(no subject)
BF: A very important component of all this is tax policy. Could you talk about tax policy?
MH: The idea of classical economics was to tax away the free lunch. In other words, they said there were two kinds of taxes. Most people these days think of taxes as adding to costs, as in if you earn wages and pay taxes out of those wages you have less to spend on consumer goods and investment... if a profitable company is taxed, it has to raise its prices to cover taxes plus the cost of production. The classicists said there were exceptions to this, that those exceptions were monopoly profits and land rents. For instance if you tax the land at rental value, it's not going to remove the land from production because nature provides it. You're not going to reduce the supply of land because you tax it, you're just collecting the rent for it because you're the government. Since ancient Babylonian times, Greece, Rome, medieval Europe, England after the Norman invasion, almost every governmental system based its taxation on land rent.
The advantage of this is that the government used this rent to finance its infrastructure, its operations and everything else, so it didn't have to go into debt. Well gradually, the vested interests were able to gain enough power to argue that land shouldn't be taxed, and monopoly shouldn't be taxed. The money then, that used to be taxed was kept by the private sector, and usually put into the financial market, forcing government to do one of two things. Either it had to tax incomes or sales, excise taxes, or it had to borrow. In effect government began to borrow from the landlords and the financial sector, from precisely the wealthy groups it used to tax.
So today, instead of the government taxing wealth under the progressive tax code it used to have from 1913 until the 1970s, it now borrows from the rich and pays them interest on it.
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Here's how the average tax bill could change in 2009 if either John McCain's or Barack Obama's tax proposals were fully in place.
MCCAIN OBAMA
Income Avg. tax bill Avg. | tax bill
Over $2.9M -$269,364 | +$701,885
$603K and up -$45,361 | +$115,974
$227K-$603K -$7,871 | +$12
$161K-$227K -$4,380 | -$2,789
$112K-$161K -$2,614 | -$2,204
$66K-$112K -$1,009 | -$1,290
$38K-$66K -$319 | -$1,042
$19K-$38K -$113 | -$892
Under $19K -$19 -$567
MH: The idea of classical economics was to tax away the free lunch. In other words, they said there were two kinds of taxes. Most people these days think of taxes as adding to costs, as in if you earn wages and pay taxes out of those wages you have less to spend on consumer goods and investment... if a profitable company is taxed, it has to raise its prices to cover taxes plus the cost of production. The classicists said there were exceptions to this, that those exceptions were monopoly profits and land rents. For instance if you tax the land at rental value, it's not going to remove the land from production because nature provides it. You're not going to reduce the supply of land because you tax it, you're just collecting the rent for it because you're the government. Since ancient Babylonian times, Greece, Rome, medieval Europe, England after the Norman invasion, almost every governmental system based its taxation on land rent.
The advantage of this is that the government used this rent to finance its infrastructure, its operations and everything else, so it didn't have to go into debt. Well gradually, the vested interests were able to gain enough power to argue that land shouldn't be taxed, and monopoly shouldn't be taxed. The money then, that used to be taxed was kept by the private sector, and usually put into the financial market, forcing government to do one of two things. Either it had to tax incomes or sales, excise taxes, or it had to borrow. In effect government began to borrow from the landlords and the financial sector, from precisely the wealthy groups it used to tax.
So today, instead of the government taxing wealth under the progressive tax code it used to have from 1913 until the 1970s, it now borrows from the rich and pays them interest on it.
----------
Here's how the average tax bill could change in 2009 if either John McCain's or Barack Obama's tax proposals were fully in place.
MCCAIN OBAMA
Income Avg. tax bill Avg. | tax bill
Over $2.9M -$269,364 | +$701,885
$603K and up -$45,361 | +$115,974
$227K-$603K -$7,871 | +$12
$161K-$227K -$4,380 | -$2,789
$112K-$161K -$2,614 | -$2,204
$66K-$112K -$1,009 | -$1,290
$38K-$66K -$319 | -$1,042
$19K-$38K -$113 | -$892
Under $19K -$19 -$567