I’m sitting here in the Portland airport with time to kill, wondering if I have been too hard on the Perfesser – not that he cares, but civility matters. I haven’t been civil with him, but it seems that doing so merely feeds the beast. The man has a massive ego, or massive insecurity. He expects to be treated with deference, his opinions accepted as having gravity beyond disputation. If one does not knock him off the podium, he just goes on and on and on … right about everything, dismissive of anyone else’s outlook. He will lecture you if you let him, but that’s about it. He’s quite a piece of work.
So I take us back to the early 1990’s. Montana’s tax system was somewhat in disrepair, in that we had a top marginal tax rate of 11%, and according to accepted wisdom, that was driving people away. In addition, as a tax preparer, I saw many people who were exempt from even filing a federal return who were required to file a Montana return and pay some tax. We need to get rid of the top bracket – it was an illusion anyway – deductibility of federal taxes knocked that bracket down to seven percent. We needed chop off the bottom as well, to free people in the low brackets from filing at all.
The legislature was Democratic at that time, and they put together a package that satisfied both objectives – knocking down the top rate, clearing out the bottom. It would have, overall, reduced taxes for middle and lower middle class and eliminated them for the working poor, with slight increases in the upper tiers – overall, it was not revenue neutral – it was a tax decrease.
Along comes the Perfesser – screaming to all who would listen – “They’re raising your taxes!!! They’re raising your taxes!!!” He’s a one-noter in that regard – in his world, taxes are inefficient, the private sector totally efficient, so that any revenue that is collected by taxation is automatically poorly spent or invested. He’s wrong about that, of course, but try telling him.
Anyway, he launched a petition campaign to put the tax reform on the ballot, and demogogued it. He told people whose taxes were actually going to be decreased that they were going up – since he is never ill-informed, I can only conclude that he consciously lied about that. But it worked – the bill was rejected by the voters, and we went back to our old system.
Along comes Judy Martz, the ditzy blond, and a Republican legislature, and they have their own brand of tax “reform” – our current system, which is essentially a flat tax at 6.9%, with limited deductibility of federal taxes, aka double taxation of the same income. That hits high-income taxpayers very hard, and they know it. And we have people on the bottom who don’t have to file federal returns having to file Montana returns, and pay taxes.
Montana’s taxpayers were harmed by this man – he alone did this damage. He is responsible for lower income people having to pay taxes and file returns, he is responsible for double taxation of income for people who pay more than $5,000 in federal tax ($10,000 MFJ). If he hadn’t demogogued a good bill, we would not have gotten a bad one instead.
Natelson has a dedicated following, much the same as Ayn Rand does – people attracted to a simple world and troubled by nuance and unpredictable outcomes. His philosophy is easy to comprehend – taxes bad, regulation bad, government bad, private sector good. There is excellence in the private sector, mediocrity in government. If we had a minimum of government, it would be a better world. No matter that the system we have now came about because the private sector constantly falls on its face, with bubbles and depressions and recessions and extremes of wealth and poverty and uninsured people needing medical care, seniors starving for lack of pensions – no matter all of that. It’s only evidence, it’s only history. And it doesn’t matter.
After all, this is all about the perfesser. And he’s always right. Don’t believe me? Just ask him.
Piece of Mindful 
So 11% wasn’t driving people away? Mark, a lot of left minded people are demanding verification of everything Prof. Rob states. Do you have any proof of that an high upper bracket has no negative effect on the amount of wealthy staying in the state?
In visiting western MT I’m always amazed at the numerous expensive vacation homes that dot the landscape and shorelines. Wouldn’t a reduced upper rate maybe entice some of these part timers to stay, claim residence?
So tell me, as a professional, if lowering the rate were to mean additional monies to the state treasury, would you endorse it? Or is this not about increasing revenues, but something a little more sinister.
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Natelson only appears to be correct all the time because of your participation in the discussion.
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You say that like it’s a *bad* thing.
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Bad thing?
Prove it.
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Now you’re not making any sense, Swede. You made the claim. What do you need proof of? Your claim? Not my job, but rather yours.
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Makes perfect sense.
Let’s make every retort provable.
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Swede – read carefully and you will find that they did not reduce the top rate. Put it this way – if you are paying tax at 35% federal, and deducting those taxes on your state return, then the effective rate at the state level is 65% x 11%, or 7.15%. Current rate? 6.9%. That was what they did.
Those houses that ruin the landscape are the product of tax cuts at the federal level.
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“The man has a massive ego, or massive insecurity. . . . he just goes on and on and on … right about everything, dismissive of anyone else’s outlook. He will lecture you if you let him, but that’s about it. He’s quite a piece of work.”
Some self analysis?
“He’s a one-noter in that regard – in his world, taxes are inefficient, the private sector totally efficient, so that any revenue that is collected by taxation is automatically poorly spent or invested. He’s wrong about that, of course, but try telling him.”
If past performance is any indication, he seems to be correct. Perhaps you could show me where the government spending has been more productive, but none comes to mind. And I say this because I have been working for the government for some time now.
“Natelson has a dedicated following, much the same as Ayn Rand does – people attracted to a simple world and troubled by nuance and unpredictable outcomes. His philosophy is easy to comprehend – taxes bad, regulation bad, government bad, private sector good. There is excellence in the private sector, mediocrity in government. If we had a minimum of government, it would be a better world.”
As the yin to your yang, you offer nothing of substance here except ad hominem, but with less intellect.
It’s not my job to defend Natelson, especially from the likes of you. But you make giant leaps of logic on the assumption that people agree with you, when their own personal experience refutes your premises.
Perhaps if you took some time and logically organized your thoughts, and laid the groundwork for your assertions, it would be more credible. I realize that blogging doesn’t usually involve that much work, and I am guilty of it too. But if you are going to persuade instead of harangue, it would be more effective.
Of course, I am betting that you can’t.
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Government spending is more efficient in public works and health care. Government investment in just one thing – the interstate highway system, has yielded massive dividends for decades. Government research has yielded important scientific advances – aviation, electronics – the internet, that 757 I just rode on, all came about because of government.
Yin to yang? Something Natelson doesn’t know, will never know, is that he is right about some things. We all are. The right and left approach the world with different outlooks, and offer different solutions to problems. Some work, some don’t, but it’s really a huge mess, and it’s a big enough world that we all get to be right about some things. Where Natelson goes off the deep end is his notion that it is all one way – government bad, private sector good. That is the art of reducing complicated matters down to manageable size. It’s a mental exercise for people who cannot handle complications, nuance, etc. It’s a way of imposing order on chaos. Doesn’t’ work, is for small minds.
So show me where I have made “giant leaps of logic on the assumption that people agree with me”… I presume that people disagree with me, don’t like it when we’re all singing the same song, which is why I don’t subscribe to liberal rags.
I think you are the one who has done self analysis. You’re a conservative dictionary – if I want to know mainstream right wing “thought” on any subject, I go to Rabid Sanity.
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An anti-government state worker. Our taxes subsidize all kinds of disgruntled retirees and “public servants.” They’re a bombastic lot with not much to do. They outnumber their keepers, so regardless of their message, how you vote, or the tax rate, they persist. I used to think tenure was a good thing, now I’m not so sure.
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Natelson is a state worker too. They are self-hating conservatives.
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I agree with Steve that your rants seem a sort of “self analysis”, or I would put it as the narcissism of small differences.
In a world where the government gets bigger and bigger every year, I welcome any efforts to slow the growth. I’m not necessarily against big government, but we end up paying more than we should for the privilege. You admire the trails in our National Forests, but I think of the overlarge amount we’ve paid for such. The government pays twice as much per square foot to build an equivalent building than the private sector. I’ve seen agencies triangulate themselves away from any scrutiny and become not much more than adult day care. I’ve come out of meetings with Interior Dept. GS 15s who don’t appear to have any more skills than a clerk at Shopko. I can recall several parking lot moments where I look at my traveling cohort and say, “If that is an extended example of what the Feds offer up, then we are #*&%@ed.” Insiders know the story better than anyone, and that’s why Natelson and Steve are a better resource than you, Mark. You want us to fall down and worship the gov’t for building the interstate highway system, but if we all knew the back story, we would be less inclined to kowtow.
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I’m certain the SeaBees would be interested to read that.
The government doesn’t build buildings; they pay contractors, private folks, who are more than happy to steal as much of your money as they can get away with. Ya see, they know that saps like you will continue to blame *the government* while they laugh all the way to the bank.
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I like the SeaBees. Military spending and all that.
The government doesn’t build buildings
That’s ’cause their crews are still trying to finish the cathedrals in Europe.
they pay contractors, private folks, who are more than happy to steal…
If you can provide a lower bid, bring it on. I’ve sat on several gov’t advisory boards overseeing such bids. There are inherent higher costs with the gov’t’s “hard bid” process, plus extra regulations: Montana requires an architect to be involved on all state buildings, environmental assessments, etc.
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Eric Hoffer had the self-loathing pegged. “Rudeness is the weak man’s imitation of strength.”
The recently fallen scream simplistic chants that use the words “freedom” and “individual liberty” a lot – but not meaning a word of it. In the end, like all right-wing lemmings the stampede could not be turned in another direction. These little angel-rodents have only one wing that works. Their prayers could not save them. But these are very special zombie lemmings who refuse to accept their demise. Now they teach our children and lurk around the halls of the University.
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First things first, fred, there is no reason at all to believe that ‘sat on’ or heard anything. You are anonymous here. Kindly keep that in mind before you claim anecdotal authority.
Second, what you’re talking about is building a lesser product. The government process can be more inefficient and obviously costly than building a lesser product, but you get what you pay for. You might want to review some of Mark T,’s writing on Walter Reed, and what happened after it was turned over to the private sector.
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Within the same quality and safety codes, there is a difference in incentives that eventually reveal a marked decline in government productivity. Look at the East German/West German dichotomy, or the North/South Korea example. Here’s an example from Donald Trump’s Wiki entry: A similar opportunity [for Trump to show his building expertise] would arise in the city’s attempt to restore the Wollman Rink in Central Park–a project started in 1980 with an expected 2½-year construction schedule that was still, with $12 million spent, nowhere near completion in 1986. Trump offered to take over the job at no charge to the city, an offer that was initially rebuffed until it received much local media attention. Trump was given the job which he completed in six months and with $750,000 of the $3 million budgeted for the project left over.[11]
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I agree that government does little efficiently. There are several reasons. The first is the bureaucratic process, which was set up to prevent fraud; multiple levels and criteria for approval means less fraud. Second, the special interests have burdened government with so many regulations the private sector doesn’t share. Then there are government’s inherent inabilities to move quickly or innovate according external conditions. Government discourages individual initiative and actively seeks “team players” rather than innovators. My last example, and I’m sure there are many more, is that government doesn’t get to “identify it’s customer base” or “find a target market”; it’s got to serve that ten percent that takes ninety percent of the effort and time. (translate that into your health care!)
Not to say government can’t build some fine buildings and highways. They just do it more expensively, everyone gets a share of the pie, lots of political points get made, and it’s always a collective effort.
I’m not sorry to be so Ayn Randian in my analysis, Mark.
I see the tax issue. Some of the efforts to reduce the top bracket are to attract investment capital; in Montana we can stalk the wily entrepreneur who could live or work anywhere but who could set up shop in one of our more desirable communities if the tax consequences weren’t so great for the successful. I’m for that.
I don’t disagree with much of Mark T’s analysis of the current state of state taxes though. I’d guess we could put Mark T and Joe Balyeat together in a small room and get a better system than anything the sausage makers could come up with…but…that’s not democracy.
Finally, there’s something to the “anti government government worker” accusation on both sides. Tenure seems a bit overly cushy, for someone constantly jumping up and down about the private sector, and then there’s the teacher’s retirement system and it’s defined benefit package and “option one”. Not exactly the private sector, is it?
Alternatively, there’s nothing wrong with recognizing the limitations of government and trying to keep government efficient within those limitations rather than seeing it as the final solution for every problem.
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Oh, and Rob Natelson is a great addition to the Montana blogging community.
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We debate so much where we really are in large agreement. I think the private sector is the best vehicle for most of our goods and services, and that private incentives are a massive driving force for public good. Money is but one of the driving forces, perhaps not even the most important one, though I must say I don’t know. But personal achievement, legacies of lasting good, enhancement of the wealth of others are all important as well.
There are some things the private sector cannot do well l- advanced research that doesn’t yield foreseeable profit, unpatented research for drugs and medical advances, affordable schooling for low income people, and health care. Then there is infrastructure – the public highway system advances commerce, as does the Internet. It’s an important role for government – to promote commerce. It has done that throughout our history, all the way back to the postal service in the beginning to the Interstate system to even something so mundane as the telegraph and railroad systems of the 1800’s, subsidized by government. Laws and regulations are meant to promote equal opportunity in the workplace and grease the wheels for business. Without government, contracts mean nothing. Without government, commerce suffers.
Regarding the cost of government versus private projects, you presume that greater cost is an inherent evil. What if that greater cost is because the government works with labor unions, rather than trying to bust them, that the government pays prevailing wages, rather than lowballing. Those are public goods. The fact that Trump came in under budget is not necessarily because he did a good job. He might have been efficient, but screwed workers in the process. That’s an essential difference between right and left – you guys place far too much emphasis on efficiency, and that usually means labor gets screwed. We want a middle class.
Another essential difference between right and left – this notion that there is a perpetual shortage of investment capital. We are usually awash in it – we could be building pyramids, but instead have paper chases such as the tech and real estate bubbles. One of the reasons behind progressive taxation is to remove surplus investment capital from the marketplace, keeping things on an even keel. That’s why the US prospered in times of high marginal tax rates.
And finally, I agree on Natelson, but observe that he has a cult-like following, as did Rand. He needs to be brought down, and so much that he asserts as obviously correct should be put forth as his humble opinion which results from strenuous research and validation of his humble opinions to the exclusion of all others, scholarly and non-scholarly alike.
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He needs to be brought down
This comes off as a weird, “enemy of the people” type statement.
we could be building pyramids
Consider the vacant tract homes in the four sand states plus Michigan.
but instead have paper chases such as the tech and real estate bubbles.
That wasn’t the plan going in. Cisco built a lot of routers. Immigrant labor built a lot of homes. Those aren’t paper.
One of the reasons behind progressive taxation is to remove surplus investment capital from the marketplace
?????
WTF
Are you admitting that our tax money is flushed down the toilet? One third of Obama’s budget is borrowed: does this mean he is going to destroy a trillion in investment capital? Do the Chinese know this? Do our congress people know this?
That’s why the US prospered in times of high marginal tax rates.
The US prospered even more when tax rates were cut. The take to the Treasury increased when marginal rates were lowered. A high marginal rate doesn’t mean the Treasury sees more money.
you guys place far too much emphasis on efficiency, and that usually means labor gets screwed.
You can’t have it both ways. My crew wants to go back to hunting and gathering, but I explain to them that they have to help pay for octomom’s stay in intensive care, and we’ve got to pay for the Dept. of Interior to helicopter in dirt to bury Kennewick man. Paying for the modern welfare state requires lots of efficiency.
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One of the reasons behind progressive taxation is to remove surplus investment capital from the marketplace.
You guys operate on the always-unproven assumption that there is a shortage of investment capital. In fact our economy is so productive that we are awash in surplus capital – the key is what to do with it. Recycling it downward as always worked, as have infrastructure projects, and military spending far beyond reasonable needs – if you don’t tax it at high rates, you get extremes of wealth and poverty, and bubbles.
The US prospered even more when tax rates were cut. The take to the Treasury increased when marginal rates were lowered. A high marginal rate doesn’t mean the Treasury sees more money.
This is false, and I have the numbers to prove it. I spent some time a few weeks back gathering information on the tax haul, 1980 forward, pre and post-tax cuts. They are very refined numbers, broken down by type of tax. I’ll put those numbers up as soon as I can graph them, print them, scan them, reduce them to a file, and display them in a post.
Bottom line is that what you said here, which is the conservative gospel, is just plain wrong.
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Income tax can deal effectivelly with the misallocation of capital, but doesn’t do nearly as well when trying to gain greater control of consumption and allocation of finite resources like oil, water, fertilizer and a variety of carbon-based products. The markets seem to react to scarcity, when what we need is anticipation and preemptive action. Targeted consumption taxes has a greater potential to reduce quantity of demand, and conserve scarce, non-renewable resource’s life-span until a renewable substitute can be found. It can also reduce environmental remediation costs too, even though these costs aren’t showing up on balance sheets.
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One of the reasons behind progressive taxation is to remove surplus investment capital from the marketplace.
I find this statement weird. It is like saying taxation removes excessive taconite from the marketplace.
You could argue that gov’t spends and invests the money more wisely than “rich” individuals. I will then point to the working models of Cuba and North Korea and ask you if this is what you mean. You will say, “No no no. Sweden! I want to be like Sweden!” to which I say “Yes, Sweden sort of works, but they left a lot of decision making to private individuals, plus some other anomalies.”
I’ll look forward to your tax receipt numbers. One thing to watch is using tax revenue as a percentage of GDP. I’ll claim higher GDP growth as a result of the stimulus, so then you will be wrong and you will have to cry.
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But you’ll have no proof – only conjecture – you’ll be in Natelsonville.
Th US is different that Cuba or NK in that we are a vast country with an educated work force and vast natural resources. We produce wealth like crazy – so much that we have a surplus of investment capital at any given time. I listed the ways to deal with that, unfortunately, leaving in the hands of investors is not terribly effective.
One way to go about it is high marginal tax rates couple with credits for investment in tangible equipment (as opposed to paper assets), and a generous deduction for charitable contributions. this leads to new plants and equipment, and cultural resources like concert halls and museums.
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There is much more to the story. Stalin and Mao invested like crazy in plants and equipment for less than mediocre results. Cuba has lots of resources, including tourist attractions. They EXPORTED something like 6 million tons of sugar prior to the revolution. Now they produce 1 million tons total. You’ve got to match your human capital with your monetary capital.
we have a surplus of investment capital at any given time.
Tell me more. Are bankers turning away depositors? Is this surplus money blowing down the street? Are there more buyers than T-bills? Are people having to store money at home, under their mattress? Either you don’t understand capital markets or I don’t understand what you are saying.
leaving it in the hands of investors is not terribly effective.
Is this a fact or a conjecture? Are you claiming the gov’t spends it better? Should we really be subsidizing tangible assets? Should we really be subsidizing fine art? I’m sure you will say “yes”, but then I have to walk by a crucifix in a beaker of urine.
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Er, uh … Cuba …. uh, er, sort of, you know, embargoed? Not that they have a great system – they don’t. But the embargo should not be ignored. It is seriously enforced.
The surplus of capital is apparent in the types of investments that they pursue – when they are investing in tech stocks and valuing Yahoo at a higher value than IBM, then it’s a paper chase. Bubbles are a sign that there is a surplus of investment capital.
Anyway, I’m citing US history up until 1980. That’s all.
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Embargo, schmargo. South Africa kept pace under an “embargo”. You’d make a good bureaucrat with your excuse making.
valuing Yahoo at a higher value than IBM
Maybe Yahoo is worth more.
Bubbles are a sign that there is a surplus of investment capital.
Did the people who lost money in the bubble tell you this? Did Stalin have a population bubble, so it’s okay that so many people died during his reign? You need to get out more.
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All right – Saturday night and all that – you’re not losing it. You’re just temporarily out of it.
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NEW YORK (Reuters) – U.S. states, already battered by the financial crisis, risk suffering a further hit to their coffers when individuals file their income tax returns in April.
Falling income tax receipts from wealthy individuals could further gouge their already battered budgets, according to state officials and financial analysts.
Raising income taxes, as California did just last week, may fail to raise more tax dollars as the incomes of some wealthy people are falling too precipitously.
[…]
California, New York, Connecticut, New Jersey, Massachusetts, Virginia, and Maryland, which all rely heavily on income taxes paid by well-to-do residents, saw these tax revenues plunge 15 percent to 30 percent. The main culprit was the fall in the stock market, officials said.
The federal government faces the same problem. The top 5 percent of U.S. taxpayers paid nearly 44 percent of all income taxes in 2005, according to the Congressional Budget Office.
— Reuters, 02/29/09
Whoops! Looks like the workingman will have to pay all those new Obama taxes as per usual. And get ready for forced savings AKA Payroll Tax II.
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Yes indeed, Knight. “Live by the sword, die by the sword.”
Mark, when we call the roll of who is “out of it”, do you worry on which side you will fall?
You are a liberal person obsessed with the distribution of wealth who is admittedly weak on economic theory. This has let you entertain some marginal ideas on the distribution of resources.
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Hey, qwerty@qwerty – first time you’ve ever made a substantive comment. You didn’t even insult anyone. Back on meds?
The states you cite are ones that were living the Bush dream – wealthy people driving the economy – New York especially could live off high-end consumption. It reinforces the idea that we need a healthy middle class to prosper as a nation.
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Fred – you’ve not shown me anything in the way of economic substance – I know enough to know that a nation of extremes of wealth and poverty, which is the natural result of unfettered capitalism, will suffer wild swings in fortune, booms and bottoms, which we are experiencing. All that we suffer came about because of the ideas that you preach – low marginal tax rates, little regulation – you did this to us, just as you did this to us in the 1930’s, which followed the 1920’s, where your ideas were in vogue. It is only left to the “economists” who serve wealth (and in whom you believe) to figure out a way to refocus the blame and keep the sting going. They are hard at it, rewriting current history as we sit here.
If I had a quarter for every right winger who told me he had a better understanding of economics than me, I’d start my own economy.
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Fred – my history is murky at best, but as I remember it, there was an arms embargo on South Africa, but a very porous one that the U.S. never really took seriously. ANC complained that the U.S. was sendind dual-purpose equipment to S.A., and that it was channeling arms through other countries as well. Israel probably helped – there’s a long relationship there between the old Apartheid regime and the new one.
There was also a boycott. That’s a different story – there was pressure on US corporations not to do business with South Africa, and for universities to divest of companies that invested in South Africa. It wasn’t terribly effective.
That’s a far cry from Cuba – an embargo of everything strictly enforced by the U.S., including Helms Burton, and act which allows the U.S. government to sanction foreign companies that do business with Cuba.
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“you did this to us, just as you did this to us in the 1930’s, which followed the 1920’s, where your ideas were in vogue.”
Hard to believe Fred did this to us. And every economy in Europe and Asia to boot! (I’m having trouble remembering the Roaring 20s in Iceland.) Really, Trotsky, you need your head examined.
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If I had a quarter…
You floated the idea that we have too much investment capital, something I find so bizarre it is “not even wrong.” I’m willing to read and discuss your defense of this notion, but I notice that you have lapsed into ad hominem and posting a laundry list of capitalist ills. I think you want to be left alone.
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That’s more like it, Knight. Your usual ugly self.
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Complete non-sequiter, but I’m just wondering if I’m the only one who’s noticed the similarities between Pawn/Rook/Checker/Knight/Micropenis and a certain ‘Jerry Chung’. Am I?
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You know, that did cross my mind.
It was so bad that even Natelson had his fill and told him to back off.
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