Kvetch

Some Notes on a 70% Tax and AOC

Let’s see. Top federal rate, 37%. ObamaCare 3.8%. California’s top rate 13.3% (and no useful deduction for the CA taxes, so those three simply add up): 54.1%. California’s sales taxes are around 9% (statewide 7+, but local taxes bring it up as high as 10.25.)

So a top earner takes home 46 cents on the (marginal) dollar, buys something for 42c and sales taxes eat up the rest. Total net tax rate: 58%.

AOC is right – we could raise the rate on the highest earners to as high as 70%, but that’s NOT the same thing as raising the *Federal* rate that much. Several economists have been cited talking about that overall level (around 70%) as reasonable and/or optimal, but pundits and columnists rarely add in State, Local, or sales taxes when considering that “optimal” level compared to where we are now.

Now the part that AOC is wrong about: (a) since we are talking about only increasing taxes by about 10-12% at the margin on the very highest earners, the revenues it would generate are really nowhere near the size you’ll see her cite. and (b) pretending that people don’t respond to incentives — ie. that the money raised by that tax change would be a simple static analysis — is also silly.

So she’s both not as absurdly wildly out of the field as the right says. But she’s also — and this seems to be a habit for her, as she’s done it in other contexts, too — she’s wildly out of line on how much you could really expect to raise by following her prescription.

And a note about historic top marginal rates of 70% — during those times, there were vastly more write-offs (ie. 100% of interest — including auto, credit card, mortgages, etc — and vastly more loopholes.)

Moreover, state and sales taxes were uniformly much much lower.

Folks love to talk about how Reagan lowered rates. He did. But it was in conjunction with closing out a *lot* of loopholes.

Finally, regarding the alleged problem of undertaxing unearned income (dividends and capital gains) with the current top federal rate of 20%:

That’s misleading, too. Again, ObamaCare 3.8%. And CA has no lower CapGains/QualDiv rate — so 13.3%.

So no, not 20%. 37.1% already (for high earners in CA — home of many of the very highest earners in the country).

Moreover, particularly for the QualDivs — that’s income that has *already* been taxed at the corporate level. The reason it gets that lower rate is specifically because it’s double-taxed. If you want to talk about eliminating the corporate taxes completely (or making div payouts deductible against corporate earnings but keeping the corp tax for retained earnings) and making QualDivs taxed as ordinary income, that’s an interesting conversation to have.   And in fact, may make sense — taxing divs as ordinary income means they are taxed much more *progressively* so rich folks pay higher rates and poor folks pay lower rates.

There may well be an argument for raising some of these rates — but bear in mind that it’s rarely as simple as anyone likes to make sound bites out of.

Raising the QualDiv rate but ignoring the double-taxation doesn’t make sense.

And raising the CapGains rate has very clear and obvious consequences since those are generally under the control of the taxpayer — if the rate is too high, they simply don’t sell assets. There are step-up basis if they hold until death, the ability to borrow against assets rather then sell them, etc.

While there appears to be some debate as to the correct spelling of “mishegas” — I noted today that the domain “mishegas.guru” is available.

I’m tempted to get “mishegas.guru” for my half-Indian half-Jewish totally-troublemaking son.

I think my wife would kill me, though. And, besides, I prefer “mishigas” even though autocorrect always tries to replace it with “michigan”. (And while we’re at it, for the records, autocorrect always tries to replace “gorsuch” with “grouch”.)

Bluetooth — and management of bluetooth connections — is still half-assed.

If you’re on your earpiece and get into your car which has bluetooth — boom, your conversation jumps from one connection to the other. If you didn’t want it to do that, bummer — now you have to navigate the panels and move it back. Meanwhile, you’re all “oh, sorry, I didn’t get that, bluetooth jumped”.

If wireless is a front-and-center technology — it needs a front-and-center control panel which you can get to immediately, which lets you say “no, unless this device goes offline completely, leave it where it is”, etc.

Apple likes to push things – to go where the technology isn’t quite ready, sometimes – to help really bring it up to a polished and usable place.

Hopefully, the AirPods will be part of that, but they are not the only problem here. Apple likes to act like folks don’t need controls for things, but sometimes you really do. This is one of those instances, and hopefully they’ll come up with a very impressive solution. But we’ve had bluetooth for *years* now and they haven’t yet.

Not that that’s stopped me from making the transition. I use — almost exclusively now — bluetooth devices with my iPad and iPhone 6.

But it’s annoying as shit sometimes.

I really want a panel which lets me lock in audio streams to specific devices (i.e., unless I actively change it, voice conversations should always go to my Voyager Edge. Music — to the car stereo. Navigation directions — if the Voyager Edge is on, to there. etc. etc.) And I should be able to get to that panel instantly from anywhere without having to navigate to the Prefs/Settings app and digging down through there.

Somewhere, somehow, the universe is tracking all the time I’ve spent installing and removing and installing and removing car seats.
And I’ll get some of it back somehow.
This, I need to believe.

My office landlord just informed me that my rent is going up a full 50%. From “astronomical already” to “nope, just nope”.

Now I’ve got to start looking for a new office. This stinks.

I really love my little office.  Sigh.

[Yeah, this isn’t really me kvetching so much as me providing a solution for something about which I was going to kvetch.]

If options like ‘Email this page” Airdrop or Facebook are missing from the pop-up share menu (i.e., in Safari) — execute the following command on the command line to reset it.

/System/Library/Frameworks/CoreServices.framework/Versions/A/Frameworks/LaunchServices.framework/Versions/A/Support/lsregister -kill -seed

If stuff still doesn’t show back up, then go to System Preferences->Extensions and check some boxes if necessary.

 Just the other day I was wondering how much better my life would be with an Internet enabled water pitcher which could magically suck money out automatically…
 

Self-serving nonsense of the day, via the WSJ:

[discussing lowering US corporate tax rates]
“But that approach, some lawmakers contend, faced a basic mathematical problem, particularly on the business side: The US corporate tax rate is the highest in the developed world, and lowering it substantially would require eliminating a large number of tax breaks to avoid adding to budget deficits. That could offset any economic benefit of lower rates.”

Translation: That would cut back on those same lawmaker’s ability to favor one constituency or another, and thereby reduce their power and the utility of lobbying by special interest, which is their actual bread-and-butter. The economic benefit is not just lower rates (and certainly not lower tax revenues) – the economic benefit is efficiency, regularity, predictability, and the reduction in the value of /lobbying/. Yes, self-serving lawmakers – the benefit here is a reduction in the value of special interests paying you guys off.

Unfortunately, the media is likely going to look at any such improvements in our tax system as “ooh — lower rates for evil corporations!” so any such rational improvement in our tax code faces TWO huge obstacles – the lawmakers and the media. The only ones likely to be cheering for it are pretty much every single economist. And businesses too small to have an army of lobbyists.

Note that it’s not the WSJ coming up with the nonsense. It’s the unidentified lawmakers they are quoting. WSJ could, however, help clarify that it’s nonsense by simply publishing, next to the article, the definition of “rent-seeking” from any basic econ textbook.