Forget The Wealthy. How Do We Tax The Lucky?
September 30, 2011, 7:08 pm
Filed under: Corporations, Economics | Tags:

A few weeks ago, the Washington Post ran a lengthy, above-the-fold piece looking into what impact capital gains tax rates were having on wealth inequality in America. “Most of the richest Americans pay lower overall tax rates than middle-class Americans do,” the reporters noted, adding that during the past two decades, “more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent.”

The primary reason for this is that wages and capital gains are taxed at different rates. (The other reason, of course, is that many in the middle class simply don’t realize capital gains because they really don’t invest in securities.) In 1986, as part of a compromise tax bill between President Reagan and Democrats, capital gains and wages were taxed at an equal rate: 28 percent. Since that time, lobbyists have doggedly worked to lower the rate to where it is now: 15 percent on capital gains and dividends, which is a full 20 percent lower than the top rate on wages. Members of Congress, many of whom are very wealthy and who own lots of stocks and bonds also were keen to do what was in their economic interest.

Effectively, the disparity means that hedge fund managers and others who derive a disproportionate amount of their income from investments, pay  a lower effective tax rates than firefighters, police officers, and teachers. As the Post article explains, “Anyone making more than $34,500 a year in wages and salary is taxed at a higher rate than a billionaire is taxed on untold millions in capital gains.” This growing inequality has prompted many, including billionaire businessman and philanthropist Warren Buffet, to urge lawmakers to raise the capital gains rate. As Buffet explained in a New York Times op-ed last month, because most of his income is derived from investments and not wages, he ends up paying taxes at a much lower effective rate than his secretary. “My friends and I have been coddled long enough by a billionaire-friendly Congress,” he wrote.

But the candidates vying for the Republican presidential nomination don’t seem to be at all concerned about these startling trends in inequality. Many, in fact, have vowed to lower capital gains rates even more if elected. And they have powerful allies in Congress, including Rep. Paul Ryan (R-WI), the chairman of the House Budget Committee, who has proposed eliminating capital gains taxes altogether. The argument from them is that capital gains taxes are a form of double taxation and more importantly, that they curtail economic growth, which is bad anytime but especially during a recession. Both claims, however, are not supported by the evidence.

The “double taxation” argument is disingenuous for several reasons. In the case of capital gains related to buying and selling securities for instance, the tax only applies to the gain (or profit) an investor sees, not the original amount he or she has invested. What about the tax on dividends that some corporations give to shareholders? Corporations have to pay taxes on their profit and then again on dividends that they issue. That sure seems like we’re taxing the same money twice. Not only is that inefficient and unfair, but it might also discourage firms from issuing dividends. “A double tax is a destructive and unfair way for the government to gain additional revenue,” longshot presidential hopeful Newt Gingrich wrote in 2009.

This too oversimplifies things. As economist Leonard Burman explained to Washington Post readers recently, “lots of corporations manage to avoid much of their corporate tax and many capital gains are on assets other than corporate stock.” More and more, many large corporations are getting away with paying almost nothing in taxes. A recent study by the Institute for Policy Studies shows that some companies pay more to their chief executives than they do to Uncle Sam. And as the Tax Policy Center’s William Gale has explained, “While the emphasis and public discussion has been on the so-called double taxation of corporate income, the non-taxation of corporate income is probably even bigger.” So yeah, it’s double taxation … but only if these companies were paying their fair share in taxes to begin with.

Nevertheless, the idea of double taxation intuitively seems unfair to most people. But it’s central to our tax collection system. All wage-earning Americans pay income and payroll taxes. (Eventually, when we make a purchase, we also pay a sales tax. That’s a lot of different taxes to be paying on the same amount of wages.)

But what about the impact on investment? As another unlikely presidential contender, Herman Cain, has said, “The capital gains tax represents a wall between people with money and people with ideas.” Lowering the rate, or eliminating it entirely as Cain and others would like to do, will spur unparalleled investment and job creation. Or so the argument goes.

The argument makes sense until you consider that everyday trading in the securities market does not have much of an impact on investment or jobs. If Warren Buffet buys, say, 1 million shares of Bank of America stock, and sells the shares when the price is higher, none of that money goes to the Bank of America because such securities transactions almost always occur in the secondary market and therefore have little impact on a company’s ability to grow and hire additional workers.

In fact, the connection between jobs and capital gains taxes seems to go in the opposite direction. Ultimately, any tax cut that is not offset by spending reductions or revenue increases elsewhere has the effect of growing the deficit. “As the government borrows to finance the deficit, it shrinks the pool of saving available for investment,” notes the Center for Budget and Policy Priorities. The more the government borrows, then, the less investment capital available to business looking to expand and hire additional workers. Lowering the rate that millionaires and billionaires pay without having a way to pay for it will actually do more than increase inequality. It will stymie job creation.

That does not mean that we should arbitrarily raise rates on capital gains. We have to encourage investment and so, perhaps, we should treat different sorts of investment differently. A person who invests in a plant should have his or her gains taxed differently than someone who runs a hedge fund. But something should be done to address to issue in a way that will have the greatest impact on the middle class and not just benefit those fortunate few who owe some of their wealth and success to, as Burman argues, luck.

Muslim-Baiters Don’t Want To Be Treated Like Muslims

Over the weekend, I posted the following message on Twitter: “When a Muslim commits terror, every Muslim in the world somehow shares responsibility. When a crime is committed by a white Christian, it’s always a lone wolf.” I wasn’t commenting on the tendency of commentators to use different words to describe the same vicious act, such as using the word terrorism to only describe violence perpetrated by Muslims, (or how post-Hurricane Katrina looting was referred to “finding” when whites were involved) but rather, trying to express my frustration with scapegoating tendency to assign collective blame: the idea that one person’s crimes/sins can in anyway be partly blamed on those who didn’t commit, endorse, fund, or encourage the nefarious act.

Collective blame was the curse of the 20th century. It inflicted untold carnage on hundreds of millions of people and it has no place in the modern world. But it persists, partly, I think, because it’s a reflex among people who feel vulnerable or fear some sort of inferiority to rationalize that those whom they perceive to be their enemies all agree on the same basic evil ideas. When some fanatical Muslim blows himself up in a crowded market, those who already feel uncomfortable about the presence of Muslims in their countries rationalize that all the Muslims – regardless of who they are and what they do – are somehow culpable in the act. The silence from Muslims, many of these people will tell you, means that they tacitly endorse terrorism. These are the same sorts of people who will tell you that a Muslim in, say, Utah has to specifically denounce every act of violence committed by a fellow Muslim somewhere else on the other side of the globe. It’s nonsense, but the simple thinking behind it makes it difficult to combat.

And it isn’t just Muslims who are on the receiving end of the illogical practice of placing collective blame. It’s pretty widespread. For instance, when an Israeli soldier mistreats a Palestinian, you won’t be shocked to hear some commentator placing the blame on all Israelis or even all Jews. In every case, a very broad demographic category is used to indict millions (or billions) for the sins of the few people who committed the particular act.

Either way you slice it and dice it, collective blame is wrong. As Slate’s William Saletan writes, “That principle—that no one should be held responsible for another person’s sins—is the moral core of the struggle against terrorism.” I couldn’t agree more.

Which is why I was surprised by the reaction I got. For whatever reason, the tweet took off and people from all around the world started sharing it with their networks. I don’t know how or why it happened, but it did and as I am writing this, the message was shared more than 5650 times. At first, I was astonished by all the attention my message was getting. But that feeling was soon overtaken by the surprise that people actually objected to what I had written, which I believe to be largely uncontroversial. The statement is nothing more than an uninsightful observation. The response I was expecting was for people to say, “Yeah, well, duh.” Instead, people argued that Muslims were responsible for the crimes of coreligionists that they didn’t know or whose views they didn’t support. Some even read it as if I was arguing that collective blame should be placed on whites for the sins/crimes of other whites rather than what I was actually saying, which was that collective blame in all is not right in any circumstance.

What prompted my message, of course, was last week’s massacre in Norway. On Friday, a man detonated a massive bomb in downtown Oslo and massacred scores of teenagers on the tiny Norwegian island of Utoya. When news first broke here in the United States, it was described as an act carried out by terrorists. When it was discovered that the attacker’s ideology was, as the Economist notes, “a form of reactionary Christian fundamentalism, fuelled by hatred of Islam, Marxism and non-whites,” the perpetrator started being described not as a terrorist but as a “lone wolf.”

I’m not one to get into the discussion about what word should or should not be used. Clearly, when people talk about terrorism, they are talking about a specific act that has an intended political motive. A mass shooting, such as the Virginia Tech massacre, clearly doesn’t fall into the same category as an attack on an embassy that was intended to terrorize people into implementing some sort of change. Some acts of violence have terror motives and others just simply don’t. But it’s a good discussion to have and Glenn Greenwald offers some perceptive criticism of the way the word terrorism is, and isn’t, used. That being said, Breivik’s actions were clearly terroristic and politically/ideologically motivated.

Breivik’s manifesto copiously cites some of the most nefarious Muslim-baiters here in the United States. As such, there has been a healthy debate about what impact these people – who literally devote their entire lives to writing about the very things that Breivik sought to bring to a halt: the so-called “Islamization” of the West and the loss of Western culture to Arabs and other foreigners – had on Breivik. As the New York Times explained, “The man accused of the killing spree in Norway was deeply influenced by a small group of American bloggers and writers who have warned for years about the threat from Islam, lacing his 1,500-page manifesto with quotations from them, as well as copying multiple passages from the tract of the Unabomber.”

These people are now on the defensive and are pushing back against any suggestion that their years of fear-mongering about how the political left is allowing Europe to be overtaken by bearded religious zealots had anything to do with the motives of a guy who attacked the Norwegian left for what he received as their willingness to let the country be overtaken by bearded religious zealots. They had nothing to do with the motives of the terrorist, they charge, because they don’t condone violence and are all about peace. Any attempt to link them to Breivik is part of an agenda to silence their loud voices, they complain.

That defense is natural. People who didn’t commit a specific crime quite naturally object to being associated with it.  But remember, these are the same people whose existence is defined by the very exact same thing they now denounce: collective blame. They don’t want to be associated with someone who clearly shared almost all of their views. But they have absolutely no problem making the charge that Muslims in the United States are somehow linked to each and every single act of terrorism that occurs, anywhere in the world.

What they now demand of the public is something that they viciously deny Muslims, and in particular, American Muslims, some of whom have never set foot in another country, let alone the Middle East. As Adam Serwer observes, “While it’s obvious that few if any of them will take this lesson to heart, the rest of us should — terrorist acts are committed by individuals, and it is those individuals who should be held responsible.”

But that sort of humane treatment and respect, some of the Muslim-baiters seem to contend, is only for them.

Keith Ellison’s Tears And Epistemic Closure

Rep. Peter King’s hearings on “radicalization” of the American Muslim community, and his contention that the community doesn’t cooperate with law enforcement, was both a waste of time and tax dollars. The affair didn’t produce a single insight into the actual and urgent issue of radicalization and extremism.

If King expected to come out of hearings as some sort of hero, he failed. Two of his witnesses offered largely anecdotal evidence which didn’t support the premise of his hearings and another embarrassingly implied that only people who have something to hide seek legal counsel.

Los Angeles County Sherriff Lee Baca reiterated yet again the point that the Muslim community in Los Angeles has done a lot to help his agency combat all sorts of crime, a point that undermines the case that Muslims have adopted some sort of ‘stop snitchin’ mentality.

The undisputed hero of the day was Minnesota Congressman Keith Ellison, who stole the headlines away from King after offering an emotional testimony in which he shed tears recounting the story of a dead 9/11 responder who some accused of being in on the conspiracy for the simple fact that he was Muslim.

Hearings that were supposed to make the country suspicion of their brown-skinned doctors and cab drivers actually produced the opposite result. The story Ellison recounted stole the show and whatever anti-Muslim narrative some of the hearing’s biggest supporters were hoping for, went with it.

That couldn’t stand. Some sort of controversy had to be manufactured to put the narrative back on the right. Ace conservative reporters took to the task of looking for that controversy. Naturally, their first tool was Google. The National Review Online’s Matthew Shaffer took to the internet, found that only one newspaper backed up Ellison’s story and concluded in a piece that the Congressman was a bigot. Wait, what?

Follow the logic here. After doing some searching around on the internet, Shaffer could only find a New York Post article that cast suspicion on the 9/11 hero. Therefore, Ellison was wrong. No, in fact, he is a bigot. Because the testimony he gave wasn’t backed up by much proof.

The problem, of course, is that had Shaffer used LexisNexis, he would have seen that other media outlets had in fact reported on the issue, including the New York Times and the New Yorker. After these other articles were brought to his attention, he issued a correction. In typical conservative style, however, he did so by attacking those who asked him to be set the record straight.

The damage, however, had already been done. The original article was picked up by other conservative sites, including by some of the vilest, most contemptible people on the face of the planet. Rep. Louie Gohmert, of terror baby fame, actually read the article on the House floor. In less than 24 hours, a lie created by a lazy writer became the narrative that was being used to discredit Ellison. The lie is now part of the Congressional Record.

The next hatchet job was by the Daily Caller’s Matthew Boyle. Boyle’s piece actually makes less sense the Shaffer’s. The article is billed as an exclusive but it seems that it’s only exclusive in the sense that only an exclusive number of brainless and logically-impaired people would actually make the argument that Boyle is making.

Boyle charges that the Muslim Public Affairs Council, a Muslim advocacy group, gave House democrats talking points to use during the King hearings. In order for this to be a story, you need to ask two important questions: First, Is there something wrong with an advocacy group briefing lawmakers? The answer is obvious. But since the group is a Muslim group, this very routine practice of giving lawmakers talking points is some nefarious conspiracy.

The second question. Did the lawmakers actually use the talking points? Boyle asks the people involved and they all deny any coordination. Ellison, who Boyle says “regurgitated all the MPAC talking points” denies that he even received the memo. At this point, the story is dead.

But being the enterprising reporter that he is, Boyle investigates some more. He sees similarities between this leaked memo and some of the questions that Democratic members of the committee raised. At this point, he once again has a story. If lawmakers echoed an advocacy group’s talking points word for word, it might interest some people. But that didn’t happen. So Boyle concludes that when Rep. Al Green brought up the KKK, it was clearly because of the fact that the MPAC memo told lawmakers to suggest that the hearings hurt our national security.

The fact that Al Green is the son of a Christian minister, and most likely has some knowledge of the KKK, as well as the fact that he has a large Muslim constituency in Houston, isn’t why he bought up the KKK. It was because MPAC told him to do so by suggesting to lawmakers to highlight the threat that the hearings posed to national security.

Every single point that Boyle sees as possible collaboration is actually a point that the editors of some of the largest newspapers in the country made. Whatever memo MPAC might have been spreading likely contained the same language as the memo of every other group opposed to the hearings. Those opposed to the hearings had a very coordinated message. That’s one reason why the hearing produced nothing of substance.

That bothers conservatives a lot.

The Washingtons Post’s Dana Milibank has, in my opinion, written the absolute best piece on the hearings.

Praying On Qasr al-Nil
February 2, 2011, 7:51 pm
Filed under: Middle East | Tags: , , , ,

One of the more memorable scenes of the Egyptian revolution will surely be that of ordinary Egyptian’s praying on Cairo’s Qasr al-Nil Bridge as members of Egyptian state police direct their water cannons at them. Truly a remarkable sight.

via Al Jazeera

“I Support Democratization, But…”
January 28, 2011, 5:46 pm
Filed under: Middle East, Uncategorized | Tags: , , ,

The Atlantic’s Jeffrey Goldberg – one of the key proponents of the disastrous invasion of Iraq – has some serious misgivings about the fledgling pro-democracy movement that’s taken over the streets of Egypt. “I support democratization, but,” he cautions, “the democratization we saw in Gaza (courtesy of, among others, Condi Rice) doesn’t seem particularly worth it.” Why was it not worth it? Well, because it didn’t result in conditions favorable to Jeffrey Goldberg. Democracy is preferable to all others forms of government if, and only if, the party that comes out on top shares the same views as Jeffrey Goldberg. What a champion of liberty.

All That Happens In The Middle East Can’t Be Explained By Religion
January 16, 2011, 8:56 pm
Filed under: Middle East, Muslim World | Tags: , , , , ,

Uncertainly rules the day in Tunisia. Zine El Abidine Ben Ali, the country’s strong-armed and authoritarian ruler since 1987, is in Saudi Arabia while the interim government struggles to restore some semblance of order.  “Confusion, fear and horror in Tunisia as old regime’s militia carries on the fight,” reads on headline in the Guardian. To be sure, the days, weeks and months ahead are likely to be just as tumultuous.

But the New York Times, which has otherwise done a decent job of covering the story, can’t seem to report the facts on the ground without breaking into the quite-familiar and largely-contrived secular/religious divide that seems to always explain events in the Middle East. For instance, in its description of transpiring events, Times reporter David Kirkpatrick includes this bit of insight:

Tunisia is far different from most neighboring Arab countries. There is little Islamist fervor there, it has a large middle class, and under Mr. Ben Ali and his predecessor, Habib Bourguiba, it has invested heavily in education. Not only are women not required to cover their heads, they enjoy a spectrum of civil rights, including free contraception, that are well beyond those in most countries in the region.

Tunisia, of course, is one of the most unfree societies on the face of the planet. Ben Ali was an autocrat in every sense of the word. But as the Times seems to suggest, the fact that contraception is readily available and that women aren’t forced to cover (they aren’t mandated to do so in most of the Muslim world), is supposed to make up for, soften, or perhaps, rationalize the repression. It’s an entirely bankrupt approach that fails to explain the complex nature of Tunisian affairs.

Writing in Religion Dispatches, Haroon Moghul illustrates why the secular/religious explanation is not only lazy and hackneyed, but often, useless in understanding people’s grievances. He writes:

There must be an explanation for why a journalist would make such a broad, unsubstantiated statement, and it returns us to the simple need to define Arabs as either secular (like us) or religious (unlike us), an effect of which is a confused causation. Namely, because many Arab states aren’t democracies, they must be Islamist states, where of course women must have to cover their heads.

This assumption lazily equates the public practice of Islam with all things undemocratic, whereas we are inclined to view secularism–even when enforced by a dictator–as explicitly preferable, even though in the experience of many Arabs (and Muslims), secularism is the ideology which justifies control of their lives, religion, and politics.

Moghul’s piece is excellent. Read it all here.

Newt Comes Out As A Muslim-Baiter
July 22, 2010, 7:56 pm
Filed under: Politics, Religion | Tags: , ,

Early this week, disgraced former Speaker of the House Newt Gingrich warned that “a commitment to religious freedom and God-given rights is being replaced by a secular oppression…”  Just hours after those words appeared on Human Events, Gingrich issued a statement forcefully opposing the construction of a community center and mosque in downtown Manhattan, two blocks from Ground Zero.

Gingrich’s affinity for religious freedom and his belief in God-given rights it would seem, doesn’t extend to Americans who are Muslim.  Such outright bigotry and blatant hypocrisy from Gingrich, an avid historian and former college professor, is even more repulsive when you consider his reasoning.

“There should be no mosque near Ground Zero in New York,” he writes, “so long as there are no churches or synagogues in Saudi Arabia.”  Gingrich, who has been railing against the so-called secular socialist machine for trying to take religion out of the public square, and who, like most conservatives, decries the influence of foreign law, wants the U.S. to apply the same standards on Muslims that Saudi Arabia applies to those who are not Muslim.

That’s rich.

As the Washington Monthly‘s Steve Benen, after noting that conservatives continually justify despicable acts of torture on the premise that other nations and non-state actors employ such tactics, points out, “We’re not supposed to lower ourselves to the levels of those we find offensive.”

Gingrich’s clarion call continues: “Those Islamists and their apologists who argue for ‘religious toleration’ are arrogantly dishonest.”  What makes them Islamists, apologists or even dishonest? Gingrich doesn’t say but if you ask him, he’ll likely tell you about the Katusha rockets that Hamas has fired into Sderot or how Iran is hell-bent on acquiring nuclear weapons.  Anything and everything to take the subject away from the “religious freedom and God-given rights” to which American Muslims are entitled.

To understand Gingrich’s paranoia that “America is experiencing an Islamist cultural-political offensive designed to undermine and destroy our civilization,” one must delve deeply into the polarizing, overzealous and paranoid minds of professional Muslim-baiters and the politicians who depend on their support and cater to their illiberal demands.

Many of them are monomaniacs who have made it their life’s mission to defeat Islam and “expose” all Muslims as radical Islamofascists.  If one asks them for evidence to support their claim that no Muslim can be trusted, they will likely mention a purported plot by Muslim Brotherhood operatives to destroy America from within.  The Council on American Islamic Relations and their intern/spies are routinely placed at the epicenter of the evil conspiracy.

Among these folks, any and all Muslims who “refudiate” such insane theories — who denounce violence and terror, profess their loyalty to the American system, take part in the democratic process and who have assimilated into the American landscape — are cleverly employing taqiyya, which, as any Muslim-baiter would tell you, is religiously sanctioned deception.  The same was said about Jews decades ago and anti-Semites once evoked the specter of “Judeo-Bolshevism” the way that Muslim-baiters and politicians like Gingrich today warn of “Islamofascism.” But none of those awful facts really matter, even to a historian such as Gingrich, because facts have long been accused of being part of the secular-socialist machine.

Gingrich’s stand against the mosque project and his attempt to smear its backers as “Islamists” and apologists earns him his anti-Jihad bona fides, and with that, the support of an increasingly mistrustful and hateful electorate which lives off of tying American Muslims to every heinous act that occurs anywhere that remotely sounds Islamic.  In this world, if the media fails to make the connection, they are clearly part of the soft-jihad.

Here is the key: The connection rarely has to be solid.  In fact, the more specious the connection, the more the Muslim-baiter will be seen by others as a patriot and an enterprising investigative reporter.  For instance, the New York TimesRobert Wright highlights one smear that has been contrived to defame the man leading the effort to bring the project to fruition.  The imam behind the project is not to be trusted because conservatives say that “[his] wife has an uncle who used to be ‘a leader’ of a mosque that now has a Web site that links to the Web site of an allegedly radical organization.”  If you can’t keep up with all of that nonsense, then you’re complacent about the Jihad.

Any and all statements against violence made by Muslims must always be placed in the right conservative context: scare quotes.  Gingrich does this masterfully.  That simple act in effect says that Muslims who preach peace are actually jihadists.

As Gingrich and his buddies believe, either you are with them or you are, through your dhimmitude, a proto-Jihadist.  No, you’re worse since you probably support a second genocide against Jews.  (Prominent Muslim-baiters have argued that Muslims instigated the Nazi holocaust!)  Now that you’ve learned all of these made up facts, you simply do not have an excuse to not fight! Wake up and oppose the “Ground Zero Mosque” the “Islamization of America” and prove to those who hate the freedom in America that those freedoms, as Newt argues, don’t actually apply to all Americans.