Taxes: who gets and who pays (response to donnernv)
June 08, 2009
– Comments (10)
So first things first. I am not going to refute the numbers in that post by donnernv, or bother to check them. The numbers look believable, and it's quite enough for me.
What I don't agree with is his reading of those numbers.
Let me put forth some objections.
1. Donnernv assumes that the "intangibles" provided by the government are distributed equally among the population. I don't think that's the right way to think about it. In my opinion, the one who has more more assets at stake, receives more benefits from such services as "law and order" and "legal system" than the one with no assets. Let's take some example. Suppose that shareholder rights are not protected by the government, and one fine morning Warren Buffett reviews the shareholder roster and doesn't find his name there. I will barely notice any difference, on the other hand, Mr. Buffett will lose some $40 bln. Would it then be approprtiate to say that Buffett "gets" more benefits from government spending on police, SEC, etc., than the average Joe Schmuck, and wouldn't it be natural to request that Buffett should also contribute more? Protection of property rights is very important. If we assign to it a monetary value equal to the actual government spending, then the distribution of benefits will approximately mirror the distribution of assets, with the top 1% getting about half of the total.
2. One can make a case that much of the military spending should also be put in that category. Really, I don't see how these imperial ambitions make me richer. You cannot deny that the only beneficiaries of the Irak adventure were Cheney, Halliberton, defence contractors, and, with any luck, the shareholders of defence companies, and everyone else was left holding the bag. Irak is just one obvious case in point, but quite generally, most of that spending is done in the interests of a very narrow group, maybe the top 0.1%. I also feel that the entire budget of the Department of the State should be paid by BAC, GS, JPM, and other banksters as I can't see anybody else benefitting from it (well, maybe some of their employees and shareholders - but they are surely in the upper 50%).
3. Much of infrastructure spending also benefits the top 50%. For example, in America, government pays for the airports, and most of us benefit from it to some degree, but which income group do you think travels more frequently? Or when it spends for those "green" programs, who benefits more - the one who rides the subway or the one who drives a Hummer?
4. Much of what donnernv believes to be "social spending for the poor" are really corporate welfare programs in disguise. How about grants for college students to help them pay ridiculously overpriced tuition that would be 50% cheaper if these grants were not provided? Or welfare programs to help recipients pay the amount of rent that landlords are only able to charge because government is pouring money into the system? Or healthcare spending that only helps inflate prices along with profits of HMOs? Our corporate welfare types are very adept at moving money from their left pocket to their right pocket, and representing it as some charity activity, which it is not.
5. Donnernv does not mention the inflation tax, which is paid by the lower classes (assets tend to go up with inflation, shielding the top 50%).
6. The government's efforts to support asset prices clearly benefit the top 50% more than the bottom 50%. Government-supported asset bubbles date all the way back to the 1980s and are by no means a recent phenomenon. As for the recent bailouts, I don't even need to mention them - I am already tired of counting the number of trillions given out to banksters.
So remember that while donnernv's numbers are important, you should also pause to think what these numbers mean.
