PB: Can we move on to taxes? Reagan cut the top tax rate from 70 percent to 28 percent in terms of personal income taxes. Clinton raised it to 39.6. Bush has cut it back to 35 percent. What do you think is the maximum income-tax rate that should be imposed on wage earners?I don't know about the percentages, but the idea seems absolutely right to me: Lower taxes for things that we like (work), higher taxes on wealth and things that we don't like.
RN: Zero under $100,000. Now you got to ask me how I am going to make —
PB: What is the rate above $100,000? What is the top rate?
RN: Then you have a graduated rate. Thirty-five percent, in that range, for the top rate. It comes down to the loopholes. When it was 70 percent, did you ever meet anybody who paid 70 percent?
Now, where would I make it up? This is where the creativity comes in. I would move the incidence of taxation, first, from work to wealth. So I would keep the estate tax, number one.
PB: You restore the estate tax to 55 percent?
RN: That is a little extreme.
PB: That is where Bush has it, 55, and he is cutting it down gradually to zero. What do you think it should be?
RN: Again, 35 percent.
PB: Would this be on all estates?
RN: No. Estates above $10 million.
PB: Ralph, you are not going to raise much money with this tax.
RN: There will still be a tax on smaller estates. I think all estates over, say, $500,000 should pay some tax. The estate tax as a whole raises about $32 billion a year, but the thing is the loopholes. Buffett, as an example, won’t pay because all of it is going to his foundation.
I think we should have a very modest wealth tax. I agree with the founder of the Price Club, who thinks it should be 1 percent.
PB: One percent of your wealth each year would be turned over to the federal government?
RN: Right. Then the third shift is why don’t we tax things we like the least? We should tax polluters. We should tax gambling. We should tax the addictive industries that are costing us so much and luring the young into alcoholism and tobacco and drugs. And we should tax, above all, stock and currency speculation.
PB: A short-term capital gains tax?
RN: Like a sales tax. If you go to a store and buy furniture, you pay 6, 7, or whatever percent. You buy 1,000 shares of General Motors, you don’t pay anything. So what we are doing is taxing food and clothing but not the purchase of stocks, bonds, derivatives, and currency speculation. A quarter-of-a-cent tax will produce hundreds of billions of dollars a year because of the volatility. You remember the days when 3 million shares on the New York Stock Exchange was a big day? Now it is 1.5 billion shares.
The point is this: work should be taxed the least. Then you move to wealth, and then you move to things we do not like. And you will have more than enough to replace the taxes of under $100,000 income and to provide for universal health insurance and decent public transit and to repair the public-works infrastructure.
UPDATE: My good friend Brian Fitzpatrick, who clerked for J. Scalia, points out by email that a wealth tax would be unconstitutional without something akin to the 16th Amendment, which authorized the income tax. Good point.
Despite my anonymity, this is intended to encourage thought, not flames. I'm glad to see you back blogging, and I hope your recovery is full.
ReplyDeleteReading the excerpted Nader interview, it seems to me that Nader is much less "tax happy", or more conservative in his views of taxation, than many or even most elected officials who call themselves conservative.
I'm no Nader fan, and in fact tend to vote Republican, but if Nader keeps talking ""no tax on incomes below $100,000", and "35% maximum estate tax", I could become one.
ObWealthTax: if one's wealth is in the form of real or personal property, we already have a wealth tax. I suppose the unconstituionality of a wealth tax is limited to cash, securities, and related forms of wealth. I can't say I'm in favor of any tax, and I think property taxes are far too high in most places, but it would be hard to complain about a "wealth tax" at approximately the same rates as property tax, if limited to "wealth" greater than some egregious threshold amount.
Of course, the problem with all taxes is that they start small and evolve into behemoths. IIRC the maximum income tax rate was 3% or so when federal income tax was inaugurated. That's why it's so refreshing to see someone talk both about actually lowering maximum rates and about raising the threshold for exemption from taxation.
I thought that was an exceptionally interesting interview.
ReplyDeleteBuchanan has concluded, correctly I think, that current establishment "conservatism," whereby we all subscribe to National Review and the Wall Street Journal and donate to the relatively less statist Republican candidates -- this approach is broken. It does not work. The current "right" coalition contains internal contradictions and self-imposed limitations that render it incapable of actually protecting the institutions it is meant to conserve. Which is why so much of our history since the 1960s resembles a slow, backward slide into cultural dissolution.
Buchanan sees this, and he is sufficiently independent-minded to try to do something about it. He is trying to find a way to step outside of the box, to liquefy current coalitions and recrystallize them into something more effective. Hence his tentative overtures to a fellow insurgent like Nader, who is trying to do an analogous populist refurb to the Left.
Buchanan's interview covered the areas where Nader is attractive to dissatisfied conservatives. But he was also careful to hit on the vital subjects, like abortion, where conservatives must part ways with him. I left that interview thinking that Buchanan respects Nader as an honest and serious man, and is willing to work with him on a tactical basis, but is under no illusions about the fact that Nader is an honest man *of the Left*, with strong differences from the conservative worldview.
It was a great read.
- Plainsman
www.southernappeal.blogspot.com
Nader's proposal seems initially attractive, but I'd argue there's a catch, at least if you're a fiscal conservative. If you impose income taxes only on incomes over 100K, you're taking away the pain of paying taxes from the vast majority of the body politic. And when you do that, where's the incentive to put a brake on spending? A periodic tax revolt to put a brake on spending increases would be unlikely if the only people calling for it were the top 5% of income earners in the country, and tax increases would be much more palatable politically. Just imagine how protests over high tax rates by the wealthy would be greeted!
ReplyDeleteLikewise, it's easy to view speculators as essentially evil, but even if we limited a tax on share purchases to short-swing trades, this type of tax would probably make our capital markets correspondingly less efficient. If, as the evidence seems to suggest, speculators perform an essential function in price arbitrage, taxing their trading activity would almost distort the market's prices, hurting efficiency throughout the economy.
OK, I've got a question. First, I know NOTHING about tax policy, so let me get that right out front.
ReplyDeleteNow, when thinking about the kind of behavior we want to encourage/discourage with tax policy, it seems to me like the #1 think we want to encourage would be *investment*: i.e., using wealth to *create more wealth*. In the big picture, isn't that the most effective use of assets -- putting them to productive use, growing the economy, creating jobs, and "making the pie bigger?" And yet, Nader seems to be saying the opposite: that he would tax investment to the exclusion of most everything else.
Maybe I am misunderstanding him, or am drastically off in my idea that we should be encouraging investment. Anyone care to set me straight?
- Alaska Jack