Opinion | The Inheritance Tax Is Far Too Low – By Lily Batchelder – The New York Times

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Ms. Batchelder is a professor at New York University School of Law.

Credit…Michael Houtz

“A massive transfer of wealth is underway and will accelerate in the coming years. Baby boomers and the generation that preceded them currently own $84 trillion, or 81 percent of all U.S. household wealth — wealth that will before long be inherited by their children and other beneficiaries.

This extraordinary transfer of resources will further cement the economic inequality that plagues the United States because this wealth is tightly concentrated in the hands of a few. And it will be passed on as taxes on such transfers are at historic lows.

Among high-income countries, the United States has one of the lowest levels of intergenerational economic mobility, meaning a child’s economic future is heavily influenced by his or her parents’ income. We have the second-highest level of income inequality after taxes and government transfers, and the highest level of wealth inequality. These disparities are sharply skewed by race. Median black household wealth is only 9 percent that of white households, a racial wealth gap that is even larger than in 1968New research suggests the pandemic will further increase wealth inequality, as the affluent save more and the poor earn less.

Effectively addressing these systemic inequalities will require many things. But increasing the taxation of inheritances is one vital component.”

Opinion | What Will the Coronavirus Do to Our Deficit? – By Paul Krugman – The New York Times

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Opinion Columnist

Credit…Bishara Mustafa/EyeEm, via Getty Images

“Almost a decade has passed since I published a column, “Myths of Austerity,” warning that deficit alarmism would delay recovery from the Great Recession — which it did. Unfortunately, that kind of alarmism seems to be making a comeback.

You can see that comeback in the gradually increasing number of news analyses emphasizing how much debt we’ll run up dealing with the Covid-19 crisis. You can also see it in the rhetoric of politicians like Mitch McConnell, the Senate majority leader, who is blocking aid to beleaguered state and local governments because, he says, it would cost too much.

So this seems like a good time to emphasize two key facts. One is economic: While we will run very big budget deficits over the next couple of years, they will do little if any harm. The other is that whatever they may say, very few prominent figures in politics or the media are genuine deficit hawks, who are actually worried about the consequences of rising government debt. What we mainly have, instead, are deficit peacocks and deficit vultures.

The term “deficit peacocks” was coined by the Center for American Progress for people who preen and posture about fighting deficits without offering realistic policy proposals. I’d broaden the term to include what I used to call Very Serious People — those who inveigh against the evils of debt not because they’ve done a careful analysis but because they imagine that it makes them sound earnest and tough-minded.

Who Pays For This? · by Morgan Housel – Collaborative Fund

 by Morgan Housel

“The federal government will run a $3.8 trillion deficit this year and $2.1 trillion next year.

Those estimates, from a budget-focused think tank, don’t include what’s almost certain to be another multi-trillion-dollar stimulus package or two, or three, in the near future.

We’re all just guessing, but when this is all over – however you want to define that – it would not surprise me if the direct federal cost of Covid-19 is something north of $10 trillion.

I’ve heard many people ask recently, “How are we going to pay for that?”

With debt, of course. Enormous, hard-to-fathom, piles of debt.

But the question is really asking, “How will we get out from underneath that debt?”

How do we pay it off?

Three things are important here:

  1. We won’t ever pay it off.
  2. That’s fine.
  3. We’re lucky to have a fascinating history of how this works.”

Source: Who Pays For This? · Collaborative Fund

Opinion | The Warren Way Is the Wrong Way – By Steven Rattner – The New York Times

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Mr. Rattner served as counselor to the Treasury secretary in the Obama administration.

Credit…Jordan Gale for The New York Times

“Senator Elizabeth Warren has unveiled her vision for how to pay for “Medicare for all” — a daunting mountain of new taxes and fees.

Thanks for providing us, Ms. Warren, with yet more evidence that a Warren presidency is a terrifying prospect, one brought closer by your surge in the polls.

Left to her own devices, she would extend the reach and weight of the federal government far further into the economy than anything even President Franklin Roosevelt imagined, effectively abandoning the limited-government model that has mostly served us well.

Ms. Warren may call herself a capitalist, but her panoply of minutely detailed plans suggests otherwise. She would turn America’s uniquely successful public-private relationship into a dirigiste, European-style system. If you want to live in France (economically), Elizabeth Warren should be your candidate.”

David Lindsay: I love Steve Rattner’s writing, but this is the weakest thing I’ve ever read by him. I don’t oppose Elizabeth Warren because she is wrong, she isn’t. I oppose her because I don’t think she would beat Trump in the electoral college, which is the only game in town for me.

Here are the two most liked comments in the NYT.  Rattner’s piece isn’t rubbish, but it is off, and both comments have merits:

Kay
Honolulu
Times Pick

This piece is rubbish and I say this as somebody with a PhD and an advanced understanding of economics. Our current economic system has built into its very design the perpetuation and worsening of inequality (read Piketty, Stiglitz, Saez, please) and the complete destruction of the climate system. Marginal efforts to address either will achieve just that—marginal effects. Warren’s plans can and will be tweaked but she’s got the basic right—fix equity and climate change through the redesign of capitalism, or face waaaaaay higher costs in the very near future, not to mention an unlivable planet.

27 Replies2191 Recommended

Sherry commented November 4

Sherry
Washington
Times Pick

What’s more disruptive, foreclosing on millions of Americans during the housing crash, or protecting them from Wall Street predators? What’s more disruptive, suing patients for unaffordable medical bills, and charging privately-insured patients ten times the cost of care, or covering all Americans with Medicare? Is it really “free enterprise” when the hospital contract is, essentially, “your money or your life”? What’s more radical, leaving corporations with more than $1 billion in charge of our government, or asking them to act responsibly? I am so sick and tired of hearing moderate Democrats charge Warren with being a radical who wants disruptive change when we are enduring radical and disruptive change and she it just trying to fix it.

11 Replies1637 Recommended:
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DL: Rattner’s piece isn’t rubbish, but it is off.

Opinion | Bill Gates, I Implore You to Connect Some Dots – by Michael Tomasky – The New York Times

“So this column is not a brief for Ms. Warren’s wealth tax or for her candidacy — I don’t have a preferred candidate. Instead, I want to make a simple plea to the country’s billionaires: Multibillion-dollar fortunes are often called excessive and decadent. But here’s something they’re rarely called but ought to be: anti-democratic. These fortunes will destroy our democracy.

Why “anti-democratic”? Why would it matter to our democracy whether Jeff Bezos is worth $113 billion (his current figure) or $13 billion?

Because any democracy needs a robust and thriving middle class, and we have spent the last 30 or so years transferring trillions of dollars from the middle class to the people at the very top. Just one set of numbers, from the University of California, Berkeley economist Gabriel Zucman: The 400 richest Americans — the top .00025 percent of the population — now own more of the country’s riches than the 150 million adults in the bottom 60 percent of wealth distribution. The 400’s share has tripled since the 1980s.

This is carnage, plain and simple. No democratic society can let that keep happening and expect to stay a democracy. It will produce a middle and working classes with no sense of security, and when people have no sense that the system is providing them with basic security, they’ll make some odd and desperate choices.

This is obviously not hypothetical. It’s happening. It’s what gave us Mr. Trump (well, that plus the campaign lies). It’s what made Britons vote Leave (well, that plus the campaign lies). It’s what has sparked protests from France to Chile to Lebanon, and it’s what is making the Chinese model — no democracy, but plenty of security — more attractive to a number of developing countries around the world than the American model. Our billionaires ought to ponder this.”

Opinion | The Big Problem With Wealth Taxes – By Daniel Hemel and Rebecca Kysar – The New York Times

By Daniel Hemel and 

The authors are law professors with expertise on tax law.

Credit…Jordan Gale for The New York Times

“Senator Elizabeth Warren unveiled a new wealth tax proposal last week that she says will raise — along with her previously announced wealth tax plan — $3.75 trillion over the next decade. Senator Bernie Sanders says his wealth tax will yield $4.35 trillion over the same period.

We fear these figures are vast overestimates. The likeliest outcome is that a wealth tax will raise exactly zero dollars. The problem, alas, is the Constitution. The Warren and Sanders plans run headlong into more than two centuries of precedent that cast doubt on the constitutionality of wealth taxation.

We are tax law professors who identify as liberal Democrats, donate to Democratic candidates, publicly opposed the Trump tax cuts and strongly support higher taxes on the affluent. We are heartened that prominent Democratic presidential candidates are taking the problem of wealth inequality very seriously. We are worried, though, that leading figures in our party are coalescing around an idea whose constitutionality is doubtful at best.

The constitutional objection to wealth taxation is based on two clauses that require any “direct tax” to be apportioned among the states based on population. So, since 12 percent of the population lives in California, Californians must pay 12 percent of any direct tax.

For the Warren and Sanders wealth taxes, that would be a deal breaker. To match revenue fractions to population percentages, as the Constitution’s direct tax clauses demand, we estimate that the wealth tax rate in West Virginia — the poorest state per capita — would need to be roughly 10 times the rate in more affluent California and more than 20 times the rate in prosperous Connecticut.”

Opinion | Trump’s Deficits Are an Existential Threat to Conservatism – By Philip Klein – The New York Times

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Mr. Klein is the author of “Fear Your Future: How the Deck Is Stacked Against Millennials And Why Socialism Would Make It Worse.”

Credit…George Rose/Getty Image

“Last week, the Treasury Department announced that the federal deficit was just shy of $1 trillion in the 2019 fiscal year that ended on Sept. 30. The Congressional Budget Office expects deficits to exceed that mark every year going forward.

During Barack Obama’s presidency, such news triggered sanctimonious outrage among Republicans. Mr. Obama’s run of deficits exceeding $1 trillion helped fuel the Tea Party. Mitt Romney attacked Mr. Obama for fiscal irresponsibility during the 2012 presidential campaign. Mr. Romney’s running mate, Paul Ryan, built his national career around dire warnings about the mounting federal debt.

Even Donald Trump regularly got in on the act. In one of many such warnings about deficits, citizen Trump used the March 2013 debt crisis in Cyprus as an occasion to tweet: “Watching the madness in Cyprus? If our government keeps spending trillion dollar deficits, that could happen here.” In 2016, as a candidate, Mr. Trump said he could eliminate the national debt in about eight years.

Yet as president, Mr. Trump has piled on about $3 trillion to the debt, bringing the total to $22.9 trillion. What’s amazing is that he has managed to increase deficits at a time of historically low unemployment and relative peace, when one would expect the national balance sheet to improve.”

 

David Lindsay Jr.
Hamden, CT | Comments at NYT.
Nice essay Philip Klein. I too care about the growing deficit. Are you supporting that ugly idea, starve the beast? Grow the deficit as a way to pressure the cutting of the safety net. Social Security and Medicare allow older Americans to grow old and die with some dignity. It was created when a large percentage, maybe half?, of older Americans lived in poverty. So don’t forget to emphasize undoing unneeded and unfair tax cuts and loopholes for the rich.
Let’s test my argument. From Nasi.org: “Before Social Security, in 1934, roughly one half of seniors were estimated to be poor. Most had to rely on family or friends, or go to the poor house. As ever more seniors paid into Social Security and then received retirement benefits, the poverty rate among seniors steadily declined from circa 50 percent in the Great Depression to 35 percent in 1959, 25 percent in 1970, 15 percent in 1975, and around 10 percent in 2000, where it has hovered ever since. Today, were it not for Social Security, the senior poverty rate would be 43.5 percent, and just over half (PDF) of elderly African Americans (51 percent) and Latinos (52 percent) would be poor.”
David Lindsay Jr. is the author of “The Tay Son Rebellion” and blogs at InconvenientNews.net.

Opinion | Should We Soak the Rich? You Bet! – By Nicholas Kristof – The New York Times

By 

Opinion Columnist

CreditCreditJohannes Eisele/Agence France-Presse — Getty Images

“Donald Trump promised struggling working-class voters that he heard their frustrations and would act.

He did: He pushed through a tax cut that made income inequality worse. In 2018, for the first time, the 400 richest American households paid a lower average tax rate than any other income group, according to new research by two economists.

Those billionaires paid an average total rate of 23 percent in 2018, down from the 70 percent their 1950 counterparts paid. Meanwhile, the bottom 10th of households paid an average of 26 percent, up from 16 percent in 1950.

That’s the rot in our system: Great wealth has translated into immense political power, which is then leveraged to multiply that wealth and power all over again — and also multiply the suffering of those at the bottom. This is a legal corruption that President Trump magnified but that predated him and will outlast him; this is America’s cancer.”

Opinion | The Rich Really Do Pay Lower Taxes Than You – David Leonhardt – The New York Times

“Almost a decade ago, Warren Buffett made a claim that would become famous. He said that he paid a lower tax rate than his secretary, thanks to the many loopholes and deductions that benefit the wealthy.

His claim sparked a debate about the fairness of the tax system. In the end, the expert consensus was that, whatever Buffett’s specific situation, most wealthy Americans did not actually pay a lower tax rate than the middle class. “Is it the norm?” the fact-checking outfit Politifact asked. “No.”

Time for an update: It’s the norm now.

For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data.”

Bernie Sanders Proposes a Wealth Tax, Taking Aim at Billionaires – The New York Times

“WASHINGTON — Senator Bernie Sanders on Tuesday unveiled a proposal to create a new tax on the wealth of the richest Americans, including a steep tax on billionaires that could greatly diminish their fortunes.

With the proposal, Mr. Sanders is embracing an idea that has been a centerpiece of the campaign of his top progressive rival, Senator Elizabeth Warren. But while Ms. Warren came first, Mr. Sanders is going bigger. His wealth tax would apply to a larger number of households, impose a higher top rate and raise more money.

Mr. Sanders’s plan to tax accumulated wealth, not just income, is particularly aggressive in how it would erode the fortunes of billionaires. His tax would cut in half the wealth of the typical billionaire after 15 years, according to two economists who worked with the Sanders campaign on the plan. Mr. Sanders would use the money generated by his wealth tax to fund the housing plan he released last week and a forthcoming plan for universal child care, as well as to help pay for “Medicare for all.”

“Let me be very clear: As president of the United States, I will reduce the outrageous and grotesque and immoral level of income and wealth inequality,” Mr. Sanders said in an interview. “What we are trying to do is demand and implement a policy which significantly reduces income and wealth inequality in America by telling the wealthiest families in this country they cannot have so much wealth.” “

David Lindsay Jr.
Hamden, CT | NYT Comments
Bernie disappoints. They tried stuff like this in Europe, and the wealthy just moved out of the country. A draconian hair cut like he suggests is not practical, unless all the developed countries of the world do it together at the same time. Warren’s idea is a good one, and it is small and limited, which is approprate for an incremental improvement, that allows to measure unforseen effects.