Thursday, October 24, 2013

Is It Time To Consider Raising Top Marginal Tax Rates?...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

There is most definitely a huge gap between what proponents of low marginal tax rates argue and what the actual results of lowering said rates over the past 30 to 40 years has been. While reading the following article from The Guardian think long term effect. Many are arguing the policies of lower taxes and increased spending (much on defense and the MIC) during this time period is largely responsible for our present sorry fiscal state state of affairs. They may have a point and it is most certainly worth considering as we look to 2014 and 2016. At the very least the party of lower and lower taxes and increased spending, and we all know who that is, should rethink it's strategy for success.

In the United States, the share of total pre-tax income accruing to the top 1% has more than doubled, from less than 10% in the 1970s to over 20% today (pdf). A similar pattern is true of other English-speaking countries. Contrary to the widely-held view, however, globalisation and new technologies are not to blame. Other OECD countries, such as those in continental Europe, or Japan have seen far less concentration of income among the mega rich.

At the same time, top income tax rates on upper income earners have declined significantly since the 1970s in many OECD countries – again, particularly in English-speaking ones. For example, top marginal income tax rates in the United States or the United Kingdom were above 70% in the 1970s, before the Reagan and Thatcher revolutions drastically cut them by 40 percentage points within a decade.

At a time when most OECD countries face large deficits and debt burdens, a crucial public policy question is whether governments should tax high earners more. The potential tax revenue at stake is now very large.

For example, doubling the average US individual income tax rate on the top 1% income earners from the current 22.5% level to 45% would increase tax revenue by 2.7% of GDP per year – as much as letting all of the Bush tax cuts expire (only a small fraction of them lapsed in January 2013). But of course, this simple calculation is static: such a large increase in taxes may well affect the economic behaviour of the rich and the income they report pre-tax, the broader economy and, ultimately, the tax revenue generated. In recent research, we analyse this issue both conceptually and empirically using international evidence on top incomes and top tax rates since the 1970s.

There is a strong correlation between the reductions in top tax rates and the increases in top 1% pre-tax income shares, for the period from 1975-79 to 2004-08, across 18 OECD countries for which top income share information is available. For example, the United States experienced a 35 percentage-point reduction in its top income tax rate and a very large ten percentage-point increase in its top 1% pre-tax income share. By contrast, France or Germany saw very little change in their top tax rates and their top 1% income shares during the same period.

So, the evolution of top tax rates is a good predictor of changes in pre-tax income concentration. There are three scenarios to explain the strong response of top pre-tax incomes to top tax rates; each has very different policy implications.

First, higher top tax rates may discourage work effort and business creation among the most talented: the so-called supply-side effect. In this scenario, lower top tax rates would lead to more economic activity by the rich and hence more economic growth. If all the correlation of top income shares and top tax rates seen in the above data were due to such supply-side effects, the revenue-maximising top tax rate would be 57%. This would imply that the United States still has some leeway to increase taxes on the rich, but that the upper limit has already been reached in many European countries.

Second, higher top tax rates can increase tax avoidance. In that scenario, increasing top rates in a tax system riddled with loopholes and tax avoidance opportunities is not productive either. A better policy would be to first close loopholes so as to eliminate most tax avoidance opportunities, and only then increase top tax rates. With sufficient political will and international co-operation to enforce taxes, it is possible to eliminate most tax avoidance opportunities, which are well documented. Then, with a broad tax base offering no significant avoidance opportunities, only real supply-side responses would limit how high top tax rate can be set before becoming counter-productive.

In the third scenario, while standard economic models assume that pay reflects productivity, there are strong reasons to be sceptical, especially at the top of the income distribution where the actual economic contribution of managers working in complex organisations is particularly difficult to measure. Here, top earners might be able to partly set their own pay by bargaining harder or influencing compensation committees.

Naturally, the incentives for such "rent-seeking" are much stronger when top tax rates are low. In this scenario, cuts in top tax rates can still increase top income shares, but the increases in top 1% incomes now come at the expense of the remaining 99%. In other words, top rate cuts stimulate rent-seeking at the top but not overall economic growth – the key difference with the first, supply-side, scenario.

To tell these various scenarios apart, we need to analyse to what extent top tax rate cuts lead to higher economic growth. Again, data show that there is no correlation between cuts in top tax rates and average annual real GDP-per-capita growth since the 1970s. For example, countries that made large cuts in top tax rates, such as the United Kingdom or the United States, have not grown significantly faster than countries that did not, such as Germany or Denmark.

What that tells us is that a substantial fraction of the response of pre-tax top incomes to top tax rates may be due to increased rent-seeking at the top (that is, scenario three), rather than increased productive effort.

Naturally, cross-country comparisons are bound to be fragile; exact results vary with the specification, years, and countries. But the bottom line is that rich countries have all grown at roughly the same rate over the past 30 years – in spite of huge variations in tax policies. By our calculations about the response of top earners to top tax rate cuts being due in part to increased rent-seeking behaviour and in part to increased productive work, we find that the top tax rate could potentially be set as high as 83% (as opposed to the 57% allowed by the pure supply-side model).

Until the 1970s, policy-makers and public opinion probably considered – rightly or wrongly – that at the very top of the income ladder, pay increases reflected mostly greed rather than productive work effort. This is why governments were able to set marginal tax rates as high as 80% in the US and the UK. The Reagan/Thatcher revolution has succeeded in making such top tax rate levels "unthinkable" since then.

Now, however, we have seen decades of increasing income concentration that have brought about mediocre growth since the 1970s. And with the Great Recession that was triggered by financial sector excesses, a rethink of the Reagan and Thatcher revolutions is underway.

The United Kingdom increased its top income tax rate from 40% to 50% in 2010, in part to curb top pay excesses. In the United States, the Occupy Wall Street movement and its famous "We are the 99%" slogan also reflects a view that the top 1% has gained at the expense of the 99% – a view endorsed by our findings about the highly unequal distribution of income gains during the recovery.

In the end, the future of top tax rates depends on what the public believes about whether top pay fairly reflects productivity or whether top pay, rather unfairly, arises from rent-seeking. With higher income concentration, top earners have more economic resources to influence both social beliefs (through thinktanks and media) and policies (through lobbying), thereby creating some "reverse causality" between income inequality, perceptions, and policies.

The job of economists should be to make a top rate tax level of 80% at least "thinkable" again.

This is an updated version of an article originally published by VoxEU

While I certainly don't advocate a top marginal tax rate of 80% in the USA it certainly seems reasonable to entertain at this time a return to Clinton era rates (or slightly higher)and review the effects of an increase in say ten years or so. If at that time our nation, and the middle class is in better shape then stick with success.

Via: Memeorandum

The Devil Responsble for Organizing Allegations of Sexual Misconduct...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

Herman Cain

The following is an excerpt from RealClearReligion. It is concerning the allegations of sexual misconduct by Herman Cain during the 2012 presidential campaign. It seems he has been able to identify the perpetrator and organizer of what he claims were (are) fallacious allegations. Come to find out is is the DEVIL himself.

Then he speculated as to who may have orchestrated the allegations: the Devil.

"It made me realize that there was a force bigger than right," Cain said.

But that doesn't mean Cain has given up. Nowadays, Cain fights against the Evil One from the pulpit. Cain has been a member of the same Baptist church in Atlanta -- "a church in the hood" -- since he was 10, where he now serves as an associate pastor.

Cain preaches that the Devil is "determined to destroy our culture" and that "the family is at the center of our culture and the center of the family is its religious beliefs." {Read the Full Story}

Just another small example of reason existing the Republican party. Oy Vey!

Via: Memeorandum

Waiting for the 21st Century Voice of Reason in American Politics and Governance...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

James Madison

Why are there no great thinkers anymore in American politics? Is is merely that we no longer notice them? A sign of the times? A result of the me first generation where the desire for and realization of instance gratification overcame long term rational self interest? Or is it just another phase in the current backwards evolution of the American electorate?

Perhaps the questions are rhetorical. However, it is certainly in the rational self interest of the people of the nation to find the answers and take the appropriate actions to correct our national trend towards the lowest common denominator.

"In framing a government which is to be administered by men over men, the
great difficulty lies in this: you must first enable the government to control
the governed; and in the next place, oblige it to control itself." --
Madison, Federalist No. 51

Where is the voice of reason in either political party? Perhaps most importantly when will it surface?

Tuesday, October 22, 2013

The Great American Income Shift...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

There has been a great shift in wealth in America. As the video will show the shift is decidedly and hugely in the direction of the very top income earners. If this continues unabated our nation is staring down the barrel of great social unrest and the upheaval that always follows. Simply put the present income distribution scenario, if it continues on its current path will result in the system collapsing on itself. One way or another.

Fixing Capitalism so a much broader base of Americans can create a measure of wealth and security for themselves and their family, thus growing the American middle class once again, is not socialism or collectivism. It is good common sense and it is the only thing that will ultimately save Capitalism. Corporations and CEO's were doing just fine back in the 50's, 60's, and 70's and so was the rest of America economically speaking. What has changed? Watch the video to find out.

Hat Tip: Progressive Eruptions

Monday, October 21, 2013

ACA and the Glitches in the Registration Process, Possibly Many Weeks Away from Correcting...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

As the administration acknowledges the myriad of technical problems with the healthcare exchange marketplace (and feigns anger) contractors have identified most of the problems but worry it may be weeks away before all issues are resolved. This is because the Obama Administration has been slow (remis) in issuing orders to fix the flaws.

From The New York Times.

Federal contractors have identified most of the main problems crippling President Obama’s online health insurance marketplace, but the administration has been slow to issue orders for fixing those flaws, and some contractors worry that the system may be weeks away from operating smoothly, people close to the project say.

Administration officials approached the contractors last week to see if they could perform the necessary repairs and reboot the system by Nov. 1. However, that goal struck many contractors as unrealistic, at least for major components of the system. Some specialists working on the project said the online system required such extensive repairs that it might not operate smoothly until after the Dec. 15 deadline for people to sign up for coverage starting in January...

In interviews, experts said the technological problems of the site went far beyond the roadblocks to creating accounts that continue to prevent legions of users from even registering. Indeed, several said, the login problems, though vexing to consumers, may be the easiest to solve. One specialist said that as many as five million lines of software code may need to be rewritten before the Web site runs properly.

“The account creation and registration problems are masking the problems that will happen later,” said one person involved in the repair effort.


One major problem slowing repairs, people close to the program say, is that the Centers for Medicare and Medicaid Services, the federal agency in charge of the exchange, is responsible for making sure that the separately designed databases and pieces of software from 55 contractors work together. It is not common for a federal agency to assume that role, and numerous people involved in the project said the agency did not have the expertise to do the job and did not fully understand what it entailed.

The people close to the project spoke on the condition of anonymity because they were not authorized to discuss the system’s problems.


A part of the system, hidden from users, draws data from several federal and state databases to determine if consumers qualify for coverage and then calculates the subsidies for which they may be eligible. Another part of the system sends enrollment data to insurers. Several people involved in the project say that problems like those of the last three weeks are not uncommon when software from several companies is combined into a large, complex system.

Insurance executives said in interviews that they were frustrated because they did not know the government’s plan or schedule for repairs. Insurers have found that the system provides them with incorrect information about some enrollees, repeatedly enrolls and cancels the enrollments of others, and simply loses the enrollments of still others.

Correcting those errors, specialists said, could require extensive rewriting of software code. Insurers said it could be weeks before their data and the government’s could be reconciled.

Accurate enrollment data is essential. Even if consumers bypass the federal Web site and go directly to insurance companies to sign up for coverage, the Treasury Department will still need enrollment data to pay tens of billions of dollars in subsidies promised to insurers.

Confidential government documents show that some technical fixes have been made to the federal Web site, and specialists say the site is slowly improving.

Nevertheless, disarray has distinguished the project. In the last 10 months alone, government documents show, officials modified hardware and software requirements for the exchange seven times. It went live on Oct. 1 before the government and contractors had fully tested the complete system. Delays by the government in issuing specifications for the system reduced the time available for testing. {Read the Full Story Here}

As America and her frustrations continue over the current ACA registration process glitches she can only wait and hope the process improves and the ACA itself runs smoother and better than its initial signup rollout. Only time will tell. It is after all the law of the land and it ain't going anywhere. Irrespective of the Tea Party, Cruz, Rubio, Gohmert and the rest of the minority working to find ways to insure its failure.

Via: Memeorandum

Sunday, October 20, 2013

Marco Rubio and Unrelated Issues, His Lack Of Understanding With Respect To Rational Self (and National) Interest...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

Senator Marco Rubio (R-FL) 

I am getting more amused every day by the loonies that constitute the Tea Party faction of the Republican Party. Being an advocates of exercising rational self interest in all thing I cannot help by marvel at Senator Marco Rubio's remarks on FOX News this Sunday. Certainly his remarks don't sound much like concern for rational self interest. Of course this is based on the belief comprehensive immigration reform is in everyone's rational self interest.

But maybe it's just me.

Via Memeorandum.

Sen. Marco Rubio (R-FL) suggested on Sunday that President Obama’s refusal to compromise with Republicans on Obamacare to re-open the government and raise the nation’s debt ceiling has jeopardized the chances of passing comprehensive immigration reform.

“I think immigration reform is harder to achieve today an it was three weeks ago because of what happened here,” the first-term senator said during an appearance on Fox News Sunday, before agreeing with opponents of immigration reform who warn that that the Obama administration will simply fail to enforce border security or other aspects of a bill he disagrees with.

“The president has undermined this effort, absolutely, because of the way he has behaved over the last three weeks,” Rubio added. “This notion that they’re going to get in a room and negotiate a deal with the president on immigration is much more difficult to do…because of the way the president has behaved towards his opponents over the last three weeks.” {Read More}

This sounds more like sour grapes and a United States Senator acting like a spoiled child than it does looking out four our nations rational self interests.

Friday, October 18, 2013

Who is John Galt and What Ails America...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

As America continues its struggle to figure out just how to marry capitalism and the ever present social concerns of a modern advanced society I personally just sit back and chuckle.

The recent national melodrama, driven by the continuing debate over politically opposing views on the ACA (ObamaCare) as well as how to control the spiraling national debt highlights the above point nicely. And, it makes me chuckle all the more.

As I listened to the video I realized, more than ever, the proponents of the opposing political view(s) will never find that place were reason can ultimately result in effective, productive, and long term lasting results benefiting the individuals of this nation. This is largely because they willfully fail to recognize what is really in their rational self interest. I say this to the ideologically driven politicians and the elected officials of both parties that are only too willing to trade in dishonesty and eager to profit from their own position of influence and power.

Businesses that take advantage of, and wallow at the trough of government subsidies and are ready to accept money (taxpayer money) and other favors to keep their failing asses afloat are in the same boat as the politicians that manipulate us as they run the federal government..

Who is John Galt?

Click HERE for the article that accompanies the video

Via: Memeorandum

Thursday, October 17, 2013

A Default Averted For Now As The Can Is Kicked Down the Road... Call Me A Skeptic Awaiting Feb. 7th 2014

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

Questions: Do you trust this man? Do you think this issue is resolved? Is it just me or has the Tea Party left reason for the realm of wishful dreams?

Then there is the following from FDL ... "It would seem that Senator Cruz should be in a more sour mood given that his plan to stop Obamacare is set to be thwarted. Things really seem to be going poorly for Cruz as the Houston Chronicle, one of his home state’s most prominent papers, took back its endorsement of him."

Houston Chronicle - "When we endorsed Ted Cruz in last November’s general election, we did so with many reservations and at least one specific recommendation – that he follow Hutchison’s example in his conduct as a senator.

Obviously, he has not done so. Cruz has been part of the problem."

And this.

"In three week period following Cruz’s speech — even as GOP’s national approval ratings plummeted — conservatives frantically built their fundraising lists and campaign coffers. In the last quarter, Cruz’s political action committee raised in $797,000, nearly twice what it pulled in the quarter prior, and Heritage Action — which has pressured conservatives to vote against any bill that does not undermine Obamcare — collected $330,000."

And finally, again from FDL, this truth. "So while the country got taken for a bumpy ride and the Republican brand collapsed in national polls – Ted Cruz smashed fundraising goals and posed for the cameras to raise his national profile. A party of one?

No wonder Cruz’s Republican colleagues hate him. His tactics have benefited no one but himself."

Of course there still remains some Senate Republicans trying to at least retain some sense of reason and rational thinking.

Visit for breaking news, world news, and news about the economy

One thing of which we can all be sure. Neither the ugly intra-party republican battle or another partisan battle is yet over. The battle(s) just finished is unlikely to deter the next onslaught by the loonies who believe in their mission to change America back to 1776, 1787, or 1860. The nation has not heard the last of Cruz, Gohmert, Palin, Bachmann, Lee, and legions of complete and utter Malcontents who support them. Via: Reason

Wednesday, October 9, 2013

America's Dysfunctional Government Considered Larger Problem Than the Economy...

by: Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

It is not at all surprising that this week's Gallop Poll shows the American people now view the federal government as a larger problem than the economy. This at the same time President Obama's favorably hits a new low according to a recent AP Poll... "53 percent unhappy with his performance and 37 percent approving of it. "

PRINCETON, NJ -- Americans are now more likely to name dysfunctional government as the most important problem facing the country than to name any other specific problem. Thirty-three percent of Americans cite dissatisfaction with government and elected representatives as the nation's top issue, the highest such percentage in Gallup's trend dating back to 1939. Dysfunctional government now eclipses the economy (19%), unemployment (12%), the deficit (12%), and healthcare (12%) as the nation's top problem.

Click Picture To Enlarge

Americans' mentions of either the economy in general or jobs in particular as the nation's top problem had already been declining in 2013. Both issues dropped further as top-of-mind concerns in the Oct. 3-6 survey, conducted in the midst of the U.S. government shutdown.

At the same time, the percentage of Americans who mention some aspect of government leadership as the nation's top problem has doubled, 33% this month from 16% last month. This almost certainly reflects the current upheaval in Washington and party leaders' inability to agree on a way to fund the government or avoid a possible government default. October is the first time since 2008 when an economic issue was not at the top of Americans' list of most important problems.

Democrats (36%) and independents (33%) are somewhat more likely than Republicans (23%) to mention dysfunctional government as the most important problem facing the country, perhaps reflecting partisans' differing views about the role and importance of government. {Read More}

Yeppers, the country definitely has it's problems. Yet the sides refuse to talk with each others. There are those who still refuse to recognize our political parties have a shared responsibility for this. Perhaps one day this will change. But given the present political environment it may be a very long time.

Via: Memeorandum

Thursday, October 3, 2013

Perhaps It Is Too Late... Something to Think About

by; Les Carpenter
Rational Nation USA
Liberty -vs- Tyranny

This will probably not be my last post, although if it were it certainly would be in my best interest. At least from a health perspective.

Reason in America has quite frankly jumped the shark. Politics, and by extension government has become a thing to be disdainful of. Personally all I have left for our politicians and GOVERNMENT is utter and complete contempt.

How easily and effortlessly the media, the politicians, the representatives, the senators, the political blogs full of partisan poisonous BS, the talking heads of FOX.. MSNBC.. Limbaugh... and more, all react to the strings their puppet masters are in control of.

Winning. Preserving the long held paradigm(s) of your chosen political ideology is ALL that is important.

Whether you be conservative, liberal, progressive, conservative, reactionary, libertarian, anarchist, socialist, communist, fascist, or whatever, you dare not risk it be said that you actually consider the issues and evident problem(s) in the attempt to find the best workable solution. It MUST first and foremost fit your long held paradigm(s) and resulting template.

There is a reason the American public holds Congress, and most everyone involved in governance in such low esteem. Those entrusted with the GENERAL WILL of the PEOPLE have failed to execute their charge.

However, having said the above here comes the core issue. The slap in the face if you will. Americans, by their own CHOOSING have failed to educate themselves on issues. They have chosen to believe the the "experts", the politically connected, the meaningless polls, the most charismatic speakers, the agenda driven talking heads. In essence the American electorate has allowed itself to lead because they simply have been too busy, or too lazy to identify for themselves exactly what their own rational self interests really are.

I only ask you to THINK about the above. Put the ideological paradigm(s) and the din of the self interested politically connected puppets and shills for all political ideologies and parties aside for the moment and consider what is ACTUALLY in the best rational LONG term interests of yourself, your family, and your nation.

Unless you act in your own rational self interests and that of your family and communities you are IN FACT allowing others to act on your behalf. As we know from historical realities POWER CORRUPTS and ABSOLUTE POWER CORRUPTS ABSOLUTELY.

The choice is yours, the responsibility is yours, and the results will be yours. Individuals do not exist in a vacuum. Society is a complex social construct. As a result living in society requires compromise. Effective compromise takes work, diligence, the ability to maintain an open mind, and it means NOT expecting you will win on all your cherished paradigms.

Progress is not anti conservative. Rather it is considered and cautious progress towards advancing the improvement of society overall and over time.

As I leave for a much needed emotional hiatus:

“When it shall be said in any country in the world my poor are happy; neither ignorance nor distress is to be found among them; my jails are empty of prisoners, my streets of beggars; the aged are not in want; the taxes are not oppressive; the rational world is my friend, because I am a friend of its happiness: When these things can be said, there may that country boast its Constitution and its Government”

― Thomas Paine, Rights of Man

Wednesday, October 2, 2013

And We Wonder Why?...

by: Les Carpenter
Rational Nation U
Liberty -vs- Tyranny

You just can't make this sh*t up. Texas Republican Governor Rick Perry obviously fails to understand how our nation of laws work. Even following a United States Supreme Court ruling that a law is Constitutional. Apparently the slightly light in the attic Governor Perry has determined that 'implementation of the national health care reform law constituted "a criminal act."' By what standard he arrived at his "scholarly" determination apparently only his God knows. He (or I) may not like or agree with the ACA but that doesn't make it criminal.


HASBROUCK HEIGHTS, N.J. -- In a campaign appearance Tuesday on behalf of New Jersey Republican Senate nominee Steve Lonegan, Texas Gov. Rick Perry said the government's implementation of the national health care reform law constituted "a criminal act."

"If this health care law is forced upon this country, the young men and women in this audience are the ones who are really going to pay the price," Perry said to a small crowd outside the Bendix Diner in this New York City suburb. “And that, I will suggest to you, reaches to the point of being a felony toward them and their future. That is a criminal act, from my perspective, to put that type of burden on them, to mortgage their future like that. America cannot stand that. America cannot accept that.”

Perry’s provocative comment came on the same day that state-based insurance exchanges, created under the 2010 Affordable Care Act, opened for enrollment.

The 2012 Republican presidential candidate, who has said that he will consider launching a second White House bid in 2016,...

One thing is for certain. If the Governor decides to run for the highest office in the land he will MOST CERTAINLY provide those who haven't jumped the shark with comic relief.

Via: Memeorandum