They were trying to get 100% of production, and the black markets became the real economy of the USSR.
You make it sound like the nominal tax rate (which no corporation in America actually pays) being high causes low revenue, and that perhaps lowering it would raise the revenue (which of course would only work if it were less expensive to pay the tax than hiring accountants). You might be interested to hear that the real world cause of America's very low corporate tax revenue despite having one of the highest nominal rates in the world is not some vague 'black market' nonsense, but that the corporate tax structure has so many rebates and incentives that almost two-thirds of American companies pay effectively no corporate taxes, and quite a few (namely oil companies) qualify for so many rebates that they actually earn money back from the IRS.
The black market is not vague. It happened in the USSR, and it is happening in Greece. I distinctly said that black markets occur after a certain threshold in tax rates, and most modern countries aren't there yet. The goal was to force Sheb to own up that 100% of GDP is not obtainable in taxes, but he has said exactly that before. If nothing else, I would like to accomplish making others here see the tax system as more organic and less mechanical. We're used to playing video games where we set the tax slider to 100% and get 100%, then crush whatever rebellions occur. In fact, if you set the tax to 100% in real life, your system becomes a joke and people develop their own underground economy. Tax rebellions can occur, but it's more common to simply ignore illegitimately high taxes. Endemically ignore. Corruption becomes cultural and is sustained even after the system changes. In Russia and in China, two places where there used to be a 100% tax, to little surprise, a strong ethos of corruption prevails even after their markets have liberalized!
America is far from 100% tax, so we're far from having a strong underground economy or a culture of gleeful corruption. Other than drugs. Punitive cigarette taxes have created a healthy black market production there, to name but one. Yet, where taxes are only moderately high, the risks aren't worth it. However, we do have a variety of gray options in the legal economy; and the higher the taxes, the more people avail themselves of gray options. You can underreport, you can report and then make improper deductions, etc. Outright non-payment probably pales in comparison to little fudged numbers here and there.
The difference between 35% and 39% tax rates seems small to us, but there's a marginal tax-payer somewhere, sitting on his ill-gotten gains, and thinking "Sure, 35% is tough but fair... but 39%... I'm just not feeling it. Time to hide some of this stuff." These marginal cases add up, the higher the tax rates are pushed. Each percentage is another few thousand marginal cases pushed over the edge. And often the underreporting is so small that enforcement would be more expensive than the recovered revenue.
Corporate taxes. Difficult issue. Corporate taxes are lower because of incentives and rebates, but also unreported and misreported profits as well. In particular, companies can record profits from high-tax countries in lower-tax countries. This use of tax shelters shouldn't be discounted as small. There's a risk that it could be discovered and enforced, but the risk in penalties and legal fees is lower than the tax.
Interesting fact: Every dollar spent to fund the IRS translates into ten dollars of revenue. Coincidentally or not, almost every Republican budget proposed for the last thirty years has called for cutting IRS funding, since that's one part of the government that everyone outside of policy wonks loves to hear getting the screws.
I think $12 billion is enough to get the job done. Any private organization other than Apple would do flips if their budgets were $12 billion. And almost half is alloted to enforcement. Big Brother is plenty fat. Any extra funding is going to hit diminishing returns. If you have a $100k a year IRS agent burning a small businessman under his magnifying glass for a $1000 improper deduction, that's a waste of time.
There are a lot of empty houses, true, but how many of those houses were made this year?
They're only remnants in relation to the number game. In terms of real stuff, it's still current prosperity.
Actually, most of them need repairs. Mold has infected large numbers of
vacant houses. When homes aren't heated and air doesn't circulate, that happens. About $5000 per a house to treat this. Old prosperity deteriorates rapidly, especially unused.
If the only thing denying a population prosperity is improper allocation of resources, then why am I wrong for criticizing the system we rely on to allocate resources?
Firstly, our present system is partly what you desire. We
do try to give houses to poor people. We call them subprime mortgages. You can hate that it collapsed, but recognize that the present system was
trying to do as you wanted. And maybe that's why the resources were misallocated in the Housing Bubble. Those people needed homes, sure, but some of those foreclosed houses are pretty big, and required a lot of construction. Maybe the people in those foreclosed McMansions didn't need houses quite that big, requiring quite that many raw resources in their construction? Resources were being allocated to recipients who couldn't reciprocate similar production levels. Because of interference.
So now, keeping in mind that the numbers game is already rigged and unnatural, it does need changes, and changes will happen in a decade or two. Possibly huge changes. Possibly what we least should desire! Criticize, by all means.The only part truly wrong with your present critique is a lack of an explanation how a new system works better, how a select few elites wouldn't easily subvert it as usual, and how the transition could be made smoothly without the butchery and famines the last time capitalism was radically overhauled.
the inner cities ... occupants had no sense of the value that they were being given for free.
That's because value is relative. The people occupying a house might not care as much about what it looks like so much as they care about the fact that they have a house to live in. Your perspective on the value of another person's stuff is different from their own.
Value is relative. True. However, there is bound to be a time when you want your stuff to be someone else's stuff, so the opinions of other people still matter. Sane people respectful of their own and others' property tend to like clean environments. They shop for houses in as good a neighborhood as they can budget. Run-down neighborhoods are home to some of these people who are down on their luck, but also to some other less functioning people who simply don't care about their own property... or about yours... or even about whether yours isn't theirs. And that's called burglary and mugging!
As an irrevelant personal aside, just frigging yesterday, my wife and I were walking down the street and a motorcycle mugger grabbed her purse and dragged her about 20 feet. She held on, and after a shocked pause, I ran at the mugger, so he fled. Feel my pain, please.
"We need the number game, because it's how we allocate resources. We can't allocate resources because it fucks up the number game."
Yep. Those resources were spent on houses because we artificially subverted the numbers game to give less-productive people the means to order their construction. Without subprime mortgages, those houses wouldn't be there, at least not
that large a house that required
that many construction materials and
that many construction workers to build. To own something, I have to produce something else and get some roughly equivalent numbers in my wallet.
Not to say a pure classically liberal economy is a perfect utopia--life is full of shit, and you have to eat it--but what I am saying is that you can't pin every single failing of the present system 100% squarely on the pure numbers. We've got a lot of people bending and fudging the numbers behind the scenes.
what's the justification for homeless children, who are completely blameless for their situation?
I'd hope that there aren't too many of those. Foster care is hardly a blessing, but it's better than the street, right?
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Topic: American Election Megathread - It's Over (Read 696256 times)