Income Tax: Hudson

[don]

Real News Network

[Shakespear]

Re: Income Tax: Hudson

I am forever surprised how little I know how things were !!!

Thanks don for that video, its is a good history class and underscores the adage that to know your history IS important.

[LorenS]

Re: Income Tax: Hudson

The unintended consequences from this policy include our current problems with health insurance and low dividends.

Since income over a certain point was so prohibitively taxed there was a huge incentive to find other ways to compensate valuable employees and delay or defer "income".

I think it's far more beneficial to have reasonable taxes with no loopholes.

Confiscatory tax rates on income don't encourage savings either.

He doesn't seem to get the difference between inflation and capital gains. His ideas on speculation due to capital gains tax rates seem spot on, though.

It sounds like a good argument for a "Tobin" tax rather than higher income taxes. I'd go for including capital gains as regular income so long as I get an inflation offset for any assets held over 1 year. I see no benefit to taxing capital gains less than other income. I just don't like getting screwed by inflation.

[c1ue]

Re: Income Tax: Hudson

He doesn't seem to get the difference between inflation and capital gains. His ideas on speculation due to capital gains tax rates seem spot on, though.

It should be noted that in the interview, Dr. Hudson explicitly stated that the goal of the income taxation was the removal of unearned economic rent and subsequent redeployment for providing infrastructure/utility type services.

One consequence of this is the theoretical indexing of taxation to inflation.

After all, the objective isn't to set up some bureaucratic trap whereby large sections of the populace wind up getting snared - which AMT effectively does.

It is to ensure that those making the majority of gains from unearned economic rent give up a lot of it.

It should also be noted that Dr. Hudson specifically mentioned the Robber Barons of the First Gilded Age - these individuals including Carnegie, Stanford, etc etc all made their outrageous fortunes despite a 90% income (including capital gains) tax.

Clearly wealth accumulation isn't necessarily impeded by high tax rates.

[don]

Re: Income Tax: Hudson

A common response of the uninitiated is, "Why do they need so much? How much can one person spend!"

Seems that was once more than the uninitiated perspective.

That's been taken care of.

There is no such thing as Society, only individuals . . . .

Margaret Thatcher

(Interesting aside. I read that Margaret never took the train, trains being inherently social. You can't have railroads without public participation in their building, maintenance and operations. They're the antithesis of the automobile. Little wonder they're left to rot in America.)

[Starving Steve]

Re: Income Tax: Hudson

I like trains because one can get blood-clots in their legs from driving long-distances. On a train, at least, one can get-up and walk-around, view the scenery, sleep in comfort, and dine in the dining-car.

However, the open-road in America is one truly wonderful thing about life in America. It is you and your car/truck, and you can drive anywhere, usually without speed-traps and photo-radar to worry about. One can drive enjoying the scenery in peace and quiet.

It is not "zero-to-sixty" but, "Go like hell, and you'll get there!".

Also, it turns-out that vehicles, even vehicles with V-8 engines, traveling at a steady high-speed ( like 110 KPH or 70 MPH ) are rather fuel-efficient. Vehicles with diesel-engines driven at a steady high-speed are very fuel-efficient..... But don't tell that fact to the eco-bunch.

[Mn_Mark]

Re: Income Tax: Hudson

It should be noted that in the interview, Dr. Hudson explicitly stated that the goal of the income taxation was the removal of unearned economic rent and subsequent redeployment for providing infrastructure/utility type services.

[snip][The objective] is to ensure that those making the majority of gains from unearned economic rent give up a lot of it.

I admit I don't fully understand the concept of "unearned economic rent". I believe it means that if I trade my labor for wages, save a portion of those wages, and loan those savings to someone who doesn't wish to save money before spending it but instead is willing to pay me interest as compensation for using my money, then that interest is "unearned economic rent."

Is that right? Income I earn by investing or loaning proceeds of my savings is "unearned"?

What nonsense.

I'll tell you what is "unearned": it's a bunch of socialist looters using the power of government to take whatever share of my interest income they claim they want/need for their socialist ends. That is TRULY "unearned income" on their part.

It's the government that is the one getting unearned income, by taxing it away from the people who saved up and invested their savings to provide the service to others of making money available for borrowing. When I am paid with interest for that service, that is anything but "unearned".

It takes a socialist moron to think that the only way a human being can "earn" something is to labor for X hours.

[Starving Steve]

Re: Income Tax: Hudson

I admit I don't fully understand the concept of "unearned economic rent". I believe it means that if I trade my labor for wages, save a portion of those wages, and loan those savings to someone who doesn't wish to save money before spending it but instead is willing to pay me interest as compensation for using my money, then that interest is "unearned economic rent."

Is that right? Income I earn by investing or loaning proceeds of my savings is "unearned"?

What nonsense.

I'll tell you what is "unearned": it's a bunch of socialist looters using the power of government to take whatever share of my interest income they claim they want/need for their socialist ends. That is TRULY "unearned income" on their part.

It's the government that is the one getting unearned income, by taxing it away from the people who saved up and invested their savings to provide the service to others of making money available for borrowing. When I am paid with interest for that service, that is anything but "unearned".

It takes a socialist moron to think that the only way a human being can "earn" something is to labor for X hours.

These are the problems with the economic thinking of the left-wing: We have to get our economic-thinking into the 21st Century and out of the 19th C. We have to stop stealing savings of workers and pensioners. The inflation of the currency has to stop. The love-in with the eco-frauds has to stop. Bird-habitat preservation is not an energy plan. The love-in with radical Islamists has to stop. The love-in with government elitists also has to stop...... Otherwise, the leftwing would be fine: Socialized-medicine works fine in Canada. Medicare works fine in America. Social Security in the U.S. works fine. Federal deposit-insurance works fine in Canada and the U.S. And much of the New Deal in America worked well. The Canada Pension Plan and Old Age Security Programme works fine. So, there is much to be said positive for socialism.

The leftwing has to get its thinking in order. Start thinking savings, much higher interest-rates, gold, hard-money, de-flation, public-works programmes like hydro-electric dams, atomic-power plants, oil-drilling, nat-gas pipelines, nat-gas in vehicles, etc. THINK!

[we_are_toast]

Re: Income Tax: Hudson

It should also be noted that Dr. Hudson specifically mentioned the Robber Barons of the First Gilded Age - these individuals including Carnegie, Stanford, etc etc all made their outrageous fortunes despite a 90% income (including capital gains) tax.

Clearly wealth accumulation isn't necessarily impeded by high tax rates.

Although I agree with your conclusion, I'm not sure about the numbers.

In 1894, Democrats in Congress passed the Wilson-Gorman tariff, which imposed the first peacetime income tax. The rate was 2% on income over $4000, which meant fewer than 10% of households would pay any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.[14] Also, the Panic of 1893 is said to have something to do with the passage of Wilson-Gorman

...

Ratification of the Sixteenth Amendment

In response, Congress proposed the Sixteenth Amendment (ratified by the requisite number of states in 1913),[16] which states:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

http://en.wikipedia.org/wiki/US_Inco...#Legal_history

[oddlots]

Re: Income Tax: Hudson

I admit I don't fully understand the concept of "unearned economic rent"

Good start.

I believe it means that if I trade my labor for wages, save a portion of those wages, and loan those savings to someone who doesn't wish to save money before spending it but instead is willing to pay me interest as compensation for using my money, then that interest is "unearned economic rent."

Is that right? Income I earn by investing or loaning proceeds of my savings is "unearned"?

No and I'm glad you voiced this objection because I think it's at the heart of why Hudson tends to be dismissed or hated in these here parts. Someone once said that investing is a conversation between generations. I think that sums up the spirit of your description of investing. Obviously if Hudson were somehow objecting to this then it would be a fatal flaw. But I don't think this is the case.

What Hudson is objecting to is a situation where a profit is earned where there is no countervailing cost (including investment) to justify it. Going back to Classical economics, the argument was aimed at the land-holding class in an aristocrat-led European system. The brute fact of historical ownership justified land rents without any countervailing contribution on the part of the owners (through investment for instance.) Contrast this with investments in the early industrial enterprises where, in great contrast, profits were generally proportional to precisely the justification you rely on: the more I save and invest on average the greater my exposure to the possibly wealth-creating productivity gains that accrue when the system works to encourage productive enterprise.

Beyond that, I think what's profound about what Hudson is saying is this: if we allow rents to be charged without any countervailing investment or similar cost then we are all poorer for it. In other words, while in theory there is no obvious limit to the size of the pie given human ingenuity etc... there is an obvious limiting factor in allowing rent-seeking behaviour to thrive since it can only, by definition, shrink the pie so to speak.

In the case of the lord in the manor it's obvious: in cartoon form he is obviously a parasite. His excesses come directly out of the common economy since they necessarily come at that economy's expense (lack of investment.) It becomes obviously more challenging when you try and apply this to our world. But I really think Hudson is on precisely the right track in this.

Think about housing. It is part of the consumption economy almost by definition. It is certainly, at the very least, among the least productive sectors of the economy. Yet investing in it has become almost a religion to the middle class of the anglo industrialised world in our lifetimes. Why? What does this development mean?

[Shakespear]

Re: Income Tax: Hudson

Thanks "oddlots' for that explanation. Now it makes much more sense. I guess through lobbying and other means, the systems has been "gamed" to such an extent that to get more "pie" they needed to go Global as otherwise the game would have been over much sooner.

[Techdread]

Re: Income Tax: Hudson

I admit I don't fully understand the concept of "unearned economic rent". I believe it means that if I trade my labor for wages, save a portion of those wages, and loan those savings to someone who doesn't wish to save money before spending it but instead is willing to pay me interest as compensation for using my money, then that interest is "unearned economic rent."

If your in the bottom 99% income earners how likely are you to earn a taxable return from speculating?

Is that right? Income I earn by investing or loaning proceeds of my savings is "unearned"?

No its not but if you are in the Top 1% percentile your probably earning more on capital gains then wages so why should it be taxed less?

I'll tell you what is "unearned": it's a bunch of socialist looters using the power of government to take whatever share of my interest income they claim they want/need for their socialist ends. That is TRULY "unearned income" on their part.

Its the government grab of Labour Income & VAT for the bottom 99% that is the real looting which Hudson is trying to explain to you.

It's the government that is the one getting unearned income, by taxing it away from the people who saved up and invested their savings to provide the service to others of making money available for borrowing. When I am paid with interest for that service, that is anything but "unearned".

Again it would not be a problem for the majority because the majority can not be in the top 1%.

It takes a socialist moron to think that the only way a human being can "earn" something is to labor for X hours.

And it takes an American to call every system they don't understand Socialist.

[BuckarooBanzai]

Re: Income Tax: Hudson

I can't believe a Marxist like Hudson gets any bit of traction in this community. Marxist ideology is nihilistic and (I say this without emotion) simply evil.

Intelligent people find it tempting to believe that economic problems can be fixed by redistributing wealth. This entire concept lacks any kind of sound moral basis, no matter the quality of one's intentions.

There is only one form of taxation that has a moral basis consistent with freedom and free will-- that is excise taxes. All other taxes conflict with freedom. The income tax turns Free people into slaves to the state. Property tax turns private property into state property. Those two statements are logically unassailable.

At this critical point in history, we are all confronted with a clear moral choice: are we for Freedom, or are we against it? If you are against Freedom, then you are on the side of charlatans like Hudson.

[Serge_Tomiko]

Re: Income Tax: Hudson

I can't believe a Marxist like Hudson gets any bit of traction in this community. Marxist ideology is nihilistic and (I say this without emotion) simply evil.

Intelligent people find it tempting to believe that economic problems can be fixed by redistributing wealth. This entire concept lacks any kind of sound moral basis, no matter the quality of one's intentions.

There is only one form of taxation that has a moral basis consistent with freedom and free will-- that is excise taxes. All other taxes conflict with freedom. The income tax turns Free people into slaves to the state. Property tax turns private property into state property. Those two statements are logically unassailable.

At this critical point in history, we are all confronted with a clear moral choice: are we for Freedom, or are we against it? If you are against Freedom, then you are on the side of charlatans like Hudson.

And capitalism is somehow less nihilistic? Michael Hudson makes the consistently important point that Karl Marx was writing about an improvement on the theories of Smith and Ricardo. While Smith was writing about what to do in this transition from feudalism to a more productive social order, Marx was writing about what to do after capitalism. In the end both represent the madness of the enlightenment era.

Freedom is an illusion. No man is free, unless he lives in the wilderness alone in which case he will be dead in a short time. Humans are and always have been social animals who live in communities and have specific duties. Material prosperity destroys the souls of people, leading to the very state of nihilism you mention. Both capitalism and communism could provide endless amounts of useless garbage people don't need, they would still be evil.

Before I leave you with this Nietzsche quote, your discussion of private property is completely baseless. There is of course no such thing as private property. You enjoy a piece of land because you live in a civilized state that has quality breeds of humans capable of maintaining civilization. The moment the guardians are gone, anarchy will ensue and your property will be ravaged. You claim the benefits of civilization while not understanding how it came to be, nor what is necessary to maintain it.

Why are libertarians so crazy? I'm just not sure what to do with them when the revolution comes. Maybe ship them off to Africa, the libertarian paradise of anarchy?



Whether it is hedonism or pessimism, utilitarianism or eudaemonism - all these ways of thinking that measure the value of thing in accordance with pleasure and pain , which are mere epiphenomena and wholly secondary, are ways of thinking that stay in the foreground and naivetes on which everyone conscious of creative powers and an artistic conscience will look down not without derision, nor without pity. Pity with you - that, of course, is not pity in your sense: it is not pity with social "distress", with "society" and its sick and unfortunate members, with those addicted to vice and maimed from the start, though the ground around us is littered with them; it is even less pity with grumbling, sorely pressed, rebellious slave strata who long for dominion, calling it "freedom". Our pity is a higher and more farsighted pity: we see how man makes himself smaller, how you make him smaller - and there are moments when we behold your very pity with indescribable anxiety, when we resist this pity - when we find your seriousness more dangerous than any frivolity. You want, if possible - and there is no more insane "if possible" - to abolish suffering . And we? It really seems that we would rather have it higher and worse than ever. Well-being as you understand it - that is no goal, that seems to us an end , a state that soon makes man ridiculous and contemptible - that makes his destruction desirable .

The discipline of suffering, of great suffering - do you not know that only this discipline has created all enhancements of man so far? That tension of the soul in unhappiness which cultivates its strength, its shudders face to face with great ruin. its inventiveness and courage in enduring, persevering, interpreting and exploiting suffering and whatever has been granted to it of profundity, secret, mask, spirit, cunning, greatness - was it not granted to it through suffering, through the discipline of great suffering? In man creature and creator are united: in man there is material, fragment, excess, clay, dirt, nonsense, chaos; but in man there is also creator, form giver, hammer, hardness, spectator divinity, and seventh day: do you understand this contrast? And that your pity is for the "creature in man". for what must be formed, broken, forged, torn, burnt, made incandescent, and purified - that which necessarily man and should suffer? And our pity - do you not comprehend for whom our converse pity is when it resists your pity as the worst of all pamperings and weaknesses?

Thus it is pity versus pity.

But to say it once more: there are higher problems than all problems of pleasure. pain. and pity; and every philosophy that stops with them is naive.

[c1ue]

Re: Income Tax: Hudson

I admit I don't fully understand the concept of "unearned economic rent". I believe it means that if I trade my labor for wages, save a portion of those wages, and loan those savings to someone who doesn't wish to save money before spending it but instead is willing to pay me interest as compensation for using my money, then that interest is "unearned economic rent."

Let me give some examples:

You buy a piece of land. A railroad is built next to it. The price of said land shoots up 500%. That increase in unearned economic rent - you didn't do a damn thing to improve the land but benefited from the government or a corporation building a railroad next to your property.

Another example:

You own 10 houses. The government passes a law subsidizing first time home buyers $10,000. Your properties each increase $10,000. That increase is unearned economic rent.

Yet another example:

You buy a house. The Fed inflates the money supply 50%. The house increases in value 50%. That increase is unearned economic rent.

In every single case, the cause of the increase was a direct government action.

Note this doesn't automatically mean all house/land price increases are automatically unearned economic rent - if for example you add a second story to your home, you invested in increasing its value. No worries.

Equally so the population increases 2% or so a year. This is the theoretical basis for 'normal' inflation. and so is not precisely unearned economic rent.

The question isn't whether you've spent your hard earned savings on it, the question is how to restrain abuse by those who aggregate huge amounts of unearned economic rent.

Although I agree with your conclusion, I'm not sure about the numbers.

I merely transcribe what Dr. Hudson stated in the interview.

It is indeed arguable what the marginal tax rate was - Wiki is quite unreliable in this context.

I can't believe a Marxist like Hudson gets any bit of traction in this community. Marxist ideology is nihilistic and (I say this without emotion) simply evil.

I think if you are unable to distinguish the difference between Marxism/Leninism/Communism, Marxist economic theory, socialism, and what Dr. Hudson prescribes for policy, then it is unsurprising why you cannot understand much of iTulip reactions to Dr. Hudson's views.