Why we should hammer the rich with taxes …

The post below regarding democratic governance in an oligarchy offers some insight, maybe, into the events of the past thirty years (and especially the past nine). We’ve been headed down the path of tyranny … Guantanamo, torture, surveillance and wiretaps, loss of civil liberties and freedom of movement. I’ve been spurred on by curiosity, of course, but that curiosity is coupled with anticipation that a trap is going to be sprung at some point. Chris Hedges commented on the precedent set by Obama when he ordered the murder of an American citizen … “things are relatively quiet now, he said (and I paraphrase), “but that power will be important down the road when there is unrest.”

I say thirty years because the critical act that set all of this in motion was the Reagan tax cuts. The oligarchy is always with us, but high marginal tax rates tend to keep them in a cage. The game “Monopoly” is an amazing source of wisdom from the past because it mimics real life. Wealth is as often accidental as the result of great skill, and more often inherited. In the board game, victory follows shortly after one player attains critical mass – enough wealth to deal severe blows to the other players. Then he knocks them off one by one. If we were to introduce a high marginal tax into the game, rather than just a $75 luxury tax, that boring damned game would go on forever!

That game did not arrive on a flying saucer, by the way. It came form the 1920’s, a time much like now. Here’s Wikipedia on the origins of Monopoly:

Monopoly is a redesign of an earlier game “The Landlord’s Game”, first published by the Quaker and political activist Elizabeth Magie. The purpose of that game was to teach people how monopolies end up bankrupting the many and giving extraordinary wealth to one or few individuals.

The game "Monopoly" was meant to be a teaching tool

We’ve traveled that road now, and we have a few individuals now who have accumulated extraordinary wealth. Michael Moore claimed in Madison that 400 individual owned more wealth than half of all Americans. I haven’t fact-checked that, and find it a little hard to believe. But I do know that the top 1% owns more than the bottom 95%. (That is less dramatic – MM likes to say shocking things because he is a good publicist.)

Suppose, for sake of argument, that we allow that that top 1% “earned” that money in some fashion. Elizabeth Magie would remind us that this is not how it works … but assume it’s true anyway. Do we have the right to tax that money away?

Gated community

Yes! Absolutely we do. But that “right” is like all “rights – we created it out of thin air. Only force (or as Black Flag would say, “violence”), keeps that “right” in place. There’s no justice or morality behind it. It’s like war itself – the rich are mere collateral damage. We don’t mean to hurt them, but we must. Perhaps Spock put it best: “The needs of the many, outweighs the needs of the few.” (That phrase is so poorly worded and comma-spliced because Spock was gasping for breath and about to die, OK?)

The mere accumulation of vast wealth in the hands of a few, as we have allowed to happen since 1980, explains much of what we see around us today. Such extremes foster resentment in the lower classes, and there is always the possibility of an uprising. That threat creates the need for surveillance, gated communities, loss of habeas corpus, torture, Guantanamo and indefinite detention, airport screening and long lists of people who are not allowed to fly, draconian drug laws and a massive prison complex.

I’m slow to learn, but have suffered from cognitive dissonance all these years.

Gated community

I knew there was no real threat posed by Muslims or “terrorists,” and yet our leadership was behaving as if these threats were real. I assumed that the only reason was to keep us in a state of fear to spur us into supporting their wars.

That is indeed part of it. But there’s another part, one even more sinister. There is fear of uprising. The laws we passed, the rights we took away, the prisons we built are all there to keep the rabble in line. Extremes of wealth bring this about – without a draconian state to protect them, wealthy people fear an uprising.

So, as it turns out, the oligarchy is not anti-government after all! They only want a government that works for them. It was never about Muslims or “terrorists.” It was about us.

(By the way, I’m a privileged white guy, middle class and all of that. I’m not threatened by all of this. It’s not about me. It’s about those who have lost their jobs, their health care, pensions, homes, and who will lose their unemployment benefits, Social Security and Medicare. If they manage to organize, we will have violence.)

About Mark Tokarski

Mostly retired CPA living the life here in Colorado. Formerly Montana, 59 years, which is why so much of this blog is devoted to Montana issues.
This entry was posted in Economics, Taxes, Terrorism. Bookmark the permalink.

23 Responses to Why we should hammer the rich with taxes …

  1. ladybug says:

    Monopoly has it all over American oligarchy. The thumb is always on the scale to prevent chance from overcoming the police powers of government. I’d trade what we have for a pair of dice in a heartbeat. And that drab, green money has got to go. Why are Americans so afraid of color?

    I’m wondering if Wall Street would invest in yet another retro business — making guillotines? It’s something every town in America could need someday. The French were once great innovators, something we should thank them for before it becomes impossible to have a good cup of coffee, fine pastry and casual, rambling conversations about any damn thing you choose.

  2. Ingemar Johansson says:

    If we “hammered” the rich with confiscatory taxes what would happen to their companies and employees.

    For instance we take all Gates monies (stock in Microsoft) sell it off, crash the price and layoff thousands. Who get hurt? Not Bill, he just moves offshore to a more business friendly country and rebuilds Microsoft from the ground floor with less regulation and more profit.

    Ok, how ’bout Warren Buffet. His wealth is accumulated in Berkshire Hathaway which owns several companies. Same senario wouldn’t ya think? But instead of one company going tits up ya got several. More layoffs, more talented people escaping Bolsheviks.

    To say talent doesn’t migrate to freedom is to ignore what happened in pre war Germany. Scientists and other well educated professionals saw the coming storm and left to American shores.

    And finally what happens after the confiscation? Adding up all the Forbes top 400’s wouldn’t even cover this years debt.

    What happens next year?

    • Your logic is specious. The purpose of high marginal taxes is not to confiscate, but to direct activity. Investors always have a choice of reinvesting, leaving money in companies, or pulling out and paying the piper.

      You have it exactly backward. You are stuck on this notion that investment creates jobs. Demand creates jobs, while investment merely allocates resources to the places where it does the most good. It’s not top-down, but rather bottom-up.

      And this shows in the last thirty years, as we have sent jobs overseas and converted from manufacturing to Wal-Mart jobs.

      Part of the problem I have problem with “conservatives,” as you call yourselves (Goldwater spins in his grave), is the inability to think counter-intuitively. It is not as all as you imagine, and you are unable to imagine otherwise.

      • Ingemar Johansson says:

        Oh I get it. The super rich (Forbes 400) get to keep their wealth-reinvesting in their companies and only taxed when the stock is cashed.

        So the ones that are really screwed are the kinda rich, small successful business owners on their way to the top. The ones who can’t board the yacht and sail to freer lands.

        I’ve always wondered why Buffet always moaned that his secretary paid more in taxes than he did-he wants to stifle the up and comers who are competing for his business.

  3. If they want to leave, the can, but oddly they don’t. Seems the USA is a very nice place to live. And … if this is enough to make them leave, I’ll stand on teh dock and wave bye bye. Don’t need them.

    What I’m describing to you, Swede, is the system in place in the post-war era up until 1980.

    It worked. We had a middle class, and a working class that was very well off by word standards. My Dad, just a semi-skilled laborer with no college, could support his family of six while mom stayed home.

    You see, the high tax rates don’t kick in until well after you have earned enough to be considered rich – $3 million or so is how they did it in the 1950’s.

  4. OK Swede – here we go. I’m not going to tell you what I think. I’m going to give you my impression of what you think. You have lightly considered notions, probably grabbed from Atlas, or Friedman if you consider yourself well-read.

    You are sure that taxes hinder economic growth. You skim the Internet looking for bits and pieces to support this notion. You don’t read. You’ve not really thought about it.

    You think that we (we are a collective and all think alike) are too dumb (or devious) to understand the simple truth that you espouse.

    Here’s the real deal: We understand what you think, we understand why you think that. It’s simple, common sense you might say, and therefore must be true. We cannot detach you from your simple premises, as they are emotionally fulfilling to you. You think of yourself as a Galt-like character,creating wealth that others steal from you. You have not begun to grasp how much you depend on government to protect you. Government enforces your boundaries, your property rights, your contracts, the roads leading to your property. Universities researched animal husbandry, and gave you this information without charging you for it, except by tax support. Your post-secondary education, if you had one, was partially subsidized by government. You probably borrowed money to buy your land, or inherited it. Conservation districts brought about good farming techniques, if you grow any crops. If you are a rancher, you might benefit from below-cost grazing leases, if you are a farmer as well, you can double your income by putting up two mailboxes.

    We know you Swede. You know nothing about us. We read Atlas Shrugged too, and found it ludicrously oversimplified to the point of stupidity, the kind of thing that appeals to immature minds.

    That’s how you became a self-made man.

    • rightsaidfred says:

      Government enforces your boundaries, your property rights, your contracts, the roads leading to your property. Universities researched animal husbandry, and gave you this information without charging you for it, except by tax support. Your post-secondary education, if you had one, was partially subsidized by government. You probably borrowed money to buy your land, or inherited it. Conservation districts brought about good farming techniques, if you grow any crops.

      Nice rant. I don’t necessarily disagree. Thing is, this makes up about 1% of gov’t spending.

      I’m sure you will ably justify the rest, the transfer payments, military spending, health care spending.

      Your advocation of gov’t as grand, final, and all-encompassing re-distributor doesn’t have a great track record.

      • Yes, I do justify public pensions and health care, as the government does a much better job than the private sector, as any fool can easily see. Military spending, no. I suspect we’d be OK with 10% of what we spend if “defense” was really what it was about.

        Track record with public health care, public pensions is nothing short of excellent.

        • rightsaidfred says:

          I do justify public pensions and health care, as the government does a much better job than the private sector, as any fool can easily see.

          …Track record with public health care, public pensions is nothing short of excellent.

          I guess this tells us your definition of “better” and “excellent”. Something like this.

          These programs are pretty expensive. I see young people struggling to start a family and play by the rules, and I think of the 15.3% in SS tax they are paying, plus the high insurance rates, etc., and it makes me think that maybe we could dial back this inter-generational wealth transfer business in favor of helping with affordable family formation. But I guess that is what immigration is for.

          • Big subject – first, the LIRR story is anecdotal, and I was referring to public pensions like Social Security and similar, much better ones in other industrial democracies.

            The contribution rate for SS is 12.4% (the balance is Medicare); and a more refined number is 11.7% (12.4/106.2). I won’t go there.

            The tax is applied only against the first $106,000 in wages. Social Security benefits are taxed on a means-tested basis. That should not be – Reagan did that to us.

            The tax is not levied against any other income, only wages and benefits.

            The program was designed to be an intergenerational insurance program. As such, it provides old-age defined benefit pensions, survivor benefits for children under age 18 who lose their provider, and disability insurance.

            There is nothing in the private sector remotely comparable to this, and if there were, it would not be affordable.

            For my generation, the baby boomers (I don’t know your age), we were asked by Reagan in 1983 to pre-fund our benefits, so for us it is not inter-generational. We have paid in an excess $2.6 trillion to fund our benefits through the year 2040, at which time we’ll be gone.

            Wall Street wants to renege on that deal, and the $2.6 trillion will have been stolen from us.

            The program is fiscally sound, wildly popular, an d it does not affect wealthy people in the least other than that they want to get their hands on the revenue stream, at which point they will steal us blind. They should instead fuck off.

          • rightsaidfred says:

            After I wrote “15.3”, I thought you might task the numbers a bit, but I’m lucky to find the “a” on my keyboard, so I don’t always cover all the bases. I know the numbers of which you speak, and BTW, your ratio should be (12.4/1.062)

            The thing about SS is that the trust fund runs out (last time I checked) in 2037, at which time it will be strictly pay-as-you-go, and by then the benefit package will be about $5 a month if current trends continue what with our new immigrant population cocooned in their ethnic enclave, not all that interested in out-group altruism, thus finding ways to keep the money for themselves and their posterity.

            • That 2037 date should be taken sceptically, as it is a projection based on current conditions. I’ve seen it fluctuate between 2050 and 2037 – right now, there is some stress on the system due to so many people retiring at age 62 due to the Wall Street collapse. Realistically, projections start to lose credibility after one year out – 26 years out – forget it.

              However, such projections are necessary for planning purposes. Right now, after passage of the rat through the snake, they project that Social Security will still be able to pay 70% of the benefits. To fix up that 30%? We’ve got lots of time, and change is part of life.

  5. Ingemar Johansson says:

    Funny, I can’t think of two people so diametrically opposed.

    You’re over read-I’m under read.

    You expand thoughts-I compress.

    You’re serious-I enjoy humor.

    You can type-I peck.

    Your writing style rambles, reads like a tax form-I’m more clear and concise.

    Now the more important differences. The more freedom a people have, the greater their health, wealth and prosperity; the less their freedom, the more their impoverishment, disease, and famines.

    You on the other hand view freedom as a threat.

    • You’re over read-I’m under read.

      Translation: I read.

      You expand thoughts-I compress.

      Translation: I think.

      You’re serious-I enjoy humor.

      Translation: A lot of stuff goes over your head.

      Your writing style rambles, reads like a tax form-I’m more clear and concise.

      This I don’t get, as you don’t write much. You usually just put up links, as your thoughts usually originate with others.

      Now the more important differences. The more freedom a people have, the greater their health, wealth and prosperity; the less their freedom, the more their impoverishment, disease, and famines.

      Here’s where you leave the track: I don’t think that you can define “freedom.” You are missing tow key elements, respect, and responsibility. You don’t respect the weakness of ordinary people, thinking that because they are only skilled enough to do one or two things well, that they don’t deserve health care or pensions or schooling for their kids. You think that there is earning, but no privilege or luck. SO you don’t feel responsibility. You are the antithesis of freedom, as you are privilege, and the only instrument available to defend privilege against ordinary people is …. your government. You are a big government guy, and a walking, linking contradiction.

      You on the other hand view freedom as a threat.

      I actually know what it is. I am a free man. I have the ability to say out loud and “fuck you” and before I hang up the phone, and not after. I answer to no one but my wife, children and grandchildren.

      • rightsaidfred says:

        I have the ability to say out loud and “fuck you” and before I hang up the phone, and not after. I answer to no one…

        Looks like a bit of attitude from a guy who ten lines earlier was preaching about respect and responsibility.

  6. rightsaidfred says:

    By the way, I’m a privileged white guy

    Hahahaha. Should we feel sorry for you? What, you have no rhythm? More accurately, you are a liberal White guy. That pretty well sums it up: your purpose in life is to hate other White people, pace Michael Moore, who looks like one of the rich people of whom you are not so fond.

    This post reminds me that liberal White guys are anxious to re-run the French revolution, but this time do it right, “keep killing them (the rich) until they don’t come back.”

    • Thanks for a deep and thoughtful post to a vexing problem – the aggregation of wealth in a few hands, and the tyranny that shortly follows.

      • rightsaidfred says:

        Yeah, I’m in a snarky mood, but I’m not sold on your solutions to all this: unions and big government. Looks like a trade of one form of corruption for another.

        • Unions are and have been corrupt, but so are the corporations, massively more so. Because we are a business-run society, you are aware of one but not the other.

          The right to form a union is sacred. Most Americans would join a union if they could, but they cannot.

          And likewise, government only becomes “big” in your eyes when it performs services for ordinary people. The massive military, corporate subsidies, regulatory capture, failure to enforce monopoly law and securities regulation … all due to the fact that we are business-run.

          Social Security and Medicare? Big government!!!

        • rightsaidfred says:

          I know full well the corruption of business. I don’t disagree with you here.

          The feedback mechanisms are different. There is some likelihood a corrupt business will fade away. Not so much hope for corrupt big government.

          I’ve never known anyone all that happy about belonging to a union, what with the featherbedding and politics. The most satisfying work is an honest days work for an honest wage.

          The best union is a shortage of workers, which is one reason I want to see more control on immigration.

          Illegal immigrants = scabs.

  7. Pingback: World’s Strangest | Retrobituaries: Elizabeth "Lizzie" Magie, Inventor of Monopoly

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