Free Markets, Free People


Premise check – who has first claim to your earnings?

Richard Thaler, a professor of economics and behavioral science at the Booth School of Business at the Univ. of Chicago, writes a justification in the NY Times for increasing taxes on the rich.

It’s a curious effort. To end up where Thaler does, the premise one must use is “other’s have more of a claim on the money of those earning $250,000 than they do”. If you believe that, then it is easy to buy into the subsequent arguments Thaler makes in the article. For instance:

There is another possible argument for including the rich in these tax cuts, one based on “fairness.” By this reasoning, the wealthy are entitled to low tax rates because they have temporarily had them, and it would now be unfair to take them back.

But by that same argument, unemployment insurance should never expire, and every day should be your birthday. “Temporary” has no meaning if it bestows a permanent right.

The question comes down to whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.

Per Thaler, if you earn – note the word, "earn" – more than $250,000, wanting to keep what you earn is the same as desiring "unemployment insurance should never expire". If ever there was an example of a false equivalence, this one takes the cake. Per Thaler, earning equals a hand out.  If however, you believe government has first claim, Thaler’s comparison makes sense.

Note also Thaler’s implicit point that in reality you have no "permanent right" to your own earnings.  The only entity with that “right”, apparently, is government (and that’s primarily because they can enforce their “right” at the point of a gun).  Therefore it claims first right to what you earn and every "right" to arbitrarily decide what is "enough" for you to keep.

If you’re still having a problem understanding the absolutely abhorrent premise under which Thaler and much of the left operate, or believing that’s actually the case, let’s go back in the article to the first paragraph:

Want to give affluent households a present worth $700 billion over the next decade? In a period of high unemployment and fiscal austerity, this idea may seem laughable. Amazingly, though, it is getting traction in Washington.

"Present"? Again, how is it a "present" when the person or persons who earned the money are allowed keep it, unless you believe others have first claim on it?

This is the stealth premise that the left operates on consistently. It underlies every argument made to increase the taxes not only on the rich, but everyone. And that’s what many of those not seeing their tax increased don’t seem to understand when they applaud the class warfare the left uses to demonize the rich. They’re as susceptible to arbitrarily increased taxes once economic conditions improve as the rich are now – and it is all because of this premise which says “government has first claim on your earnings, not you”.

Unfortunately, it is something the GOP either doesn’t understand or is incapable of explaining.   It is a premise which must be challenged and exposed each and every time it is trotted out to substantiate tax increases for anyone.

And yes, that includes the rich.

~McQ

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26 Responses to Premise check – who has first claim to your earnings?

  • And it’s the guy who said the taxes would hurt him and his family that gets flamed out of blogging…

    I’m starting to wonder if, when civilization ends, I will miss it…

  • Check out this exchange between a reporter and Gibbs from 9/9/2010. The reporter should have continued hammering at the heart of the matter and this opinion, but this is the state of Journalism today.
    “Q    Robert, are you saying that the government needs the $700 billion more than the people who earned it?
    MR. GIBBS:  I’m saying that we cannot afford $700 billion in tax cuts for millionaires, yes, or billionaires, or multibillionaires, absolutely…you couldn’t normally with a straight face go on television and bemoan the sheer amount of spending and then not even pause to breathe before blowing through another $700 billion in tax cuts that, again, the preponderance of them go to millionaires.  A millionaire would get a $100,000 tax break.  We are not a $100,000 tax break from a millionaire away from being in an economic position that strengthens us.  We’re just not… If you care about spending, we can’t borrow $700 billion for tax cuts we can’t afford. That’s the President’s message.
    Q    Yes, but you don’t have to borrow that money.
    MR. GIBBS:  Do you have it?
    Q    That’s $700 billion that is revenue you won’t get to spend if the tax cut is extended.
    MR. GIBBS:  Do you have to pay on the debt?  Do you have to –
    Q    Well, sure.
    MR. GIBBS:  Okay.  The answer to that is yes.
    Q    But the government can cut spending on its end.
    MR. GIBBS:  Yes.  And, again, the President does not believe that that’s in any way a good use of that revenue.”
    WOW, seriously wow.
    http://m.whitehouse.gov/the-press-office/2010/09/09/press-briefing-press-secretary-robert-gibbs-992010

  • Again, and always:  $250,000 is NOT FREAKING RICH

    • Its rich, possibly excepting New York City or SF if you are paying rent and have several children in private schools or something. Then again, private schools are for….rich kids, no? 

      It doesn’t really matter, though. If you earn the money, its your money, rich, poor or middle class.

  • Feudalism.

    All money belongs to the Nobles and the King first.

    • Yep.  The history of law shows how the entire concept of property rights developed during the Middle Ages, and was pushed down to the peasantry by the Renaissance and Enlightenment.
      A European or English peasant, at periods, had very little right to own property.  What they had was usually there’s only at sufferance of their master; it could be taken on a whim.  Owning a chair, for instance, was a rare luxury for many.
      The law of property and the capitalist system sort of grew up together, as you might expect.  And capitalism can be strangled by weakening the rights to property that provide an incentive to produce, just like the Obami are working hard to do.

    • Communism is an attempt to return to Fuedalism based out of the factory instead of the farm field.  Also with modern marketing techniques to disguise the regression.  

      • While that’s not what it is SUPPOSED to do, that certainly has been the EFFECT it has demonstrated.
        One little wrinkle a lot of people over-look is that communism REQUIRED (in theory) that there be a capitalist precursor…because it would create wealth…that the communist system would then appropriate and redistribute.
        Never, ever works…  But it DOES get a lot of people killed and a lot of wealth destroyed.

  • By this reasoning, the wealthy are entitled to low tax rates because they have temporarily had them, and it would now be unfair to take them back.

    Note how he never mentions that their “low tax rates” are still higher than everyone elses?  I mean we’re still talking about people in the top tax bracket here.  It’s not like the income tax structure goes from zero to 25% and then back to zero again.

    • An oft repeated refrain of mine is this; how is it moral…remotely…for some to pay for government, while others pay not at all?  How is that even good civics?

  • The question comes down to whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.

    This is a simply breath-takingly STOOOOOOooooopid statement from anyone who lays claim to JACK-SPIT about economics.  Really, I’m simply floored.
    First, as we know, in a capitalist society, there is no such thing as a PIE…or a static supply of wealth.  It grows and it contracts, but if left alone, has tended to grow very nicely OVER TIME.
    Second, in America there is no such thing as “the rich”…in the sense of a class.  There are categories of income, but people move very fluidly between those categories.  People who are “poor”, we know, will often be “rich” in a matter of a few years, and visa verser (as Archie Bunker would say).
    Third, while not unrelated, income and the standard of living are not unitary by any means.  The “poor” in America today enjoy a MUCH higher standard of living than did the rich in 1950, DUE ENTIRELY TO MARKET INNOVATIONS.  Up until the recession, the middle income earner in America has enjoyed a strongly rising standard of living, while actual earnings have remained relatively flat.

    • Yeah yeah yeah Rags, all I know is they have cooler stuff than me, and that’s not right.  We should all have the same cool stuff, that’s fair, and it’s up to the government to make sure that happens because those rich fat cat son’s of guns are greedy greedy greedy, and they keep takin my pie.  They want old people to die for want of health care,  they want to make the air so I can’t breath it, they want to make water so I can’t drink it, they want the polar bears and caribou to, respectively, drown and be submerged in oil, they want to drive their big gas guzzling SUV’s and deprive me of my right to have an electric car that gets great mileage at a low price, they don’t want wind mills, and solar panels and green jobs, and they like war, war, war, war and killing.

      And they PROVE all this by trying to hang on to money that THEY probably think THEY earned, when everyone KNOWS that money REALLY belongs to someone else, and I WANT IT to be spent on things for ME, uh, I mean, for the good of the poor, the kittens, the puppies, and the country, of course.

      • I’ll tell you what we really should be concerned about. All these rich Hollywood celebrities, all the Cloony’s, Damons’, Afflecks, Sheens, etc. They all have much better looking women than I have ever had. And they get lot’s more of them. IT AINT FAIR!

        Fairness demands a girlfriend tax on rich celebrity democrats, I demand equal use of their women!

  • They’re as susceptible to arbitrarily increased taxes once economic conditions improve as the rich are now – and it is all because of this premise which says “government has first claim on your earnings, not you”.

    The word is pernicious. Logically, this idea holds that we are, in fact, vassals to the central government…or greater good…or whatever the hell.
    And, of course, if higher-income Americans are chained to their less productive fellows, we are all still mere units under the New Baronial class.  This is one of those areas that could spark an insurrection, since many of us will not tolerate this (I suggest civil disobedience).
    Inflation CAN be used to PUSH more and more people across an arbitrary line…say “$250,000″…defining who the target-class is, in the event the government destroys enough economic vitality to thin out the group earning that under current conditions.

    • I suggest a “Democrat Tax” … you must pay the government for the privilege of being a Democrat.
      Put an extra box on the 1040,

      are you a Democrat ?  Multiply total tax by 1.5

      • I proposed a “money where your mouth is” tax system about two decades ago.  Anyone who openly opines that we impose anything LIKE socialism should have all income confiscated, and then they should have a stipend equal to that of the average “citizen of the World”.  You’d hear a lot of silence

  • Leadership today is about how the U.S. government attracts and educates more of that talent and then enacts the laws, regulations and budgets that empower that talent to take its products and services to scale, sell them around the world — and create good jobs here in the process.

    You can’t write better government propaganda than that
     

    • …how the U.S. government attracts and educates more of that talent and then enacts the laws, regulations and budgets that empower that talent…

      Wow.  That is pure Collectivist thought…which is like saying “pure corruption”…coupled with Rainbow and Unicorn hard science.  And this guy teaches at the Univ. of Chicago…which once had a reputation among economists…  Every one of his students should join a class-action lawsuit for fraud.

  • “”The question comes down to whether we want a society in which the rich take an ever-increasing share of the pie, or prefer to return to conditions that allow all classes to anticipate an increasing standard of living.”"

    No, Dr. Marxist, the question comes down to your lack of evidence that increasing taxes upon the rich will in any way help the poor or middle class.  We have grown government almost exponentially since the 1950′s and still we have poor people and a struggling lower middle class. 

    The only thing we do know for certain is that less money in the private sector equals slow economic growth, and that hurts poor people and the middle class a lot more than it hurts the rich. Jackass.

    • “We have grown government almost exponentially since the 1950′s and still we have poor people and a struggling lower middle class. ”
      Well Kyle, you greedy conservative type  – it’s simple, like education, we just haven’t spent enough.  Those Bush Tax Cuts (which will be known as the ‘ Obama Tax Cuts’ if we reinstate them, but will become ‘Republican Taxes’ if we allow them to expire) are costing our government billions in funds that we could be spending to help the poor and struggling lower middle lower classes achieve parity.

  • McQ[T]he premise one must use is “other’s have more of a claim on the money of those earning $250,000 than they do”.  [emphasis original - dj505]

    I know some liberals (“Hey, I’m sure a lot of you people do, too!” he said defensively).  Most of them don’t think of it in quite these terms.  Rather, they use the soft, squishy sort of rational that they have been taught since childhood: it’s just the right thing to do for folks who have a lot of money to give a little to help poor people. 

    What we see in in Thaler’s article is what happens when you point out that FORCING people to “help the poor” is really a sort of theft: they get self-righteous.  Rich^ people don’t want to help poor people and should be PUNISHED for their vicious, wicked greediness.    The religious-minded lefty* will even start spouting – as The Dear Golfer has recently done – a mishmash of Biblical verses about our (undeniable) duty to help the poor.  It’s a moral issue for these modern-day Robin Hoods who have not only the right but the actual duty to rob from the rich and give to the poor.  To help ease their conscience, they construct the rationale that one can only be rich by – somehow – taking it from somebody else.  They go even further by claiming that money is rather bad in itself because people spend money on all sorts of things that they don’t need that are bad for their health and even bad for the planet.  By taking money from the rich, the lefty not only feels virtue from “helping the poor” but also from striking a blow against “consumerism” that is wrecking the planet.

    It’s quite a little philosophy that these people have: because their intent is noble and good and virtuous, ANYTHING they want to do becomes a virtuous act.  Even better, the rules don’t apply to them.  “The rich” are always somebody else.  So, no moral dilemma arises from raising taxes on “the rich” while (for example) docking one’s multi-million dollar yacht in another state to avoid paying those taxes, or “forgetting” to declare income from rental property, or writing off used underwear for a tax deduction.  “I’m a decent sort who wants to help the poor; why shouldn’t I enjoy my life?”

    —-

    (^) “Rich”, of course, is usually hazily defined but the term conjures images of idle trust fund babies who have more money than they can possibly ever need.

    (*) Religion is generally a pose or hustle for the lefty: they will yap about “brother’s keeper” all day, but you don’t DARE start talking religion when it comes to sexual morality or abortion lest you provoke outraged shrieks about separation of church and state, American taliban, etc.

    • What they are guilty of is taking a sound idea and going to an extreme with it.   Although progressive taxation is the tool of Marxists, I don’t have a problem with it in theory. 

      For two reasons, since government does provide valuable services and needs to be financed, then we need some taxes, inasmuch as a person makes a lot of money, they have profited more from those services than the average.  Also, just as a practical reason, you tax wealthier people because, well, that is where the money is.  If you tax poor people you will just get a bigger case of hardship and more demand for the government to “do something”

      So I am not philosophically opposed to some sort of progressive taxation.  The problem is when it is used to punish the wealthy instead of merely raising revenue, and the other problem is the sheer size of our tax burden, it is oppressive.

      No doubt some of you will disagree with me on this, but it is my viewpoint.  Now, I think sales taxes would be a better way to finance government, but it is a pipe dream, it will never happen in our modern society.  Sales taxes carry their own progressivity since the more you spend the more you pay.

      The other problem with a national sales tax, besides that it will never happen, is that in order for it to be a reasonably low tax rate, it would have to be on everything, no exemptions, but politically there would be ten thousand lobbies who would argue for some sort of exemption.

      • kyle8[S]since government does provide valuable services and needs to be financed, then we need some taxes, inasmuch as a person makes a lot of money, they have profited more from those services than the average.  Also, just as a practical reason, you tax wealthier people because, well, that is where the money is.

        I agree that the government must be funded.  Whether or not an income tax is the best way to do it is a subject for another time.  I do not agree with progressive tax rates simply because it tends to balkanize the country, putting the government in de facto charge of deciding who is “we” and who is “they”.  If there was a uniform income tax rate, for example, then I suggest that there would be quite a lot less class warfare / tax the rich because EVERYBODY would pay more if Congress decided to bankroll another spending spree with our money.  Indeed, it strikes me that a uniform rate would contrain the Congress; as it stands, it’s easy for people to demand more federal spending on this and that because it’s always somebody else who has to pay for it.

        As for the rich having the money, so long as the tax rate was a percentage, then they would always pay more in absolute dollars than the poor.  The same can be (probably) said of a sales / consumption tax: people with more money tend to spend more.  I agree that a sales tax thus becomes progressive, but it is a voluntary progression: if I’m rich, I can choose to buy a Ferrari instead of a Civic and, in effect, choose to pay the larger tax bill.

        • I used to think as you do but I have wrestled with the thought of taxing a struggling lower class family of four the exact same rate as a person who made tremendous wealth due to all the opportunities this nation offered .

          Besides which since it would be materially impossible for such a rate to be very high (because poor people could not pay it) then it will invariably not be high enough to fund the government.

          You and I might agree that the government should be cut down to size, but reality is that it needs to be fairly large even if we only did the things government did fifty years ago.

          The other argument is that having zero progressivity is a system that leads to it’s own destruction, similar to getting rid of all social safety nets.  What I mean by that is that the socialists would use every example of greed or conspicuous consumption as an excuse to take over power again and re introduce socialism. 

          Same if you got rid of all social welfare, the first poor person to freeze to death would be a cause celebre.  So in taking an absolutist stance you would end up actually getting a worse outcome than if you jsut tried to control it.

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