Politically Feasible Stimulus
Is going to disagree with Barack Obama and Paul Krugman (alternative title “which one here is not like the others”). Krugman writes and Obama implies that no large stimulus will pass congress.
I think a proposal to send a $500 check to every US citizen containing family would pass congress. In particular some allegedly Democratic Senators (cough Conrad) are arguing for a temporary extension of Bush tax cuts for the rich. My proposal dominates Conrads both as effective stimulus and as popular politics.
Update: However, it is not gonna happen
the top White House spokesman on Thursday said a large spending measure is not being considered.
“Some big, new stimulus plan is not in the offing,” White House press secretary Robert Gibbs said.
Note that Sam Youngman at The Hill uses “spending” and “stimulus” as synonyms, supporting the mistaken belief that the ARRA did not include tax cuts for the vast majority of Americans. I almost wonder if no one in the White House considered doing it with just tax cuts. I consider it a no brainer.
update II: this is weird. A trial balloon in the Washington Post. The possible proposal is a payroll tax holiday. I think that is better policy than an income tax rebate, but it is much worse politics. People in the USA are angry and want to soak the rich and especially hate hate hate tax cuts for corporations (proof at pollingreport.com search for “Gallup Poll. April 6-9, 2009. N=1,027 adults nationwide. MoE ± 3.”). Somehow the Obama administration is determined that they express their populist rage by electing Republicans.
They will get no political benefit from the bill. If it passes people won’t believe that they cut payroll taxes. Only a check in the mail will convince many many US voters that some taxes were cut.
Also an anonymous source has decided to basically assert the false claim that the stimulus bill did not include huge tax cuts
More spending on infrastructure, particularly transportation projects, is also under discussion. But it would be easier for a package composed purely of tax cuts to “avoid the stain of a ‘bailout’ or ‘stimulus’ label,” said one official familiar with the talks, speaking on the condition of anonymity because the deliberations were private.
Check the quotes. A Obama administration source linked the words “stimulus” and “bailout”. I think that’s a firing offence. The line must be “This time we will propose only tax cuts as, for some reason, many people didn’t notice the huge tax cuts in the stimulus bill.” And if the reporter asks for explanation, repeat slowly.
Can anyone there play this game ?
My thoughts based on less solid evidence after the jump.
Krugman argues that there is no way to get significantly more stimulus out of congress (he began writing this when arguing that the ARRA stimulus was too small).
He writes “the Republicans will oppose him regardless” and “we need another round.
I know that getting that round is unlikely: Republicans and conservative Democrats won’t stand for it …”
Obama clearly agrees. In the latest comment on the economy (which I could find) The Whitehouse doesn’t go far beyond supporting the small business helping bill which Republicans are filibustering in the senate. In particular, the White House almost declared that they are not going to propose another really large stimulus “Now, no single step is the silver bullet that will reverse the damage”
I will explain why I think my proposal is political dynamite. Republicans might oppose it suddenly discovering their concern for the deficit (while arguing for extensions of Bush’s tax cuts). I am sure this is political suicide. Or they can go along and Americans get a nice check in the mail soon before they vote (before the end of October — I would call it the trick and treat bill).
They and the Washington Post editorial board and similar scolds will denounce it as a transparent attempt to buy votes. This will publicize the measure.
I am very dismayed by Obama’s “no silver bullet claim.” First I think it’s false as applied to stimulus. The form of the stimulus matters, but right now the main issue is that it should be large. Yes money giving money state governments is better than giving money to consumers who might just save it, but congress will give no more money to state governments.
Another key thing is that the bill be simple. When asked in a poll, only 12% of US adults correctly stated that the Democrats had cut taxes for the vast majority of US families (in ARRA). 12% !!!
Assuming I’m right (a big assumption) what’s wrong with Obama ? I think partly he is too pure to buy votes — he will propose a stimulus which he thinks is efficient. Partly he is cautious (which is insane given the polls, when you are behind you have to gamble). Partly the ghost of Ira Magaziner haunts the White House (this was the guy who loved complexity for its own sake and designed the horrible Clinton Clinton and Magaziner health care reform fiasco). A simple, simple bill doesn’t appeal to people who want to show they are smart (I am not thinking of Obama here).
Mostly, I bet they just can’t stand admitting that Paul Krugman was right. No one likes doing that, but it is, alas, part of the human condition.
“People in the USA are angry and want to soak the rich”
Really? I think that some people want to soak the rich, but most only want the rich to bear their fair share of the burden of the economic crisis. They see the bank bailout followed by record bank profits and bonuses amidst high unemployment and bankruptcies.
“They will get no political benefit from the bill. If it passes people won’t believe that they cut payroll taxes. Only a check in the mail will convince many many US voters that some taxes were cut.”
Really? I would sure notice when doing my taxes. Maybe the IRS can make it obvious, by having people calculate their payroll taxes and then giving them a credit. Stupid, as far as tax calculation goes, but it gets the point across.
Mean guys like Eisenhower too. I’m not sure the US in the 20s was a Potemkin economy. Post WWII GDP was pretty much on the trend from earliest data through 1929. I think the problem in the 20s was lack of proper financial regulation.
I think the rich are protected in large part by Democrats in office. In all polls which I have seen there is a majority for increasing taxes on the rich either undefined or defined as income over $250,000. Notably the surtax on the rich was the only part of health care reform which was easy and popular. Also notably it was added at the last moment. I really think the rich protect themselves by buying off the elite and not by foxing the masses. I think the masses tell pollsters that they want to soak the rich. This is one very strong regularity in polling data (about as strong as the US masses don’t like foreign aid and do like the death penalty).
I tend to assume that dollar debt will be inflated away. Basically a whole lot of it belongs ot the People’s bank of China and they don’t vote in US elections. The irrationality of average Americans who are up to their neck in debt, much of it long term at fixed nominal rates, and who hate inflation defies description or comprehension. I can’t believe it will last forever.
My claim that people didn’t notice the tax cut is not mere talk. There was a huge tax cut in the ARRA (stimulus bill). $800 per family or $400 per individual for well over 95% of working families. According to a Pew poll, 12 % of adult Americans agreed that the Democrats had cut their taxes.
I expect that you are part of that 12% and know about tax cuts. That’s not enough. We need a majority. In any case, the claim which you contest is supported by solid data. Your theory doesn’t top my data.
It is true that most Americans just want the rich to pay their fair share (and think they are not now paying their fair share). Importantly a large majority of adult Americans thought that in 2000 — before the Bush tax cuts.
By the way, the links are not decorative. You seem to think that the view that the rich don’t pay their fair share is a new phenomenon. In fact, it has been the view of the majority for decades (click the link in my post for proof).
Robert, I think due tro your own location you are missing the anger that the average voter has for the failure of this administration’s stimulus. You did say something that most thinking voters understand: ” The form of the stimulus matters, but right now the main issue is that it should be large.”
Absolutley correct in many voters’s minds. The current stimulus was malformed. It was plenty large enough, but way off target. They will not accept another large stimulus bill because they have lost trust in this administration. That loss is because the rhetoric has not matched their actions.
As an aside, Dem/liberal policies have been on display for the past two years. A large portion of the voters have decided they are worse than Repub/conservative policies. To this voter, they have been abject failures.
BTW, I commend you for admitting the plan is to buy votes. Regrettably, that is one of the main failures of the past stimulus, roll out based upon election schedules. This plan is NOT the October surprise.
How about a 2-year payroll tax holiday. The retroactive-to-last-year part in the form of a check in the mail, next years’ part as a corporate tax cut. This is real money, real stimulus, good for people, good for jobs, and good politics.
Five hundred is nothing, is tossing the rubes a bone. You want a ‘trickle-up stimuli? Five thousand is an undershoot, fifty thousand each, equivelent to what we’ve spent bailing out the international bankers and insurers, is the number your looking for. Five hundred is nothing.
Most Americans do not sit around studying economics or thinking about tax bills. They are busy doing their jobs or looking for a job.
Only a few of us, via our jobs or retirement or both, get to sit around studying and think about these issues.
This point is often lost on economists (not a knock, someone has to get paid for thinking).
Run the budget costs of hiring an employee at $10 an hour with no benefits, then subtract some part of the payroll taxes, and there is no compelling case to hire UNLESS top line revenue is headed upward.
No demand, no hire.
Business won’t hire until consumers spend. Consumers won’t spend until they feel their jobs are secure. Vicious circle. Anyone know how to break this?
I thought, for once, that I might agree with something CoRev wrote. Then comes the punchline:
“A large portion of the voters have decided they are worse than Repub/conservative policies.”
Utter nonsense, of course. Polling data show that while Democrats are mighty unpopular, so are Republicans. Some voters, no doubt, have short enough memories to have forgotten that this recession got started under Bush and that Republicans were repudiated in the most recent election for a reason. There is no evidence that this is true of “a large portion” of voters. That’s bull, pure and simple.
so what is the rich’s “fair share”?
the top 1% of taxpayers already pay 40% of income tax. the top 10% pay 70%. the top half pretty much pay ALL the income tax.
the top 5% of income tax payers pay more tax that the bottom 95% combined.
this is all from IRS data.
so, 70% of taxes paid by 10% of taxpayers isn’t a “fair share” yet? the top 3% of taxpayers pay as much as all the rest combined. how much should they pay before it hits your notion of “fair”?
this isn’t a rhetorical question, i’m actually serious: what is it that you think is fair? people throw the term “the rich need to pay their fair share” all the time, but they never seem to set out a strucutre for determining what fair is. so what is fair? by what definition of fair can 3 people out of 100 be asked to carry the same burden as the other 97?
I agree with a lot of what is being said here. I agree that people DON’T notice tax cuts. A $1200 tax cut but divide it up among 26 paychecks, it works out to < $50 per pay period or about $92/month. I think many if not most households would absorb the extra income without thinking about it, probably by substituting upwards in terms of quality (steak instead of hamburger, $100 shoes instead of $80) or simply buying without waiting for a sale. This "stimulus" gets spent $10 here and $20 there. Yes it adds up but people aren't conscious of it and don't go out to dinner a second time per month and toast Obama and the Democrats for their ability to do so. I also agree that $500/family is too small. $500 per person maybe. $2000 per person and now we’re talking. We would also want to maximize the impact of any money that is sent out. I suspect that if we send out $55 billion in checks we’ll simply see household debt levels drop by 50 billion and sell a few extra new cars or something. Can we send it out in a form that guarantees that it will actually be spent? I occasionally get $50 or $100 awards at work that come in the form of a debit card. If the card isn’t used in six months, the balance on the card drops to zero. Lets send out debit cards with a balance that expires – “here’s your stimulus; use it or lose it.” Give people the option to turn it into cash if they really need to, but require that the jump through a couple of hoops. What I would really like is if we could figure out how to make sure the vast majority of the money is spent locally. If a large chunk of money is spent on Chinese or Korean made televisions, that doesn’t benefit us very much, but if the money goes to home upgrades, education, or services from local vendors (restaurants, landscapers, etc.) then there is far more benefit to the US economy.
then why are the republicans beating the democrates by a record 10 points in the generic gallup congressional poll?
trying to do “the politically possible” is just agreeing to be insane because everyone else is.
any kind of tax cut will not help the economy. the problem is that people have no confidence so they are not spending.
a program of hiring people to do needed work… i like the idea of infrastructure investment… politically possible or not… would put money into people’s hands who would spend it, and build something for the future.
a payroll tax holiday is evidence of how easy it is to spread a stupid idea through the minds of the people, even those who should know better. the payroll tax is “really” the employees money. so all your payroll tax holiday does is take the employees retirement and spend it. the workers will never even know. their bosses will not hire any new workers because they can get them 6% cheaper, or 12%, but they will learn that the payroll tax is a “jobs killer.” a new meme for conservative and liberal idiots to hum on the way to perdition.
a tax raise would not hurt the economy right now. sorry that’s not what you learned in your economics book… but they were fighting the last war.
Rusty said: “Anyone know how to break this?”
1) Stop the verbal, tax and regulatory attack on businesses.
2) Promise to lock or even lower federal spending at/from current levels.
3) Promise to stop all unnecessary new taxes.
4) Allow the Bush income tax cuts to expire only on the top 5%.
5) Continue the entire remaining Bush tax cuts.
6) Provide new tax incentives for employers to hire.
7) Provide new tax incentives for companies to make captial investments.
8) Announce delayed implementation of the healthcare bill.
9) Announce delayed implementation of any energy tax bill/EPA regulation.
Most of those things will not happen until we have a different Congressional makeup, but many/most will happen soon there after.
Even after these are implemented it will take nearly as long to repair the damage they brought.
‘Scuze my confusion. A payroll tax holiday would result in higher take-home pay. Most people would notice that. 🙂
CoRev, if you do not know who the leeches are, I feel sorry for you.
tyger tyger: “we’re talking about the income tax rate. what does that have to do with any sort of financial mess?”
I thought that we were talking about fairness. Generally speaking, income tax rates are the result of continuing negotiations, and more or less represent the culture’s concept of fairness.
However, in the current mess the rich and not-rich do seem to have been treated differently, with the not-rich treated unfairly. That has generated a lot of anger.
coberly: “the country needs money. we can argue about how much or how spent later.
“the only place to get the money is from taxes.”
Taxes take money away from people. The only place to get money is from the Federal gov’t.
save_the_rustbelt: “I don’t put much stock in “generic polls.”
Especially since the exact wording matters. 🙂 What is apparently the same question, phrased differently, can get quite different responses. On top of which, the reported interpretation of the poll results is another rephrasing, one which was not actually asked. Questions with obvious biases in the wording get reported as though they were not biased.
tyger tyger: “but the whole bunch is changing its tune. the GOP is looking like it’s serious about being the party of small governement again”
Because they are expressing concern about deficits? Then they should be happy to let the Bush tax cuts expire. Their apparent concern about deficits is posturing. “Deficits don’t matter.” — Dick Cheney
The Reps have certain social values, but economically they take the viewpoint of the rich and the creditors.
Jimi: “Democrats are incumbents who took a bad economy and made it worse.”
No, the economy is pretty well holding steady, with slow growth. The Reps have opposed stimulus measures without advancing their own. (The Blue Dogs would join them, plus some other Dems.) In short, the Reps are complicit in the lack of economic growth and the persistence of high unemployment.
Min, feeling sorry does not answer the question. There are many leeches in this country. To which set are you referring?
CoRev, maybe that was written by a small business owner in NJ, but it sounds like it was written by a political hack. 😉
SBOINJ: “Before that money hits her bank, it is reduced by the $2,376 she pays as her share of the medical and dental insurance that my company provides.”
Hmm. That sounds like the writer thinks that the employee should not pay her share of medical and dental insurance.
SBOINJ: “And then the government takes its due. She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare.”
Nor, in his view, should she pay for any of that insurance, either.
SBOINJ: “Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay. Health insurance is a big, added cost: While Sally pays nearly $2,400 for coverage, my company pays the rest-$9,561 for employee/spouse medical and dental. We also provide company-paid life and other insurance premiums amounting to $153.”
Hmmm. He doesn’t want to pay for insurance, either. (OC, what this means is that the nominal salary is smaller than the actual salary.)
So I guess that SBOINJ either does not believe in insurance, which is an extreme view in modern society, or he believes that people should not pay for it. It should be free. The guy is a closet Socialist!
coberly: “and completely stupid. the payroll tax is what pays for the workers retirement.”
A payroll tax holiday should be written so that the contributions to the trust funds stay the same as they would have been if the taxes had been paid. Like a sales tax holiday, where the Federal gov’t pays the states what would have been collected.
save_the_rustbelt: “Business won’t hire until consumers spend. Consumers won’t spend until they feel their jobs are secure. Vicious circle. Anyone know how to break this?”
Yes. It has been done before. First, there are consumers and consumers. Some consumers will spend, even without a secure job or prospect of a job. The poor, and state and local gov’ts that have obligations to meet. Other consumers, who are better off than the poor, will save some and spend some. The point is to get money into the hands of those who will spend it. Second, the Federal gov’t can hire people directly. We could bring back the CCC, even the WPA. Or start some new programs.
coberly: “we could learn to live on a little less. as long as the less was distributed so that folks with more money than they know what to do with found a way to share money… and work… with those who don’t have enough to live on.”
I suspect that the politically palatable way to do that is through moderate inflation, like 5%. I. e., people have less because their money is worth less, not because it is taxed away and given to the “undeserving”. Yes, people often refer to inflation as a kind of tax, but they don’t squawk as much. 😉
H-Bob: “If Social Security is “running out of money” then how can a payroll tax holiday be feasible ?”
A holiday on Social Security taxes does not necessarily mean that the difference is taken out of the Social Security Trust Fund. It should be funded as though the taxes were collected.
Besides, Social Security is neither broke nor broken.
Robert Waldman: “my claim about what people in the US want is supported by polling data.”
What polls were you relying upon for the idea that people want to “soak the rich”? I really would like to know. Thanks. 🙂
Homunq, I wit ya on that. NancyO
@CoRev: Taxes take money away from people. Do you disagree?
The only place to get money is from the Federal gov’t. I mean that the Federal gov’t is the source of our money. Banks can create money temporarily, but that increases the indebtedness of the people.
CoRev: “Who’s angry?”
Do you follow the news?
“latest Foxnews poll asks if Obama deserves to be re-elected”
Assuming that the question was worded, “Does Obama deserve to be re-elected?” that shows the strange nature of polls. Who deserves anything? Isn’t it likely that this question would get a different response from, “Should Obama be re-elected?” or “Would you vote for Obama?”
The wording of poll questions matter, and the interpretation of results is not obvious.
I follow the news nearly constrantly when awake, and the anger is against the current Congress/administration. Anger against the richa appears to be on the left leaning blogs/MSM.
Min, you appear to be projecting. You have added motivation to statements of fact. Show us where he made any of the statements you impute.
Robert, the poll you cited is from early April. Things (voter perceptions of jobs and the economy) have changed dramatically since then. Get some fresher polling results, please.
i hope that is a joke.
if you mean that the gov can just print the money, that’s true to a limited extent, but more generally money represents production, and if it is not matched over a relatively short time with production it ceases to be money.
i will part company from you here. people who work harder than others because they want more “deserve” the more they get to the extent they get it honestly. this is by no means always the case.. that they get it honestly… but it is a “fair” principle. your version of “equal distribution” means not only that the less able get more (as may be fair in a higher understanding of “fairness”) but also that the shirkers get more, or that even people like me who don’t want more get it whether we want it or not.
yours is the kind of “philosophy” that dooms the left to political ineffectiveness except in times when the majority of the people are suffering actual want.
Co Rev at 14:40:35 same day as CoRev at 18:07:31
“NanO, your just spouting the Dem talkng point rubbish.”
factual perhaps. whining certainly. pretending to himself that if only the mean old government wasn’t taxing him, or he wasn’t paying the employee enough to cover medical insurance and eventual retirement, both he and the employee would be better off.
that is just pathetic. Min is not projecting, he is showing the brain damage inherient in the “employers” whining. generally the brain damaged do not even notice the absurdity of what they are saying.
and what would this achieve… the Fed government pays your payroll tax? is that a way of turning it into welfare. Or is it just to give the employers another reason to blame the payroll tax for their inability to make a profit and pay a fair wage?
if you need to give people a tax cut, take it out of the income tax and be honest about it. don’t take it out of the employees retirement fund.
Plus those who want to discuss fairness need to understand that they are building in a theoretical assumption that history suggests is not true at all.
Classical economic theory seems to start from the assumption that original distributions from productivity are magically delivered in strict accordance with the value of the respective inputs of labor and capital and that the Invisible Hand is wearing an equally Invisible Glove of Equity. You don’t have to swing all the way over to full blown Marxism to realize this formulation, which comforts the comfortable ignores the obvious history of divergent pricing power over labor, power that was often backed by the police and military forces of the State. These days the methods are a little different than they were when the cavalry sabred down the protesting crowds at the Peterloo Massacre of 1819, instead it is more likely to come in the form of threats to shutter the factory and move to South Carolina if you refuse pay and benefit give backs.
In my mind progressive taxation is not about fairness in an abstract sense, it is a recognition that on a day to day basis the power to distribute production is overwhelmingly in the hands of the possessors of capital and their natural (and per classical economic theory normal and moral) impulse is to maximize their own self-interest. So what the ‘taxation is theft’ people seem as simple appropriation I see as a recognition and partial redress of that original power imbalance which allows capital to over reward its actual contribution to productivity
In practice, I mean that the gov’t can spend more than it receives in revenues. Andrew Jackson paid off the Federal debt in 1835. In the 175 years since then, the gov’t has run deficits in more than 2/3 of those years. So what?
Running deficits provides the economy with money. Right now, the economy needs more money than it is getting. So we should run a higher deficit. That does not mean that we should spend the money stupidly or unproductively. But it does mean that we should not rely upon taxes for current spending. (The time for higher taxes is during “fat years”.)
as long as the economy is iffy, the 500 dollar check will just get saved. or go to the landlord… who will save it.
to be sure. but better to make an honest case for what needs to be done, than to go along with the insanity of the blue dogs and the rest of the stupid right.
i don’t think so. people out of work need jobs. they probably need help finding jobs they can do. inflation might take “money” away from those who have it, but it won’t find money for those who don’t.
an intelligent jobs program, would, whether it was paid for by taxes or by printing money. in the long run it would have to be paid for by taxes to the extent the jobs were in the public sector — doesn’t mean they have to be make-work … of course the public sector jobs would tend to support a lot of private sector jobs. something the stupid right can’t figure out.
then why bring Social Security into it at all. you could give the employers the same break on their income tax. ditto the employees.
but the fact is that no tax cut is going to stimulate the economy under present conditions.
@CoRev: Can’t you tell a joke? Even with a ;)?
Seriously, there are implications from saying that somebody’s salary is reduced by insurance payments that are taken out. Why is that even relevant? The short answer is that the woman’s actual salary is larger than her nominal salary, which is larger than her take home pay. So what?
you are certainly right about the last.
and you are right about the nominal tax rate. my 9% came from the Statistical Abstracts of the U.S. and appears to be the aggregate result counting all the deductions etc. I can find the cite but i’d rather not take the time.
i take it by “get the workers new found purchasing power” you meant get it and take it away.
without researching it, i’d accept your figures. but look at them. is that truly a “disproportionate” burden? the richest get 63% of income and pay 71% of the tax? that doesn’t seem grossly unfair to me considering the considerations we have discussed about basic living expenses, marginal value of a dollar, and benefit from government spending.
the only way you can find that unfair is to insist that only a “flat tax” is fair. and there is no way a flat tax could pay the country’s current bills and leave the poorest half with enough money for groceries, not to mention the rent they pay to the richest half.
coberly: “the Fed government pays your payroll tax? is that a way of turning it into welfare.”
No, it is a way of putting money into the hands of people who are more likely to spend it than others (for the duration of the holiday).
coberly: “if you need to give people a tax cut, take it out of the income tax and be honest about it.”
Many people who would spend the tax cut pay more in payroll taxes than they do in income taxes. Let’s get money to them. 🙂
coberly: “don’t take it out of the employees retirement fund.”
Agreed. That’s why the gov’t should credit the trust funds as though the tax had been paid. 🙂
well not a simple minded “flat tax” concept of fairness anyway.
the richest people in france found a way to pay no taxes. and with all the money they saved, they bought themselves a guillotine.
Yup. I think that’s how it works anyway, after catching the tail end of the 1976-1980 housing boom in California and then the one we just had.
Or I guess health care could eat it up while Wal-Mart, Target and Amazon.com all decide to have a sale with the payroll tax savings in a grab for market share.
I’ll believe the 9% net after deductions.
The idea the inflation is some sort of Robin Hood that taxes the Rich and gives to the Poor is a rather outmoded concept. I think it began when we were an agrarian economy and on the gold standard. Farmers needed to borrow to put in the crop. If they had a good growing season, supply causes prices to fall. The loans were denominated in gold back when we had the gold standard. This is why they had the big push for “silver coinage”, which really was a way of increasing the money supply to combat deflation. Rich people fought it viciously, however.
But we fixed all that, and I doubt many poor people are clamoring for inflation, but maybe that’s just because they are not economists.
Going back further in history to England, if a successful farmer couldn’t pay his loans due to this phenomenon, he was thrown in debtors prison. The proprietor of the prison tabulated the prisoners room and board during his incarceration and he was expected to pay the bill before being released.
This was difficult to do with no job.
Why would any intelligent person make reference to a FoxNews poll or pay heed to the report of such a poll? Has FoxNews suddenly been shown to be anything other than a totally partisan media organization?
When you can reference to or link to a source outlining the polling methodology used we might be more attentive to any poll results you want to post. Otherwise, you don’t have a good track when it comes to reliable and valid data references.
Min, nope didn’t catch the joke. Sorry.
i agree with all that.
but this time i think higher taxes would actually help. the very rich have more money than they know what to do with. so they gamble with it… and the economy suffers. a tax raise would have a salutary effect.
deficits are fine sometimes. but when you have a dick cheney saying deficts don’t matter and the country finances an unnecessary war on its credit card you are entering irresponsible territory, and it scares people.
“lets get money to them.”
how about a 500 dollar “filing rebate.” they get the money just for filing their income tax.
coberly and corev,
I don’t agree that my arithmetic is wrong. I’d be happy for an explanation of the perceived error. As noted above, CoRev’s addition of the %s for the two groups is wrong, as one group includes the other.
CoRev’s last comment, above, is a good example of what I’m trying to make clear. The top 40% earn 62.5% of a supply of income that is more than three times the size of the fund of tax revenues of which they pay 71.2%. The percentage of total GDI earned by one group in comparison to that earned by the other must be taken into account inorder to satisfy a fairness requirement. That would also satisfy the ability to pay argument. Try hard to understand this concept, it ain’t that difficult. If the top tiers of earners benefit in a disproportionate manner from their government’s efforts at structuring and maintaing the economy then those top earners, who are benfiting most, owe the greater share of the cost of that government. Cost of government is far less than total economic income, so the pay-off is far greater than the cost. The tax schedules have to take that into account inorder to be considered fair.
its a matter of choice of language. the poll shows people favor a tax increase for those making over 250k. more than they favor a tax increase for those making what they make.
calling this soak the rich is just putting it honestly, if politically stupid.
there are many ways to tax. there is a level of flat tax that would raise the exact same amount of revenue the current tax system does. we can argue over what the level is, but not that one exists.
this comes back to my original question: is that more fair than a graduated tax? notions of “spare” money are arbitrary and sunjective. how is asking half the people to pay for all more fair than asking everyone to contribute an equal % of income. how is it fair to give huge write offs for certain kinds of activity, but not for others?
if you go out to dinner with 3 friends, there are 2 generally accepted “fair” ways to spit the bill: take the bill and divide by 4 or have people pay for what they ate. why is the tax system different?
all the answers i hear boil down to “because we like it that way” and “the rich can affors to pay more”. they will already pay more with a flat tax.
we don;t pay different amounts for milk or internet access based on income, why is governement the only good we consume that is priced this way?
there is more than one way to cut a deficit. more growth and less spending works too.
citing the branch of republicanism that is being repudiated to stand for the branch that is emerging is a silly rhetorical trick and a factual fallacy. you think it’s the neo-cons driving this?
Oh please Coberly. You are an ignorant blowhard bully. There is no one on these boards who is even half as rude as you are. Grow up.
Thank you, James!
continuing discusions about fairness, or a function of power balance.
if the 50% who pay 3% of taxes can raise the taxes of the 10% who pay 70%, the outcome is “make the rich pay higher rates so we can benefit.”
that’s not fairness, its tyranny of the majority.
what is the ethical discussion underpinning this “discussion of fairness” you cite? if we voted that asians had to pay a higher tax rate, that would be considered unfair. so why is it fair if you earn more? a flat rate for everyone could be considered “fair”, but what’s the rationale for the existing system other than voting power and expedience.
i’ve yet to see anyone even try to lay out an ethical system that defends the existing situation.
you htink the folks paying all the taxes aren’t angry? try living in california and paying out 50% of you income just in income tax. toss another 7.5 on for FICA, and it really starts to sting. the difference is that when the wealth get angry, they can’t do anyhting about it because they are a minority. being outvoted does not make them happy milchcows nor mean an outcome is fair.
FICA is a tax to fund programs that are supposed to give the money back – medicare and social security. think of those as insurance payments. they are the same for everyone because we all get the same policy. if you and i buy the same insurance, it costs the same, just like any other product.
you are making the assumption that stimulus works to reinvigorate a slow economy after a debt crisis. it hasn;t and doesn’t. it may have provided a quick blip, but it did not “prime the pump” and get the economy rolling again. meanwhile, the federal debt to GDP ratio has doubled in 4 years after 50 of steady decline. what do you propose doing, running huge deficits forever and keeping the economy from ever actually readjusting?
we don’t have to argue over what the level is. it’s a mathematical question. 14%.
but you are remarkably resistant to hearing the answer to your question. taking 14% from the poorest half of the population would leave them destitute, unable to pay rent to the richest half of the population. there is a difference between “can’t afford” and “don’t have.”
as for the different amount.. it is argued that the rich get more out of the government than the poor.
the fact that you don’t agree with that does not alter the fact that it answers your question.
please stop repeating the same question over and over. it has been answered.
most people invent new technologies because they enjoy creating things. and believe it or not, in non-capitalist societies the commons gets taken care of. by the community.
one reason you think people won’t work without differential money incentive is that you have only seen workers ground down by the twin systems of working “for” another who treats them as objects. the twin systems are big corporation capitalism and state capitalism otherwise known as communism. most people enjoy working when they are treated fairly (not by Rober’s definition of fair) and can see the value of their work…. to their community.
of course i agree with you about FICA… it is not a “tax.” even though it is in some respects like a tax.
it is certainly not regressive. calling it regressive is one way certain liberals have of demonstrating that they are not clear on the concept.
very politely expressed.
at the least, i don’t understand your calculation. it looks wrong to me.
CoRev. on the other hand,
doesn’t seem to understand the question.
if there is a less rude way to say this, please explain it to me.
we have tried and tried to explain what we mean by “fair”. CoRev is stuck with the idea that the only fair tax is either a flat tax or a head tax. that may satisfy his idea of fair. but there are other ideas of what is fair. the progressive tax seems to have satisfied the reprentatives of the people for at least the last hundred years. before that no one would have even thought about taxing the poor.
at least, not in America.
you seem to regularly exceed my standard in abusive language. but you think you are just using a feather duster.
i cannot account for the implications you read into, or fail to read into, what i say, or even what you say.
the income tax has been progressive for my entire life, and i think at least since about 1920. i am not much interested in researching it beyond that. and the not progressive taxes you refer to are first, not very big compared to the income tax, and second more in the nature of a “user fee” than a true tax. but again, i cannot acount for your strange sense of proportion in order to make your point.
meanwhile i love being arrogant. i earned the right. paid my dues. there is no way in hell you could judge my intellect… without claiming that your intellect was greater than mine, which would make you the arrogant one.
this is what the psychiatrists call a fugue state. your rant has nothing to do with reality.
Jack has made a case for his idea of “fair.” You cannot seem to even acknowledge that he has a right to his idea. You appear to be convinced there is only one possible meaning of “fair” and that it is yours.
Then you go into a word salad, to which i can only say, “hmmm. hmmm. and can you tell me how you are feeling about this right now?”
whatever else “fairness” may be, it is NOT a “well defined term.” neither is “benefits.”
Dale asked: “and can you tell me how you are feeling about this right now?”
CoRev that was irony not an offer.
It’s Sunday and there has to be a football game on, and I know there is a big NASCAR race today. Take the rest of the weekend off. You’ll feel better.
By using the 50th percentile rank in making comparisons we ignore that the distortions of responsibility occur within the 5th percentile rank and the distortion increases as we reduce the size of the rank that is included. But even if we look at that 50% of all participants we find that they are earning virtually all the income. So why would we not expect them to pay nearly all the income tax. Using CoRev’s some what vague nearly all I felt obliged to use the equally vague virtually all. And in fact the bottom 40% earn little more than 15%, if that, the stats aren’t easy to find in equal units. They have nothing left to pay to the Treasury after sales tax and FICA. I remind CoRev and all of his partisans that it was just such a distortion of grossly inadequate income together with bearing the burden of disproportionately high taxation that has led to explosive upheavals of the working class in days past. It can’t go on forever without such explosive responses.
Bruce, I wish i could feel better. I’ve been fighting for a week some creeping crud I picked up from my grandson. Remember for some of us everyday is a weekend day! :))
I am sorry you are not feeling well.
The tragedy of this situation is that I know you are a good guy, but your arguments don’t make any sense to me. Not that I disagree with them, but that I cannot make them add up. And to be sure, my arguments don’t make any sense to you. There is no way to resolve this, but if I get drawn into an argument… some I try to pass up… I am going to say what I think, and my style is not mealy mouthed. Try not to take it personally. Get better soon.
Jack, with this comment: “By using the 50th percentile rank in making comparisons we ignore that the distortions of responsibility occur within the 5th percentile rank and the distortion increases as we reduce the size of the rank that is included.” you are just railing against how the income tax is bracketed. I hope you also realize your statement works for each and every bracket, but that the difference is in the top bracket where there is no ceiling. No matter how finely you engineer the brackets, there will always be a final bracket that goes to infinity.
As to your historical reference, there is actually little US history that supports your contention. If we revolt is will be because of loss of rights/freedoms and the take over by Govt of industries. Of course that couldn’t happen here. Our Healthcare, auto, banking/investment, energy, mining, drilling … industries are so free from Govt control or takeover.
You have an unending capacity to disregard the crux of a matter and divert your attention away from explanations that are offered to you in an effort to explain to you the erroneous nature of your ideas. “…how the income tax is bracketed.” Take one small aspect of the structure of a system and insist that it is the crux of that system. We’re not discussing the sectioning of tax calculations. We’re discussing the inadequacy of the rates attached to the upper tier of that sectioning. You can’t seem to understand, or you prefer to ignore, the concept that if one benefits more so than all the others from a complex system then that one is responsible for a matching proportion of the cost of supporting that system. No, it is not sufficient that the percentages of income taxes paid match the percentage of income earned. The two gross amounts from which those percentages are derived are enormously different in their size, e.g., the percentages of each are not a fair measure if they are equal. If the concept is too difficult for you to comprehend then you will forever be a dupe of the One Percent club.
“If we revolt is(sic) will be because of loss of rights/freedoms and the take over by Govt of industries. Of course that couldn’t happen here.” CoRev
I suppose that’s what the guys in Boston harbor were complaining about when they were dumping all that government tea over board. Or the moon shiners in the hills of Pa might think differently about your disconnect between unfair methods of taxation and explosive reactions. And have you any understanding of what the different levels of the Estates General were trying to come to an agreement on just prior to the blow up in Paris? It had something to do with who earns what and who pays for it all?
“Don’t bother to respond. I’m done here.”
I’d say more accurately that you were done with any semblence of an honest attention to facts and logic from the first words you typed on this subject matter, as is your habit when discussing other issues. Your quotation: ““… France still practised feudalism in the 18th century. The nobles and clergy enjoyed special privileges. They did not have to pay taxes. The common people did not have power and freedom in politics. They worked hard and had to pay heavy taxes. The nobles and clergy made up the First and Second Estates in the Estates General.” “
What part of nobles and clergy didn’t pay taxes and the common people had to pay heavy taxes do you not understand in regarsds to my last several comments? Add to that quote that the nobles and the clergy owned virtually everything. Does the scenario sound a bit familiar. Thanks for the support.
That sounds like we’re saying much the same thing. Any concept of fair taxation must take into account not only trhe percentage of total taxes paid, but also the percentage of total income distributed to each group of tax payers. The One Percenters take hopme nearly all the bacon. So why would they not be expected to pay for nearly all the fattening of the hog?