When famous bank robber Willy Sutton was asked why he robbed banks, he reportedly replied "Because that's where the money is." And when our next President, no matter who it is, and Congress try to unscrew this financial mess, they will quickly realize two things:

- It will require a crapload of money.

- Poor people don't have money

Like a group of Willy Suttons, they will come after the rich because no one else will have any money. The fairness part of the debate will become moot.

The problem is that the rich are the only group powerful enough to stop the government from raising their taxes. So my question to you today is this: What is the best way to confiscate money from the rich?

There must be some way to give the rich a spoonful of sugar to make the medicine go down. Somehow the impression of unfairness has to be mitigated so they comply willingly. Allow me to jump to some bad examples to make the point.

Suppose the next President made the following pitch. "This is a once-in-a-century cash crisis. To get us through, we are going to tax the rich heavily for the next ten years. In return, the rich will each get two votes in every election."

Now remember that the spoonful of sugar can be more psychological than economical. A double vote is the one sort of thing a rich person can't already buy. And it wouldn't have much impact on democracy because there aren't that many rich people. Everyone gets something. The poor get money, the rich get slightly more influence.

Or suppose the rich were required to fund alternative energy projects directly, and in return get some equity, like a mandatory venture capital model. I would much rather give my money to a specific venture with a tiny chance of payback, as opposed to the general tax fund.

I would also feel okay about a tax increase if 100% of the extra money went to buy healthcare for those who couldn't afford it, and I knew how many people that was. For example, if I got a tax bill from the government with a specific dollar amount, and next to it an estimate of the number of people it will give healthcare to, I couldn't feel so bad about it. I'll only get pissed if my money goes into some general fund to buy bridges to nowhere.

Or suppose Congress makes a deal with the rich, something along the lines of raising their taxes only if the government reforms something in particular that is widely agreed to need reform. I wouldn't mind paying extra taxes if it inspired the government to be more effective or efficient going forward.

Or how about requiring the rich to buy foreclosed houses, with a requirement that they rent them to others for the next 15 years? The rich can qualify for the lowest loan rates (or pay cash), so the credit problem would be solved. While the rental income wouldn't cover the loan and other costs, there is some potential that the investment could turn at least neutral when home prices rise in the future. Low income people would get extra places to rent, and rich people wouldn't feel so screwed if they owned property that had some chance of breaking even. And banks would be solvent.

And suppose you require the rich to install solar panels and other energy solutions to each foreclosed home they purchase, and optionally roll that expense into the mortgage. That would create lots of jobs and reduce national energy consumption at the same time.

In business school we learned that you can usually reach a deal whenever two parties put different values on things. Do you have any better ideas for how the government can confiscate money from the rich and make everyone happy about it?

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Jan 16, 2009
Most people feel that you cannot totally blame killing on entertainment especially nowadays. However, it is widely believed that such influences can fuel something dangerous in a person that is already there. Raising children, especially a teenager, can sometimes require a payday loan. Today, it seems every teenager owns or at least wants a cell phone, an MP3 player, and the latest trends out there. Raising a teen is a huge task for almost every parent. But should we give in to their every demand and support all their “wants?” Is getting a payday loan and providing them with everything they want, the way to go? Or should we teach teens the appropriate ways to earn what they want? I found an article that suggests ways a teen can make their own money by doing simple things like shoveling snow. For more ideas on raising teens, visit the <a title="READ Raising teens with the help of payday loans and maybe medication" rev="vote-for" href="http://personalmoneystore.com/moneyblog/2009/01/14/raising-teens-with-the-help-of-payday-loans-and-maybe-medication/">payday loan</a> blog at PersonalMoneyStore.com.
Sep 24, 2008
Auction off sponsorship naming rights to West Virginia.
Sep 24, 2008
I may be reading this wrong, but I don't think Scott is talking about taking money from the rich and giving it to the poor, he's talking about taking money from the rich and using it to pay down the debt and pay for the services everyone uses. (Health care, etc) Then give the rich something they like almost as much as money in return so they don't feel like they are being robbed, they question is, what can you give them.

When Scott posted this originally in June of 2007, he had lots more ideas besides giving the rich an extra vote, but I am guessing he either felt those would no longer work, or he forgot that he has blogged about this before.
Sep 24, 2008

I got the wrong idea about you from your chronologically last post, but reading back I thought you were OK. There you go, your existence is acknowledged in a mildly positive way.
0 Rank Up Rank Down
Sep 24, 2008
Nobody forces the rich to be rich.

If they don't like paying taxes, they can simply give away all their money.

If people don't like sales taxes, they can stop buying things.

All seems fair to me.
Sep 23, 2008
The banks don't need bailing out. The plutocrats who run this country have decided to extract their losses from the public. This can be easily proven. Since John Hussman has already proven this, I will simply refer to his "An Open Letter to the U.S. Congress Regarding The Current Financial Crisis" at http://www.hussmanfunds.com/wmc/wmc080922.htm
"The key is to recognize that for nearly all of the institutions currently at risk of failure, there exists a cushion of bondholder capital sufficient to absorb all probable losses, without any need for the public to bear the cost. Why on earth would Congress put the U.S. public behind these bondholders?
By John P. Hussman, Ph.D.
President, Hussman Investment Trust "
Sep 23, 2008
Here is a government perspective on that, Scott: Give us whatever money we demand, or we'll send you to jail where you will get pegged by Wesley Snipes. But that won't happen...because you put a different value on your freedom that we do, right, Scott?
Sep 23, 2008
Did anyone else read this post and immediately imagine Robin Hood (the Disney version) beating the crap out of Bill Gates and Warren Buffett? This would make a great Dilbert strip, by the way, if you could some how get past the whole plagiarizing thing.
-1 Rank Up Rank Down
Sep 23, 2008
Nice comments. I want Obama to be a nice centerist president like Clinton was, please. I am in the higher tax bracked and "fairness" is important to me. If, for example, the double Social Security I'm paying on the first $100,000 of my income is raised to $200,000, that will be unfair -- I'll basically be paying for the retirement of like 10 people and getting nothing back. Remember that if we're not treated fairly, we'll respond by lowering our income (which I plan to do the first sign of B.S.), reincorporating my company in a state with no/low taxes, etc. Keep the increase fair, and income to the country will increase. Otherwise, it will decrease.

P.S. this blog is frustrating to use. I click the box that says Remember my settings and log me in, yet it never does. I want to see posts in most-votes order, but it doesn't remember this. That's a Fail right there.
Sep 23, 2008
Well, your assumption that the government will come to the rich for income in the case of the bailout is surely false.
We will all pay through inflation caused by the government cranking up the presses that print money. Doing this, of course, dilutes the value of the (already depressed) dollar.
It is not so bad for Americans though. Since the world is now a global economy, EVERYONE everywhere will help pay for the bailout.
Sep 23, 2008
Two citizens with similar backgrounds grow up and have families. Citizen A works hard, saves, sacrifices and invests - and gradually builds a nice next egg. Citizen B blows every dime on gambling and alcohol.

Question 1: which citizen does the government reward when their children apply to college?

Question 2: since citizen A is now rich, and citizen B is in debt (and hiding from loan sharks), how much money should be forcibly taken from citizen A and given to citizen B, in order to be "fair"?
+1 Rank Up Rank Down
Sep 23, 2008
Ha ha, you think the RICH are going to be asked to pay for this?

They can manage to not piss anyone off by simply borrowing the money, ensuring that someone else has to deal with it in 20 years and it won't change their vote totals.
+1 Rank Up Rank Down
Sep 23, 2008
Why. On Earth. Would you EVER. trust the government to use that 100% tax increase to help people who need health care???

Does your social security deduction go into the big social security account for your retirement?

Does your 50 cent or so a gallon gas tax pay for your roads?

Does your property tax keep the public school system running?

Do NOT trust the government with YOUR MONEY!! Honestly. Have we learned nothing??
Sep 23, 2008
Two words: Fake charity.

Rich people love donating to charity. So, invent one, put a starving child on the brochure and launder the money.
Sep 23, 2008
People, the bailout is NOT for the rich. It is for the economy. These companies having troubles have assets. Do you know what they are? Fannie Mae and Freddie Mac hold mortgages (or your houses). AIG is an insurance company. They have assets that belong to regular people.

While I'm not very keen on the idea of a govt bailout (socialism), I do understand that the little people are the ones who will suffer when their houses are taken or they lose insurance policies or retirement accounts, etc. I'm not an expert in financial policy. But I do know that if you have a mortgage on your house, you don't own it.

Companies that go under sell their assets for pennies on the dollar to whoever is buying. I assume when people talk about the rich being bailed out, they are talking about the executives of these companies. However, I expect they will soon be unemployed.
-1 Rank Up Rank Down
Sep 23, 2008
Just a few days ago VP candidate Biden explained that it was patriotic to want to pay higher taxes. That should be the spoonful of sugar that will give every wealthy liberal a warm and cozy feeling.
Sep 23, 2008

Scott, don't forget about the class in the middle between the poor and the rich! That middle class is inevitably who will shoulder the bulk of the cost for the bail-outs of the investment banks.

But ... in terms of raising taxes, keep in mind as well that the Iraq war is estimated to cost $2 Trillion by the time the troops are back home, equipment restocked, etc. You'll probably notice that in the interim (i.e. the duration of the war), taxes did not go up ... but the federal debt has ballooned enormously.

Inevitably, that's how the bail-out will be funded - through increased public debt to be paid down in the future by all taxpayers, poor, middle & rich. Note that the current total federal public debt is $9.7 Trillion.

Wikipedia has a good entry: http://en.wikipedia.org/wiki/United_States_public_debt
Sep 23, 2008
The cognitive dissonance behind this "cut taxes so there's money out there to be spent" rhetoric is astonishing. It's not like the government is just stashing money under the mattress in the Lincoln Bedroom. The Government spends the money and it recirculates, just like if you and I spent it.

Are income taxes distortionary? YES. Are government programs sometimes wasteful or corrupt? YES. This doesn't justify telling the government to stop collecting taxes. We as a society have generally decided that the distortion is justified by the need to provide basic services and equal opportunity and to maintain public goods like roads.

Cut the Ayn Rand !$%*!$%* and start talking about real issues instead of tired cliches.
+1 Rank Up Rank Down
Sep 23, 2008
Every time people talk about taxes, the things that come to my mind first is costs. As in "why things costs so much that the government need more money". Lets see if I can come up with a few of the issues here.

- The government is spending a lot of money on military (specially Iraq and Afghanistan)
- Health care costs so much, in part, due to liability/legal issues. MDs have to pay a lot (so do hospitals) to be covered against people suing them
- Considering how "court happy" most of the people is, we also have liability/legal costs attached to pretty much everything
- A good part of the money the government spends is to keep the government itself running (paying employees etc)

These are just 4 items from the top of my head. I'm sure there are many others. Maybe if the courts started rejecting stupid lawsuits (a patient suing his doctor because said doctor causes "undue suffering" by telling him bluntly that he was going to die and nothing could be done about it). Most of the "politically correct" stuff costs a lot of money, and most of them are just stupid. I'm from Latin America. Should I be able to sue someone because they called me a "Latin" ? Or by calling someone "black", or "Chinese" whatever. Should I be able to enter a store and demand them to give me back part of my money because I bought something from them last week, and this week they lowered the price ?

I won't get here into the whole "War on Terror" issue. It is a very delicate topic, and it is hard to find 2 people that have the same opinion on the subject. Regardless, it is costing America a lot of money, with returns that are very difficult (at best) to measure.

So the government needs more money for health care. The first question is: why is health care so expensive ? It is interesting to notice that, at the same time health care gets more expensive, the hospitals are making less money. A very nice lose/lose situation, which for me points are something much wronger than "the government needs more money".

On those same notes, I seriously doubt give the government more money would, by itself, help solve the current economic crisis. But maybe, just maybe, if the government spent less money, solving the crisis would be simpler.
Sep 23, 2008
We understand that this bailout is revenue-neutral in the long run, so any additional taxes levied today will be balanced by taxes that won't need be levied later.
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