03-07-2012, 10:13 PM
Rewarding inventors with patent protection for creating devices that enrich most people's lives significantly is something I'm pragmatic enough to say is okay - even to the point of the inventor amassing a fair bit of wealth (at least for a number of years). I'm generally pragmatic about things; if it were a crystal clear case that lower taxes on capital gains income than on wage income generally has a beneficial affect, then I wouldn't be against it even if there were some - not extreme - accumulation of wealth for some individuals because of it. If everybody is clearly better off for it and some people get a bit better off than others because of the economic mechanism involved, then I guess I can pragmatically accept the inequity of someone getting a lower tax rate for "pushing money around" compared to some guy pushing asphalt around to make our roads.
But... it sounds like the empirical evidence is murky - that the interpretation of the evidence depends a lot on assumptions that are made and fed into the models and the assumptions may be overly influenced by ideology. In that case, the pragmatic justification for the lower rate on capital gains isn't at all clearly made to my way of thinking.
And there is a kind of non-monetary "cost" that I imagine the economic models don't include because it's a judgment that is probably intrinsically nearly impossible to quantify. That is the social/moral "cost" of inequality between the rate that someone getting income from labor may have to pay compared to someone who gets their income much more heavily from capital gains. If there isn't a clear pragmatic justification for that disparity then I think the social/moral cost tilts the table in favor of not taxing the two different kinds of income at a different rate. I suppose that someone could argue that it is the highest income earners who are favored by the lower tax rate on capital gains, but that it is still fair for them to pay a lower rate because they pay such a high percent of the income taxes taking all income into account. I would say that that is an argument for something like a flat income tax rate rather than a good rationale for carving out an "exemption" of sorts in the form of capital gains tax rates. (A flat tax being something I would reject on other grounds.)
I suppose that I don't have much business going on about this since you, JoeH, clearly have a much deeper understanding than me. But it bothers me that so many discussions take place in the forum about economic matters without delving into the underlying assumptions for the positions people take. Not doing so just seems like asking for people to talk past each other or just spout whatever ideology that strikes their fancy.
I really don't like thinking about money and economics, but it's so central to our political lives - I think now more than usual - so I don't feel like I can avoid it. I appreciate your (JoeH) input and hope that you will continue to bring some light into these discussions. I'm sure I'll make mistakes, but I have a big enough ego that I'll probably keep blabbing on sometimes anyway. But I do try to be willing to accept and acknowledge when someone shows me that I'm wrong, so keep bringing it on!
But... it sounds like the empirical evidence is murky - that the interpretation of the evidence depends a lot on assumptions that are made and fed into the models and the assumptions may be overly influenced by ideology. In that case, the pragmatic justification for the lower rate on capital gains isn't at all clearly made to my way of thinking.
And there is a kind of non-monetary "cost" that I imagine the economic models don't include because it's a judgment that is probably intrinsically nearly impossible to quantify. That is the social/moral "cost" of inequality between the rate that someone getting income from labor may have to pay compared to someone who gets their income much more heavily from capital gains. If there isn't a clear pragmatic justification for that disparity then I think the social/moral cost tilts the table in favor of not taxing the two different kinds of income at a different rate. I suppose that someone could argue that it is the highest income earners who are favored by the lower tax rate on capital gains, but that it is still fair for them to pay a lower rate because they pay such a high percent of the income taxes taking all income into account. I would say that that is an argument for something like a flat income tax rate rather than a good rationale for carving out an "exemption" of sorts in the form of capital gains tax rates. (A flat tax being something I would reject on other grounds.)
I suppose that I don't have much business going on about this since you, JoeH, clearly have a much deeper understanding than me. But it bothers me that so many discussions take place in the forum about economic matters without delving into the underlying assumptions for the positions people take. Not doing so just seems like asking for people to talk past each other or just spout whatever ideology that strikes their fancy.
I really don't like thinking about money and economics, but it's so central to our political lives - I think now more than usual - so I don't feel like I can avoid it. I appreciate your (JoeH) input and hope that you will continue to bring some light into these discussions. I'm sure I'll make mistakes, but I have a big enough ego that I'll probably keep blabbing on sometimes anyway. But I do try to be willing to accept and acknowledge when someone shows me that I'm wrong, so keep bringing it on!