Progressive Taxation: What Would Jesus Take?

The short answer is: all of it.

The long answer is more complicated.

Rush Limbaugh was a little ticked off a while back because liberals were asserting that Jesus would raise taxes, especially on the rich, which is, of course, a complete caricature of Jesus' teaching. Jesus wouldn't just raise taxes. He'd have made them completely irrelevant. For everyone.

The fact of the matter is, Jesus advocated complete liquidation of one's assets as a condition of discipleship. And after one did so liquidate, one would have no job to tax, either, because one would have to leave one's job to follow him.

Read the famous story about the rich man in Mark 10, paralleled in Matthew 19 and Luke 18, whom Jesus instructed to "sell whatsoever thou hast, and give to the poor." Liberals like to stop right there, with the obligations this story places on the rich.

Few like to reckon, neither liberals nor Christians it must be said, with Luke 14:33: "Whosoever he be of you that forsaketh not all that he hath, he cannot be my disciple."

Or with the calling of The Twelve Disciples, who left all and followed Jesus at his command, wandering around Galilee and Judea for something between one and three years until Jesus met his coup de grace, leaving their families unsupported for the time and becoming deadbeat dads in the process. A fine lot, they.

The truth is Jesus had only these 12 takers, and all of them proved to be something of a disappointment in the end, to say the least. Everyone else he called to discipleship found it a bit of a stretch, and followed at a distance, as it were, especially if a miracle feeding looked to be in the offing. The analogy would be to the Jewish proselytes to whom Paul preached his gospel, which they found rather more attractive than that whole circumcision thing required to become Jews.

Jesus' radicalism makes a certain kind of sense if the end of the world and The Final Judgment is just around the corner, which, of course, would make practical concerns beside the point. "Take no thought for your life, what ye shall eat, or what ye shall drink; nor yet for your body, what ye shall put on." "Some of you standing here will not taste death before you see the kingdom of God come with power."

This is the sort of stuff from which progressive liberalism, inspired by 19th Century liberal Christianity, tried to salvage something, denuded as it was of its supernaturalism and its apocalypticism. Inappropriately inserting their interpretation of a timeless Christian religion into American life, the progressives advocated a moral sensibility based on an unhistorical reading of the history of the religion, pretending all the while that only fundamentalists sought to impose a theocracy on America. In view of the high rates of taxation they came to advocate starting from 1913 (see here), one would almost gladly settle for the fundamentalists' theocracy with its tithe. What rich man in America wouldn't kill for a 10 percent tax rate?

Progressive taxation is a Christian heresy, arbitrarily ratcheting up the cost of discipleship citizenship the richer one gets, but never quite taking all the money, and never really justifying the varying costs in any given year, nor from year to year. Why is the price of entry at a lower rate for a relatively poorer rich man than for a richer rich man? Oh, progressivism tries to pretty this up with sayings of Jesus such as "To whom much is given, much is required" and the like, but at the expense of the full record which shows that Jesus demanded the same from everyone: a complete turning of one's back on one's former existence, no matter how great or how small by human standards of measurement. The Christian conception for this turning was summarized in a single word: "repentance." By contrast the paying of taxes in America is merely with reluctance.

In addition to this heresy, progressivism offers a related one which asserts that a better, improved future is just around the corner for all, if only the rich pay their fair share. This promise of an immanentized eschaton is a bastardized version of Jesus' belief in the coming sudden end of the world and of the in-breaking of the kingdom of God. But the reality is, like the prediction of the end of the world before it, the progressives' expected bright future never arrives, no matter how much money they throw at it.

The message of Jesus was much more stern and demanding than you will find in any church in America, or in the tax-writing committees of the Democratic caucus for that matter. Jesus' message was both much more pessimistic and much more undemocratic than most Americans would care to hear, which is why you don't hear it. It assumes that though many may be called, few end up being chosen. "Narrow is the gate and difficult the way that leads to life, and few there be that find it." (Note to Rev. Rob Bell).

To a significant degree, that pessimism about human nature naturally animated the American founding generation, which ever sought to restrain human evil by recourse to divided government and divided powers within it. They were as familiar with the weaknesses of human nature through their reading of ancient history, literature and philosophy as they were through their reading of the Gospels and St. Paul.

They knew better than most men before them or since that you can't make men good simply by passing laws.

Paul in particular had written that sin was not counted where there was no law, but that when the law came, sin revived, and he died. The analogy from the tax world is similar: If you want to witness tax evasion, multiply the taxes. So funding the new government was going to be at best a tricky business. Which is one reason I think the founders decided to export the sorry business of taxation the way they did, imposing tariffs on foreign trade to generate government revenues, instead of taxing the population directly. They knew it was better to raise the ire of the alien who could be kept at bay than the ire of the countryman who could not.

It's a lesson we need to relearn, and fast.  

Annual Cost to the Taxpayers of Earned Income and Child Tax Credits is $109 Billion

So admits the liberal Tax Policy Center, here:

Each year the earned income tax credit (EITC) and the child tax credit (CTC) deliver more than $109 billion of cash assistance, mostly to families with children.

There's corporate welfare, and then there's . . . well . . . welfare!

By contrast, the mortgage interest deduction costs the Feds about $88 billion in lost tax revenue annually.

And the rich don't pay Social Security taxes on any compensation beyond $107,000 in wages and salary each year. I estimate that loss to the Treasury at about $100 billion annually.

So, Solomon, which is worse?

Phyliss Schlafly Likes Herman Cain's Corporate Tax Reforms

As reported here:

We should reduce or eliminate taxes on businesses that employ Americans producing goods and services inside our own country, while increasing taxes on the profits that corporations earn by outsourcing or manufacturing overseas.

Above all, we should eliminate the foreign tax credit, a self-destructive provision that allows corporations to pay China, Venezuela or Saudi Arabia the money they would otherwise owe the U.S. government. Let's also cut out the deductions that U.S. corporations take for hiring foreigners to do work that Americans can do. ... 

Of Republican presidential candidates, only Herman Cain and Rick Santorum understand that what corporations need is lower taxes on their operations inside the United States rather than on the profits they earn in other countries.

The Economic and Social Value of the Joint Income Tax Return Produced the Baby Boom

So says Phyliss Schlafly, who thinks Texas Gov. Rick Perry's flat tax plan flattens the traditional family and rewards kinky couples, here:

The joint income tax return for husbands and wives was landmark legislation. The Republican Congress passed it in 1948 over President Truman's veto.

As originally designed, the joint return recognized a husband and wife as two equal partners, even if the husband earned all the family's income. Each tax bracket, deduction and exemption was equal to twice that of a single person.

Subsequent tax reform bills, especially the one signed by Richard Nixon in 1969, which also introduced the hated Alternative Minimum Tax, reduced the value of a joint return to only about 1.6 persons, while increasing the tax benefit of an unmarried "head of household" to about 1.4 persons. Simple arithmetic shows that a single parent with an unmarried live-in "partner" gets more favorable tax treatment than respectable married couples struggling to support their own children.

And by the way, the postwar "baby boom" happened during the 20-year period when married couples were fairly valued in the federal income tax. That's not coincidence; incentives matter, and America's marriage rate and birth rate plummeted after the value of the joint return was reduced.

Direct Taxes Are Limited To Taxes on Land and Improvements, and to Capitations

According to the opinion of Chief Justice Salmon Chase in Veazie Bank v. Fenno, 1869:

The question before the Supreme Court in this case was the constitutional validity of an act of Congress in 1866 imposing a 10 percent tax on the issuance of circulating bank notes by nationally chartered banks or by state chartered banks. ...

Chief Justice Salmon Chase delivered the opinion of the Court. The Court held the tax to be constitutional. ...

Chief Justice Chase turned to the historical record.

He pointed out that Congress had enacted taxes that were acknowledged to be direct. Those taxes were enacted in 1798, 1813, 1815, 1816, and 1861. In each instance the sums collected were apportioned among the states. The subjects of those taxes were, variously, lands, improvements, dwelling-houses, and slaves. Chief Justice Chase pointed out that Congress never considered taxes on personal property, contracts, or occupations to be direct taxes. He observed that slaves were not an exception because, even though many of the slave states had considered slaves to be real property, slaves were, of course, persons and subject to a capitation, which was direct.

Therefore, Chief Justice Chase concluded, Congress understood direct taxes to be limited to taxes on land and improvements, and capitations.

-- Alan O. Dixler, 2006 (here)

Kalle Lasn Thinks Anti-Semitic Viewpoints Deserve Free Speech Protections

Kalle Lasn said the following, quoted here, in response to a controversial photo spread in Adbusters Magazine pulled from Canadian magazine shelves last year:

"If you think that publishing side-by-side images of the Gaza and Warsaw ghettos is a valid expression of free speech, email the Canadian Jewish Congress and tell them to back off," Lasn wrote. "In Canada, we should be free to choose from a diversity of viewpoints and decide for ourselves what is anti-Semitic and what is a legitimate critique of Israel's occupation of Palestine."

The trouble with Kalle Lasn is that one gets the impression from him that Jews shouldn't occupy anything, including their own homeland.

Bill Clinton's Middle Class Tax Increase Meant the Rich Got a Bigger Piece of the Pie

Mark Perry seems to have missed a good story.

He's been talking recently about how the income share of the top 20 percent has been FLAT since 1994, as shown here.

What's more interesting, however, is the oddity that his charts show that the income share of the top 20 percent experienced a pronounced spike up between 1992 and 1994, which includes the first two years of the Bill Clinton administration.

Why did the richer get a bigger share of the income pie after Bill Clinton raised taxes on them in 1993?

Top marginal income tax rates had declined from 38.5 percent in 1987 to 28 percent in 1988, as shown here, and in 1991 another higher rate of 31 percent was added under Bush 41. But under Clinton in 1993 an additional marginal rate of 39.6 percent was added with the help of the Democrat controlled Congress. So higher marginal income tax rates prevailed, but the richer nevertheless got a bigger share of the income.

That doesn't make any sense. How did that happen?

The answer is Clinton's middle class tax increases.

For one thing, the cap on income subject to Social Security taxes was raised. That bumped up the limit on incomes on which the tax was levied. A tax increase for all wage earners. For another thing, the cap on income subject to Medicare taxes was removed. That meant no ordinary income could escape the tax any longer. Another huge tax increase. And thirdly, Social Security income beyond 50 percent up to 85 percent became subject to income taxation. Anyone taking Social Security income felt this, not just the rich. Another huge tax increase.

These were massive tax increases on wage earners, as opposed to those richer Americans who could take their income differently if need be, often in the form of capital gains, or from tax-free municipal bonds, or from tax shelters.

The net effect of the Clinton tax increase was that just about everyone in the four quintiles below the top 20 percent lost ground on income, which meant that the rich appeared to spike up in their share of the income pie. The regimentation in law of the tax increases on everyone altered and froze the aggregate shares of the income pie going forward, hence the flatness of those charts since 1994.

The truth was that Clinton's tax increase on the richer, who ended up shifting income to avoid taxation, masked a massive tax increase on everyone else, who couldn't shift their income if they wanted to, and they've experienced a smaller bite of the income pie ever since.

That's what expanding the tax base in tandem with raising rates will do.

Republicans, take note.

America's Biggest Militia is the National Rifle Association: 4.3 Million Members

SPLC Claims 500 Percent Growth in Active Patriot Militias

As reported here, in a story about the recent arrest of members of a so-called militia in Georgia:

“This is only the latest manifestation of the patriot militia movement we have seen grow since 2008,” said Mark Potok of the Southern Poverty Law Center in a phone interview. “In 2008 we counted 149 patriot militia groups operating in the United States—by 2010 that number had increased to 824—that’s a 500 percent increase. It’s hard not to notice that this jump coincides with both the rise to power of Barack Obama and the subprime mortgage collapse.”

Actually it's a 453 percent increase, but liberals never were very good at math.

For example, an illegal weapons charge against a Hutaree militia member was recently dropped, evidently because the FBI was using a ruler made in China which was short by an inch. We'll have to wait for defense statements on that one when the case finally comes to trial, two years after the arrests in March 2010 in the wake of the passage of ObamaCare.

The Georgia case is four old coots in what we used to call an old-fashioned conspiracy to commit murder, but in this day and age where everything is exaggerated to the superlative degree (I'm great!), the disgruntled federal employees' plot becomes a TERROR PLOT and their self-description as a MILITIA gets taken as seriously as Barack Obama's claim to be a Christian.

If the FBI could hear the conversation around the family dinner table every night since that Commie bastard got elected president, we'd all be in jail thanks to George Bush's anti-terror legislation now in the hands of a leftist ideologue.

The next thing you know the Southern Poverty Law Center will start counting well-armed husbands, wives and children as militias when all they are is FAMILIES.

Onward Christian soldiers!

Unemployment At or Above 9 Percent For 28 of Obama's 34 Months in Office

That's 82 percent of the time, most of which he has spent on more important matters, like interfering with your healthcare, campaigning for stimulus spending, campaigning, partying, campaigning, golfing and campaigning.

Did I mention he's spent a lot of time campaigning?

National Review's Exhausted Conservatism Incubates More Liberal Monetarism

As with Ramesh Ponnuru's call here at The New Republic (!) for more monetary loosening and fiscal tightening, a policy neither Democrats nor Republicans embrace.

He must be reading Ambrose Evans-Pritchard at the UK Telegraph since the financial crisis, who keeps calling for same.

He has no understanding of, and pays no attention to, the source of the explosion in debt in The Great Moderation, however, which was a civilizational commitment to misallocation of capital to housing. To finance it, money creation had to pass from the control of central banks to so-called private bankers.

It is they who have brought us to this pass with massive amounts of leverage, with Democrat and Republican accommodation all the way, in exchange for power, money and influence.

National Review is incapable of teaching such things because it's part of the problem, not part of the solution. No wonder Ramesh wanders.

US Bond Market at $35.3 Trillion for Q1 2011, Grows 2 Percent Since 2009

The overall bond market has grown in size by about $700 billion since 2009.

(source)

Top Corporate Bankruptcies

The largest corporate bankruptcies in US history, according to the most up-to-date report from The Wall Street Journal:

1) Lehman Bros., $691 billion

2) Washington Mutual, $327.9 billion

3) WorldCom, $103.9 billion

4) GM, $91 billion

5) CIT Group, $80.4 billion

6) Enron, $65.5 billion

7) Conseco, $61.4 billion

8) MF Global, $41 billion

9) Chrysler, $39.3 billion

10) Thornburg Mortgage, $36.5 billion

11) Pacific Gas and Electric, $36.15 billion.

Just four of these top failures occurred previous to 2008.

Fannie Mae and Freddie Mac Have Now Cost the Taxpayers $141 Billion

The latest cost figures are reported in The Wall Street Journal, here.

Rush Limbaugh, Boob Extraordinaire, Attacks The Basis of Western Civilization

In a long, truly embarrassing, tirade against studying Greek and Latin and all things Classical, here. 

Calling all that useless and worthless because some student studying Classics is worried her degree will prove to be so and said so at Occupy Wall Street:

Now, do you think somebody going to college, borrowing whatever it is in this case, $20,000 a year to get a degree in Classical Studies ought to be told by somebody at a school that it's a worthless degree?

In this Rush is the typical American utilitarian, for whom any field of study which doesn't get you a job and a career in that field is useless and worthless.

The lumpen barbarians aren't just occupying Wall Street.

Happy Binary Palindromic All Saints Day!

11.1.11

The Collection is Eluded: Consumption Taxes Allow YOU to Control How Much Government Gets

And that's why the FAIR TAX has gone nowhere so far. Neither Democrats nor Republicans want YOU to kill the golden goose.

But now we have the very likeable Herman Cain, who advocates the consumption tax, the tax the Founders advocated. Even Alexander Hamilton, to whom we owe our strong central government, advocated for it in Federalist 21:

It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, "in political arithmetic, two and two do not always make four." If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.

Two important commentators at Forbes are coalescing around the perfections associated with a consumption tax, Lawrence Hunter and John Tamny, but Hunter is clearly the constitutional originalist in this matter.

John Tamny, who has argued for a gross receipts tax on corporate business if there must be a corporate tax, however, has caught the spirit here:

As Larry Hunter, another fellow Forbes contributor has noted recently, the beauty of a consumption tax is its limiting nature. Quite unlike taxes on income that are paid no matter what, with a consumption tax individuals would be able to limit the amount of money handed to the government by virtue of spending less.

This is particularly important during times of economic hardship. While with income taxes we pay regardless, if a consumption tax were implemented Americans could put the federal government on a diet at the same time that economic uncertainty is forcing them to tighten their own belts.

At present, and as evidenced by the boomtown that Washington, D.C. currently is, the government industrial complex is gorging at the same time that most Americans are reducing expenditure. This is wrong on so many levels, and as it’s true that during downturns individuals tend to spend less (their savings once again an economic stimulant), so should Washington be forced to. 

Morgan Stanley's Stephen Roach Ridicules Fed's War on Savers, Who Are Indispensable to Future Growth

He is quoted here at CNBC.com, identifying zero interest rate policy as

"financial repression practiced by your favorite central bank, the Federal Reserve. The idea that we can run zero interest rates in perpetuity and penalize savers is absurd."

"Do you know that half of American workers have no retirement fund?"

"How else are we going to fund economic growth?"

"Right now we’re borrowing surplus savings from abroad because we don’t save a nickel at home, and we have to wean ourselves from that."

Last week's GDP release indicated a precipitous fall in the personal savings rate of 20 percent in the third quarter to 4.1 percent annualized as Americans spent all their minor wage gains and diverted monies from savings just to keep up with rising prices for food, energy and healthcare, among other things.

They are not buying major appliances with the money, as Whirlpool is set to lay off 5,000 in coming months due to rapidly falling sales.

Herman Cain's National Sales Tax Might Make Renters Better Off, With Transitional Problems For Existing Owners of Residences and Rental Income Properties

An important study published in 2008 here simulating the effects of the Fair Tax, Herman Cain's ultimate goal, namely a consumption tax to replace all other federal taxation, concluded the following about its impact on housing:

The enactment of H.R. 25 thus causes the homeownership rate to gradually decline as the demand for housing falls. Demand for owner-occupied housing decreases because of the elimination of the tax on normal returns to capital in the nonresidential and rental housing sectors (which reduces the relative tax advantage of owner-occupied housing) and the elimination of the tax deductions for mortgage interest and property taxes. Note that under H.R. 25 all consumption goods are treated roughly the same since most nonresidential consumption is taxed, rental housing payments are taxed, and the tax on new investment in the owner-occupied sector is roughly equivalent to a front-loaded or prepaid tax on the flow of housing services from such investment; only housing services from existing, owner-occupied housing are untaxed. As a result, there is no preferential tax treatment of new investment in owner-occupied housing under H.R. 25. Because of this, a portion of the investment in owner-occupied housing that would have occurred under the income tax is shifted to the nonresidential and rental housing sectors. Rental capital as a share of the total capital stock increases from 13.4 percent to 13.7 percent in the long run and the output of rental housing as a share of total housing output increases from 24.9 to 26.2 percent. This decreases the real price of rental housing services as the stock of rental housing increases, which makes renters better off. ...

Our results indicate that such a reform would generate significant overall macroeconomic improvement in both the short and long runs, reflecting the labor supply and savings responses to lower overall tax rates on labor income and the elimination of the taxation of normal returns to capital income (a marginal effective tax rate of zero on the income earned by new investment). In particular, the model simulation results indicate that GDP would increase by 3.8 percent in the long run, reflecting a 2.9 percent [increase] in labor supply and a 5.3 [percent] increase in overall investment. However, the implementation of such a reform would raise some significant transitional issues, especially in the housing sector. These can be grouped into effects on the owner-occupied housing sector and the rental housing sector. ...

[T]he simulations suggest that the prices of existing homes would fall by 10.1 percent in the year of enactment of H.R. 25, although this effect would dissipate rather quickly, with declines of only 2.6 percent two years after reform, 1.2 percent five years after enactment, and no effect in the long run. ...

[T]he real value of existing rental housing would decline by 25.7 percent in the year of enactment of reform, and this decline would remain roughly constant, with a long run decline of 25.8 percent. These declines arise because investments in rental housing were made on the assumption of continued depreciation deductions under the income tax, but these deductions disappear under the sales tax while rents are fully taxed under the new regime.

Author Estimates Underground Economy Worldwide at $10 Trillion a Year

There is a story about the new book, Stealth of Nations by Robert Neuwirth, here:

More than half of all employed people worldwide work off the books. And that number is expected to climb over the next decade.

"Estimates are that the informal economy around the world is [worth] about $10 trillion a year," says journalist Robert Neuwirth. "That's an astounding figure because what it means, basically, is that if the informal economy was combined in one country, it would be the second-largest economy on Earth, rivaling the United States economy."

At a tax rate of 25 percent, which is what the US budget, if we had one, effectively requires because we are spending $3.8 trillion per year in a $15 trillion economy, worldwide we are talking lost tax revenue of $2.5 trillion.