Tuesday, January 29, 2019

Tuesday Morning Links

This and that for your Tuesday reading.

- Josh Mound opines that Alexandria Ocasio-Cortez' call for a 70 per cent tax rate on ultra-high incomes is just the beginning of a needed conversation about the morality of the extreme concentration of wealth. And Vanessa Williamson writes that beyond raising public revenue, we should also value the improvement in equality generated by a more progressive tax system:
Progressive taxation should work as a corrective tax, like tobacco taxes or a carbon tax. Sure, tobacco taxes raise some revenue for the states. But their primary purpose is to curb smoking. While a carbon tax could produce a lot of government revenue, the real point is to limit global warming pollution. In essence, corrective taxes try to put themselves out of business; if tobacco tax revenues decline because people quit smoking, or if carbon taxes stop rolling in because the economy becomes fossil-free, that is victory, not defeat.

Taxes on the wealthy discourage a different societal ill: exploitative capitalism. Progressive tax policy is a powerful corrective to economic inequality and wealth concentration. As economists Thomas Piketty and Emmanuel Saez concluded in their seminal paper on U.S. income inequality, “steep progressive income and estate taxation” helped prevent the accumulation of immense fortunes in the middle of the 20th century. In cross-national data, moreover, there is a “strong negative correlation between top tax rates and top 1% income share.” In other words, where top tax rates are higher, the income distribution is more egalitarian – not just post-tax, but even before taxes are taken out.

That’s because progressive taxes blunt the incentives for wealthy people to overpay one another and exploit the less privileged. For instance, contemporary CEOs are often financially rewarded for what is in essence good luck: changes in market conditions that have nothing to do with their individual performance. High tax rates discourage these CEO windfalls, leaving more money available for companies to invest productively. That means higher marginal tax rates make the economy fairer and more productive — and have no negative effect on growth, no matter what billionaires at the World Economic Forum prefer to believe.
Early proponents of progressive tax policy knew that it was not just a revenue source. In our contemporary Gilded Age, and as our political institutions feel pushed to the breaking point, we would do well to remember that progressive taxation is a democratic reform.
- Meanwhile, Liz McCormick, Saleha Mohsin and Alexandre Tanzi report on the U.S.' trillion-dollar borrowing to fund the Trump tax giveaway to the rich. And Richard Partington writes that the UK's corporate tax handouts have likewise proven far more harmful to the public treasury than promised.

- Oscar Guardiola-Rivera highlights why the corporate-driven push for a coup in Venezuela is dangerous for all concerned. But Joshua Goodman, Luis Alonso Lugo and Rob Gillies report that Canada has been at the centre of a secret push to install an unelected leader in order to facilitate resource-sector profit-taking.

- Chris Tollefson reviews three books documenting how Canada's petro-state is blocking climate progress. And Elizabeth Aguilera points out how environmental damage is inflicted on people who can't afford to leave polluted areas due to structural inequalities.

- Finally, Eric Andrew-Gee and Tavia Grant examine some of the gaps in publicly-available data about Canada and its citizens.

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