Econ Militia: What is a progressive income tax? Do progressive income taxes make sense?

Ever wonder how we came to have a tiered income tax in the United States? Why is our tax code so convoluted? In this episode, the citizen economists take a look at progressive income taxes.

Progressive taxes exist because the poor cannot save. That's an unflattering, but accurate, interpretation of the economic policies of John Maynard Keynes. Keynesian economic policies were all the rage after the Great Depression, and we saw by the 1970's that they were failures in case after case after case. So why does President Obama support these flawed and failed policies?

We cover all this and quite a bit more in a short, six minute slice of heaven.

Keynes believed a tiered tax model would allow the poor to spend all their money, and just withdraw savings from the rich. The glaring flaw in Keynesian policies is that they believe savings have no value -- savings, to them, takes money out of the economy.

The reality is just the opposite, which is why progressive tax policy is so bad. Savings is used by banks to fund growth, and growth fuels job creation and innovation and wealth generation.

I don't know about you, but those are three terms I like: job creation, innovation, and wealth generation.

The three best phrases for Keynes and Obama? Wealth redistribution, extreme spending, stagnation. Anyone like those?

Tell truth to power. Hear the real story. Think for yourself. Join the conversation at econmilitia.com.

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[TheNavigateur]

Thomas Paine, a founding father, believed in progressive income taxation and OPPOSED inheritance-based power (conservatism).

[EconMilitia]

Paine's belief about social programs was part of his support of the French Revolution, and we see how poorly the French system is doing. Certainly, they adopted his ideas as their own.

On our side, Jefferson kept slaves. While our Founders had some improper and incorrect ideas as individuals, together they provided us a framework for a republican structure unlike any other, centered around a small federal government.

Oh, and equating conservatism to inheritance-based power is just silly.

[samuils]

Amen

[EconMilitia]

That's high praise indeed. Thanks!

[riverbilly224]

Pure economic propaganda.

[ishitonallah]

You forgot to mention that a higher savings rate is also used in the Research and Development that is responsible for long-term growth (not just the capital accumulation that results in medium-term growth). Yet another reason why stealing from the "rich" and giving to the irresponsible poor is a bad idea.

Otherwise very good video.

[AbitaVets]

@EconMilitia Paine's belief about social programs was part of his support of the French Revolution, and we see how poorly the French system is doing

SAD HOW THE CHILDREN CANT SEE THE ECONOMIC FOREST FOR ALL THE DEBT TREES IN THE WAY

SOCIALISM IS A FAILURE. IT CONFLICTS WITH THE BASIC TRUTHS PRESENTED IN "ON LIBERTY" J.S. MILL

TO PARAPHRASE "WHEN GOVERNMENT DOES FOR THE PEOPLE, THAT WHICH THE PEOPLE CAN CLEARLY DO FOR THEMSELVES, THE RESULTS ARE A WEAKER LESS CAPABLE CITIZENRY

[AbitaVets]

@Argon1115

DID I MENTION THE FACT THAT FRANKLIN RAINES A CONNECTED DEMOCRAT OF CLINTON WHITE HOUSE, JAIME GORELICK(CLINTON WHITE HOUSE) AND J. JOHNSON RECEIVED NEAR 100 MILLION DOLLARS IN PAY AND BONUSES FRANKLIN WAS FINED 24.5 MILLION.

MILLIONS IN PAY AND BONUSES IN LESS THAN 10 YEARS,

MAKES YOU WANT TO BE A CONNECTED DEMOCRAT, PAY IS GOOD AND LITTLE RISK OF JAIL FOR FELONIOUS BEHAVIOR.

YOU MIGHT EVEN WRITE LAWS PERTAINING TO TAX CODE, YET NOT FOLLOW YOUR RULES MADE FOR OTHERS.

[AbitaVets]

@A15

No, Wrong, what we see is a prime example of government forcing money into markets.

Result of Fannie/Freddie

$400bil of risk for u.s. taxpayers.

What good are rules when democrats like BarneysFrank ignore auditors sounding alarms.

When Maxine Waters attack auditors as racist for a accurate audit.

My congressmen Baker(R) screamed since 1999 of the billions in bad debt extorted by government and A.C.O.R.N. through civil rights lawsuits, and government redtape.

YOUR FALSE HISTORY IS WRONG

[Argon1115]

The reality is the opposite - savings have been "invested" into unregulated speculation. Our government hasn't operated on Keynes since the 70's. Milton Friedman and Ann Rand "deregulation" have been the guiding principle for the fed (Greenspan/ Bernake) monetary policy since Reagan "government is the problem". The deregulation ideologues neglect to mention that the other word for "lack of rules" is ANARCHY (which is what we have achieved in the financial industry.

[AbitaVets]

FAILURE: WHEN IDEALS MEET REALITY

[EconMilitia]

I don't know what they wanted to make, but I know what they made. Keynes wasn't a political figure or a dictator, though, so grouping him with the people you mention seems unreasonable.

The complicated thing is supply side economics has some spectacular failures of late. We touch on it a little here and a little in the newest episode (in edit now), where we say politicians want it both ways: they want to cut taxes AND increase spending.

Know any who are cutting their spending? We need them!