Ben Stein On Fiscal Cliff: "We Need Higher Taxes"


#1

BEN STEIN: “They’ll reach a compromise and the fact is that taxes will go up on rich people by a lot. We need higher taxes, we need more revenue, we can not go on running these deficits forever. The whole idea of being a Republican is fiscal sensibility, and fiscal sensibility says we can not leave our children and grandchildren a bankrupt America. There are a lot of rich people who have an awful lot of money and are not taxed enough.”

video


#2

Ben stein is a jerk. [all i can say]


#3

Stein is correct. And not being a politician, is free to say so. At least, he’s correct if one believes that one should pay for what one purchases, be it by an individual or as a society. One may have buyer’s remorse, and even claim that they did not aurthorize the purchase, but that’s not an option after the purchase has been made and, boy, have we made out purchases…largely for ourselves. So, of course, we have to pay for them. And the only question is whether we’re going to do so by reduced spending alone, allowing government to run a surplus, or by some combination of reduced spending and increased taxation. Whether that taxation is via increased rates or broadening the tax base may take some wrangling, but there can be no doubt that the overall revenues received by government need to go up, and there is precious little evidence that American individuals are undertaxed, by any modern standards.

Having read Stein for quite some time, I would say it a mistake to believe that he does not know that the spending cuts must come first; he’s merely honest enough to say, an all too rare commodity, that people in his income bracket are not strapped and can afford to pay more. That’s not particularly controversial.


#4

More revenue will mean even higher spending.


#5

Maybe, maybe not. What has been proven demonstrably true though, is that lower taxes doe not lead to lower spending.

Fresh off the presses, on that very topic:
Gorging the Beast | The Weekly Standard

Niskanen looked at both spending and taxes as a percentage of GDP. On average, he found, if federal revenues declined by 1 percent, federal spend- ing increased by 0.15 percent. When revenues rose, on the other hand, relative spending decreased. A fur- ther study in 2009 by another Cato economist, Michael New, came to the same conclusion after the gluttonous administration of George W. Bush. Under Bush and his mostly Republican Congress, new benefits like subsidized Medicare drugs and increased federal education spending followed on the heels of large tax cuts.

Niskanen’s explanation for the failure of STB was straightforward, a conjecture based on standard eco- nomics: When you cut the price of something, demand for it will increase. Lowering taxes without lowering benefits meant that tax- payers were getting the benefits at a discount. The government made up the true cost with borrowed dollars that future taxpayers would have to repay. There was a big difference, Niskanen said, between a kid on an allowance and the federal government: The government has a credit card with no debt limit.


#6

Stein would be correct if;

  1. The “Rich” were not already carrying most of the tax burden while utilizing Government services the least.
  2. If the amount of revenue that these taxes were likely to raise amounted to more than a pimple on an elephants butt.
  3. If punishing productivity had no effect on the willingness of those who have earned much wealth to risk that wealth and fuel growth.

Stein is advocating for a prolonged drought in economic growth, the single greatest contributor to the rapidly expanding debt is the compounded effects of a stagnant economy.


#7

A big fat :yeahthat: to RET.

[quote=“Sway, post:3, topic:37188”]
Stein is correct. And not being a politician, is free to say so. At least, he’s correct if one believes that one should pay for what one purchases, be it by an individual or as a society. One may have buyer’s remorse, and even claim that they did not aurthorize the purchase, but that’s not an option after the purchase has been made and, boy, have we made out purchases…largely for ourselves. So, of course, we have to pay for them. And the only question is whether we’re going to do so by reduced spending alone, allowing government to run a surplus, or by some combination of reduced spending and increased taxation. Whether that taxation is via increased rates or broadening the tax base may take some wrangling, but there can be no doubt that the overall revenues received by government need to go up, and there is precious little evidence that American individuals are undertaxed, by any modern standards.

Having read Stein for quite some time, I would say it a mistake to believe that he does not know that the spending cuts must come first; he’s merely honest enough to say, an all too rare commodity, that people in his income bracket are not strapped and can afford to pay more. That’s not particularly controversial.
[/quote]Perhaps we should just hand it all over and let the various levels of government and their central planning committees decide the best way to direct all resources. Why stop at a little more on the rich? When do you think it’s too much? When might Ben Stein think it’s too much? Why not just go all the way and be done with all this silliness? Whadya think?


#8

Most federal individual income taxes are paid by those earning $75,000 to $1,000,000. They paid 62% of the tax burden in 2010. Those earning $100,000 to $500,000 paid 44%. That group should be considered the middle class tax payers.

source: SOI Tax Stats - Individual Income Tax Returns Publication 1304 (Complete Report)
Table 1.1: Selected Income and Tax Items, 2010 (xls)


#9

But I bet Mr. Stein has a retainer of $1000/hour lawyers, to find him ways to keep his millions.

When Liberals spout off higher taxes, what they really mean is ‘Higher taxes for everybody else’


#10

There is no evidence that a modest tax increase on the rich will have any significant economic impact. People who contend otherwise purport to have a better understanding of the Laffer Curve than Arthur Laffer himself. Anyone who contends knowing where the line exists between where raising taxes hurts productivity and reduces revenue, and between where it increases revenue with little harm to productivity, is selling you a bill of goods…for goods they don’t own. We need look no further than the Bush tax cuts now debated, which did little to nothing to improve economic growth.

For my part, I am fully in favor of low taxes, but forced to acknowledge that the budget will not be balanced by spending cuts alone. And I remain adamant that spending cuts must come first before taxes are raised. But, we should understand that our fundamental economic problem is not a tax structure that taxes too much, but a disastrous imbalance between spending and revenue. There are tax rates which need to be cut, but they are not the individual tax rates.

  1. The rich pay the highest percentage of tax revenues received. That does not mean that they have the highest effective tax rates, nor that they use government resources the least. In fact, the rich have the most capability to avoid high tax rates, by virtue of the mechanism by which they receive income, and they take disproportionate advantage of tax breaks and tax avoidance measures that are not only perfectly legal, but best crafted for the rich. All one need do is look at wealthy farmers to see the aptness of the point, or note that poor and lower middle class people do not get to write off mortgage interest or avail themselves of cheap financing available from tax-free equity loans on McMansions.

  2. The amount of revenue raised is likely to be greater than that raised by increasing rates on any other quintile of taxpayer. One cannot have it both ways, in saying that the rich pay disproportionately more, while contending that raising their rates would yield no increased revenues.

  3. There is no evidence that raising individual taxes would have any effect on productivity, particularly if there were a corresponding tax cut made on the corporate income tax.

The single greatest drag on the American economy is not high marginal tax rates threatening economic activity. It instead, is doubt about what the US government will do about financing the huge deficit, and debt load, it refuses to cut or levy taxes for the paying thereof. The US economy will do nothing to take off until the deficit is resolved. Tax increases will be a part of that equation. And the tax increases will fall disproportionately on the rich for the simple fact that the American tax code can hardly be made more progressive than it already is. With just under half the American working populace paying no federal income tax, the only segments upon which taxes may be raised is upon the upper middle class and the rich.

If conservatives are too be taken at all seriously in the matter, they had best re-familiarize themselves with the Laffer Curve they purport to know so well, and also take the time to familiarize themselves with all of the tax deductions that serve to lower the effective tax rates of the rich and not-quite rich of the upper middle classes. As long as the Grover Norquist crowd regard a capping on the home mortgage interest deduction as a tax increase there will be no coherence to the conservative argument on taxation.

Conservatives are not going to get away with making cases for the federal deficit existing purely because of “waste, fraud, and abuse” anymore either. The principle cause of the deficit is spending on three programs, the majority of which benefit the wealthiest segment of American society, in Medicare, Medicaid, Social Security, and interest on the debt. The wealthiest quintile of the American populace is that over sixty years of age, the very group that Medicare and Social Security dollars flow to. Heath care and Social Security are provided to the wealthiest of Americans irrespective of need or income. A retiree with an income of one million dollars per year still receives Social Security payments and his health insurance from the government. If anything significant is going to be done about the federal deficit it will of necessity come in government health insurance programs and Social Security.

One of the areas taxes will be raised on the rich will be in increasing the amount of earnings that are subject to Social Security, which is currently a regressive form of taxation. Another will be found in indexing Social Security benefits for income. The argument that seniors paid in and thus are entitled will be put to rest at last. They also contributed to the purchase of aircraft carriers, but I’ve yet to hear of a senior who expects to receive one as a retirement benefit. Relatively wealthy retirees will also be expected to buy their own health insurance; another “tax increase”.

And, if taxing the rich, while reducing their benefits, doesn’t work the middle class, whose taxes are at historic lows, will be forced to contribute more. It is long past time that the federal books balanced, and the simple reason they don’t is because of spending we do on ourselves, often without regard for personal need. That will not continue for, it cannot continue. Deal with it.

For more on the facts:
Essential Facts About the Federal Budget - WSJ.com


#11

I will use round numbers for simplicity.

Raising taxes on the people making more than $250,000 per year is expected to raise about $160 billion per year. The current budget deficit is about $1,000 billion per year out of spending about $3,400 billion per year.

The tax increase won’t even come close to covering the budget deficit. I’ll predict it will have no impact on taxes collected. First the “rich” will restructure their taxes to minimize the impact of this tax change. Part of the restructuring of their taxes will result in less economic activity and causing a drain on the overall economy.


#12

Exactly, growth will significantly raise tax revenues but this idea of Steins will do nothing to accomplish debt reduction and actually harm the cause of returning to a robust growth cycle.


#13

Marc Thiessen today writes that Republicans should allow the country to go off the fiscal cliff in January rather than give in to a tax the rich cave in. He makes some very valid political and “educational” points IMO. Here’s a sample:

"Today, the only ones in Washington who advocate fiscal cliff-diving are liberal Democrats. It’s time for conservatives to join them. Letting the Bush tax cuts expire will strengthen the GOP’s hand in tax negotiations next year, and it may be the only way Republicans can** force President Obama and Senate Democrats to agree to fundamental tax reform. "…**

"Letting these tax policies expire would level the playing field for Republicans in tax negotiations next year. Instead of being in a “box,” Republican leaders would have leverage again — something the Democrats want and would have to make concessions to get.

Going over the fiscal cliff would help the GOP in another way: It would save Republicans from having to break their pledge not to raise taxes. If GOP leaders hold the line on taxes this fall, and the Bush tax cuts expire despite their best efforts, it would not harm their reputation as the party of low taxes. But if Republicans vote proactively to raise taxes as part of a “grand bargain,” the GOP brand would be irreparably damaged.** Raising taxes and losing a fight to stop automatic tax increases are two different things.
**
Moreover, if the Bush tax cuts expire, the baseline for future negotiations would be reset. A bipartisan agreement would be within reach that reforms and simplifies the tax code, with a top rate lower than the Clinton rate but higher than the Bush one. Instead of Republicans being under pressure to raise taxes, Obama and the Democrats would be under pressure to reduce the top rate from the Clinton level as part of an eventual deal. "…

“What if we go off the fiscal cliff and Democrats still won’t negotiate? Then Republicans should make clear that they are willing to live with the higher, Clinton-era rates. It will be hard for the Democrats to paint such a scenario as an economic disaster, because letting the Bush tax cuts expire simply restores the status quo during the Clinton administration. During the campaign, President Obama repeatedly told us how he wants to “go back to the income tax rates we were paying under Bill Clinton — back when our economy created nearly 23 million new jobs,…”

"It would also force all Americans — including the middle class — to pay for growing government services, instead of borrowing the money from China and passing the costs on to the next generation.

Americans had a choice this November, and they voted for bigger government. Rather shielding voters from the consequences of their decisions, let them pay for it. "

More at the link… Marc Thiessen: Let’s go over the fiscal cliff - The Washington Post


#14

That $160 billion amounts to one quarter of the defense budget. Whether the “rich” restructure their finances will depend not only on the amount their taxes are raised, but the availability and cost of pursuing tax havens. Small to moderate changes in the tax code do not usually provoke such efforts, especially since their taxes will still be low by any post-WWII standard.


#15

Good link, Cam. I actually advocate Republican legislators abdicate to their recent Democrat opponents…give 'em the whole shebang and let them settle it. I’m only half kidding. And I don’t have but the most minor of worries about sequestration, though it’d be better if cuts were made without it, because it may be the only way to ensure that the spending cuts occur before taxes are raised or, at least, simutaneously.


#16

Look closer at your data not the actual dollar amount spin doctor. Those who earn 50-75k pay the highest “percentage” of thier income then the next two higher groups of tax payers. lol those earning 1-5000 dollars pay higher percentage of thier income then 1000,000. The middle class and those who earn a wage get a greater “percentage” of the “main” income source taxed. I can tell you that the 20% the 50k-75k hurts alot more then the 4% those who earn 200k contribute in income taxes.


#17

You’re misreading the chart. (sigh)


#18

Ben Stein has absolutely no credibility.


#19

Which is why he’s been published monthly, for the last thirty years, in the second most subscribed conservative periodical in the country?


#20

[quote=“Trance, post:9, topic:37188”]
But I bet Mr. Stein has a retainer of $1000/hour lawyers, to find him ways to keep his millions.

When Liberals spout off higher taxes, what they really mean is 'Higher taxes for everybody else
[/quote]Bingo