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In this genre, I prefer Irving Berlin's song I Paid My Income Tax Today, and you can find the lyrics here. Various anecdotes had him declaring that he loved to pay taxes out of his patriotic love for his adopted country.

The US is scaring me

I'm not old enough to remember McCarthyism v 1.0 or the Vietnam era. Maybe someone who'a been around longer has more insight: Are the Americans just up to the same old same old or are they is it getting nutty and dangerous?

They are getting hugely nutty and dangerous. The Tea Party is considered fascist by people who study that phenomenon. Large scale authoritarian (http://home.cc.umanitoba.ca/~altemey/)

There is also the related End Times phenomenon. http://www.grist.org/article/scherer-christian/

That one could trigger a nuclear holocaust.

The US has always been bat-shit insane. It really has. They've dialed up the volume a lot, and they're more divorced from reality than usual, but the current paranoia is not at all out of character in a long-term context. Read up on the Philippine-American war and the politics of that era. The Americans are typically at their best when they're fighting a significant enemy that requires the cooperation of others, i.e. the Cold War. Left to their own devices, they go insane. It's really not a politically cohesive society in the sense that France or Britain are. It probably never will be.

In the meantime, the free world can thank communism for 40 years of relative stability. China is too smart to step into the role of "bad guy", so it looks like we're going to see more of this psychosis. But there's a flip side to it all - ordinary Americans are finally getting fed up with the BS. This recession has really cut across their society in a way that previous ones have not. It's quite clear to everyone that Wall Street is the villain, as they continue to make obscene profits at everyones' expense and rub peoples' noses in it. I think real change is coming. There is ample rage out there, and as things continue to get worse the probability that someone will focus that rage on just a few of the correct targets approaches 1. That will get the ball rolling.

In the meantime, enjoy this list of American military operations:

http://en.wikipedia.org/wiki/American_war

Re: nutty/dangerous/insane.

The US is a big, complicated place.

What I'm interested about is the economics and politics of taxation in the US, especially the recent proposals to extend the Bush-era tax cuts. How has taxation become so totally disconnected from spending, and government so completely devalued?

I think one of the biggest problems in America is that both sides have complete disrespect for each other. The liberals think of the conservative/tea party movement as an anti-poverty, greedy and borderline racist movement while those on the right think of the Democrats as busy-body, debt crazy, heathens. The thing I love about Canada is that even though the left and right can disagree at least we maintain basic decency and respect for our opponents. Just look at John Stewart's rally to restore sanity, the antagonism has gotten so bad that they need a comedian to point out the absurdity.

I also think that the political system in America is beyond broken. When you have 1000+ page bills that no one reads and have innumerable pork added on to them at the last minute, even the rational voters in America are getting weary of what essentially amounts to theft. Its really hard to see how America can get out of its debt problems (I think you need to have unrealistic assumptions about their future growth rates and future interest rates) and its hard to see how anyone is going to be willing to take responsibility for that quagmire.

Frances: The evidence would suggest that the answer to your question is: yes.

I was in California recently on holiday. The decay was obvious. Public spaces not cared for, roads and public buildings unmaintained etc ... But hey, taxes are low.

I'm not much of an historian, but it would seem to me you are comparing two different eras - the fist when the US was in its ascendancy as a world power, emerging after WW2 as the dominant western power. "What's good for GM is good for America" sort of stuff.

Are we now in the Decline of the American Empire phase? I wouldn't write them off just yet - extremely resilient - but this having your cake and eating it too attitude, perhaps best exemplified by the Bush tax cuts, strikes me as avoiding reality, or at least desperately grabbing for the best berth as the ship starts to take on water.

There's also very little mention by either side of cutting US military spending as a way to bring public expenditures down. They spend at least much as the rest of the world combined (quite a bit more if you count DOE spending that is really defence spending).

Alan Grayson and a few others tried to make the point with the War is Making You Poor Act, but I doubt it'll get much traction.

Just visiting - "you are comparing two different eras - the fist when the US was in its ascendancy as a world power ... are we now in the Decline of the American Empire phase?"

The question is: is the unwillingness to accept taxation a cause or an effect of this decline? (if that decline is happening, and the movie the Matrix was right, the best time of all was the US in the mid- to late- 90s).

As Lenin said, "The surest way to destroy a nation is to debauch its currency." Without some alignment between spending and taxes, how can the US dollar have credibility? Without a strong dollar, can the US be a strong country?

I believe Americans have a much better self-image and sense of purpose when battling large, truly dangerous enemies.

Taking resources from weak, disorganized traditional authoritarian if not feudal-like societies immediately blows back in the form reduced collective self-esteem. The lopsided body counts make a considerable number of Americans feel horribly guilty, while others feel annoyingly defensive and prickly.

One of my dafter ideas: maybe governments should award medals to those who pay the highest taxes every year. We should applaud people who earn high incomes and pay high taxes on it, not say they are overpaid. In this competition to win a medal, cheating would be allowed. There would be no penalty for lying and declaring your income was higher than it really was, or under-declaring your expenses and deductions.

Nick - excellent idea. But should the award go to those who pay the highest absolute amount of tax (so Warren Buffett would be a contender) or the person who pays the highest average tax rate (so his secretary would be in there with a fighting chance)? Isn't the latter a better measure of individual sacrifice?

Frances: the award should definitely go to whoever pays the highest absolute amount of tax. We need tax dollars, not sacrifice. We want those tax dollars whether they came through hard work, skill, or sheer luck.

Or, to make a different argument, we can't really observe "sacrifice", and the average tax rate is a poor measure. Someone who had the ability to earn a high income, but chooses instead to work shorter hours at an easier job, isn't making as big a "sacrifice" as someone who makes the opposite choice.

The medals should reward the results we want, namely high tax revenue. This would go some way towards offsetting the disincentive effects of positive marginal tax rates.

I can't remember what politician (I think Liberal?) said "The problem is we don't have enough millionaires in Canada", and got dumped on for saying it. More millionaires, more tax revenue.

Is it just possible that it's reasonable to feel differently about income taxes when they are applied in the low single-digit percents, versus when they are applied in the high double-digits?

Frances Woolley:

As Lenin said, "The surest way to destroy a nation is to debauch its currency."

Actually, that's most likely an apocryphal quote, which gained wide circulation because Keynes cited it in The Economic Consequences of the Peace. There's an interesting story behind it.

I read the Procedure Manual of the House of Commons a while back and I was struck by the "Financial Prerogative of the Crown". This is an (unwritten, but very firm) constitutional principle that the Crown, and only the Crown through its Ministers can request Supply (taxes). If a private member introduces a spending motion, it must get the Royal Recommendation eventually before leaving the House or it will be ruled Out of Order. Furthermore the principles of Responsible Government make supply motions far less amenable to amendment in order to bribe every other member into voting for them.

Perhaps the dysfunction of the US system stems from the fact that it wasn't set up to have that kind of streamlined control, whereas Westminster systems have evolved explicitly in tandem with financial controls. For instance whenever the Upper House in the UK, Australia and Canada has voted down a Supply bill (1911, 1972 and 1990), the result has been a constitutional crisis. In the UK and Canada the House of Commons took action to override the Lords and the Senate respectively through the Parliament Act and Section 24 of the BNA Act.

Perhaps the problems is more political than economists would wish.

Second, if the US and Canada do diverge on tax and spending policies, it wouldn't be the first time. Canada took a more socialist direction after WWII due to the presence of the CCF/NDP and the influence of the UK Labour Party on Canadian political thought. Our war experience in 1918 and 1945 was much more like the British than the American (except for not being financially exhausted after WWII). We've tacked our own way before, maybe we'll do so again.

Geoff NoNick, did you watch "The new spirit" video that I linked to above? My favourite part of it is the bit where you can see the 1940 tax form - you can even work out Donald Duck's tax rate, which is tiny - low single digits.

Vladimir, Determinant, fascinating comments, thank you.

Uh, the US wasn't at war in 1940 and hadn't begun to mobilize yet. That was 1941 and 1942. Donald may be paying low single-digits but the high tax rates came later historically.

Frances,

You're right, the participation of major public corporations like Disney in producing propoganda to help the state is a difference from the past. Those 1940s Disney cartoons are fascinating (I used to use them and related ones teaching the history US-Latin American relations). They created simple correlations between issues that the US government wanted communicated, whether to pay your taxes or that Brazil, Mexico and the USA were all friends, on the same team.

I also recall that some applicance company (Westinghouse, maybe) had an image/advertisement about sacrific now to have a refridgerator later, after the war (when resources would be available to build them for a mass market).

What image would a US company project today? "Pay more taxes rather than buy our stuff" doesn't seem so likely.


Some excerpts from G&M interview: Waning U.S. faces a ‘cluster of hard choices,’ historian argues

Paul Kennedy’s book, The Rise and Fall of the Great Powers, argues that military power flows from economic strength. However, huge military expenditures tend to erode that wealth leading inexorably to the fall of empires. Originally published in 1988, the Yale historian’s book has sparked renewed interest as Western countries grapple with debt and overseas conflict.
...

You know, at one point, American war veterans were encouraged to say, "We’re not going to win the war if we don’t have the funds to finance it." So these poor bloody 20-year-olds have got to say, "Go home now and buy U.S. bonds." This propaganda effort worked terrifically. Americans decided to buy bonds rather than to buy a second Chrysler, so the money went into the U.S. Treasury, which could then pay for all the purchases. Today, now it’s the Chinese buying the bonds. Back then there was nobody else who could buy U.S. bonds because everyone was conquered, devastated, burned out or exhausted. So Americans dipped into their savings and it stimulated the American economy. Now Americans have no savings.

http://www.theglobeandmail.com/news/world/americas/waning-us-faces-a-cluster-of-hard-choices-historian-argues/article1744448/


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