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I liked the old John McCain a whole lot better… October 23, 2008

Posted by WorldbyStorm in Uncategorized, US Politics.
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But here is something that takes the biscuit. Some while back – well 2000 to be precise -John McCain at a meeting/TV interview had an encounter that went like this (you may have seen it on the Daily Show)…

UNIDENTIFIED FEMALE: Hi. Since I’ve been studying politics, I’ve had this question that I’ve never fully understand. Why is it that someone like my father, who goes to school for 13 years, gets penalized in a huge tax bracket because he’s a doctor? Why is that — why does he have to pay higher taxes than everybody else, just because he makes more money? Why — how is that fair?

MATTHEWS: You mean…

MCCAIN: I think your question — questioning the fundamentals of a progressive tax system where people who make more money pay more in taxes than a flat, across-the-board percentage. I think it’s to some degree because we feel, obviously, that wealthy people can afford more. We have over the years, beginning with John F. Kennedy, reduced some of those marginal tax rates to make them less onerous.

But I believe that when you really look at the tax code today, the very wealthy, because they can afford tax lawyers and all kinds of loopholes, really don’t pay nearly as much as you think they do when you just look at the percentages. And I think middle-income Americans, working Americans, when the account and payroll taxes, sales taxes, mortgage pay — all of the taxes that working Americans pay, I think they — you would think that they also deserve significant relief, in my view…

MATTHEWS: How many — how many people here believe that the people who made the highest level of incomes in this country should pay a higher percentage of their income in taxes?

Miss, do you want to follow up? Miss, do you want to follow up, do you want to follow up, do you want to follow up? Go ahead.

MCCAIN: Do you want to follow up? Please…

MATTHEWS: Go ahead, please, go ahead.

MCCAIN: … you were dissatisfied with Chris’s comment, I could tell.

UNIDENTIFIED FEMALE: I still don’t see how the — how that’s fair. Isn’t the definition of slavery basically where you work and all your money goes? I’m not saying this is slavery, I’m saying that isn’t the defin — are we getting closer and closer to, like, socialism and stuff, when you have — you have some people paying 60 percent overall in a year of their money to taxes. That’s their money, not the government’s. How is that fair? I haven’t understood it.

MCCAIN: Could I point out, one of the fundamentals of a town hall meeting is, we respect the views of others, and let them speak. So, look, here’s what I really believe, that when you are — reach a certain level of comfort, there’s nothing wrong with paying somewhat more. But at the same time, that shouldn’t be totally out of proportion. There’s some countries such as Sweden where it doesn’t pay anything to work more than six months a year. That’s probably the extreme.

But I think the debate in this country is more about tax cuts rather than anything else. And frankly, I think the first people who deserve a tax cut are working Americans with children that need to educate their children, and they’re the ones that I would support tax cuts for first.

These day’s McCain is openly accusing Obama of pitching the US towards socialism. Entertaining, if only because it is GW Bush who has arguably done more to oversee intervention than any President since FDR…

You’ve also got to wonder about the level of education that student had that she was unable to understand the principles behind, and the equity, of progressive taxation…

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1. CL - October 23, 2008

Today former Federal Reserve Chairman Alan Greenspan “conceded that his free-market ideology shunning regulation was flawed.” Something was wrong with his eduction in economics too.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ah5qh9Up4rIg&refer=home

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2. WorldbyStorm - October 23, 2008

Ooops… brilliant stuff CL!

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3. Graham - October 23, 2008

I agree WbS – most “education” does a good job of helping people to “understand” progressive taxation! 😉

Seriously, though, It does seem that IF the government is going to seize a certain amount of money from people’s incomes, then those on lower wages (who probably won’t be able to position themselves to receive very much of whatever emerges from the government anyway) should probably be left alone as much as possible. I don’t know how anyone could calculate this.

What I find most curious are the romantic notions about progressive taxation. Rather than just being the way that a massive government can fund itself without completely decimating the incomes of the poor, I get the impression from some quarters that it is seen as an instrument of social engineering in its own right. Apparently, some people believe that eviscerating the most productive workers is just a good idea. Now that is something I find very puzzling indeed. Maybe somebody can help me out or clear this up?

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4. WorldbyStorm - October 23, 2008

I’m equally puzzled with the statements that progressive taxation is, ‘just … the way that a massive government can fund itself without completely decimating the incomes of the poor’? As is ‘eviscerating the most productive workers is just a good idea’. I’m puzzled you’d think that to be the case. Perhaps you can explain why?

🙂

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5. Graham - October 23, 2008

Of course I don’t think that eviscerating the most productive people is a good idea – I’m hoping to be reassured that nobody else does either!

My first point is just a pragmatic justification I can think of for progressive taxes. A government wants to take a certain large amount of money from the population, but if it tries to take the same amount of money from everybody, then those on lower incomes could possibly be left with nothing. On the other hand a flat rate might not provide it with everything it needs (of course it might – the idea behind the Laffer curve is important here). Hence, thinking from the point of view of a government which is determined to seize a large amount of money from its citizens, but does not want to leave the poorest members of society with absolutely nothing, we have a reason to implement progressive taxation.

I find that justification more reasonable and less dangerous than the other type of justification, i.e. that progressive taxation is a good thing in itself, just because we think rich people are too rich, or something like that. Since I clearly don’t know very much about this subject, I was hoping to be informed on the true principles behind progressive taxation 🙂

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6. sonofstan - October 24, 2008

Short answer Graham:

Even if the lowly paid don’t pay income tax, they are, in fact, taxed on pretty much all their income, since they spend it all. The rich, on the other hand, after food, clothes and shelter, will have a surplus which they are likely to invest or save and which, therefore will mean the state gets its hands on less of it than it would if this surplus were spread out among a few dozen poorer people.

Thus, leaving aside any argument about whether the highly paid are rewarded proportionately to their productivity – which i would dispute – the fact is, the higher your income, the less of it is likely to be taxed, even with a higher band approaching 50%, since the top portion of the income is unlikely to go on goods from which the revenue can grab its due, and more likely to go into generating further income – if the rich would agree to spend all their spare money on cigarettes, alcohol and lottery tickets, then maybe we wouldn’t need progressive taxation….

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7. WorldbyStorm - October 24, 2008

Graham, again, can’t address that now, will later, but a thought, I note that you critique those who ‘romanticise’ progressive taxation while somehow ignoring the ‘demonisation’ of it (and the state), as with the language you use re the state above.

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8. Eagle - October 24, 2008

WBS,

Well, of course, McCain is campaigning and he’s got to have soundbites that get people’s attention. He can’t make a reasonable argument because (a) the media doesn’t want it and (b) people don’t have the time.

I would be surprised if he had changed any of those views expressed above. I haven’t heard him argue in favor of a flat tax. McCain’s talking about how to spread the pain of taxation, not spreading the wealth around.

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9. CL - October 24, 2008

“It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”-Adam Smith, Wealth of Nations.

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