Olympic Taurocoprolites; Global Warming Pretenders; and Other Matters
31st July 2012
Jerry Pournelle has some thoughts.
Most interesting to me:
The best thing one can do for giant corporations is to thicken the business environment with regulations requiring compliance specialists; the result is to prevent newcomers from entering the business, thus ensuring that the business will be dominated by the existing giants.
The same logic applies to tax policy, and this can be recast as: ‘The best thing one can do for rich people is to thicken the tax environment with regulations requiring compliance specialists; the result is to prevent newcomers from entering the “rich people” business, thus ensuring that the “rich people” business will be dominated by the existing wealthy.’ Which is what I’ve been saying all along about Warren Buffet and his fellow travelers.
July 31st, 2012 at 07:02
“thicken the tax environment with regulations requiring compliance specialists” The analogy breaks down on many levels.
‘Thicken’ implies adding to. Changing marginal tax brackets does not add anything; it merely redefines what already exists. Same goes for changing the tax rate on capital gains, and the other proposals currently on the table. If anything, the current postition of both parties involves ‘thinning’ the tax environment by reducing or eliminating some of the exemptions, loopholes, and deductions in the code. (The big fight will be over which ones to pare or eliminate, but that’s a different subject.)
Specialists in ‘compliance’ (read: ‘avoidance’, if not ‘evasion’) in the form of tax accountants and attorneys have been a part of the fiscal landscape for at least two centuries. Nothing new there.
And yet those who were not super-rich before still managed somehow to become super-rich. However did they do it?
In sum, your position just doesn’t hold water.
July 31st, 2012 at 11:32
If the tax law were ‘pay 10%’ and we were discussing changing it to ‘pay 12%’, you might have a point. But we’re not. The tax code is planted thick with regulations from end to end, and marginal tax rates are small beer when compared to the Byzantine determinants of what you have to count, what you can skip, and the amounts that you can count 7.35% of on odd Tuesdays.
Legislators like to prate about ‘reducing or eliminating some of the exemptions, loopholes, and deductions’, but that rarely happens, and when it does happen each elimination is replaced with a dozen additions.
‘Compliance’, when it comes to the law, ALWAYS ‘means “avoidance” if not “evasion”), because the law by its nature is attempting to prevent you from doing what you want to do — so holding your nose in the air doesn’t make it an argument. And, as you say, ‘nothing new there’, which was my point, so I’m not sure why you’re wasting our time repeating something that we already know.
The super-rich managed to become super-rich either by inheriting their money from people who made it when the code wasn’t so thick (Hello, Kennedy!) or by making money so quickly that the government couldn’t keep up (Hello, Bill Gates!). Even a blind pig finds an acorn every now and then, and government is not known for its efficiency.
My position doesn’t need to hold water, since it’s not a bucket.
July 31st, 2012 at 12:03
“If the tax law were ‘pay 10%’ and we were discussing changing it to ‘pay 12%’, you might have a point. But we’re not.”
We’re not talking about eliminating the capital gains rate? We’re not talking about letting the Bush tax breaks lapse on some payers but not others? Oh. Well, since those are the only two issues of the tax code being bruited about at the moment, and since those changes are relatively simple to expound and implement, then perhaps you could enlighten me on what hypothetical but not currently extant code changes you are on about?
“I’m not sure why you’re wasting our time repeating something that we already know” From your construct, one wouldn’t be able to deduce that you already know it. So excuse me. (And the nose-holding was merely adjunctive to the argument, not the argument itself…which you knew, but were being deliberately obtuse about.)
“inheriting their money from people who made it when the code wasn’t so thick” You name Kennedy, but you forgot the Waltons and Kochs–both of whose progenitors made their billions relatively recently, so I don’t think ‘when the code wasn’t so thick’ really applies here. Unless you posit an exponential increase in the ‘thickness’ in just the last 50 years or so…
July 31st, 2012 at 13:54
Actually, this has already been done and was quite successful. Big Oil, always a historical leader in crushing competition, managed to use environmental regulations to get rid of smaller refineries. Exxon jumped in bed with EPA on low sulfur standards for diesel about 10 years ago. (Lower sulfur generally means less particulate matter in uncontrolled diesel exhaust.) They helped them set a standard so low that smaller refineries either had to purchase very low sulfur crude (extremely expensive) or install new hydrotreating (removes sulfur from oil) equipment. More hydrotreating means more complex and very expensive sulfur recovery plants – which just happen to be very difficult to get new air permits issued. The little refineries just had to drop out of the business. Much to nobody’s surprise, the price of diesel went up along with Exxon’s profits.
July 31st, 2012 at 14:04
And exactly what does your example have to do with the tax code?
August 1st, 2012 at 11:27
It has to do with using government regulation to crush competition without violating antitrust rules.
August 1st, 2012 at 22:08
But the topic isn’t government regulation or anti-trust. The topic is the tax code.
Pay attention.