Flat Tax & VAT, Jack (Hudson)

[radon]

Re: Flat Tax & VAT, Jack (Hudson)

It's about recognising that the FIRE sector is not growing the pie it is shrinking it.

It is more than that. The pie is going to shrink regardless of what happens to the FIRE sector. Barring a miracle in energy production we are near the end of growth and need a new way going forward. Demonizing the rich and arguing about taxes might sell books but won't make a bit of difference in the long run. Hudson is arguing about who pays the bill while the restaurant burns down around him.

[oddlots]

Re: Flat Tax & VAT, Jack (Hudson)

It is more than that. The pie is going to shrink regardless of what happens to the FIRE sector. Barring a miracle in energy production we are near the end of growth and need a new way going forward.

There's no point in worrying about energy production because we are going to be hit by a massive asteroid before the effects of peak energy are felt.

See the problem here?

Demonizing the rich and arguing about taxes might sell books but won't make a bit of difference in the long run. Hudson is arguing about who pays the bill while the restaurant burns down around him.

Well I'm certain you don't work in publishing if you think anyone buys books about tax policy. Aside from that I really don't see much demonising of rich people. In fact what's remarkable to me is that even those that committed, aided or abetted or simply benefitted enormously from outright fraud do not seem to provoke the kind of scorn they deserve. There have been no indictments! If even Jim Grant can ask "Where's the outrage?" why can't you find any?

I'm cheered though that you seem to implicitly accept - even as you try and deflect it - that the problem is activities that "shrink the pie" (another description of economic rent.) Progress.

[ThePythonicCow]

Re: Flat Tax & VAT, Jack (Hudson)

To be fair the government could just issue the currency directly. It worked for Lincoln.

Yes, they could. This scheme is sometimes called chartalism or modern money theory.

Taxes are then used in such a system to create a demand for such currency, and to modulate the quantity in circulation (avoid inflation.)

Death and taxes -- there's no escaping them.

[c1ue]

Re: Flat Tax & VAT, Jack (Hudson)

Sigh.
An "economist in the Marxist tradition" is still a Marxist. Marx started with premises that are 100% wrong-- and then used twisted logic to make them "right". Any ideas that are remotely derivative of Marx are therefore 100% wrong. Hudson is full of brown stuff.

Clearly you also don't get the difference between analysis of economics using the framework of Marx vs. Marxist government which actually sprang from Engels (and Lenin).

Under your "big bucket" frame of understanding, then democracy is government by direct referendum - and thus the United States is NOT a democracy.

Similarly your enlightened methodology envisions a literally invisible hand governing the behavior of players in the marketplace.

Addressing your points one by one:

"Unearned economic rent"-- HA!. When the state taxes property, it asserts primary ownership of that property. That is a logically unassailable fact. You either accept the notion of private property (the foundation of free enterprise), and all the consequences of it (which include "unearned" economic rent), or you reject it (which is the foundation of communism). It's clear where Hudson stands-- he stands for communism.

You're trying to refight an old and already lost war.

Government requires income to survive, and the only choice is if that income (from taxation) is equitably distributed or not. Hudson had done seminal work showing how taxation which used to be on property and thus well distributed amongst those who have money - is now being taken via income taxes, FICA taxes, sales taxes, and mortgage interest.

Merely whingeing about some Libertarian fantasy of a world without taxes is stupid.

Let's be clear about our definitions. Government does not "invest", government spends. Government does not produce anything; the private sector does that. Sometimes government spending eventually results in things of value, when that spending results in funding of private enterprise to produce things like roads; but always there is corruption, waste, and gross inefficiency when government is involved. Not a matter of opinion since empirical evidence is 100% supportive. "Efficient Government" is a laughable oxymoron.

So I suppose the highway system, the laws under which we live in, the FCC, the FDA, etc etc are all just parasitic entities. Because surely the private sector wouldn't stoop to providing shoddy products in the name of greater profit, or would go out of its way to prevent rats from falling in the canned deviled ham, or would not build shoddy buildings, etc etc.

Again, Libertarian fantasy of the highest order.

Certainly government is not the end all be all, but equally so it is not the devil.

Flat tax-- since all income taxes lack a moral basis consistent with concepts of Life, Liberty, and Property, there is NO income tax that is moral. The founding fathers prohibited Direct Taxes for a reason. Excise taxes were the only constitutionally-supported taxes because they can be legally and morally avoided, and thus consistent with Life, Liberty, and Property. If you are for an income tax of any kind, you are a socialist-- by definition-- as then the State has first claim to your Labor, i.e., you are indentured to the State.

I really don't understand why Hudson gets so much play here at iTulip. Looking for answers from communists is like looking for diamonds in pig sh*t.

Um yeah. Well. If you persist in fighting for no taxation of any kind - that's wonderful for you.

There are plenty of places with such benefits in the world already - Somalia comes to mind.

Petty insults aside, every time it looks like he might say something worthwhile I have to deal with his political rubbish. The interviews posted here, for instance, begin promisingly and degenerate into some sort of class warfare spiel.

Your opinion is, of course, your own.

But the class warfare is a reality. Whether it is on the precise terms Dr. Hudson states is a matter of perception.

Your critiques, however, have yet to show substance.

More in line with Buckaroo Banzai's tirade no doubt triggered by the 'M' word.

Hudson is arguing about who pays the bill while the restaurant burns down around him.

Hudson is describing the problem as he sees it, and one way in his opinion that said problem could be fixed.
Unless you can show his facts are wrong - solely arguing his conclusions based on ideology just shows how unprepared for the discussion you are.

Demonizing the rich and arguing about taxes might sell books but won't make a bit of difference in the long run.

Again, your view is wrong both historically and in the present.

The rich get that way not from enterprise - it can happen but almost always it is due to control of land and productive means.

History is replete with examples where an oligarchy achieves a certain level of wealth and influence, then uses said wealth and influence to start monopolizing an entire society's output.

Pre WW I - the US avoided this problem by simply having a constantly expanding pie of land (Manifest Destiny/the West). Post Great Depression, this phenomenon was negated by WWII and the subsequent 2 decades of inflation plus growth of the overall US economy.

Today we have neither Manifest Destiny nor any likelihood whatsoever of another WW II/reindustrialization of the world.

It is time the root problems are addressed.

[Chris Coles]

Re: Flat Tax & VAT, Jack (Hudson)

It is more than that. The pie is going to shrink regardless of what happens to the FIRE sector. Barring a miracle in energy production we are near the end of growth and need a new way going forward. Demonizing the rich and arguing about taxes might sell books but won't make a bit of difference in the long run. Hudson is arguing about who pays the bill while the restaurant burns down around him.

Totally wrong. Why? Take just this single inventor; yes, me. I have proposals for a gravity and energy research institute. It will be impossible to find funding from government for the simple reason that I am "Off the wall" as far as conventional science is concerned. There is simply no funding mechanism available. No, I am not fishing. There are millions just like me out there full of new thinking, they simply cannot get past the roadblock created by the investment banks creating a financial system that is totally predicated by the idea that investment is always about buying complete control of the start-up and then ASAP selling them on to the largest company for as much as they can get. Long term view; forget it. Steady hands to stand alongside for the decade or more anyone always needs to settle in new technology, forget that too. Where else to go? China, Hong Kong certainly looks likely, but no funds to get there in the first place. And please, you too offer slavery? Get Lost! Not interested in becoming anyone's slave. Period.

Inventions stuck in the Rust Belt surrounded by a lack of imagination that says the Western economies cannot revive.

You get what you wish for; but please, do not try and make statements for those of us, given the funding, would be able to prove you wrong.

For the record, Hudson speaks a lot of good sense. True capitalism, particularly free enterprise capital investment where the inventor is given, yes, given, free money, as equity capital, is as close to socialism as you can get without being a socialist.

Using old fashioned labels is a smokescreen hiding a lack of imagination. There is right and wrong in every viewpoint; the trick is to pick out the best parts and get on with the job of recreating a successful economy. If all you can contribute is the negative, then stand aside for others that have the whit to see the way forward and make a go of things.

There are millions who need a better future; arguing about what is wrong provides no solution. Look up and see the future. It can, indeed, must - be better than today.

[llanlad2]

Re: Flat Tax & VAT, Jack (Hudson)

The argument by RADON

"Why must he frame everything as rich vs poor?"

is because that is exactly the stage we are at. Hudson is a capitalist and a realist with a knowledge of history not a load of made up economic equations . Only someone who is unaware of how Europe was pre 18th Century can defend the present system. A concentration of untaxed wealth at the top leads to stagnation as it become easier to get free money than earn it by setting up companies and creating jobs. See EJs latest investment idea for confirmation.

“free lunch” economic rent – off interest, dividends, rents and capital gains – onto wage-earners.

When capitalism took off in the 19th Century it was the rich landowners who were taxed NOT the workers.Read this about the introduction of the income tax in the UK.

INCOME tax was introduced by William Pitt the Younger nearly 200 years ago to finance the struggle against Napoleonic France. Subsequent wars have brought big changes in tax.
The schedules of the new tax listed sources of income. The list began with property, moved on to woodlands, through trade, profession or vocation, Crown appointments and ended with a final catch-all for income which did not come within any of the other categories. In a history of the tax system, John Kay wrote: "The idea that employees were people of sufficient standing to be liable for income tax was not conceived of." Yet that catch- all now catches most of us.

When Hudson says the tax burden has moved from unearned to earned income and calls it regressive he is spot on. "Income" tax is not income tax anymore. It is a worker's tax. Lower salaried workers pay a far higher percentage out of their income in tax than the super rich bankers and CEOs. This is why Buffet famously said he paid less tax than his cleaner.

"Unearned economic rent"-- HA!. When the state taxes property, it asserts primary ownership of that property. That is a logically unassailable fact. You either accept the notion of private property (the foundation of free enterprise), and all the consequences of it (which include "unearned" economic rent), or you reject it (which is the foundation of communism). It's clear where Hudson stands-- he stands for communism.

As for who wrote the above. Ignorance beyond belief. Private property = foundation of free enterprise. This is true but with the caveat that the land is taxed and its proceeds is taxed as opposed to the labour. Why was the period from 500AD to the 1600s known as the dark ages in Europe. Lords/Earls/Barons/Bishops throughout this period "owned" the land and it was the labourers (peasants) who paid the taxes. Massive inequality with no progress was the result.
Land was the traditional source of wealth, and the purchase of land the natural investment for anyone with a spare fortune as it gave a free untaxed income. It was wasn't until this free income was taxed that capitalism took off as alternative investments were needed to create a profit.

Hudson is predicting a return to Feudalism as labour/land renters (ie workers and home "owners") are paying all the taxes. A serial entrepreneur like EJ deciding that becoming a rentier is the best way of staying rich is solid evidence that Hudson is right. Buying land and houses does not create wealth only maintain and concentrate it.
If the average worker can't afford stuff because his outgoings on non-discretionaries (income-tax, sales tax, housing, food, health cover, transport, heating) use up all his income then capitalism breaks down because there is no market for your goods, hence no point in being an entrepreneur.
This is where we are now. Lowering the tax burden on workers would stimulate economies as they may then be able to afford something they don't already have which would create a demand.Giving tax breaks to the super rich doesnt stimulate anything as they don't need TWO Lear Jets to get around. Instead they will just buy more land and property.

[radon]

Re: Flat Tax & VAT, Jack (Hudson)

There's no point in worrying about energy production because we are going to be hit by a massive asteroid before the effects of peak energy are felt.

See the problem here?

When finite resources run into exponential growth the results are unpleasant and usually nonlinear. You won't know there is a problem until the crisis, then it will be to late to act proactively. Feel free to keep whistling past that grave yard.

Well I'm certain you don't work in publishing if you think anyone buys books about tax policy. Aside from that I really don't see much demonising of rich people. In fact what's remarkable to me is that even those that committed, aided or abetted or simply benefitted enormously from outright fraud do not seem to provoke the kind of scorn they deserve. There have been no indictments! If even Jim Grant can ask "Where's the outrage?" why can't you find any?

I'm cheered though that you seem to implicitly accept - even as you try and deflect it - that the problem is activities that "shrink the pie" (another description of economic rent.) Progress.

Maybe not but they buy books on evil empires run by those most notorious of criminals - the bankers. It wasn't just the rich that benefited from fraud during the bubble. The real estate agent, the assessor, the loan officer even many of the buyers were in on the scam. There was an entire ecosystem that grew up around the last bubble. There aren't many clean hands here.

As for outrage, Americans are well trained. If they don't mind getting felt up at the airport just to ride a plane then I doubt they will even notice the rest of this mess.

[radon]

Re: Flat Tax & VAT, Jack (Hudson)

Your opinion is, of course, your own.

Well, we agree on precisely one thing so far.

Unless you can show his facts are wrong - solely arguing his conclusions based on ideology just shows how unprepared for the discussion you are.

Facts or opinions. All I've heard from you so far is the latter along with some empty rhetoric and name calling. It is hardly persuasive.

I've already stated what I find objectionable about his article(s) and why I think that tax policy will be infective.

I even linked some charts so you can clearly see that over the past few decades the effective tax rate on the top 1% does not change much, neither does personal income tax as a percent of federal revenue. Tax reform or no.

Pre WW I - the US avoided this problem by simply having a constantly expanding pie of land (Manifest Destiny/the West). Post Great Depression, this phenomenon was negated by WWII and the subsequent 2 decades of inflation plus growth of the overall US economy.

Today we have neither Manifest Destiny nor any likelihood whatsoever of another WW II/reindustrialization of the world.

No, the US avoided it by not having a strong central authority to hijack. The US started with a weak federal government. This has changed over time as Federal power has expanded at the expense of state and local authorities.

It is time the root problems are addressed.

The roots indeed.

[oddlots]

Re: Flat Tax & VAT, Jack (Hudson)

When finite resources run into exponential growth the results are unpleasant and usually nonlinear. You won't know there is a problem until the crisis, then it will be to late to act proactively. Feel free to keep whistling past that grave yard.

If you can understand that then surely you can understand the problem of compound interest that Hudson discusses. That is the problem that financial claims tend to run ahead of and outstrip the non-exponential growth of GDP. Care to explain what's ideological about that? Seems pretty rational to me.

But you miss the point of my post (I'm hoping intentionally): I'm simply saying, nice deflection there buddy.... So I still want to know whether you think that the Wall Street ploy of creating a massive housing bubble with Fed sponsorship, riding it up to the top of the roller coaster and then creating a way to short it all the way down (weeeeee!) was a productive form of private enterprise or a vile example of free enterprise run amok. When you have depressed cities crawling with mortgage brokers eager to produce product for their banking masters by fraudulently signing up people without (and I quote) "a pot to piss in" all in order to boost bonuses in investment banks... AND TO TOP IT ALL OFF, FOR THOSE NOT QUICK ENOUGH TO GET SHORT THROUGH CDS, THEY GET BAILED OUT BY THE GOVERNMENT WHOSE DEBT IS NOW BUSTED BY THE BURDEN AND SO THE VICTIMISED TAX PAYER NOW HAS TO FUND THE APPARENTLY INVIOLATE BONUSES OF BANKERS BY SACRIFICING THEIR SOCIAL SECURITY INTO WHICH THEY HAVE PAID THEIR ENTIRE WORKING LIFE.

THAT'S CLASS WAR.

Now what were you saying?

[oddlots]

Re: Flat Tax & VAT, Jack (Hudson)

Just wanted to say I'm really enjoying this discussion. It's about time we had a really good punch up here. The times demand it.

[Sharky]

Re: Flat Tax & VAT, Jack (Hudson)

I've read him closely. He is full of marxist BS, and he can't go two paragraphs without incorporating that drivel into his articles. His point would be better made without the political sidecar.

Exactly. Statist, egalitarian crap.

A few points:

1. People seem to forget that total tax revenue went up after the Bush tax cuts
2. One reason the capital gains tax should be abolished is because some or all of the gains may not be real; nominal gains can happen simply as the result of inflation
3. Wealth (and therefore jobs) comes from production, not from shuffling paper around, and certainly not from government intervention or inflation. Production means creating things that people want.
4. Most corporations are honest, and add jobs and wealth to the economy. The few that are full of crooks are almost always in league with the government. To the economy to have a hope of recovering, the crooks need to be locked up.
5. A command economy is impossible. Life is just too complex. This is just one of many reasons why socialist societies eventually implode.
6. Inflation and high taxes damage the economy and hurt job growth because they steal from the savers, who are also the productive members of society, for the benefit of the borrowers and the leaches.

[Milton Kuo]

Re: Flat Tax & VAT, Jack (Hudson)

Exactly. Statist, egalitarian crap.

Hudson's remedies for the various economic ills he sees in the U.S. are sometimes debatable. However, his analysis of the problems and their causes are almost always spot-on.

One thing Hudson is correct about is the issue of taxing gains on real estate and eliminating all of the real estate giveaways. For example, the ridiculous ability for a commercial real estate property to be depreciated time and again each time the property changes hands regardless if the new owner ever spends any money improving or maintaining the property.

Hudson also does not propose taxing property for improvements the owner makes. In fact, Hudson specifically states that only the land value be taxed to encourage land owners to truly improve the property and not be slum lords. One other real estate gain Hudson talks about capturing through taxation are gains resulting from government infrastructure, such as building of roads or public transportation.

1. People seem to forget that total tax revenue went up after the Bush tax cuts

Yes, but is the increase in tax revenue sustainable or is the increase in tax revenue a one-time thing resulting from the housing bubble? How are tax revenues today, after the housing bubble crash?

[mesyn191]

Re: Flat Tax & VAT, Jack (Hudson)

Did I project his diatribe on evil white bankers as well? The last time I read something like that it came out of the mouth of someone who would go on to murder millions.

Yea dude you're projecting. He is a capitalist who wants more equitable treatment for labor in general, not a marxist or would-be mass murderer. Again he is very explicit about all of that so you need to quit projecting or trying to "read between the lines" or whatever you want to call the mental gymnastics that you're doing to end up with the conclusions you're making about Hudson when you read his stuff.

If you knew how hard it is to start and run a business in NY you would see right away why those places have poor prospects, and raising income and capital gains tax won't change that. But be rest assured the federal government will spend every last penny. Most of that money wont end up in places like upstate NY.

Raising taxes on the rich and increasing capital gains taxes wouldn't hurt or improve business prospects in upstate NY or anywhere for that matter. It would allow a more equitable distribution of wealth throughout society however, which is what I and Hudson have been talking about...

It is not a myth. Central bureaucracies are astonishingly bad at allocating capital.

You think trickle down economics works? Really? So why are corporate profits through the roof right now but unemployment is also still high then? Shouldn't those rich people be making more businesses and buying more stuff, trickling down all those profits throughout the economy? You're also right about a central bureaucracy being bad about allocating capital, but I never said they were good either, just that we (and "we" is as a whole country BTW, not an individual) would be better off.

You advocate raising capital gains to strip the rich of their income

No, I said they'd still make money just less, I thought I was clear about that. You're either not reading what I'm saying or projecting again. No "stripping of income" going on here. They'd still be rich just less so. Even with a capital gains tax of 50%, which BTW would be too high IMO, they'd still be rich.

and then go on to say that the government doesn't enforce rules and regulations. What makes you think raising tax rates will be anything but a feel good measure to reassure the public or have any effect on the rich who make the rules.

That is the reason why I'm so pessimistic. Our government is all to happy to enforce the regs where the non-rich are concerned, but if you're wealthy enough the rules don't really apply anymore. That has to change but I don't see how it'll happen since it would mean that we need better, note I didn't say good, politicians instead of the crooks on both sides of the aisle we have now. And no I don't the Libertarians or Tea Baggots will be the solution either, same goes for the Green or Socialist parties while I'm at it.

Like I said, I'm pessimistic.

[Milton Kuo]

Re: Flat Tax & VAT, Jack (Hudson)

Here's an interesting site I found that I used to get some total tax revenue data for the past decade.

Let's take a look at how much additional tax revenue the Bush tax cuts brought to the United States.

Year	Revenue (in billions)
1998	$1,722.0
1999	$1,827.6
2000	$2,025.5
2001	$1,991.4
2002	$1,853.4
2003	$1,782.5
2004	$1,880.3
2005	$2,153.9
2006	$2,407.3
2007	$2,568.0
2008	$2,524.0
2009	$2,105.0

From roughly $2.0T tax revenue in 2000 to $2.1T tax revenue in 2009. If we take inflation/dollar devaluation into account, it looks like the Bush tax cuts didn't increase revenue one bit. In fact, overall tax revenues have actually fallen on a purchasing power basis.

[Sharky]

Re: Flat Tax & VAT, Jack (Hudson)

Given the botch of things that the Anglo-American empire has been making of late (the last century, at least), you could make a good case that "Looking for answers from capitalists is like looking for diamonds in pig sh*t."

Capitalists botched things compared to what? 100M+ murdered by the socialists / communists? More than a thousand years of stagnation under feudalism and theism?

The "Anglo-American Empire" is not a natural progression of capitalism; it's what happened when Americans abandoned capitalism in pursuit of progressivism, subjectivism and unprincipled pragmatism.

And I suppose all of the conveniences of modern life are also botched, along with the untold wealth that capitalism created, even in its corrupted mixed-economy form?

Collectivist economies have produced almost nothing in comparison; they are little more than leaches off of the productive economies of the world. For example, many would have starved had it not been for aid from the "evil" capitalists in the West.

By this argument, I should never have been taxed. Any money taken from me in taxes, whether on my income, on my spending (sales), on my property or on my transactions (fees and levies) was the taking of my property.

Correct. Taxation is theft because you are being denied the use of your property without your consent; it is therefore also immoral.

Ergo -- no taxes. Ergo, I suppose, no government. Ergo, I anticipate, no civil law and order. Ergo, no doubt, anarchy. Ergo, no life, for I am a wimp and some thug would long ago have taken my last can of Spam and left me to die.

Nonsense. Government can be funded in many ways other than by direct taxation. The US itself, before the creation of the income tax in 1913, is an example. Funding options include everything from user fees to uniform excise (indirect / avoidable) taxes.

The thugs that I worry about most today are not the ones roaming the streets; it's the ones in government, together with their corporatist friends, who are forever dreaming up new ways to pick my pockets and rob me of my liberties.