Dean is right if you think of returns to private capital as analogous to debt-service on Govt securities. I don't. Payments to capital are made out of profits, debt-service to foreigners as out of taxes. Maybe there is some relevant super-category of surplus value that applies, but I'm no Marxist scholar.
Cap gains are taxed at a lower rate, but we were talking about interest on Federal Gov bonds, taxed at the top marginal rate. On average the rich pay higher taxes, notwithstanding the preferences to capital gains. -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Bill Lear Sent: Monday, May 18, 2009 2:32 PM To: Progressive Economics Subject: Re: [Pen-l] Vulnerable logic in Dean Baker's argument? On Monday, May 18, 2009 at 13:15:45 (-0400) Max B. Sawicky writes: >A few points pro- and con- this chestnut: Thanks for these, good points. A few comments/questions: >a. Increasingly the interest goes to foreigners, whom one might not >classify as "ourselves" Baker says this: There is an issue of foreign ownership of debt. But this is due to the trade deficit, which is a result of the over-valued dollar and has no direct connection with the budget deficit. If we had the same over-valued dollar, but no budget deficit or even national debt, then we would be in the same situation relative to foreign investors, except that they would be buying up more of the private capital stock rather than public debt. The outcome for future generations would be the same; a larger share of future income would be paid out to foreigners. >b. While bond ownership is maldistributed, income tax liability is >also concentrated on the upper income portions (top 20% pay vast bulk >of it). But don't upper income portions have a lower percentage of income that comes from wages, and more from capital gains, that is taxed at a much lower rate? Bill _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
