all time high of 45% of income. Most of the fiscal drag, however, fell on the bottom 50%.
People claiming that the good times of post-WW2 were due to the 91% marginal tax rate are ignoring the geopolitical, financial, and economic climate of that period. Namely, Europe and Asia were left devastated by the war, and the USA’s production capabilities were unrivaled globally. In the 1950s, the effective tax rate on the Top 1% was about 42% of their income, albeit the marginal tax rate at the time was 91%. Today, the effective tax on the super rich is slightly lower than what it was in the 50s.
Statements from these leftist activists imply that the rich were somehow paying 91% of their income in the USA’s history. That implication is an outright lie, and the failure of these activists to make that clear is all the more proof of them pursuing an ideological agenda, facts be damned, not unlike their republican counter-parts. And as for the claim that higher marginal tax rates bring in more revenue for the Government [so it can fund more public services or fund existing ones better], that too is false. Since WW2, tax revenue in the USA, despite changes in taxation levels, has remained about 19.5% of GDP.
Now let’s address the moral claims of these leftist activists, useful idiots of the Establishment. The left and the right and center are taught by conventional wisdom to view moneys that people make only in terms of sums, figures. They never ask from what type of activities those moneys are obtained. If they bothered to ask this little question, they would see how utterly unjust and fallacious the former logic is. There’s a difference between earned income and unearned income. There’s a difference between a markup drawn up from actual competition vs a markup drawn up from cartelization. There’s a difference between making money from labor, from profit [enterprise], from rent [land and other natural monopolies / natural commons], and from usury. If we recognize the nature of these different economic activities, then we wouldn’t be taxing the former productive ones and allowing the latter parasitic activities to go untaxed and unhindered.
We would be taxing economic rents, we’d work to abolish patents, and we’d have a banking sector that loans at near zero markups for productive purposes (for businesses to expand output capacity, for people to fix up their homes, that sort of thing). We wouldn’t tolerate a banking system like we have today, with sky high markups, that gives out loans mainly for speculative purposes – predatory schemes that thrive off asset price inflation (rents of location), only to later on transform the populace into serfs and then having the Enlightened, Humanitarian, Bourgeois Intellectuals and Caviar Marxists sermonizing about the evils of populism, isolationism, and the need for decision making to be had at Trans-National level among the properly educated and wealthy few in the attempt to create another Tower of Babel in the satanic ambition that representatives of a degenerate off-shoot of human culture shall become gods in heaven, not just on earth.
In truth, however, the rightists are regressive because they want to reduce taxes indiscriminately (trickle down economics), and from these efforts, the rent-seekers and usurers reap the highest gains. And the leftists are regressive because they want a higher tax burden, that, like previously shown, falls mainly on the working classes, and not at all on the super rich.
The income inequality issue gets most of public attention, especially in the mainstream media, precisely because it’s a debate from which both camps argue based on flawed assumptions. The issue gets turned into political soccer, devoid of any actual facts, devoid of any true emotion of righteousness – it all becomes an opportunity to proselytize, to signal virtue, to shame, and to feign outrage in the worst way imaginable.
In truth, however, mankind has been plagued by a more gargantuan and sinister specter throughout history: wealth inequality. One solely requires the curiosity to search and the wits to see this truth, as it rises from the antediluvian dirt beneath our feet. Land, the first factor of production. Land, nature-made, unlike capital. The site value, established by the labors and investments of the community (including the public authority), NOT by the idle classes, landlords and usurers. The working classes will reclaim the natural and social commons, or they will be content to live with the idea that the word “The People” only exists de jure on some scrawny piece of paper, and not at all in reality, past, present, or future.
Nowadays, the hope touted among so-called progressive circles is a false one: that these Democrats with some new adjective attached before that label are somehow the forces of radical change for good. As Nick Barrickman concisely states, their role is to fool youngsters (and in my opinion some old timers as well) to vote for the Democratic Party, to fool them into believing that this war-mongering, thieving, and undemocratic party can be reformed. Young people generally don’t vote, or if they do, they vote 3rd party or independent; so that’s a demographic segment coveted by the Establishment.
It’s always effective to present two options, one as evil, and one as the lesser evil to the public, and then have the audacity to claim ‘freedom of choice,’ ‘political pluralism,’ and ‘the will of the People, in accordance with the law, has spoken.’
In domestic affairs, what the Republicans and Democrats offer the American People is simple: Feudalism with borders and Feudalism without borders.
For further info on what the Government should and shouldn’t tax, see these videos.
Property Tax vs Site Value Tax
Site Value Taxation & Agriculture
Site Value Taxation and Buildings
Site Value Taxation & Public Infrastructure/ utilities