Re: [Pen-l] Vulnerable logic in Dean Baker's argument?

[Bill Lear <rael@xxxxxxxxxx>]

On Monday, May 18, 2009 at 13:15:45 (-0400) Max B. Sawicky writes:
>A few points pro- and con- this chestnut:

Thanks for these, good points.  A few comments/questions:

>a.  Increasingly the interest goes to foreigners, whom one might not
>classify as "ourselves"

Baker says this:

  There is an issue of foreign ownership of debt. But this is due to the
  trade deficit, which is a result of the over-valued dollar and has no
  direct connection with the budget deficit. If we had the same
  over-valued dollar, but no budget deficit or even national debt, then
  we would be in the same situation relative to foreign investors,
  except that they would be buying up more of the private capital stock
  rather than public debt. The outcome for future generations would be
  the same; a larger share of future income would be paid out to
  foreigners.

>b.  While bond ownership is maldistributed, income tax liability is
>also concentrated on the upper income portions (top 20% pay vast bulk
>of it).

But don't upper income portions have a lower percentage of income
that comes from wages, and more from capital gains, that is taxed
at a much lower rate?


Bill
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