Raise Taxes on the top 1 percent of income earners
Debate Rounds (4)
Taxes should be increased on the top 1 percent of income earners
Burden of Proof
The burden of proof is on me.
Taxes: "a sum of money demanded by a government for its support or for specific facilities or services, leviedupon incomes, property, sales, etc." [1. http://tinyurl.com...]
Top 1 Percent of Income Earners: "The top 1 percent of American households had pretax income above $394,000 last year." [2. http://tinyurl.com...]
Increased: "to become progressively greater (as in size, amount, number, or intensity)" [3. http://tinyurl.com...]
Round 1 is for acceptance
Round 2 is for opening arguments
Round 3 is for rebuttals
Round 4 is for final rebuttals and closing remarks
1. Any form of sniping, trolling, or semantical games will merit a 7-point less.
2. A forfeit will merit a loss.
3. Any definition not found in this opening will be found on Merriam Webster or dictionary.com.
4. Standard DDO Rules apply.
First, I would like to lay out the criteria by which I will fulfill my burden. I will articulate the facts of my case and demonstrate how it fulfills these three criteria in the later rounds due to space constraints.
Utilitarianism is "the belief that a morally good action is one that helps the greatest number of people" (1). I will be arguing that raising taxes on the top 1 percent of Americans will provide the maximal good to the vast majority of the country.
I will be making the case that it simply isn"t fair that so much wealth and influence has been amassed by the top 1 percent of Americans, and a more equitable distribution of wealth, as we had in the 40s, 50s, and 60s, would be preferable.
3. Economic Sense
This criterion will be the crux of my case. I will argue that not only is income and wealth inequality both unfair and immoral, but economically toxic. Therefore, it is in our economic interest to reduce it, one way of which is to raise taxes.
C1) The Tax Cut Deception
We"ve been told that we must cut taxes for the "most productive" because they are the ones who create the jobs. This, however, is a bold-faced lie. There is a wide body of academic research demonstrating that this is false.
S1) Tax Cuts Don"t Work
I will first point out a paper from the Congressional Research Service, examining tax rates since 1945,which proves my point. Note the conclusion:
"The results of the analysis in this report suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top statutory tax rates appears to be uncorrelated with saving, investment, and productivity growth." (2)
The conclusion has been echoed in several other papers. Note this paper from Andrew Fieldhouse:
"Analysis of top tax rate changes since World War II show that higher rates have no statistically significant impact on factors driving economic growth"private saving, investment levels, labor participation rates, and labor productivity"nor on overall economic growth rates." (3)
Fieldhouse provided some further insight, giving us an idea of what the tax rates would need to be for there to be any negative ramifications for economic growth:
"Recent research implies a revenue-maximizing top effective federal income tax rate of roughly 68.7 percent. This is nearly twice the top 35 percent effective ordinary income tax rate that prevailed at the end of 2012, and 27.5 percentage points higher than the 41.2 percent rate in 2012. This would mean a top statutory income tax rate of 66.1 percent, 26.5 percentage points above the prevailing 39.6 percent top statutory rate." (3)
As he explains, tax rates could be much higher then they are today, and the economy would continue to grow.
Fieldhouse draws largely on Diamond and Says, who weigh in on what the optimal tax rates would be:
"[T]he optimal top tax rate using the current taxable income base..would be `4;* = 1/(1 1.5. " 0.57). = 54 percent, while the optimal tax rate using a broader income base with no deductions would be `4; * = 1/(1 1.5. " 0.17). = 80 percent. Taking as fixed state and payroll tax rates, such rates correspond to top federal income tax rates equal to 48 percent and 76 percent, respectively." (4)
Former Labor Secretary Robert Reich has also weighed:
"During periods when the very rich took home a larger proportion " as between 1918 and 1933, and in the Great Regression from 1981 to the present day " growth slowed, median wages stagnated and we suffered giant downturns. It"s no mere coincidence that over the last century the top earners" share of the nation"s total income peaked in 1928 and 2007 " the two years just preceding the biggest downturns." (5)
As we can see, there is no reason to believe that cutting taxes is at all economically beneficial.
S2) Historical Precedent
Let's review this graph from Business Insider shedding light on what the historical precedent of statutory tax rates in this country (6):
Of course, it would be remiss to not to key on, also, on effective tax rates:
As we can see, effective as well as marginal tax rates on the affluent have been falling. In fact, they have never been as low as they are now at any time in the post-WWII era. Why, then, must we have more tax cuts? If they haven't worked before, and aren't working now, why must we buy into the myth that we must again pursue them? In fact, tax rates from 1945 to 1980 never fell below 70 percent, and were in fact as high as 92 percent, and yet the economy boomed. How can that be the case if we are to slash tax rates in order to generate prosperity? The claim is a flat-out lie.
S3) Impact on Economic Inequality
Now that we understand the precedent of tax rates, let's review these rates in context:
How about we examine relative changes in wealth distribution from about the 1980s onward? This is a graph from the Stanford Center on Poverty and inequality:
As we can see, right around the Reagan revolution, the very affluent began to do extremely well, whereas others began to do progressively worse. For instance, productivity has increased 80 percent from 1979 to 2009, but median wages have been nearly flat and in fact have fallen since the crisis according the U.S. Census Bureau. Since the recovery of 2009, 95 of income gains went to the top 1 percent.
The Fieldhouse paper, the paper by Diamond and Saez, the paper by the CRS and much more attribute tax cuts to inequality.
A large reason for this, as Thomas Pikkety has written about, is that capital income has been concentrated at the top, allowing the very affluent not only to escape taxation -- since capital gains are taxed at a lower rate than annual income -- and accumulate wealth much faster than people who spend almost everything they earn (i.e., poor people).
Examine the following graph (8):
What this shows us it that in recent years capital income -- rates for which have been slashes significantly over the past 15 years, and which has long been taxed at lower rates than earned income (why, for instance, Mitt Romney only paid about a 14 percent tax rate) -- has been increasingly concentrated at the top of the income spectrum.
Pressman elucidates Pikketty's case as to why this is a problem and why we should care (9):
"Piketty makes the case that inequality tends to rise in developed capitalist economies as a result of three empirical facts. First, a slow annual growth rate (1 percent, maybe close to 2 percent). Second, returns on wealth of around 5 percent per year (as has existed over long stretches of history). And third, the fact that the distribution of wealth is more concentrated than the distribution of income. This being the case, it follows that those with lots of wealth will see (on average) their annual gains (or their income) rise around 5 percent each year, while those without much wealth will see their incomes (on average) grow only 1 percent or so annually (the growth rate of the economy). Income inequality rises as does wealth inequality."
There's much more to the argument, however. Income inequality is the United States is far worse than the vast majority of developed countries, worse only than Chile, Mexico, and Turkey, according to a 2013 report by the OECD (10). Examine the following graph:
Let's examine these figures in context, though. How does this relate to tax rates? Simple. Examine the following graph (11), also from the OECD:
The only two countries with lower tax burdens -- note that these are a representation of tax revenues as a percentage of GDP than the US are Chile and Mexico; note that that Turkey's tax burden is only half a percentage point above the United States.
Andrea Louise Campbell writes the following: "Compared with other developed countries, the United States has very low taxes, little redistribution of income, and an extraordinarily complex tax code" (11).
Now, why should we care about this? There certainly are moral arguments, and appeal to Rawlsian ethics or utilitarianism could conceivably balance out my case. However, there are broader problems: we're all worse off collectively due to income inequality.
As the following graph demonstrates, there is a negative correlation between income inequality and GDP per capita (12):
Why is this so? Nobel Laureate Joe Stiglitz explains (13). He argues that it hinders tax receipts, the middle class's ability to spend to restore economic recovery, stifles innovation by promoting asymmetries as it pertains to educational attainment, and it is consistent with more frequent boom-and-bust cycles. For the final point, he noted that income inequality wasn't as bad as it is today since the 1920s, which culminated in the Great Depression.
I'm now out of character space. Back to CON.
M.Diz forfeited this round.
I am quite disappointed that Con has forfeited. Per the agreed-upon rules, a forfeit merits a loss. However, I will leave that at the discretion of the voters, and would invite my opponent to present his arguments in the next round.
At this point, I obviously have nothing to rebut and my case remains unchallenged. However, I will take the time to elucidate the points I have made and summarize my arguments in reference to the three criteria I laid out in the last round in fulfillment of my burden of proof.
Criteria 1: Utilitarianism
This is essentially a case not only for focusing on the "99 percent" instead of merely the top 1 percent. Not only are the vast majority better off if we reduce income inequality, but we maximize propserity generally speaking. For instance, we know of the negative correlation between G.D.P. per capita and wealth inequality, and know that many other countries as well as the U.S. in the 40s, 50s, and 60s have thrived under significantly higher marginal tax rates. The point is, if in fact we can get more revenue by raising taxes -- and by all accounts we can -- then we should.
Criteria 2: Fairness
This has much to do with income inequality. The GINI coefficient figures I provided were quite clear: most rich nations have GINI coefficients around .25 to .4, whereas the U.S. has a .5. At the same time, it has one of the lowest tax burdens as a percentage of G.D.P. It simply isn't fair that we promote a policy that, by all empirical approach, exacerbates the inherent inequities in society, especially when we know from what Stiglitz and others points out that it also hinders us economically. Why is it fair that, by virtue of regressive state taxes as well as payroll taxes et al., poor and middle class people end up in many cases paying higher effective tax rates than multi-millionaires like Mitt Romney, or multi-billionares like Warren Buffet?
Criteria 3: Economic Sense
We know from plenty of empirical research that tax cuts, particularly those skewed toward the affluent such as the Bush and Reagan cuts, have adverse affects -- i.e., exacerbate -- income and wealth inequality. As affluent people see their incomes rise, their MPC shrinks and their MPS increases, meaning their wealth rises. In the case of poor and middle-income people, they have very little, if any, actual wealth -- perhaps negative net worths due in part to collapsing housing values post-crisis and high private debt burdens for those who were foreclosed upon in the aftermath of the bursting of the housing bubble. The logic is that, because their incomes are low enough that they will consume with nearly every dollar they have earned, increasing their incomes boosts consumption, which props us the broader economy. Therefore, getting money into the hands of people who will spend it is proper policy.
The implication is that, if the affluent have more money at their disposal and can keep more of their earnings, they will have both the means and the incentive to invest. In essence, the case is Say's Law, which boils down to needing savings in order to invest. However, the opposite is the case. You need investment in order to have savings, and you need demand in order to have investment. Corporations are hording about $1.5 trillion offshore that they aren't investing because the economy as now is so poor and aggregate demand has contracted.
How does this tie into raising taxes? It's quite simple. By all estimates, the ARRA was far too small. Krugman said it should have been about three times larger than it was bearing in mind the magnitude of the output gap: about $1.2 trillion in total when bearing in most lost consumption. If we raise taxes, we can not only combat already in-place austerity and compensate for the fiscal hawkishness of recent years, but can strengthen the current recovery, in the process getting the $1.5 trillion back into the economy.
M.Diz forfeited this round.
Extending once again. Unfortunately CON failed to provide any arguments and is not permitted to offer any now because I won't be able to respond.
M.Diz forfeited this round.
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Vote Placed by Zarroette 2 years ago
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