Country ... USA
Politics 2012 ... Taxation

Intelligence Squared Debate: THE RICH ARE TAXED ENOUGH

Burgess COMMENTARY

The money profit laissez faire capitalist market economy has its origins with Adam Smith and the book he published in 1776. The modern economy is, however, very different from the low productivity shortage economy of that time. In 2012 science and technology has enabled amazing productivity and less labor is needed to produce more than people consume ... hence endemic unemployment.

But this is not the whole story. Maybe a billion people are poor and hungry in a world that has surplus. Why? The money profit market system only allocates resources to economic activity that is profitable. I argue that the metrics of money profit needs reform so that there is also valueadd for society in the core metric. A blended metric of this sort ... I call it TrueValueMetrics ... would enable capital markets that take both money profit and social valuadd into account.

I look forward to the debate.

OCT 24 THE RICH ARE TAXED ENOUGH

ABOUT THIS EVENT

It is all bad news when it comes to the economy; the question is, how do we fix it? The U.S. government's budget deficit is nearing a trillion dollars for the fourth straight year and unemployment remains high. With the Bush-era tax cuts that are set to expire at the end of 2012, what is the best move for continued economic recovery? President Obama says we should raise taxes on those making more than $250,000, and invest some of those additional tax dollars is social services. Others say that the richest 1% already pay more than a quarter of all federal taxes and higher taxes for job creators would slow economic growth. Are the nation's wealthiest not paying their 'fair share,' or should tax breaks be extended for everyone in the name of job creation?

FOR THE MOTION

The rich already pay their fair share. The top 1% pays nearly 40% of all collected federal income taxes. The bottom 50% pays just over 2%.

Taxing the rich more won’t solve the deficit problem. According to the Tax Foundation, taking all the income of those making more than $10 million per year would only reduce the deficit by 12% and the debt by 2%. Taxing millionaires at 50% would reduce the deficit by 8%.

We have a spending problem, not a revenue problem. The U.S. government runs sustained deficits because it spends too much, not because Americans are taxed too little.

Tax hikes for those making $250,000 or more means hurting job creators and small businesses.

AGAINST THE MOTION

For the top 0.1%, the average tax rate has fallen from 51% to 26% in the last 50 years. Average tax rates for the middle class has risen slightly or remained constant over the same time period.

The rich can afford to pay more. The after-tax income of the top 1% has risen to nearly four times what it was since 1979, while income for the middle 60% rose by just 40%. After taking inflation into account, in the past decade the real income of the average American family has fallen by about 6%.

Higher tax rates do not mean less growth. During his first year in office, President Clinton pushed through tax increases that led to 32 straight quarters of economic growth and a budget surplus.

The rich can start businesses and hire employees, but if no one can afford to buy what they have to sell, those businesses will fail and those jobs will be lost. Ordinary middle-class consumers are the real job creators.

PANELISTS

FOR THE MOTION

Glenn Hubbard
Dean, Columbia Business School
Glenn Hubbard is Dean of Columbia Business School and the Russell L. Carson Professor of Finance and Economics. Hubbard is the author of two leading textbooks on money and financial markets and principles of economics, as well as co-author of The Aid Trap: Hard Truths About Ending Poverty and Healthy (2009), and Wealthy, and Wise: Five Steps to a Better Health Care System (2006). He previously served as Deputy Assistant Secretary at the U.S. Department of the Treasury from 1991 to 1993, and Chairman of the Council of Economic Advisors from 2001 to 2003.

FOR THE MOTION

Arthur Laffer
Known as “The Father of Supply Side Economics.” Former Member, President Reagan’s Economic Policy Advisory Board
Arthur Laffer is the Founder and Chairman of Laffer Associates, an economic research and consulting firm, and Laffer Investments, an investment management firm. In the 1980s, his economic acumen and influence in triggering a tax-cutting movement earned him the distinction as “The Father of Supply-Side Economics.” Laffer was a member of President Reagan’s Economic Policy Advisory Board from 1981 to 1989 and served as Chief Economist in the Office of Management and Budget from 1970 to 1972.

AGAINST THE MOTION

Robert Reich
Chancellor’s Professor of Public Policy at UC Berkeley and former Secretary of Labor
Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. Reich was Secretary of Labor in the Clinton administration from 1993-1997. He has written thirteen books, including the best sellers Aftershock (2011) and The Work of Nations (1992). His latest is an e-book, Beyond Outrage (2012). He is also a founding Editor of the American Prospect magazine and Chairman of Common Cause. He writes his own blog about the political economy at robertreich.org.

AGAINST THE MOTION

Mark Zandi
Chief Economist of Moody's Analytics
As Chief Economist of Moody’s Analytics, Mark Zandi directs the company’s research and consulting activities. Zandi’s recent research has studied the determinants of mortgage foreclosure and personal bankruptcy, analyzed the economic impact of various tax and government spending policies, and assessed the appropriate policy response to bubbles in asset markets. Frequently testifying before Congress, Zandi is a trusted adviser to policy makers on topics including the economic outlook, the merits of fiscal stimulus, financial regulatory reform, and foreclosure mitigation. Zandi received his Ph.D. at the University of Pennsylvania, where he did his research with Gerard Adams and Nobel laureate Lawrence Klein.

Dean, Columbia University Business School

Glenn Hubbard is Dean of Columbia Business School and the Russell L. Carson Professor of Finance and Economics. Professor Hubbard is the author of two leading textbooks on money and financial markets and principles of economics, as well as co-author of The Aid Trap: Hard Truths About Ending Poverty and Healthy (2009), and Wealthy, and Wise: Five Steps to a Better Health Care System (2006). He previously served as Deputy Assistant Secretary at the U.S. Department of the Treasury from 1991 to 1993, and Chairman of the Council of Economic Advisors from 2001 to 2003.

Publications:

Obama's Budget Means a Tax Increase on Everyone
Glenn Hubbard, Wall Street Journal, April 24, 2012

Tax Reform is the Swiftest Path to Growth
Glenn Hubbard, Wall Street Journal, August 12, 2011

The Romney Program for Economic Recovery, Growth, and Jobs
Glenn Hubbard, August 13, 2012

The Economic Questions for the 2012 Campaign
Glenn Hubbard, Huffington Post, September 18, 2012

The Problem with Obama's Arithmetic
Glenn Hubbard, Financial Times, July 17, 2012

A Conservative Growth Agenda for the U.S. Economy
Glenn Hubbard, Financial Times, July 12, 2012

Taxes and Debt: Left and Right Dare to Agree
Glenn Hubbard and Alan Blinder, CNN Money, September 18, 2011

Romney's Go-To Economist
David Segal, New York Times, September 13, 2012

Former member of President Reagan’s Economic Policy Advisory Board, “the Father of Supply Side Economics,” and President of Laffer Associates

Arthur Laffer is the Founder and Chairman of Laffer Associates, an economic research and consulting firm, and Laffer Investments, an investment management firm. In the 1980s, his economic acumen and influence in triggering a tax-cutting movement earned him the distinction as “The Father of Supply-Side Economics.” Laffer was a member of President Reagan’s Economic Policy Advisory Board from 1981 to 1989 and served as Chief Economist in the Office of Management and Budget from 1970 to 1972.

Art Laffer has also participated in: Big Government Is Stifling The American Spirit- For

Publications:

The Tax Cliff is a Growth Killer Arthur Laffer and Ford Scudder, Wall Street Journal, July 15, 2012

Laffer and Moore: A 50-State Tax Lesson for the President Art Laffer and Stephen Moore, Wall Street Journal, April 20, 2012

Arthur Laffer on Income Inequality, Raising Taxes Jeff Horwich interviews Art laffer, Marketplace Morning Report, July 26, 2012

Why Gingrich's Tax Plan Beats Romney's Art Laffer, Wall Street Journal, January 31, 2012

Taxes: How High is Too High? Paul Solman, PBS NewsHour, January 11, 2012

The Bill Gates Income Tax Arthur Laffer, Wall Street Journal, October 5, 2010

The Soak-the-Rich Catch-22 Arthur Laffer, Wall Street Journal, August 2, 2010

Tax Hikes and the 2011 Economic Collapse Arthur Laffer, Wall Street Journal, June 6, 2010

Soak the Rich, Lose the Rich Arthur Laffer, Stephen Moore, Wall Street Journal, May 18, 2009

Chancellor’s Professor of Public Policy at UC Berkeley and former Secretary of Labor

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. Professor Reich was Secretary of Labor in the Clinton administration from 1993-1997. He has written thirteen books, including the best sellers Aftershock (2011) and The Work of Nations (1992). His latest is an e-book, Beyond Outrage (2012). He is also a founding Editor of the American Prospect magazine and Chairman of Common Cause. He writes his own blog about the political economy at robertreich.org.

Publications:

The Truth About Obama's Proposal (and the Lies the Regressives Are Telling About It)
Robert Reich, July 10, 2012

Why Taxes Have to Be Raised on the Rich and End the Bush Tax Cuts for the Wealthy
Robert Reich, June 6, 2012

Romney's and Ryan's Economic Plan
Robert Reich, August 27, 2012

How the Fiscal Cliff Turns Into a Gentle Fiscal Hill
Robert Reich, Christian Science Monitor, October 12, 2012

Mitt's 13% Tax
Robert Reich, August 17, 2012

Why the Buffet Rule Sets the Bar Too Low
Robert Reich, April 10, 2012

Hardball with Chris Matthews
Chris Matthews, Robert Reich, and Stephen Moore, April 10, 2012

I abstain from voting, because America's budget problems cannot be solved by taxing the rich.

The fiscal gap can be closed, in part, through increased taxation of the highest brackets. But, tax increases alone cannot solve the problem. We also need reforms of entitlement spending (Social Security, Medicaid, Medicare); discretionary defense spending; intelligence spending; and other statutory mandates.

The wealthy probably should pay a greater share, either by treating capital gains like regular income under the tax code, or through some other means. But, that is only part of the answer.

The proposed motion is unsatisfying - perhaps necessarily so.

That 70% are against this motion doesn't surprise me given the tenor of the conversation throughout the country during this political season. But the stands that people take on the notion of 'Fair Share' and what's right with regards to this issue surprise me.

If you came from another planet and looked at the tax code and the tax base in our country you would see that wealthier Americans pay the vast majority of the taxes. Then if you looked at the tax plans proposed by either political party and you would see that the story really doesn't change that much. Wealthier Americans will continue to pay the vast majority of the taxes under any mainstream proposal.

So why all the shouting about how what we have is wrong and unfair and destabilizing? Particularly when the options on the table would only move the needle slightly in one direction or the other. People can disagree about what the right direction is for taxes gong forwards. But the language of 'fair/unfair' and 'right/wrong' are not appropriate given that any changes wouldn't greatly alter the overall dynamic.

Mark Zandi sold his company Economy.com to Moody's several years ago and took full advantage of the prevailing capital gains tax rates in existence at that time. I think it would be sportng of Mark to kick off his comments by announcing that he is going to voluntarily remit the difference in the rate he paid and the rate he suggest wealthy people should pay today. After all Mark has monetized the value of his company, somethng that most people cannot take advantage of. I am sure that if Mark did this his partners in Economy.com would just jump at the chance to join him.

I live in the rural Southeastern Greene school dsciritt, which always gets the shaft when budgets are cut. Kids are the future, and frack tax revenue should go to offset the GOP's education tax cuts. Do we really want the Commonwealth in the hands of stupid people, like it is now? Run by morally bereft Dittoheads? Fund education now!

Very excited for the debate. I still don't understand why any American thinks it's just for any person to work for 50 cents on the dollar. I understand the jealousy that resides in people who have very little, who see the 'rich' living the high life, who feel like a victim of their situation, who feel hopeless, and how easy it is to believe that the 'rich' have no clue what it's like to struggle. The problem is that if you never try to climb out of poverty you don't figure out that most of those people have struggled. Taxing the rich at punitive levels does nothing but give the poor an excuse to stay poor by dividing society into us versus them. The reason America is great is because I don't have to just accept my poverty. If you want a better life go after it. If you think the key to a better life is getting the government to beat up people with money you are sadly mistaken. The key is to quit crying like a baby, man up, and go for it. Whatever happens you'll be better for it, even if you don't become a millionaire.

Sheesh, virutally everyone that has any integrity left believes and says the the highest income earners in the US are undertaxed. We would not have this huge debt/deficit if they were not.

Joe Stiglitz, Nobel Prize winner wrote a book recently with all the data and reasons the rich have too much power and all the facts against the silly argument of the Conservatives who as Obama said paraphrased ... screwed up the economy in the last 10 years,and now want to double-down on that.

The country has gone crazy, and a lot of that is due to the Republican war on anyhthing public, against the whole idea of the public and anything publlic.

Why private American citizens buy into this at all is the biggest mystery in the universe.