When is humor no longer funny?

[Jester]

So then are you saying that a flat tax on investment income is fair?

I'm not sure how you would get that out of what I said.

Although, in the libertarian way of thinking, taxes are an almost punitive action. I don't really have issues with taxing conspicuous consumptions, but when you tax "income" and "capital" you are sinking the greedy fangs of government directly into the roots of growth and success. I've made this argument here before, but wealthy people can choose their level of income while its the middle class who cannot and pays the taxes.

If this is true (and the fact that the wealthiest, despite being able to "choose their level of income", pay the lion's share of taxes seems to indicate that it is not), then what needs to happen is that the wealthiest need to be taxed both harder and smarter, and that the middle class needs more tax relief. The Bush tax cuts, despite your claims to the contrary, seem to be aimed first and foremost at "liberating" the very wealthy from giving any more of their historically-unprecedented levels of wealth towards an increasingly bankrupt government's debts and necessary expenses, even leaving aside all the things you disparage so much.

According to David Goldman from the former Bear Stearns, "An investor pays the capital gains tax only when he liquidates his investment. In practice, investors liquidate taxable securities and incur the capital gains tax only if they must do so in order to meet large, non-recurring expenses. Wealthy investors often hold onto assets that have appreciated in value until they die, passing them to their heirs and avoiding the capital gains tax (though not the estate tax) altogether. In contrast, middle-class families who have either invested in securities or built small businesses typically must sell a large portion of their investment at the peak of their savings, in order to pay for a large expense like retirement, a child’s education, or the purchase of a home. At that time, these investors have no choice but to pay tax on their capital gains."

... all of which could be dealt with, in terms of the middle class, by a simple system of exemptions, either by setting up lifetime thresholds below which you do not pay capital gains taxes, or with retirement-and-education oriented investment accounts that are immune from taxation, provided the proceeds are used for their intended purpose. Lowering capital gains taxes (overwhelmingly benefitting the richest, in more-than-proportion to their riches) to eliminate those problems seems to be solving a paper cut with a lobotomy.

I don't have a problem with that. Ronny Reagan didn't get the first wave of voodoo tax reforms passed until midterm, so what we see in 79 is the aftermath of the Carter years. In fact, even through this last Bush term, revenues into the federal coffers have been growing while effective rates continue to fall.

Yes, because your economy has been growing (this last year aside, when tax revenues have stagnated). Tax revenues should always increase, given perfectly ordinary levels of economic growth, even in the face of tax cuts. The question is how much of that growth is due to the tax cuts, and how much of that makes it back into the pockets of the government. The answer to that question is almost certainly "not nearly as much as if they hadn't cut taxes".

However, new spending combined with run amok entitlement programs are rising much faster than revenues ever could. Obama offers no change from the past 30 years where both Republicans and Democrats continue to hyper-inflate the size of government.

New spending including an extraordinarily expensive war that you supported? Government is the only tool available for delivering a major economic stimulus. (You could try your plan for small business loans, but even that would require colossal government spending, at least in the short term.) The alternative to such a stimulus is the risk of a new great depression. Who knows, that may happen anyway. But this is not just some crazy socialist fearmongering. It appears to be the consensus position of pretty much every mainstream economist on the planet, although the devil, as always, is in the details.

-Jester