Paul L. Caron
Dean



Wednesday, July 29, 2020

How America Was Tricked On Tax Policy

Bret Bogenschneider (Indiana University East), How America was Tricked on Tax Policy (Anthem Press 2020):

Tricked 3How America was Tricked on Tax Policy explains how regular citizens were “tricked” by the outdated view of economists that much heavier taxation of labor rather than capital is economically justifiable. The truth is that workers pay their taxes while the rich pay very little.  Based on reputable sources of information, including the publications of the Organization for Economic Cooperation and Development (OECD), official statistics data, and the publications in high-ranked journals, the book paves the way for a new policy making process aimed to achieve more sustainable taxation and to increase the wellbeing of citizens as the main goal of any modern state policy.

Dealing with critically important and underexplored topics in tax policy, the book challenges an enshrined dogma that is rarely challenged at the level of policy. In doing so, this book envisions policy changes that could be highly impactful in a new political administration. This book proposes that governments should look for not just corporate income tax rate reduction when announcing their tax reforms but should equally focus on the reduction of the overall tax burden on labor. The negative impact and high social cost of wage taxation is exemplified by the key areas of tax policy that are relevant for every wealthy state, such as taking due care of public health, investing in education and wellbeing of children, and supporting small business for the overall benefit to society.

The book provides sound arguments that “labor” should essentially be treated as “human capital” and be given the same tax treatment as that of classically understood “capital”. This understanding is extremely relevant nowadays as we are facing the issues of digitalization, in general, and “robotization,” where a new type of labor, i.e., nonhuman labor, is entering the workforce. The book’s fresh novelty comes from its new approach to tax policy while addressing the issues relevant to the “digital” era such as taxation of artificial intelligence or “robots” that are currently partially substituting the human workforce. The book compellingly argues how tax policy could be improved by incorporating science and scientific methods.

Table of Contents
Introduction, The Classic Deceptions in Tax Policy
Chapter 1, Tax Policy in the Oval Office
Chapter 2, The Abandonment of Scientific Methods in Tax Research
Chapter 3, How the Business Tax System Favors Large Multinational Firms over Small Businesses
Chapter 4, The Limits of Moral Philosophy in Formulating Tax Policy
Chapter 5, Wage Taxes Do Have Social Costs
Conclusion, Postmodern Tax Policy, or Why the “Little People” Matter to Tax Policy

https://taxprof.typepad.com/taxprof_blog/2020/07/how-america-was-tricked-on-tax-policy.html

Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Comments

"The truth is that workers pay their taxes while the rich pay very little."

While I agree that taxing labor is a terrible idea, and regressive in America, a lot of wealthy people qualify as workers and they pay most all federal taxes. The top 20% of households are not idle and unproductive.

Posted by: MM | Jul 29, 2020 6:57:43 PM

Mr. Bogenschneider is 100% correct! It is high time we stopped getting tricked like this with false, outdated tax policy! And Mr. Bogenschneider is also 100% correct that these are outdated views from outdated economists. Another outdated view, if you will allow me to point to a different but related matter – Such as figuring unemployment by adding up monthly applications for unemployment benefits. That is absurd on the face of it – what about the millions of folks who no longer apply for benefits? Who have fallen through the cracks and are no longer counted and added to the mix? As an example of a related outdated methodology from more outdated economists.

At any rate, I took a lightly different view on all this. Inspired by Mr. Bogenschneider's excellent, accurate article. Hopefully you’ll find some value in this –

It’s time all of us Americans with a modicum of common sense start calling and emailing our so-called representatives in the Congress and Senate to get their priorities straight… to stop pandering to the NRA and other extremist special interest groups who only care about themselves and their bottom line – and begin listening to their constituents, like you and I, about lowering our taxes during a severe Pandemic for example, a crisis which does not appear to be going away any time soon. Which has zero Federal response or assistance, which is stunning if you step back and think about it… and which has deliberate disinformation floating around on TV confusing the public even more. So why don’t we attempt to get something productive accomplished here. Tax relief, for example. With 42.1 million people having submitted for Unemployment Benefits so far.

Property tax breaks, for example, that would help out Americans enormously right now, at a time when tens of millions of people are out of work. We’re referring to property tax relief measures that could be implemented very quickly, and would help people right away, enormously… and modeled after California’s peerless Proposition 13, Proposition 58 and Prop 193 property tax breaks – for starters. Perhaps with some tweaks to fit each state in customized fashion.

This would involve constituents who have the interests of their state and our great country at heart. As they say, country over party. Residential and commercial property owners in every state in America should read up on property tax relief in the great state of California… and learn up on how a tax break like California Proposition 13 and Prop 58 would lower the tax hit on property transfer, or inheritance, from parents (i.e., Proposition 58) and grandparents (i.e., Proposition 193) as well as lock in a low tax rate, equivalent to Proposition 13, for as long as you keep the property you inherited from parents… even affecting and lowering property taxes on secondary properties from parents.

Every property owner in America should understand what using a loan to an irrevocable trust is all about – to buyout siblings’ property shares, for example. Inheriting property taxes, and keeping those yearly taxes at parents’ low rates, basically forever. Residential and commercial property owners in ever state in the USA should study up on and understand the profound benefits provided by trust lenders furnishing loans to trusts, specifically loans to irrevocable trusts and CA Proposition 13 transfer of property, and fixed low base rate used in conjunction with Proposition 58 with a transfer of parents’ property and transfer of parents property taxes of course… They should understand what inheriting property taxes is all about, how to keep parents property taxes with property tax transfer of all sorts – and why parent to child transfer, or parent to child exclusion, is so profoundly important at the base root of property tax relief in California… and hopefully in other states as well. No other state allows this. Simply read up on this at the official CA State Board of Equalization Website, at https://www.boe.ca.gov/ Plus research some fact-based blogs like https://propertytaxtransfertrusts.com Or go to some other Websites focused on property tax breaks, probate, Proposition 58 and trust loans for Californians, like https://cloanc.com/tag/california-prop-58/ Living in a state with low property taxes can provide a major benefit, rather than a liability, to your life. Even if many homes are pricey perhaps to begin with... lowering property taxes on them, to a number you can really feel, can have a profound affect on your lifestyle, and maintain the quality of your life, to where you need it to be.

Sure, houses and goods and services can be expensive in states like California, Texas, New York, New Jersey, Massachusetts, and Connecticut are all pricey states, in terms of day to day living… However, getting a “life-toll” such as property taxes down to a manageable level can change your entire outlook on your life, eliminating that particular financial struggle. Moreover, the concept of paying yearly taxes on something you purchase and then keep for many years, might be flawed to begin with. What other large purchase you may make continues to charge you fees such as taxes, after the initial [large] purchase? A boat? Plane? Car? Motorcycle? None. Only real property. Perhaps the whole concept of taxing real estate after the initial purchase could use some fresh, new examination.

Posted by: Geoffrey Sadler | Jul 30, 2020 5:02:46 PM

FWIW, Joe Biden would tax capital gains at the same rate as wages* and do away with the stepped-up basis loophole. *For those making over $1 million. https://taxfoundation.org/joe-biden-tax-proposals/

Posted by: Gerald Scorse | Aug 1, 2020 10:14:52 AM

Gerald: "Joe Biden would tax capital gains at the same rate as wages."

Why don't you wealthy, white Democrats voluntarily pay more in taxes instead of trying to impoverish everybody?

Posted by: MM | Aug 1, 2020 4:44:33 PM

MM: "Impoverish everybody" by having the same taxes on capital gains as wages? That makes even less sense than your usual comments.

Posted by: Gerald E Scorse | Aug 2, 2020 12:52:45 PM

Gerald: "That makes even less sense than your usual comments."

Still waiting for a reply to my simple question. Why don't white liberals voluntarily pay more in taxes instead of advocating raising everybody else's?

Posted by: MM | Aug 4, 2020 8:55:12 PM

MM's trollery is on full display here. No cites, outlandish claims, ducks people who call him out on it. How sad.

Posted by: Unemployed Northeastern | Aug 6, 2020 12:26:55 PM

UT: "No cites, outlandish claims, ducks people who call him out on it."

What's the outlandish claim? And would you even read the citation if I provided one? In my experience, you won't even do that, let alone cite anything yourself.

Nobody's called me out, sir. As usual, leftist regulars avoid simple, direct questions like the plague, because they have no excuses for their own hypocrisy on the issue of taxation.

Posted by: MM | Aug 6, 2020 8:08:38 PM

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