Goldy may hate to dwell on this, but I’m going to keep piling on. The Seattle Times’ “Calitaxication” editorial is one in a long series of deeply misleading claims they’re making about the crisis here in California. In order to ensure that Washington doesn’t follow California’s path, it’s necessary to do as thorough a demolition job as possible on the Times’ editorial as possible.
I think Goldy’s done a good job of hitting the flaws of the Times’ argument that I-1098 would somehow replicate the taxes found in Oregon and California. But there’s a deeper point that needs to be made: California’s budget woes aren’t due to too much tax – instead the issue is that taxes aren’t high enough on the upper end.
One piece of the Times’ editorial that needs further attention is this:
California did that. Its state income tax on high earners is 10.8 percent, and its sales tax mostly ranges from 8.75 to 9.75 percent. Such high levels of tax have not brought wealth and balanced budgets to California. Skilled people are leaving.
This isn’t really true. And since it’s at the core of the argument against taxing the wealthy – that doing so would cost jobs and lead skilled workers to leave – it’s important to show how this too is a flawed statement.
Despite the reputation the Times gives California, the Golden State isn’t actually all that tax happy. After Republican Governor Pete Wilson pushed through an income tax increase in 1991, the top tax rate was 11% for high earners (individual incomes of $200,000 and above). Those expired at the beginning of 1996, but did not prevent California from coming back from the severe early ’90s recession by that time – nor did they lead to any mass exodus of the rich and the skilled from the state. In fact, the numbers of people paying the higher rates under the Wilson tax increases in the 1990s rose, according to research from the California Budget Project:
The number of California’s joint personal income tax filers with incomes of $200,000 or more rose by 33.4 percent between 1991 and 1995 – a period in which California temporarily imposed 10 percent and 11 percent tax rates on high-income earners. In contrast, the total number of joint filers declined by 6.7 percent.
In the late 1990s Wilson pushed through a massive tax cut, including to personal income taxes, justified by the dot-com boom. By 2002, this lost revenue played a key role in producing the state’s large budget deficit that ultimately brought down Governor Gray Davis and gave Arnold Schwarzenegger his opening to become governor in the 2003 recall.
In 2004, however, California voters approved Proposition 63, which raised the tax rate to 10% on incomes over $1 million in order to fund mental health services. It passed with over 53% of the vote.
According to the Seattle Times, this should have destroyed the state’s economy and caused a flight of the rich. It did no such thing. The numbers of people who paid that tax rose after it was enacted, just as it did in the 1990s (again from the CBP):
The number of millionaire taxpayers – those with adjusted gross incomes of at least $1 million – increased by 37.8 percent between 2004 and 2006, after voters approved an additional 1 percent surcharge on taxable personal income above $1 million, which took effect on January 1, 2005. During the same period, the total number of personal income taxpayers increased by 4.2 percent.
As we well know, California’s bubble burst in 2007-08, and again revealed the underlying weakness of the state’s budgetary system. But the problem isn’t high taxes – instead it is the legacy of the notorious Proposition 13, passed in 1978, which capped property taxes and forced state and local governments to rely on more volatile sources of revenue, such as the sales tax. This legacy was compounded by the extremely reckless Wilson dot-com era tax cuts that I mentioned above.
So are skilled people leaving California as a result of these tax increases? As we saw above, the opposite seems to be happening: tax increases on the wealthy if anything have been accompanied by an increase in the number of people paying the tax. California’s boom and bust economy has many causes – an overreliance on real estate, a lack of public services to help secure and grow the middle class – but taxes on the wealthy aren’t one of them. Skilled workers continue to come to California to start businesses, work at our leading corporations, and to innovate the 21st century economy.
Neither are these taxes leading businesses to flee the state. Jed Kolko of the Public Policy Institute of California debunked this notion back in June 2010:
Rhetoric aside, California loses very few jobs to other states. Businesses rarely move either out of or into California and, on balance, the state loses only 11,000 jobs annually as a result of relocation—that’s just 0.06 percent of California’s 18 million jobs. Far more jobs are created and destroyed as a result of business expansion, contraction, formation, and closure than because of relocation. Business relocations, although highly visible, are a misleading guide to the overall performance of the California economy. The employment growth rate, which takes into account job creation and destruction for all reasons—not just relocation—is a much better measure of the state’s economy.
There’s no doubt California faces serious challenges. Our unemployment rate is 12.2%, much worse than Washington’s 8.7%. But that is due largely to the much more severe impact of the housing market bust than the impact of taxation, as shown above.
Here in California, we’re all too familiar with the impact of tax cuts, which have destroyed our public services and our ability to balance our budget. It’s not for nothing that some of us call this state “Failifornia” (in fact, it was the title of my Netroots Nation panel on California politics). As someone with a lot of family and friends left in Washington State, I urge you to not believe the BS that the Seattle Times is trying to sell you as they try to turn Washington into Failington by adopting the insane anti-tax policies that have devastated California.
(Oh, you might be wondering who I am. I lived in Seattle from 2001 to 2007, but now live in Monterey, California, where I work as Public Policy Director for the Courage Campaign, a 700,000 member organization working to make California more progressive. I also write at the website Calitics, the state’s leading political blog. I’ve also written several articles at the Olympia Newswire earlier this year on state budget and tax issues.)
You didn’t mention your involvement in the California High Speed Rail blog.
Welcome to HA. Good post.
Proposition 13 was the worst thing that ever happened to California next to the super majority rules in the legislature.
California used to be a place of dynamism and drive. It’s a shadow of its former self now.
@1, nor did I mention my involvement in Democratic Party politics (I’m vice-chair of the Monterey County Dems and on the state party executive board), but that was only because I didn’t want to take up too much of people’s time with my numerous affiliations!
@2, thanks – the 2/3rds rule is another huge problem which, of course, you all get to vote on *yet again* this fall. Hopefully majority vote is upheld.
California is still a place of dynamism and drive, but the lack of funding of local government really undermines what can be done. The contrast with Washington State is instructive, where local and state government is certainly imperfect, but much more effective at providing services and innovation in government than the increasingly sclerotic state and local governments here in CA.
The Times is just straight up dishonest to say that CA’s high taxes are behind our problems.
You mean there’s more to our problems than high taxes and Mexicans??
The one thing that rich people everywhere have in common is they want government services, public subsidies, and use of publicly-owned resources for free. What I mean is, they didn’t get rich by working for their money. They got rich by taking from someone else, and lower income taxpayers are the softest touch of all. After all, our political system is a wholly owned subsidiary of the wealthy class, and exists to serve their financial pleasure at our expense.
Usually your propaganda is a bit better than this. Have a carrot and see if your zing doesn’t come back.
Rich people are the smallest consumer of government services and the biggest
Sorry, hit submit. I hate laptops.
Rich people are the smallest consumer of government services, and the biggest payer for them.
What subsidies exactly? Those that encourage investment and savings, rich or poor, for the net financial stability provided? Farm subsidies to keep our agriculture from being wholly outsources? Which subsidies do the rich enjoy?
Not a single wealthy person earned their money? Interesting.
Mr. Cruikshank,
The fundamental issue in taxation should be fairness. If we must pay for more government services why should a tiny percent at the top pay for a large percent at the bottom paying, effectively, no taxes at all?
The progressive notion of fair taxation is morally bankrupt. It is a punishment for the sin of doing well and working hard, qualities we should be encouraging.
Sorry, but if the premise is flawed, everything that follows is as well.
Wealthy California Republican gives to Jerry Brown.
http://www.sacbee.com/2010/08/.....brown.html
Meg Whitman is glib and vain. She blathers on and on about the same old right wing bromides. You can predict what comes out of her mouth way before she opens it. She’d be a disaster for California. But in all honesty I don’t see Brown being able to do all that much given such a sclerotic legislature.
Oh here’s something our local right wingers will luurve about Ms. E-bay:
http://www.youtube.com/watch?v.....re=related
She’s a big fan of “communist” Van Jones.
and how are “we the people” doing today?
over the past 30 years, the income of the top 1%, adjusted for inflation, doubled: the top one-tenth of 1% tripled, and the one-one-hundredth quadrupled. Meanwhile, the average income of the bottom 90% has gone down slightly.
does this “promote the general welfare”?
nothing morally bankrupt about progressive taxation
The fundamental issue of taxation should be fairness? That is a flawed premise. The fundamental issue is the promotion of the public good.
Therefore, according to your logic, all that followed was pure BS.
Live by the premise, die by it, Losty.
@8
“Rich people are the smallest consumer of government services and the biggest payer for them.”
Some the rhetoric is so silly you’d think it would be hard not to realize it. So, who travels on airplanes more often. Rich people or poor? Who paid for the airport construction and maintennance?
Who is more likely to incorporate themselves as an LLC, set up a family trust, or s-corp, rich people or poor? Who paid for the administrative courts, county records officers, an legal courts should any suit originate from legal filings?
Who is more likely to tie up a divorce proceeding (child support not withstanding) for several years. A poor couple with few assets or a rich couple? Who paid for the court reporters, pro tem judges, hell courthouse maintenance?
The opposite is more generally true. The wealthy push more externalities onto the society while availing themselves to a greater variety of state common services.
Assume global warming (or terrorism, it really doesn’t matter) is “real”.
Assume something must be done.
Assume the measures necessary shall be “expensive”.
Assume the rich have all the money.
Who pays?
Is this fair?
Discuss.
@9: yes, the issue is fairness.
Is it fair that someone who has a ridiculous amount of money pay the same rate of tax as someone like myself who barely gets by?
10% of my income is a lot bigger of a bite than 10% of Bill Gates’s income.
Of course, we’re all just sort of playing along with the Seattle Times on this, taking them at their word that this is some high-level intellectual policy argument. The reality is that the Blethens don’t want to pay another dime to keep Washington’s children educated, its people healthy, its workers employed, or its communities a safe and pleasant place to live. They’ve got theirs, so screw the rest of us.
RE 12
I’m unsure how this is legitimate government activity, deciding who can and who can’t make more money. Who decides what is a reasonable increase? You? Me? Senator Murray? So we sacrifice a few to maintain a phony notion of fairness in which some at the top have property confiscated?
Yes, the word is morally bankrupt.
RE 13
I don’t agree. We must have taxation to pay for the things government is Constitutionally mandated to do. Fine. The public good is served by how those taxes are spent, not how they are collected. Fairness of collection is the only way to keep society together. Creating a class of sacrificial lambs to bear the brunt of government expenditure is simply undemocratic and anti social.
Re 14
Most of the examples you provide are local tax based. Courts, airport construction and maintanance, county or state licensing, incorporation etc are usually fee based. That is I pay a fee to pull a building permit. I pay a fee to incorporate or file for divorce. And property tax is another tax which assesses the wealthy at higher rates than the poor, answering further your contentions.
At any rate who consumes the criminal courts, policing, social services and education? The wealthy pay for these, but the poor consume them.
I know you and the rest truly believe the wealthy are the clients of government. It simply isn’t true.
Re 15
I can assume that some problems are too large or involve too many actors to leave them to private means of settling without assuming either of these-
The rich have all the money. Not really. They do have a disproportionate share relative to their numbers.
This is a social issue, not a government one. To take an example, if you don’t like the compensation of health insurance execs you have two options. You can choose not to purchase a good or service from a company with whose policies you don’t agree. Or you can mandate all Americans to have health insurance, thus ensuring those compensation packages, higher insurance rates and so on in perpetuity. Yeah, we made the right choice all right!
Or, having money means you have an obligation to pay the duties and debts of your poorer fellow citizens. To be fair, you didn’t state this, but it is a standard of the beliefs of the left.
RE 16
“Is it fair that someone who has a ridiculous amount of money pay the same rate of tax as someone like myself who barely gets by?”
Yes it is. Bill Gates derives no more benefit from citizenship than you, and should owe no more of its costs.
“10% of my income is a lot bigger of a bite than 10% of Bill Gates’s income.
And this is important to tax policy why exactly?
“The reality is that the Blethens don’t want to pay another dime to keep Washington’s children educated, its people healthy, its workers employed, or its communities a safe and pleasant place to live. They’ve got theirs, so screw the rest of us.”
Ah yes, standard liberal cant; Class warfare under the banner of fairness. If the Blethens are tired of being asked to pay taxes while nearly 50% of Americans don’t (either through benefits received balanced against taxes paid or simply by being exempt and getting an EITC check for the valuable service of being a citizen) I don’t blame them one bit. If I went to lucn
RE 16
“Is it fair that someone who has a ridiculous amount of money pay the same rate of tax as someone like myself who barely gets by?”
Yes it is. Bill Gates derives no more benefit from citizenship than you, and should owe no more of its costs.
“10% of my income is a lot bigger of a bite than 10% of Bill Gates’s income.
And this is important to tax policy why exactly?
“The reality is that the Blethens don’t want to pay another dime to keep Washington’s children educated, its people healthy, its workers employed, or its communities a safe and pleasant place to live. They’ve got theirs, so screw the rest of us.”
Ah yes, standard liberal cant; Class warfare under the banner of fairness. If the Blethens are tired of being asked to pay taxes while nearly 50% of Americans don’t (either through benefits received balanced against taxes paid or simply by being exempt and getting an EITC check for the valuable service of being a citizen) I don’t blame them one bit.
Is it fair? That’s not my fucking problem.
You can’t tax the top 1.5% enough, fuck them.
An this is why you fail…
@17
You pay a permit fee. But that fee doesn’t cover nearly the full realm of the service. A standard fee is an assumed amount that hopefully (in the eyes of whatever agency levels the fee) will overcharge for simple services and undercharge for more complex.
If you really think airports and courts are supported by local taxes you really are fooling yourself. Air traffic controllers are local? The port of Seattle isn’t funded by municiple, state and federal funding? Airlines aren’t subsidized in the interest of increased commerce? And don’t even get started on the external cost of providing jet fuel. Do the airlines make up refinery subsidies? Does the airfare and $25 fuel surcharge cover the cost of Navy protection of tankers at sea?
Meanwhile a fee based system doesn’t take externalities into account. I’ll stick with the divorce. The couple who goes to a mediator for a few hours, draws up and signs papers and files them pays the exact same fee as the couple who has multiple appearances in family law court, multiple settlement confrences, multiple summary judgements entered. So, it could accurately be said that the fees of the “quickies” are subsidizing the enhanced services of others.
Lost, you are not consistent. You are against gay marriage because it’s not good for “families”.
But a society of a few extremely rich and a huge mass of desperate poor is not good for most families.
Yet you cling to the idea of tax fairness despite that some reasonable amount of “unfairness” that ended up with say merely “rich” and a huge mass of comfortable families would be a good thing for most families.
An 60% tax on 10 million dollars still leaves $4 million dollars in the bank. I think most of us would agree that $4 mill is enough to live on well.
Why is money “fairness” more important than family to you?
HAHAHAHA
So Robert, lets say 500,000 millionaires make $1,000,000. We already know Forbes along with Capgemini have told us millionaires have left California due to higher taxes since 2007. Puddy already gave the links. The fool ylb already has those links. Butt, he won’t replay the facts.
So how many of those do you think are DUMMOCRAPTS Robert? Remember CA is a big DUMMOCRAPT state. How much money would that be Robert? Now how much do you tax them Robert?Please tell us.
Re 23
You missed a bit-
What I’ve written before is that income disparity is not properly a government concern. But it is certainly a concern. I’ve written that I know of no society with this kind of disparity that lasted long.
And I’ve written that consumers can withhold their commerce from companies with whose compensation packages they disagree.
I just don’t believe it within reasonable government bounds to decide how much to leave me to live on, whether this is 4 million or $40,000. Nor do I think it reasonable that one citizen bear the citizenship costs of others on the pretext that he or she can afford it.
Re 22
Fine. Assuming everything you write to be true for purposes of argument-
Change the fees to accurately reflect what the services cost locally and charge all citizens a flat tax to pay for common costs of citizenship federally. Fair enough?
Who the HELL are you to tell someone what is enough to live on.
DUMMOCRAPTS always playing the class warfare game!
And they probably feel the same way about you too.
Off point, but I’d like to hear how our so-called “Christian” wingies respond to this:
http://www.facebook.com/note.p.....=624841870
Cynny, Puddy, lost?
Re 23
“Why is money “fairness” more important than family to you?”
Honestly, it is. The reason has less to do with personal ethics than an assessment of what my fellow citizens will fight for.
They will (eventually, hopefully, please God soon) fight for their vanishing privacy and civil rights. These are drilled into us as part of our partrimony as US citizens.
They will not fight for ‘money fairness.’ Most gain from the kind of income redistribution favored by the left. From a little less than 50% paying no federal taxes in this country economists estimate we will cross that tipping point during the Obama administration. That is to say, a solid voting block will have skin in the game to rationalize their right to the property of their fellow citizens. They will rationalize not because they’re evil or morally deficient, but because that is human nature.
So how does more than half of taxpayers freeloading off of others strike the left as fair?
Well proud leftist, when you tell us if your father would have married you and another man, Puddy will take a stab at it!
goldy’s toenail fungus?
Tens of thousands of dead fish are lining the Jersey Shore — as far as the eye can see — beginning at High’s Beach in Middle Township Wednesday.
“Once you figured out what it was, the smell hit you,” Flavia Scotto of Burlington, N.J. said about the bizarre fish kill.
http://www.nbcphiladelphia.com.....59094.html
lost @ 29,
You are truly lost. Damn, just when I thought we had a Republican here who could think.
Puddy @ 30
Don’t go personal here. You folks on the right dislike much of the Constitution, though you claim to be its upholders. With regard to the Old Testament, you need to explain why you believe every word is true. I can reconcile my beliefs about the evolving Constitution and the Bible. You can’t, Puddy. I am quite sure of that.
I think the gov should only let all people keep 10% of their earinings. The the gov can make sure that everyone (I mean those they deem rightous) will live in a “fair” world and have the life they deserve.
God love it my comrades. Screw freedom and the right to work hard or the right to be a bum and live that way.
Fuck off. Sorry..I know some on this board won’t read if there isn’t some explitive envoked.
RE 32
Ah well. I’ll see if Cartoys has an ideological GPS. “Turn left here. Turn left here. Turn left here” Or vice versa depending on whether the reciever is republican or democrat.
Off to bed, early day tomorrow.
btw – what’s wrong with capitalism? Goldy…..how do you like your blog? Did that come from the gov? (fyi – i know the history of the Internet). What’s wrong with make everyone’s life better through capitalism and the constitution? Wilson, FDR, LBJ, Carter & Obama (Clinton misses the list by allowing America tol be great) all pushed policies that led to the economic and social decline of America.
No wonder folks on this board want Sharia Law.
The richest people paying a larger share of taxes makes more sense than charging poor people a higher interest rate.
re 36: What’s wrong with capitalism is that people like you and me don’t have equal access to it and the whole system tends toward monopoly — which is the total opposite of the free market.
Anyone who cannot wrap their mind around that is a first class idiot.
Poor proud leftist. Can’t admit truths so he goes dark.
When confronted by the truth, leftists tell lies. It’s DUMMOCRAPT progressives who want to remove the Keep and Bear Arms from US Citizens. Reminds Puddy of what the Germans did in the 30s before the holocaust. Seems like a a historical repetition, parallel universe thing. It’s leftist who claim the 14th Amendment is goona get repealed, when no one of any political stature has claimed that.
Don’t vote for I-1098, whatever you do! If you do, and it passes, you’ll live to regret it!
So basically what you’re saying is in 2007 you fled Washington State’s high taxes.
Lost (way back @ # 9) says: “The fundamental issue in taxation should be fairness.”
Wrong. The over-riding issue is the fundamental purpose of taxation: to raise money for use by the government.
A secondary issue is to do so in a way which has the least harmful impact upon society.
Beyond that, we can argue about the details (how much, from whom, in what manner it’s calculated and collected, and how it’s spent).
So how does more than half of taxpayers freeloading off of others strike the left as fair?
You are looking at it wrong. What’s wrong with the economy that half the tax payers are not being paid enough to pay federal taxes?
The economy is not the stock market, the economy is people with jobs buying things from local businesses.
Why are the rules of our economy stacked so that Wallmart who buys everything from china, the cheapest place to buy things?
Why are the rules of our economy stacked so that it rewards sending jobs over seas?
Why are the rules of our economy stacked so it’s almost impossible to unionize?
Why are the rules of our economy stacked so we are not protecting american jobs so that most people are making enough to pay federal taxes?
Yes, according to right wingers Al Gore invented it.
re 42
Fair point. But tax policy which systematically victimizes one class for the benefit of another is tax policy which dooms the nation which practices it.
@45
But tax policy which systematically victimizes one class for the benefit of another is tax policy which dooms the nation which practices it.
Why do you assume that? Where is your proof?
Sweden, Denmark, and Holland have progressive income taxes yet they have have NOT doom befall them.
Unilaterally, any editorial using the term ‘calitaxicate’ has to be full of shit.
“But tax policy which systematically victimizes one class for the benefit of another is tax policy which dooms the nation which practices it.”
In other words, going back to the previous level of income taxation of the very wealthy (what’s that, 3% more?), will doom our nation. Going back to the capital gains and dividends rate of 20% instead of 15% will doom our nation. Going back to taxing the estates of the rich will doom our nation. How’d we ever survive the doom when we had such taxation levels in the recent past? You want doom? Lost, we gave the bastards what they wanted and look at where we are now! There’s your fucking doom for ya!
Will you ever bother to back up you assertions of fact with, um, facts?
@44 Not quite right…the righties only give Al credit for the part with all the porn.
Progressive taxation isn’t unfair. It taxes the people who benefit the most from the public weal at the highest rate.
It’s no more unfair than banks (the people distributing the ‘capital’)charging a higher rate on a riskier loan than to a well heeled person. Is that fair? Of course not. And if you want to have a society that works, you’ll have to tax the rich at a higher rate than the poor — because that’s how the system works.
Unlike janitors, retail clerks, carpenters, and auto workers, nearly all high income earners in this country are protected in one way or the other from the winds of economic competition (unrestricted foreign trade; immigration, illegal or otherwise; barriers to entry; patents; subsidies, etc., etc.).
Action and enforcement by the government ensure and maintain these protections, and a good case can be made that these very same people have undue influence on the making and/or the enforcement of these laws and regulations.
This mutural circle of predatory behavior has created a nanny state for the rich and well off. They reap outsized rewards and bear little, if any, risk. Their government is somehow always there to help them.
A progessive income tax is only one small step toward repairing our badly damaged social compact and re-align tax policy and the law with the Public Good.
@48: Rich folks who pick this year to die will pass on their boodle unscathed from the predations of the IRS. The estate tax this year is ZERO.
I have failed to detect a pickup in economic activity associated with this boondoggle as the heirs fall into vast amounts of untaxed and unencumbered wealth. Where is the hiring and new investment?
Nor have I witnessed a huge outbreak of death itself amongst the rich hoping to assist their heirs. What? They don’t care about the loved ones left behind?
Estates above a generous, but not unlimited threashold, should be taxed at 95%.
HMMMMMMMMMMN…… Why is it so impossible to explain to a wingnut that supposed ‘American’ manufacturers are in favor of duty free imports not because they are fair and high-minded businessmen, but because they have things produced in slave labor conditions and then reimport it (duty free — get it wingnuts?.
It’s all for sale right there in WalMart — where Durrell is doing his darndest to make sure thatr you get all the cheap crap you can afford with your 40 year old flat wages.
It’s like trying to reason with a two year old about running out in the road. They just don’t understand. The only thing they do understand at that age is a swift whack on the bottom every time they approach the road.
That’s a metaphor for defeating you wingnuts in elections. Don’t worry. I’m not going to spank jhay-=walking wingnuts. In fact, I encourage them to run right out in traffic — frequently.
I have failed to detect a pickup in economic activity associated with this boondoggle as the heirs fall into vast amounts of untaxed and unencumbered wealth. Where is the hiring and new investment?
Good point. Where is the boom?
# 52: Actually, the lack of a federal estate tax this year might be one of the reasons why the current economic recovery is so slow.
All economic activity depends upon transactions. Each stage of the transaction results in multiple economic interactions, each having it’s own multiplier affect. Even a gift or a sale of a business or property has an economic effect.
If everyone stands pat, with no one buying or selling, the economy slows to a crawl.
But for many who have a substantial amount of wealth towards the end of their lives, the wealth consists of deferred transactions. Instead of taking out their money in salary or dividents, they have allowed it to accumulate in their estate, and the appreciation is tax-free. Since our current tax systems are triggered by an actual transaction (sale, gift, or inheritence), no taxable event has taken place, and taxes are avoided, indefinately.
Since the heirs of an estate take it on a “stepped-up basis”, they never pay a tax on the appreciation of the estate. If there is no estate tax, they pay no tax at all. The decedent has successfully avoided paying any capital gains on his investment not only for his lifetime, but his heirs have avoided any such taxes as well.
If the descedent had sold his estate a week before he died, his estate would have to pay capital gains tax.
Which is why we need an estate tax. Decisions of whether to accumulate or hold property shouldn’t be based on a tax-avoidance strategy, they should be made on their basic merits. The estate tax and the capital gains tax should have a roughly equal impact.
So lets get back to the effect of this on the current economy. With no estate tax this year, there is a huge financial incintive for people to hold onto their large estates and not divest themselves of even the smallest portion of it. Even if a business needs “new blood”, or an infusion of capital only a new owner could provide, it’s going to sit and fester until the “Ol’ Massa” dies. That way they avoid paying taxes on years of deferred income.
So no transaction, no tax. And during a year when our economy needs economic activity desperatly, our tax system is actually discouraging economic activity.
Yep, George Steinbrenner’s heirs will make sure many generations of Americans to come will hate the Yankees with the extra 600 million that came courtesy of GS’ very well timed passing.
I’m encouraged that someone had the bright idea to put a sunset provision in the Bush tax cuts. Anybody know who was responsible?
Of course, the Republicans being still the last true believers in the Laffler Curve (still digging through that horse poop, looking for the pony underneath), probably assumed that the merits of it would be so obvious by our vibrant economy that there is no way we wouldn’t extend it permanatly in 2010.
But now McCain’s campaing to extend the tax cuts has a tremendous obsticle to overcome. They have to have control of both the House and Senate, and enough in both houses to override a Presidential veto. That just isn’t going to happen.
If the tax cuts were permanant, then all they would have to do is filibuster to prevent a bill eliminating the tax cuts to avoid it becoming law.
I believe that was the result of the tax cuts being passed through budget reconciliation.