Posted By Terence on January 24, 2012

Below I have references three articles going back as far as 1987 arguing for lower capital gains taxes. Pay attention to the specificity of the arguments FOR lowering these taxes. Philosophy matters, as Ayn Rand has argued, and it is because these arguments were made quite consistently and I would add, aggressively, from the 1980s up until today when the bizarre opinion has developed among many average Americans that taxes are too high on upper incomes! If one googles “capital gains taxes economic productivity activity”, they will find almost exclusively articles arguing for the lowering of capital gains taxes. Why the intense moral passion around this issue, an economic one? Why the passion to lower taxes on those who already have a great deal? This is strange itself.

There are three counter arguments we must learn to make just as assertively and confidently as the no-tax crowd. One: It is not moral or just to have tax rates on passively earned income (income earned on capital investment) that are lower than rates paid on earned income. Two: We are in very high debt in great part from the excessive lowering of tax rates in the last three decades. Three: There is no empirical proof that higher capital gains taxes harms economic activity. Such arguments usually depend on selecting very particular criterion. One example: Claiming that raising the capital gains tax will increase the tax RATE on middle income earners more than wealthier earners. This isn’t practically relevant. The middle income earner will pay much less in absolute dollars, while the absolutely wealthy person will be absolutely more.

Paper One, 1987: The Economic Effects of Capital Gains Taxation, Congressional Committee. Click here for whole article.

Between June 1981 and December 1986, the federal government allowed taxpayers to exclude 60 percent of capital gains from taxation. However, the Tax Reform Act of 1986 eliminated this exclusion, raising the maximum capital gains tax rate from 20 to 28 percent, a 40 percent increase. The increase was largest for middle income taxpayers, whose tax rate increased from 8.7 to 15 percent, a 72 percent increase. A capital gains tax reduction would help promote economic growth, benefit taxpayers across the income spectrum, and mitigate the unfair effects of taxing inflation-generated gains.

Macroeconomic Effects. Economist Allen Sinai maintains that a capital gains tax reduction would lower the cost of capital, boost investment, and stimulate economic growth. He estimates that a capital gains tax reduction could:

increase real gross domestic product (GDP) by an average of $51 billion annually;
create 500,000 new jobs by the year 2000; and
increase real business spending by an average of nearly $18 billion annually.

The effects of increased investment and economic growth would reverberate throughout the entire economy in the form of higher wages and rising living standards. In addition, the United States taxes capital gains more harshly than its major international competitors. Reducing the capital gains tax rate could increase U.S. global competitiveness.

Tax Revenue. The historical evidence suggest that capital gains tax reductions tend to increase tax revenue. When capital gains tax rates were lowered in 1978 and again in 1981, revenue climbed steadily. Conversely, when the tax rate was increased in 1987, revenue began declining despite forecasters predictions it would increase. For instance, capital gains tax revenue in 1985 equaled $36.4 billion after adjusting for inflation, yet $36.2 billion was collected in 1994 under a higher tax rate. In other words, tax revenue in 1994 was slightly less than it was in 1985 even though the economy was larger, the tax rate was higher, and the stock market was stronger in 1994.

Who Would Benefit? A recent NASDAQ Stock Market survey suggests that the notion that all investors are affluent gentlemen coupon-clippers is no longer true. The survey found that:

stock ownership doubled over the past seven years to 43 percent of the adult population;
47 percent of all investors are women;
55 percent are under the age of 50; and
50 percent are not college graduates.

Paper Two, 2010:

Capital Gains Taxes and the Economy. Click here for whole article.

In 2011, capital gains tax rates for taxpayers in the top four income brackets are set to move higher. At year end, the current 15% tax rate on capital gains for assets held one-year-or-more will rise to 20% for individuals earning approximately $34,000-or-more and married couples earning $68,000 or higher.

This paper assesses the macroeconomic effects of changes in capital gains tax rates for individuals, with estimates from simulations with the Sinai-Boston (SB) large-scale macroeconometric model of the U.S. economy. The Model is used in simulating reductions, and increases, in capital gains taxation starting in 2011 and extending to 2016, relative to the current 15% rate paid by many taxpayers. The capital gains tax rates considered ranged from 0% to 50% with gradations at 5%, 10%, 20% and 28%.

Several conclusions are suggested by the results:

Very high, or very low, individual capital gains tax rates relative to the current level can do significant damage, or provide significant help, to the economy.

Raising the capital gains tax rate from 15% to 20%, 28% or 50%, reduces growth in real GDP, lowers employment and productivity and, ex-post, or after feedback, negatively affects the federal budget deficit. For example, at a 20% capital gains rate compared with the current 15%, real economic growth falls by an average of 0.05 percentage points per annum and jobs decline by an average of 231,000 a year. At a 28% rate, economic growth declines by 0.10 percentage points and the economy loses an average of 602,000 jobs yearly. When the capital gains tax rate is increased to 50%, real GDP growth declines by an average of 0.3 percentage points per year and there are an average 1,628,000 fewer jobs per annum.

Paper Three: Why Capital Gains Taxes are Unfair, by Martin Feldstein. Click here for entire article.

Counterarguments:

Paper Four: Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits ? Or Is It Voodoo Economics All Over Again? 1997.Click here for while article.

Category: American politics, Political-economics | No Comments »
Tags: Disordered Philosophy

Posted By Terence on January 24, 2012

I was very happy to see that The Tree of Life got nominated for Best Picture. One of the most artistic and true expressions of a religious sensibility I’ve seen in the public realm. We need more of this to counter that unique aspect of the US: A great deal of religious activity, but most of it shallow and spiritually thin. There is something very deep about the fact that Disney World and Hollywood are peak sources of cultural expression in our nation. This is a certain intentionality to be and remain shallow, or in the form of the images projected by these two sources: two dimensional. Terrence Mallick as director functions as an artist should but in America mostly don’t, and anyone with a true religious sensibility just does: As one who conveys to the public an experience of the deepest truth of human existence.

Category: American culture, depth psychology, Spirituality. | No Comments »
Tags: American culture, spirituality

Posted By Terence on January 23, 2012

I found the poetry of David Whyte a few years ago when researching the Myers-Briggs personality type “INFP”. Click here to be brought to his website.

Self Portrait

It doesn’t interest me if there is one God
or many gods.
I want to know if you belong or feel
abandoned.
If you know despair or can see it in others.
I want to know
if you are prepared to live in the world
with its harsh need
to change you. If you can look back
with firm eyes
saying this is where I stand. I want to know
if you know
how to melt into that fierce heat of living
falling toward
the center of your longing. I want to know
if you are willing
to live, day by day, with the consequence of love
and the bitter
unwanted passion of your sure defeat.

I have heard, in that fierce embrace, even
the gods speak of God.

— David Whyte
from Fire in the Earth
©1992 Many Rivers Press

Category: depth psychology, Spirituality. | No Comments »
Tags: spirituality

Posted By Terence on January 20, 2012

Click here to be brought to the web site of Americans Elect 2012. This may be a worthwhile alternative to the current two party system.

Category: American politics | No Comments »
Tags: Policy and Good Government

Posted By Terence on January 19, 2012

“The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.”

As quoted by Nicholas Kristof in the New York Times, on Thursday, January 19th.

My point in highlighting this quote is not to bash business, but to underscore the moderate contrast to the anti-social claim made by today’s free market radicals. They claim that the ability of the individual to get rich is a moral right and the justification for capitalism.

Category: Political philosophy, Political-economics | No Comments »
Tags: Policy and Good Government

Posted By Terence on January 16, 2012

We don’t get a sense for datelines for historical “periods” until well after the period has effectively ended. I imagine that there are others who have said this, but I want to make a claim: The Enlightenment ended in 1989, with the fall of the Soviet Union. This is a nice date, as we can say that its peak period began in 1789. This will give historians a nice round number of 200 years. I then want to say there was an “interregnum” period from 1989 until 2001 with the attacks of 9/11. Now, since 9/11, the United States has entered a period in which the “End Time” form of historical Christianity has come to dominate one of the major political parties. Such a radical, anti-rational philosophy must lead to bad government, with all the chaos that accompanies it. This is the second posting of the article in the New York Review of books.

Text from article in The New York Review of Books, by Mark Lilla.

The real news on the American right is the mainstreaming of political apocalypticism. This has been brewing among intellectuals since the Nineties, but in the past four years, thanks to the right-wing media establishment and economic collapse, it has reached a wider public and transformed the Republican Party. How that happened would be a long story to tell, and central to it would be the remarkable transmutation of neoconservatism from intellectual movement to rabble-rousing Republican court ideology. The first neoconservatives were disappointed liberals like Irving Kristol and Nathan Glazer, who saw the failures of a large number of Great Society programs to deliver on the unrealistic expectations of its architects, and consequently began to appreciate the wisdom of certain conservative assumptions about human nature and politics. Kristol’s famous quip that neoconservatives were liberals who’d been mugged by reality captured the original temperament.

Sometime in the Eighties, though, neoconservative thinking took on a darker hue. The big question was no longer how to adapt liberal aspirations to the limits of politics, but how to undo the cultural revolution of the Sixties that, in their eyes, had destabilized the family, popularized drug use, made pornography widely available, and encouraged public incivility. In other words, how to undo history. At first, neoconservatives writing in publications like Commentary and The Public Interest (which I once helped to edit) portrayed themselves as standing with “ordinary Americans” against the “adversary culture of intellectuals,” and to that end promoted “family values” and religious beliefs they did not necessarily share, but thought socially useful. Yet by the Nineties, when it became apparent that lots of ordinary Americans had adjusted to the cultural changes, neoconservatives began predicting the End Times, and once-sober writers like Gertrude Himmelfarb and Robert Bork started publishing books with titles like On Looking into the Abyss and Slouching Towards Gomorrah.

The new apocalypticism reached a fever pitch in a symposium published in 1996 in the widely read theoconservative journal First Things, edited by the late Richard John Neuhaus. The special issue bore the title “The End of Democracy? The Judicial Usurpation of Politics,” and was provoked by a court decision on physician-assisted suicide. The opening editorial put the following question before readers: Given that “law, as it is presently made by the judiciary, has declared its independence from morality,” and that, due to judicial activism, “the government of the United States of America no longer governs by the consent of the governed,” have we “reached or are [we] reaching the point where conscientious citizens can no longer give moral assent to the existing regime,” and therefore must consider responses “ranging from noncompliance to resistance to civil disobedience to morally justified revolution”? To raise such a question, the editors insisted, “is in no way hyperbolic.”2

This is the voice of high-brow reaction, and it was present on the right a good decade before Glenn Beck and his fellow prophets of populist doom began ringing alarm bells about educated elites in media, government, and the universities leading a velvet socialist revolution that only “ordinary Americans” could forestall. Apocalypticism trickled down, not up, and is now what binds Republican Party elites to their hard-core base. They all agree that the country must be “taken back” from the usurpers by any means necessary, and are willing to support any candidate, no matter how unworldly or unqualified or fanatical, who shares their picture of the crisis of our time. In the early Sixties, the patrician William F. Buckley joked that he would rather be governed by the first two thousand people in the Boston phonebook than by the combined faculties of Harvard and MIT. In 2010, former Commentary editor Norman Podhoretz wrote in The Wall Street Journal that “I would rather be ruled by the Tea Party than by the Democratic Party, and I would rather have Sarah Palin sitting in the Oval Office than Barack Obama.” This from a former student of Lionel Trilling. And he wasn’t joking.

Seen in this context, the current deadlock in Washington does not look so surprising. During the 2010 congressional election campaign, Republican candidates (and some Democrats) were put under enormous pressure to sign the Americans for Tax Reform “Taxpayer Protection Pledge,” which obliges them to oppose any increase in the marginal personal or corporate tax rate, and any limits on deductions or tax credits that aren’t offset by other tax cuts. To date, all but six Republican representatives and seven senators have signed this collective suicide note, making the group’s president, Grover Norquist, nearly as successful as Reverend Jim Jones. That’s how the apocalyptic mind works, though. It convinces people that if they bring everything down around them, a phoenix will inevitably be born.

Click here for relevant article.

Category: American politics, Political philosophy, Spirituality. | No Comments »
Tags: Disordered Philosophy, Republican Policy

Posted By Terence on January 12, 2012

I consider Eric Voegelin to be the best philosopher in the last 100 years. In his classic book on political philosophy, The New Science of Politics, he goes into great detail in discussing a particular movement of culture that he argues has come to dominate Western civilization, and in particular Protestant culture. He calls this movement “gnosticism,” using the term in a somewhat more specific way than it is generally understood. On page 166 of the book, he claims that when gnosticism comes to dominates a society, it causes it’s intellectuals and political activists to “interpret a concrete society and its order as an eschaton; and in so far as they apply their fallacious construction to concrete social problems, they misrepresent the structure of immanent reality. The eschatological interpretation of history results in a false picture of reality; and errors with regard to the structure of reality have practical consequences when the false conception is made the basis of political action.” (p. 166, NSP)

I argue that the Republican Party in the last ten years has become increasingly “gnostic” in this sense. Their policies are increasingly driven by a misguided spiritual and moral impetus. The sign of the presence of gnosticism as an animating idea is moral intensity injected into politics. Look for any policies that talked about with intense moral language, that allow no compromise, and are all-or-nothing in their implementation.

The most significant “principle” which is essentially gnostic, then, is the notion that economic freedom is a moral absolute. This leads to the absolutist positions on taxes and spending. In the West, the result of gnosticism in politics is an decline in the economic well being of average citizens and increase in political confusion and disorientation.

Category: American politics, Political philosophy | No Comments »
Tags: Disordered Philosophy

Posted By Terence on January 11, 2012

I have argued that the Republican Party in the last 10 or so years is much more radically liberal, in the classical sense of “liberal”, than the public realizes. This book review makes the same claim.

Excerpts from an article by Mark Lilla, reviewing “The Reactionary Mind: Conservativism from Edmund Burke to Sarah Palin.

Note: The author of this web site is related to Edmund Burke!

Most of the turmoil in American politics recently is the result of changes in the clan structure of the right, with the decline of reality-based conservatives like William F. Buckley and George Will and the ascendancy of new populist reactionaries like Glenn Beck, Ann Coulter and other Tea Party favorites. To understand why the distinction between them still matters, we need to remind ourselves what the terms “conservative” and “reactionary” originally meant.

….

Americans’ assumptions about human nature are basically liberal today…. Most intellectuals who call themselves conservatives today accept as self-evident the truths enumerated in the Declaration of Independence, which no traditional European conservative could. … Stricly speaking, they are go-slow, curb-your-enthousiasm liberals like Toqueville, not conservatives like Edmund Burke or T. S. Eliot or Michael Oakechott. As for those like Congressman Ron Paul who promote a minimal state and an unregulated economy, their libertarianism is actually a mutation of early liberalism, not conservatism. …

Here is the link to the entire book review.

Category: American politics, Political philosophy | No Comments »
Tags: american politics, philosophy