Tomorrow morning, I’ll join CNBC’s Squawk Box to talk about a new effort to tax the rich. The segment will air at 7:50 ET. I’m not referring to the so-called billionaire tax that President Biden called for in his State of the Union address last week. That almost certainly isn’t going anywhere. I’m talking about a
It's tough to do it in a state because rich people will leave the state to a more tax friendly state. As happened in Kansas, they don't care what havoc it reaps in that state.
Hugh Spitzer, is a constitutional law professor at the University of Washington, and has been a prominent proponent of changing the way Washington state taxes citizens. He favors creating a system that incorporates a moderate income tax to create similar tax-payment percentages across income levels in this state.”
But he’s not holding his breath that this case will be the spark that ignites that kind of constitutional change.
“While I’d be thrilled if our state Supreme Court were to overturn the 1933 case, and expressly say that an income tax is constitutional … my guess is they’re not going to do it,” he said. “It’s very straightforward and really easy for them to recognize that this is a straight-over capital excise tax, rather than some kind of property tax. They don’t really have a reason to make a constitutional decision.”
Citizens of the state await a state Supreme Court decision. The case was heard January 26, 2023. I am unclear on when we will hear a decision.
From a strategic standpoint, the US would do well to nationalize education to educate & pay teachers more effectively with living wages, eliminate systemic racists educational barriers, and solidify investment in our kid’s education just to start. Only MMT offers the economic understanding to make this policy a reality. I’d appreciate reading your reviews of such a policy through the MMT Lens.
I guess Republicans in these red states will never learn the disastrous impact of their tax cuts and austerity measures will have on the people they claim to serve. The same nonsense of them saying it will promote economic growth when the exact opposite is true. Kelton is right, the billionaires tax won't go anywhere, the donors won't allow that to happen.
And the federal govt. could send more money to the states via revenue sharing with the stipulation that state taxes are not reduced.
The legislature in Washington created a Working Group a year or so ago to look into tax reforms for both business and individuals. They quickly shelved any form of individual income tax because, as one member declared, "they tend to increase over time." WA has no income tax but has a hefty sales tax. What the Working Group ignored is that this state's sales tax routinely increases over time.
IMO the sales tax should be abolished and replaced with a progressive income tax. But there is a state constitutional provision requiring equal rates that seems to prohibit a progressive tax. That ignores the unequal impact of a sales tax which runs, on average as a percentage of income, from INFINITE on those unemployed and not receiving unemployment benefits (72% of the unemployed nationally and in WA) to about 15% for low-income workers and less than 2% for Washington's top tier of income recipients. This state also has a revenue tax on businesses. Most or all of the majors here find a way to legally conduct business elsewhere. Boeing, which moved its HQ to a state WITH an income tax, has been reported to routinely sign many or most of its contracts for new planes at 30,000 feet over international waters.
Good question. I live in Connecticut and the proximity to New York kept many people here. New York is still a real financial center. There are many people moving from California to Texas. Connecticut has been losing population for awhile but lately is holding its own and I think even gaining some. I don't want it to gain too much. I like it the way it is.
I’m all for taxing corporations and wealthy individuals more than is currently the case. But not until we can improve the subsequent allocation of those taxes. The federal government isn’t accountable to the voters for spending. Waste and misallocation is rampant. Billions leave the US monthly to corrupt entities.
A more radical, and perhaps more marketable, agenda for those states would be this:
(1) Eliminate state corporate income taxes entirely. They are a zero-sum, full-employment program for tax lawyers and accountants and serve no useful purpose.
(2). Leave most earned income untaxed, except perhaps above a very high threshold: Maybe $1 million/year.
(3). Impose a steeply progressive tax on capital gains, with the tax rate tied to the length of time between purchase and sale of capital assets (so as to discourage high-frequency trading and encourage longer-term investment).
(4). Demand federalization of funding for public goods -- education, housing, health care, infrastructure -- that markets can't and won't provide equitably, thus eliminating the need for states to fund such programs using either highly regressives taxes -- on sales and fuel -- or property taxes (which, when relied upon to fund local public education only exacerbate inequality). Distribute these funds to states on a per capita, inflation-adjusted basis and let the states control how they are spent (subject to basic rules regarding, e.g ., non-discrimination and transparency), thus making state legislatures and governors -- not Congress -- the target of complaints about how the money is spent.
I'm gonna run for President on that platform in 2024. Does anyone want to form a campaign committee for me?
Dr Kelton, is there any research on how to determine what “fair share“ of jurisdictional revenue any individual taxpayer should pay? I’ve seen arguments ranging from equity-focused increasingly progressive tax rates, to behavioral economics driving individuals to make tax-efficient decisions, but struggle to find an analytical framework that doesn’t devolve into envy vs greed.
I wish the federal gov't would sit down and have "THE TALK" with Americans. It might go something like this:
"Here in the U.S. we operate a capitalist economic system--whether you like it or not. And this system will allow a few enterprising individuals to make an awful lot of money. But here's the thing. Where do these magnificently successful people imagine their fortunes came from? Well, so far the US Treasury/Federal Reserve has spent about $31.5 trillion dollars into the world economy that we have decided (so far) not to claw back in taxes. So, in effect, the US gov't has proclaimed: 'Let our citizens (and the rest of the world) compete for these dollars, and after a period of time we'll see where things stand.' But be aware that we may want some--if not most-- of our money back.
In the game of Monopoly, the eventual winner doesn't get to keep the money--that would be ridiculous. It's returned to the "bank"--which actually works more like a Treasury, if you think about it. In the same way, we expect successful people to return their winnings to the Treasury (in the form of taxes) during and at the end of their very successful lives. But not all of it. It only seems fair that they be rewarded for their entrepreneurial expertise and vision. Anything up to about--oh, I don't know--a billion dollars seems like compensation enough. I mean, remember, it's the gov't's money, and we let these wealthy folks "play" with it. But now the game is over. So live out the rest of your days like royalty--and give the rest back."
MMT has shown us what the true source of our "financial wealth" is--the U.S. gov't's deficit spending! After all, where else could the US dollars in your savings account have come from? You don't have a "Benjamin Tree" in your backyard. As the great Randy Wray says: "Balances have to balance!" If the federal gov't runs a deficit, it means by force of logic that the private sector (and the rest of the world) must run an equal surplus. Stephanie has eloquently made the same point.
The wealthy should be proud (if they've done it legally and ethically) of the contributions they've made to society. But it's childish for them to think that they "deserve" to keep their total winnings that only exist due to the clever "game" established by the federal gov't.
Since money is speech in America, taxing the rich is necessary to prevent the damage that unconstrained plutocracy does to democracy.
Just saw that interview. Your views on tax vs MMT are totally contradictory. On the one hand, deficits worries are a myth and we can print money as needed. On the other hand, 'tax justice' requires ever higher tax rates and outright wealth confiscation.
Today we tax corporate profits and the dividends that are paid. We tax investor earned income and dividend & cap gain income. Some of that after-tax income is invested and the dividends & cap gains it generates are taxed again. Now you want wealth taxes on accumulated wealth. You want to eliminate the step up in basis at death and ostensibly still want to keep estate & inheritance taxes.
How many times should each dollar be taxed? If deficits don't matter, why do we need to tax anyone's income at all? What is 'just' about a tax code in which 50% of citizens pay zero federal income tax and 10% of earners pay 80% or more of all taxes?
Is our tax system one that's meant to raise federal revenue or is it supposed to be a system for social activism? Our current federal tax code is raising record revenue now - what is the problem? Many states have surpluses and reserve balances - why do they need more tax revenue?
I wish Michigan could enact progressive taxation but unfortunately a flat rate income tax was written into out state constitution in 1961.
MMT answers far more of the issues we see in the modern economy than does Keynesian theory.
If you read the book then you should understand it.
The point of progressive taxation is not necessarily 'more revenue" immediately though that could be an outcome. Gaining more revenue does allow states to weather downturns when revenue drops because otherwise they have to go into disruption of austerity measures. We have seen this in Michigan since the early 1990s as Republicans cut taxes and when a downturn hits, critical programs end up getting short funded.
I remember Brownback's tax cuts in Kansas. We were sending rolls of toilet paper because Kansas "couldn't afford" them.
Right, I should have said that MMT nievely assumes effective investment of deficit spending regardless of the source. The federal government isn’t effectively investing the enormous debts being incurred today. So what you’ll have is more debt not benefiting those debt holders. Investment of any printed debt should be carefully invested with the approval of the citizens.