The philosophical underpinning of the current American progressive tax system (aka marginal utility theory for beginners). We’ll look at data on who’s actually bearing the tax load, where actual income growth has occurred over the last several decades, and data on changes in the New York tax system over the last several decades. We’ll talk about the impact of unchecked inequality on the US political system, the economic inefficiency of the growing inequality, and address concerns about progressive taxation, ”fleeing millionaires” and the myth of layoffs at “small” businesses.

1. Progressive Income Tax

2. What do you think?
1. Everybody should pay the same dollar
amount of tax (regardless what they earn).

3. What do you think?
1. Everybody should pay the same dollar
amount of tax (regardless what they earn).
2. Everybody should pay the same percentage
of their income.

4. What do you think?
1. Everybody should pay the same dollar
amount of tax (regardless what they earn).
2. Everybody should pay the same percentage
of their income.
3. We should have income tax brackets with
increasing percentages.

5. What sort of society do you want?
What percentage share of the total wealth pie
should the top 20% have?

6. Well, how about that?
Sweden is the nation with wealth distribution that most
closely resembles what most Americans want.

7. What are we talking about (income)?

8. What are we talking about (income)?

9. What are we talking about (wealth)?

10. What are we talking about (wealth)?

11. What are we talking about (income)?

12. Progressive taxation – The History

13. Progressive taxation – The Assault
"I don't want to abolish
government. I simply want
to reduce it to the size where
I can drag it into the
bathroom and drown it in
the bathtub."
- Grover
Norquist, Americans for Tax
Reform

14. Progressive taxation – The Assault
“We are not the successor
of, we are not a continuation
of Western civilization. We
are a unique and different
civilization.
- Grover
Norquist, Americans for Tax
Reform

15. Progressive taxation and inequality

16. Redistribution – other tools
• Earned income tax credit
• Food Stamps
• Medicaid
• Supplemental Security Income
• Housing assistance (Section 8 etc.)
• Estate Tax

17. Why Progressive Income Tax?
1. Theory of Marginal Utility
2. Helps avoid plutocracy
3. Egalitarian economies are
healthier
4. Americans are healthier
5. Founding Fathers wanted a
Republic, not Aristocracy

18. 1. Marginal Utility
That third piece of pie
at Thanksgiving
doesn’t taste as good
as that first piece. And
that 99th stack of
$10,000 isn’t as
valuable to you as the
first 5 stacks.

19. 2. Plutocracy
Getting elected is expensive. Who are our
elected leaders listening to?

20. 2. Plutocracy
Getting elected is expensive. Who are our
elected leaders listening to?

21. 2. Plutocracy
Getting elected is expensive. Who are our
elected leaders listening to?

22. 2. Plutocracy
Getting elected is expensive. Who are our
elected leaders listening to?

23. 2. Plutocracy
Getting elected is expensive. Who are our
elected leaders listening to?

25. 2. Plutocracy
Getting elected is expensive. Who are our
elected leaders listening to?

26. Aw, c’mon!
This helps explains the occupy movement.

27. 2. Plutocracy
Getting elected is expensive. Who ARE our
elected leaders?

28. 3. Healthier Economy
Spurring economic growth is one thing. Sustaining it is
another. Income equality is a critical factor.

29. 3. Healthier Economy
Spurring economic growth is one thing. Sustaining it is
another. Income equality is a critical factor.

30. 3. Healthier Economy
“But the rich are ‘job creators’ and we need to give
them tax breaks to make more jobs!”

31. 3. Healthier Economy
“But tax cuts for the rich will stimulate the economy!”

32. 3. Healthier Economy
“But tax cuts for the rich will stimulate the economy!”

33. 3. Healthier Economy
“But higher marginal tax rates will hurt
small business owners!”

34. 3. Healthier Economy
Actually small business owners were 7 times more
likely to use the EITC.

35. Let’s say a small business (less than 100 employees) has net profits of $250,000.
Under Obama’s proposal that business would have paid an extra 3% tax on
income above $174,400. That’s an extra $2268.

36. 3. Healthier Economy
“During the 1970′s, for every dollar of new investment in plants and equipment, $1.30 in stocks
were traded on the U.S. exchanges… But from 1998 to 2007, $27 in stocks were traded… for
every dollar of corporate investment in plant equipment. Such a rapid stock turnover has
diverted the attention of managers of enterprises from long-term planning.” - John Miller, D&S

37. 4. Healthier Americans
Inequality causes shorter, unhealthier and unhappier lives; it increases the rate of
teenage pregnancy, violence, obesity, imprisonment and addiction; it destroys
relationships between individuals born in the same society but into different classes.
- Wilkinson & Pickett, The Spirit Level

38. 4. Healthier Americans
Inequality causes shorter, unhealthier and unhappier lives; it increases the rate of
teenage pregnancy, violence, obesity, imprisonment and addiction; it destroys
relationships between individuals born in the same society but into different classes.
- Wilkinson & Pickett, The Spirit Level

39. = $60,000?
4. Healthier Americans
“Below 60,000 dollars a year, people are unhappy, and they get progressively
unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I’ve
rarely seen lines so flat.” – Daniel Kahneman, Nobel Laureate

40. Entail and primogeniture
“concentrate the property
of the country, and with it
the power and influence
of a few.”
Senator James Barbour
5. Founding Fathers wanted a Republic, not Aristocracy
European primogeniture and entail laws enabled the aristocracy to pass on their
fortunes, undivided, the their firstborn male heirs. Our revolutionary leaders wanted
to avoid these concentrations of wealth.

41. “The balance of power in
a society… accompanies
the balance of property in
land.”
5. Founding Fathers wanted a Republic, not Aristocracy
European primogeniture and entail laws enabled the aristocracy to pass on their
fortunes, undivided, the their firstborn male heirs. Our revolutionary leaders wanted
to avoid these concentrations of wealth.

42. But…

43. “But the rich pay more taxes!”

44. “But the rich pay more taxes!”

45. “But the rich pay more taxes!”

46. “But the rich pay more taxes!”

47. “But the rich pay more taxes!”

48. “But you could be rich some day!”

49. “But that’s human nature!”
(aka “The poor will always be with us)

50. “But that’s human nature!”
(aka “The poor will always be with us)

51. “But big gov’t isn’t the answer!”

52. “Well, I don’t want my tax dollars
going to ‘those people’!”
"The share of
benefits flowing
the least affluent
households, the
bottom fifth, has
declined from 54
percent in 1979
to 36 percent in
2007“ – NY
Times, 2/12/12
The placard reads “Keep the government out of my Medicare!”

53. “Well, I don’t want my tax dollars
going to ‘those people’!”
Entitlement spending
that goes to healthy
adults accounts for
9% of total
entitlement spending.

54. “Well, I don’t want my tax dollars
going to ‘those people’!”
Of the $1.1 trillion in tax
expenditures (mortgage
interest deduction,
employer-paid health
benefits, favorable tax
treatment for capital gains
and stock dividends) two-
thirds of those benefits go
to the wealthiest top fifth of
households and 24% to the
top 1%.

55. “But millionaires will flee!”

56. “End the Death Tax!”

57. “End the Death Tax!”
“To keep farms in
the family we are
going to get rid of
the death tax.”
- President Bush

58. “End the Death Tax!”
When asked to find examples of “To keep farms in
families that had lost farms to the family we are
going to get rid of
the estate tax the American the death tax.”
Farm Bureau Federation could - President Bush
not find one family.
The Estate Tax is 35%. The first $5 million is exempt.

59. Welcome to
the U.S.
In the United States, the top 1 percent controls roughly
40 percent of the nation’s wealth. According to a
study, which examined Roman ledgers, pre-imperial
edicts, and Biblical passages, Rome’s top 1 percent
controlled less than half that at the height of its
economic power.

60. Welcome
to NY

61. The Good News
HEADLINE
68% Of Millionaires Support Raising
Taxes On Millionaires
POLL
About three-quarters (73%) of Democrats say that what bothers them
most is that the wealthy don't pay their fair share; this compares to just
38% of Republicans who say the same. Independents side with the
Democrats -- 57% say the wealthy don't pay their fair share of taxes.