Sunday, January 6, 2013

Nero Fiddled, but Did He Pay His Taxes?

Recently I watched an argument on Fox news about whether the rich should pay more taxes. In the shouting match, several key points were raised.

Patriotic Millionaire Eric Schoenberg leaves Fox Business host Stuart Varney speechless at 3:51 of this video

Stuart Varney belongs to "Patriotic Millionaires for Fiscal Strength", and was facing a panel on Fox news.

To summarize the existing situation:  The USA is in a fiscal crisis with high debt levels, and President Obama has noted that during the last 50 or so years, tax rates have declined, especially on the rich.  Obama campaigned on the argument that the rich should pay their fair share of taxes.

On the other side of the coin, the rich (represented by Fox News), argue that "it is not a sin to make money" and "making the rich pay will not solve America's debt crisis", and "Jobs are created by the rich, but not if they are taxed too much".

One point that was raised on this program happened when the host Stuart Varney told Eric that if he wanted to pay more taxes, to take out his chequebook and make a payment to the USA government.  And let the other rich people keep their hard earned money.  Stuart explained first, that taxes are not a charitable contribution where you pay whatever you want.  And secondly, if people did pay taxes voluntarily, then those who refuse to pay should not get free government services.  Eric mentioned a list of services including police protection, fire protection, and good roads.

When he brought up the subject of fire protection, one of the Fox Panel jumped in with the fact that there are more fires in slums where people don't even pay taxes.  Apparently rich people's houses don't burn down as frequently, and so do not use up resources from the fire department.  Logically I guess that means that poor people living in slums should pay more for fire services etc.

But wait a minute here.  I am not aware of any study that has determined that poor people living in slums use up more of the government services than rich people. (I'm not talking just about fire services, but police services too.  And roads and infrastructure such as drainage, water, electricity.)  I think it's the opposite, with rich neighbourhoods getting the best support.  I'm not arguing that that is right or wrong, but I cannot tolerate pure bullsh*t that says fire department funding goes mainly to slum dwellers.

Let's get into fire protection, then.  One of the hardest fires to fight, and the most dangerous, are forest fires that can ravage wealthy neighbourhoods as easily as the slums. Wealthy people have a tendency to place their homes in open forested areas, where they are very hard to protect from forest fires.  Poor people cannot afford these expensive home sites because of the cost of land.

A little research on the internet comes up with these facts.

Richard Branson's "cottage" burns to the ground. (Richard Branson is rich)

Firefighter lured to their deaths in ambush. This did not take place in a slum, but I'm guessing the gunman was not a millionaire either.  On the other hand, he could easily have been a Fox News watcher.  And Fox does support making guns more available.

The Cerro Grande fire, New Mexico, 2000.  400 homes lost.  Also, the Los Alamos National Laboratory was damaged, which brings up the situation where fire fighters are fighting to save Government infrastructure, not just the private dwellings of taxpayers.

Historically, inner city fires are a boon for the very rich, as slums can be cleared more easily when they are in smoking ruins, and somebody has to redevelop the now-valuable property.  Check out this story about Rome under Emperor Nero.

Picture: Detroit home target for fire.


  1. I think this debate needs to be raised to higher level, to encompass the larger picture. And that larger picture includes the excessive levels of violence in American society.

    Without extensive reforms to the taxation system (both income and estate taxes) in the U.S. (and, increasingly, also here in Canada), the economic inequalities will continue to increase. And, as economic inequality increases so, too, do the levels of violence. Debate about 'gun control' is a red herring - the real problem include growing inequality and a failing mental health care system.

    An interesting study put out by the World Bank correlates countries' Gini numbers to levels of violent crime. The current American Gini index at 40.8 (Canadian is 32.6) puts the U.S. in even worse shape than Russia, at 40.1, for levels of inequality.

    The World Bank study concludes; ' 'The main conclusion ... is that income inequality, measured by the Gini index, has a significant and positive effect on the incidence of crime. This result is robust to changes in the crime rate when it is used as the dependent variable (whether homicide or robbery), the sample of countries and periods, alternative measures of income inequality, the set of additional variables explaining crime rates (control variables), and the method of econometric estimation.'

  2. I had understood that levels of violent crime are coming down these days.

  3. The overall U.S. violent crime rate, as reported by the FBI in its Uniform Crime Reports (UCR), has decreased since its peak in the 1990s (from ±750/100,000 in 1993 to ±400/100k in 2011).

    However, the rate of decrease has slowed; the major decrease - from 750/100k to under 500/100k - took place in the 1993-2001 period, and decreases appear to be levelling off.

    'Overall' crime figures (like 'average incomes') can be somewhat misleading. The FBI does not comment on its UCR figures, but many criminologists see violent crime persisting as a serious - if not growing - issue, especially in poverty ridden urban areas. There are also concerns about the integrity of the UCR numbers - with possible under-reporting by police departments under pressure to show decreasing crime rates.

    Independent U.S. Bureau of Justice Statistics (BJS) figures actually indicate an increase in violent crime in 2012. And, as we witnessed over the period from the fairly affluent 1960s (UCR violent crime rates in the 200/100k range) through the implementation of 'conservative' economic policies over the 1970s and 1980s, where rates climbed to nearly 800/100k, disadvantaged neighbourhoods tend to be the bellwether, with violent crime subsequently spreading to more affluent neighbourhoods.

    And, finally, despite the highest incarceration rates in the world (at over 700/100k - compared, e.g. to Canada at 110/100k) the U.S. does continue to report among the highest violent crime rates within the OECD nations.

    (BTW ... Enjoyed your - since deleted - comment about, 'a recent study linking recent studies with high levels of BS.' ;-)