tv [untitled] RT August 25, 2010 11:32am-12:02pm EDT
crosstalk is on the way if you're in our team but first let's get you up to date on today's top stories parties delayed the extradition to the you want from the man dubbed the merchant of death that's well new charges brought against the alleged russian arms dealer viktor booth best to gauge. the online whistleblower wiki leaks promises to release a secret cia document on wednesday the announcement comes just a month after lifting the lid on scandalous u.s. military files were guarding the afghan war. and russian rock music fans are eager anticipation as moscow is getting ready to host the irish rock for a new tune some eighteen thousand people are expected to attend the show the world's most expensive staging today. but that's it for me and you so now we're here in moscow i'm off to see you too out next peter lavelle presents are lively debates talk and in this edition he asked if during the global economic slowdown
it's time the rich started paying their fair share in taxes. every month we give you the future we help you understand how we'll get there and what tomorrow brings the best in science and technology from across russia and around the world join us for technology update on r g. p soon which brightened a few new very soon from phones to impressions. whose phone starts on t.v. dot com. and you can.
start. to. follow in welcome to cross talk i'm peter lavelle does the world need the return of robin hood should the rich be taxed more for the benefit of everyone else and what kind of global financial system is necessary that goes beyond protecting and enriching individuals and banks. to take. steps to. discuss whether taxes taxing the rich would help i'm joined by benjamin harrison he's a senior research associate at the economic studies program at the brookings institution and we have scott hodge he's the president of the tax foundation and curtis do bay he's a senior policy analyst at the heritage foundation and another member of our cross talk team on the hunger all right benjamin if i can go to you first and then
a number of states in the u.s. and a number of countries in the european union and elsewhere are in acting. we're trying to enact millionaires taxes soak the rich make them pay during this time of economic crisis of economic turnaround is that the right strategy is i just populism or is it something or something to it the rich should pay more because they have more. well peter let me just start by saying that i think that if you want to talk about tax policy you need to start by talking about budget policy in two thousand and ten we're in a situation where we have mounting deficits looking forward that are on an unprecedented proportion or the next ten years if we stay the current course will have about eleven trillion dollars in deficits this is an incredible problem the only get worse now the solution to this problem lies both in decrease spending and also increase taxes so about your question about whether or not the rich should pay more the answer is simply everyone needs a pay more taxes in two thousand and ten are lower than they've been in sixty years
were to situation now where we definitely to cut spending but there is some room to raise taxes as well ok got if i can go to you everybody should pay more but that's maybe a good idea but it's politically at this point in time a lot of people think that is not enough because of these huge deficits that we're running up those that have a little bit more and did extremely well before the crisis should probably pay more especially in the united states when we have the bush tax cuts that are coming to an end should they be renewed. well i disagree with. benjamins premise there already of the rich are already paying the lion's share of taxes in america in fact taxpayers earning over two hundred thousand dollars a year now pay fifty one percent of the nation's income taxes and they pay more than forty percent of all taxes in at the federal level so we're already taxing the rich to the maximum in fact a study by economists at the o.e.c.d.
in paris found that the united states has the most progressive income tax system in the industrialized world our rich our top ten percent actually of americans pay a larger share of the burden than any of the other industrialized country in our poor have the lowest tax burden of any industrialized country and moreover we're not under taxed at this point tax revenues are down because the economic slump but it's not because we've been cutting tax rates per se it's simply the economy is collapsing we're raising taxes right now is not going to fix the economy nor will it fix spending spending is the problem that's why we have big deficits and we did a thought experiment and which we asked how high would have to raise all income taxes to to lower it to erase the deficit and you'd have to raise all tax rates in america by two hundred fifty percent in order to try to close the budget gap simply by raising taxes that's economically ruinous and it's bad policy and so no taxes
are not the answer to this problem ok courtesan i go to you i mean a lot of people to tend to think taxation is the problem and i go back to when i started at the beginning of the program a millionaire's tax i mean again is this just populism is just politicians wanting to say i'm on your side here it's a class issue and it's kind of it's sometimes it's a very crass way to gain popularity because in times of economic downturn amino obviously the rich and the particularly the bankers of late are not the most popular people in the world. were able to pollute the easy answer right mean. easier to raise taxes on the rich than to raise them in broad based on everyone however i think ben hit on it and scott into the problem is spending not taxes the us has traditionally spent about twenty percent of gross domestic product and government spending at the federal level we typically raise about eighteen percent of g.d.p. in tax revenue right now president obama and congress are trying to push federal
spending to twenty six percent of g.d.p. our task in this was in the wall street journal just a couple weeks ago can only raise between eighty and ninety percent of g.d.p. if we're going to spend twenty six percent and raise about eighteen nineteen percent we're going to have a large deficit if we brought that spending to the historical levels to twenty percent we'd have sustainable deficit levels however washington is going if they persist push for twenty six percent they are going to go for for higher taxes and it's not the tax on the rich cannot pay you cannot fill that gap that's why we're here in talks and that's why the push for that is coming soon ok if i go back to you benjamin i mean can we just apply a means test i mean if we need more money to pay off these deficits the rich have lost obviously have more money to be taxed i mean there's a certain point where you know there how do you tax unemployed people i mean there's the number of people that have been hit by this massive recession they're
not going to be able to help us out very much through the tax base i mean what is fair for everybody. well i agree with some of this god said he said the rich pay the lion's share of the income tax and taxes in general in this country that's true but the rich also have the lion's share of the income tax policy center estimates the wealthiest twenty percent have about fifty percent of the income in this country but also pay about two thirds of the total tax so it's difficult to raise money without taxing the rich is almost impossible but you brought up populism and i want to say one thing which is that when we look at the democratic and republican tax strategies they agree on ninety five percent of the tax policy for the country they agree that republicans think that no one should have higher taxes and democrats think that ninety five percent of people should have higher taxes this is the wrong strategy to raise any move money going forward. i think that we have to get creative about other types of revenue streams scott's right we can't do it with just the income tax i personally think there's some room to raise
rates back there two thousand one levels but that's not going to go far enough we have to get creative with other revenue streams we need to start doing about of that which is in every industrialized country except the united states we need to think about a tax on carbon emissions which isn't just good tax policy but also good energy policy and we need to think about cutting back on some exemptions from the income tax they tend to benefit high income tax payers what about those exemptions should they be cut now i mean the bush tax exemptions for the for the for the rich your segment was very generous a lot of people would say should they be just withdrawn completely when i think when they could expire what at the end of this year beginning of next year. no i think that we have to keep tax rates as low as possible right now to keep the economy humming or at least allow it to come back to life what we do need is fundamental tax reform there are a lot of areas of the tax code that are just simply bad tax policy and we ought to move toward a flat simple rate system with the broadest rate possible there is certainly
a lot of areas the tax code that we can eliminate certain types of credits and exemptions that are there that are nothing more than economic and social policy delivered through the tax system but let's get back to the basic point of your question is that do we need a millionaire's tax or something like that and i'd say no that's really sort of. mob rule tax policy where we're just going to pick on the smallest group possible because they can't defend themselves and that's really what the commissioner is ranch after the rich case and the rich and powerful can defend themselves i'm sorry go ahead but i think it's you know they have you know if you anyways into it and it . go ahead and it doesn't work and it doesn't work if we look at all the u.s. states that have implemented millionaires taxes over the last two years we find number one they are getting less money out of that than they anticipated in fact here in maryland which is right near the district of columbia right here washington they saw the number of millionaires declined by thirty percent and we see the same
thing going on in great britain right now which passed a fifty percent top individual income tax and they're seeing the number of millionaires fully plea to places like monaco and switzerland and elsewhere because a you can run a hedge from fun from anywhere you don't have to be in london and so they're there richard just simply fleeing the country so when we go in trying to use this sort of mob rule tax policy we find out that number one you get less money out of it you get fewer millionaires and as a result your economy suffers as a result ok what do you think about that i mean. we've got brought up mob rule here maybe there's an element to it again it's populism in for a lot of people but a flat tax i mean you know rush is relatively new with a market economy but we have a flat tax here and people really do like it and people actually do pay their taxes but mob rule and when it comes to tax tax law. well i think we need to focus on what's actually going on here legislatively the next few months millionaire's tax
isn't on the table right now but what is coming up is an increase of the top tax rates from the top rate of thirty five percent up to thirty nine point six percent and what often gets lost in the discussion is that those top rates will hit small businesses hard the left always likes to say that you know not very many small businesses earn enough to earn over two hundred fifty thousand a year to be hit by the tax rates but it just isn't true according to treasury department seventy five percent of small business income is earned over two hundred fifty thousand dollars a year and that those businesses that are in that early two percent of all income they pay seventy five percent of all the small business taxes so it's the biggest small businesses the one that employ the most people and earn the most income they'll be hit hard by higher tax rates and as the economy continues to struggle to recover hitting them now is going to cost more jobs slow recovery keep wages lower we should not be raising rates right now we should not even be discussing one million the tax maybe it's just going to slow recovery maybe it should be this little bit more varied how about you know
a luxury taxes and things like that because luxury commodity sales are up now after a bad year in two thousand and nine they're recovering in two thousand and ten can we be more nuanced i think it would be just want if you really want to nice watch just a surcharge of twenty five percent or something like that what i'm saying is that you know it's interesting you brought that up because what you are is are interested in the risk go ahead ahead go. we tried that before but twenty years ago we tried to tax on yachts and a few other luxury items what happened to the discussion was all which is rich people that buy yachts while tax some will get special revenue and it's just it's just a bunch of rich people buying yachts anyway there they make an afford to pay what happened the industry got shut down and who builds yachts woe in middle income workers they lost their jobs because the tax on the current as you point well changed and after a short break we'll continue what we have to go to a break after our break could you know our discussion on taxes they would argue.
a special tax on luxury items is moving up their agendas of several countries in need of cash to counter the crisis this proposed you to live is goods all services considered love to raise rather than necessities jewelry real estate or expensive cars in russia however whose capital is second only to new york in billing me as citizens attempts to impose a luxury tax failed in the state duma russia's public opinion research center conducted a survey to gauge people's attitude towards luxury tax in times of crisis while fifty seven percent supported it twenty eight percent opposed taxing the finer things in life overhaul for respondents also expressed the belief that no luxury tax could help narrow the gap between rich and poor peter. curtis before we went to the break you want to finish your point about the luxury taxes go ahead
. well i was making a point that we tried that in the us and it ends up hurting low and middle income workers because people cut back the rich cut back on purchasing the items that get hit with a luxury tax but in a broader sense taxing the rich doesn't just hurt the rich listen i don't have any great sympathy for the rich course they can afford to pay more but that's not the standard we should be using anybody with ten dollars in their pocket can afford to pay more taxes we should be looking at is the economic impact and when you tax the rich it hurts the rest of us they cut back on investment they cut back on savings they cut back on working for the rest of us that cost jobs and it costs lower wages and right now as the economy struggling we just can't afford that ok gentlemen i want to listen to something that hillary clinton said a few days ago about american tax policy i know she's the secretary of state and maybe she's thinking about the future in politics but let's give her a here because she talks about policy in the united states and compares it to another country in the world which nobody she had to say. the rich are not paying
their fair share in any nation. that is facing the kind of employment issues whether it's individual corporate whatever the taxation forms are and i go back to the question about brazil brazil has the highest tax to g.d.p. rate in the western hemisphere and guess what it's growing like crazy and the rich are getting richer but they're pulling people out of poverty there is a certain formula there that used to work for us until we abandon it. to our regret in my opinion. well i suppose hillary's polarizing again and i do eventually them out that's an interesting comment she made you said that the brazilians one of the bric countries are doing what we used to do so what was that and what should we be doing like we did before can we learn from brazil in other words. well what we need to do going forward i think that we need to stop polarizing this issue this is a national issue and requires
a national solution what i didn't like about some the obama administration's recent health care bill was that they put the entire cost of health care bill on the rich certainly i agree that the rich can pay more but this is a national issue spending is a national issue is just not a matter of giving benefits to everyone by taxing only a few at the same time i disagree with some people on this program that the rich can't be taxed more they certainly can so what we need to do we need to go back to a time our country when we're more concerned about budget deficits when you go back to a time when we were more willing to balance our books i think that there is national psyche the deficits don't matter and that's absolutely wrong martin feldstein who was one of the top economic advisers in the reagan administration and is one of the top economists who has been a champion for tax cuts for the past several decades recently came out in the wall street journal and are you to let the bush tax cuts expire and he's exactly right the question isn't whether or not there are negative consequences of of tax
increases of course there are the question is whether or not those negative consequences are more harmful than letting the budget deficits run wild and in most cases the answer is we need to address the budget deficit and it's colleges like to reply that i own case curtis you jump in there then we'll go to chicago headquarters. i agree on two points one that budget deficits are unsustainable but i disagree on the cause the cause is soley spending it is not a tax problem it's a spending problem we spend twenty percent of g.d.p. we're now spending twenty six percent we cut back on the deficits and cut back on the spending deficits we brought under. troll but end this decade our tax revenue will be back up back to historical levels so it's not like once again it's not a spending it's not a tax problem it's a spending problem and ben said yeah the rich can afford to pay more and i said this before anybody with a few dollars in their pocket can afford to pay more but we have to weigh the economic cost of somebody paying more and it's very steep for taxing the rich all right scott would you like to reply with. all right if you want to. really going to
be very patient go ahead real quick. there's a reason why it's there's a reason why it's difficult to address it on the spending issue in the short term which is almost all of our spending comes from one of five major programs and that interest which can't be cut social security which can't be cut in the short term but should be cut in the long term medicare medicaid which are just reform and probably won't be cut and defense which is difficult to cut because we're in the middle of two wars so i agree wholeheartedly that in the long term we absolutely need to reduce spending we have to this is this is not up for debate but it's very difficult to do in the short term ok scott it was a lot said there you can take your time you've been patient. gosh i don't even know where to begin just begin with hillary clinton's rather rather bizarre issue her comments are well not only is she wrong on the facts that the rich aren't paying their fair share they're actually paying twice their fair share if you ask me. but
she's wrong on this rather bizarre sort of trickle down economics pointing to brazil and saying if we tax the rich enough and redistribute it to everyone else or to raise everyone else's boats it is so bizarre i can't even believe it were there's enough redistribution in america going on today that is truly really troubling in fact we've done our analysis shows that the majority of americans now get more back from government than they pain in taxes and they were redistributing over eight hundred billion dollars a year from the top forty percent of american families to the bottom sixty percent that's really troubling when you have the vast majority of a country essentially with no skin in the game they're getting more back from government than their pain and taxes and they're they're asking the rest of their neighbors a smaller and shrinking minority to pay not only their tax bills but everyone else as well i think that that's a recipe for not only a social problem and social conflict but it's
a recipe for fiscal disaster all you have to do is look at california to see how this works and now perhaps even look at greece and many of the other european countries that are facing these kinds of problems and let's get back to ben's point by raising taxes all of the all of the countries that are now facing fiscal meltdown in europe all have a value added tax they all have tax to g.d. g.d.p. ratios far higher than the united states so do you think raising our tax rates to their levels is going to solve our fiscal problems get real ok gentlemen i want to change to get change gears slightly here what about this levy to be put on financial transactions a lot of people are calling it the the right. robin hood tax ben can i go to you on this one here there is it's called the no brainer. we get four hundred billion to six hundred billion dollars a year and we can use it for charities we can use it for the environment. popular it's growing in popularity in europe it's even going to be discussed at the g.
twenty i mean how viable is this kind of tax on financial transactions because again it's a real populous nervy thing because of the banks and bankers what do you think about it ben well i think in general it's not a good idea to tax angry we need smart tax policy not just you know knee jerk reactions to what's happening and i'm not convinced that a financial transactions tax is the right way to go i think that's still up in the bay and i don't have a strong feeling one way or another but i do think that there are better taxes that we can levy like i said earlier a tax on carbon emissions a value added tax scott brought up the fact that every country in europe has every developed country has a value added tax the reason they are every country has a value added tax is because it works really well but as far as financial transactions that i think we need to have time with this go ahead. it's got a. it's got all this kind of taxes won't solve our problems i mean let's get
real this is just it's a desperate money grab and in some cases i think ben is right this is angry tax policy and that's not the way that the tax code should be used in order to punish people or punish industries to simply be used in the most economically neutral way to raise revenues for the federal government but that's not the way that this tax policy is being used and we ought to be very wary of using that if that is actually going to go away or occurred if you want to jump in there i want to talk about this levy on financial transactions you think it's a good idea because like you again it's being it's being spun as the no brainer to generate income for whatever cause you want to put it away for a rainy day what do you think. no i think it's a bad idea and i think ben spun a great phrase there it's taxing angry and any time the politicians do that task angry or try to use populist anger to enact a tax and on a narrow group of people they get the tax policy wrong with the think this through if we if we levy a tax on transactions or levy
a tax on banks like the abomination is proposed who is going to end up bearing the burden and it's going to be us consumers we're going to pay in higher bank fees or lowest interest rate lower interest rates so taxing angry ends up hurting the rest of us the bad idea there are better ways to the to lower the deficit start by cutting spending ok then if they were to do have this kind of levy on financial transactions wouldn't it be a big debate about how to spend it because you know as i noticed it was all these charities that are for a greenpeace all these kind of people like that i mean is that is that just another way just for them to generate income for their own purposes. how the money is spent is really up to congress you know it all goes in the same pot so i mean my hope to be would be if we raise more revenue that would go toward steps that reduction. also not all financial transactions taxes are created equal we're sort of using them is this umbrella term but you can you can tax financial transactions or you
can tax banks or you can tax profits on. people who work at banks or a lot of fun ways to do it some are better than others or some are less worse than others depending on how you look at all right gentlemen i'm going to have to jump in here we're run out of time here i guess one thing is for sure that we will all be paying a lot more taxes in the future i think many thanks to our guests today curtis debate in benjamin harrison and thanks to our viewers for watching is here to see you next time and remember cross talk rules.